Territory report: U.K.

Merger hold-off taunts U.K. biz

LONDON — These are trying times for Blighty’s commercial broadcasters. Ad revenue and audience shares are heading south, and until media ownership rules are relaxed, a further round of mergers remains off-limits.

Only the BBC has extra money to spend, but even there there’s a catch. Its new digital nets — greenlit last month — are subject to strict regulation and stiff quotas to ensure that imported shows are kept to a minimum.

The U.K.’s two biggest private broadcast producers, Granada and Carlton, want to merge and finally end the federal system that has caused so much division within ITV and is partly responsible for its present financial problems.

Final consolidation is perhaps two years away because new legislation, following on from last winter’s communications white paper, is necessary and broadcasting legislation is not exactly uppermost in lawmakers’ minds.

“My guess is that by the time ITV is allowed to merge, it will be too late for a British media company to compete globally,” says BBC director general Greg Dyke, a former ITV veteran whose old company LWT was swallowed up by Granada in 1994.

A year ago, Dyke predicted that advertising-funded TV would start to struggle in the U.K. The past few months have proved him right — all the terrestrial webs are hurting.

ITV is feeling the most pain as ad revenues are predicted to fall by up to 20% in the key fall season.

The huge losses sustained by ITV Digital, a terrestrial pay service owned by Granada and Carlton, running at more than $100 million, have made matters worse still.

One possibility is an eventual tie-up with competing platform Sky Digital, one of the original partners in what became ITV Digital that was forced out because regulators regarded its involvement as anti-competitive.

Channel 5, the newest of Blighty’s five terrestrial nets, is also struggling. CEO Dawn Airey needs more money from her main backer RTL, the pan-Euro giant, so she can invest in programming and — hopefully — boost ratings, now showing signs of stagnating.

Recently there has been speculation that Rupert Murdoch-backed BSkyB would take a stake in Channel 5, but BSkyB CEO Tony Ball appeared to rule this out when he said at last month’s Royal Television Society Cambridge confab that he is not interested in minority ownership.

But under present cross-media rules, a controlling stake by BSkyB in a terrestrial service is in any case outlawed.

TV homes:23.6 million

Cable homes:3.6 million

Satellite homes:5.5 million

Local programming:70%

Top show:ITV’s “Coronation Street” (60% share)

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