Media arm spin-off to focus on ITV merger

LONDON — Granada Group is planning to spin off Granada Media into a separate unit, creating a pure media company arguably better placed to be the key player in the consolidation of the ITV network.

Granada told Daily Variety that it is in advanced talks toward an £18 billion ($27 billion) merger with catering group Compass. After the merger, Granada Media will be separated, and will likely bid to take over either Carlton Communications or United News & Media, the other two big ITV companies.

The hotels-to-TV conglom is keen to thwart the planned merger of Carlton and United, currently under review by the U.K.’s Competition Commission. It is a marriage that requires changes in legislation; at present, no individual company can command more than 25% of TV ad revenue or 15% of viewership in Britain.

As a stand-alone group, an acquisitive Granada Media could be less of a concern to regulatory authorities. One observer said Granada was “trading size for focus.”

Heading Granada Media as chairman will be Charles Allen, Granada’s present chief exec. Granada chairman Gerry Robinson — who is known to have wanted to pull off one more big deal before retirement — will step down after the spinoff, and become a consultant to Granada/Compass and a non-exec director of Granada Media.

Both highly regarded execs have long argued that only a consolidated ITV can effectively compete with the growth of cable and satellite TV in Britain.

Granada Media’s present interests include Granada Television, the maker of the venerable British soap, “Coronation Street,” as well as channels London Weekend TV, Yorkshire and Tyne Tees TV.

Granada is also partnered with Carlton in the ONdigital platform, the terrestrial rival to satcaster British Sky Broadcasting, and cablers NTL and Telewest.

Granada’s merger with Compass is effectively a takeover. Granada’s market cap is about $18 billion, twice that of Compass.

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