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U.K. ITV stations plead cross-ownership case

The chairmen of ITV’s 14 regional stations meet today with National Heritage Secretary Peter Brooke to discuss possible changes in ITV cross-ownership rules.

A powerful group comprising most of the major ITV companies wants the rules relaxed immediately to allow members to merge with each other. This camp includes Central TV, Carlton TV, LWT and Granada.

But a significant minority, led by Meridian Broadcasting, Anglia TV and HTV, want the current restrictions preserved at least until 1996 to allow time for a thorough review of ownership rules across the whole spectrum of British TV.

Some of Britain’s biggest newspaper groups are also getting involved in the debate, although they have not been invited to the meeting. They argue that if the government lifts the current rule, which restricts large ITV companies to a 20% stake in each other, then it should also let newspapers own more than 20%.

Confronted with such disagreement, Brooke, a cautious politician, seems likely to leave well enough alone. The government was considerably embarrassed by the chaos of the 1991 ITV license auction and will not be keen to create more disruption in the ITV system just as it is beginning to settle down into its new order.

But the London Stock Market apparently thinks otherwise, judging by the rise in ITV share prices since the meeting with Brooke was announced. Central TV, which is leading the lobby for change, has bounced up 19 pence.

Central’s executive chairman, Leslie Hill, argues that permitting mergers between large ITV companies is the only way to preserve the programming strength of the network in the face of the severe commercial pressures introduced by the license auction and the arrival of cable and satellite TV.

Such mergers, supporters contend, would save the network up to T100 million ( $ 150 million) a year in costs — money that could then be invested in programming.

This figure is ridiculed by HTV chairman Louis Sherwood as “wishful thinking masquerading as business logic … a figment of those who want to dominate ITV, who care nothing for our regional character.”

He thinks the more prudent course is joint ventures between ITV companies, such as already exist in airtime sales, international distribution and, increasingly, in co-production of local programming.

Under existing rules, the nine large ITV stations cannot own more than 20% of each other, although they can each own one of the six “small” licenses.

Last year, for example, the large Yorkshire TV merged with the neighboring small Tyne Tees TV. Last month the large LWT bought 14% of Yorkshire Tyne Tees. Carlton owns 20% of Central TV, which in turn owns 20% of Meridian.

Up to the end of this year, all major ownership changes must be approved by the ITV regulatory body, the Independent Television Commission.

But beginning in 1994, the ITC will lose its power to block hostile takeovers if they conform to existing ownership restrictions.

This means that a European company such as CLT or Fininvest would be able to bid for a major ITV station, although a fellow ITV company or British newspaper group would still be prevented from doing so.

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