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UK broadcasters slump
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September 26, 2000: 11:39 a.m. ET
Broker downgrade hits Granada Media, UK rivals; On Digital in partner talks
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LONDON (CNNfn) - Shares in British broadcaster Granada Media PLC slid 8.9 percent Tuesday after investment bank Merrill Lynch & Co. slashed its estimate of the company's profit next year by 21 percent, sending sector rivals down in tandem.
 Merrill Lynch cut its forecast of pretax profit in the year ending Sept. 30, 2001 to £256 million ($371 million) from £321 million to reflect disappointing advertising revenues on the Independent Television network in which Granada is one of the main regional franchisees and program makers; more conservative accounting for the United TV assets; and additional costs of digital new media.
Shares in Carlton Communications PLC (CCM) slumped 5.2 percent while British Sky Broadcasting Group PLC (BSY) slipped 1.1 percent.
Merrill Lynch forecast that Granada's ITV advertising revenue would be down 3 to 4 percent in the 2001 fiscal year as a result of declining audience share.
Separately, pay-TV broadcaster On Digital, which is jointly owned by Granada Media (GME) and Carlton, has held preliminary talks about selling a stake, with several big telecom and cable companies showing interest, a source close to the companies told CNNfn.com.
The Financial Times reported Monday that British Telecommunications PLC (BT-A), Telewest Communications PLC (TWT) and mobile phone operator Orange were understood to have had talks about becoming a partner of On Digital before the digital broadcaster's estimated £2 billion ($2.9 billion) flotation.
On Digital, Carlton, Granada and BT declined to comment.
Investment bank Morgan Stanley Dean Witter has been brokering the discussions. A partnership could bolster investor confidence in On Digital before it goes public, the report said.
A tie-up with a telecom operator would extend On Digital's communication capabilities, while a cable partnership could give regional cable companies national reach, the Financial Times reported. 
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