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Carlton aims for Central

Carlton Communications has launched a T624 million ($ 924 million) takeover bid for Central Independent TV, the most profitable company in the ITV network.

The deal, made possible by last week’s proposed change in ITV cross-ownership rules, brings together the two largest stations in the ITV network, Britain’s main commercial web with 15 stations, and creates a powerful platform for international expansion by Carlton.

In particular, Carlton has recently explored broadcasting opportunities in Asia and is known to be considering a move into German commercial TV, possibly through an alliance with Bertelsmann.

Carlton, which owns 90% of London weekday ITV station Carlton TV, already holds a 19.1% stake in Central, which broadcasts to 25% of the country from its Birmingham headquarters. Together, the two stations broadcast to about a third of the U.K. population and earn about 30% of ITV’s advertising revenues.

Carlton has already secured the support of Central’s management for its bid, and publisher D.C. Thomson has agreed to sell its 19.3% stake in Central. The offer price, T26 ($ 39) a share, is a premium of 24% above the market price and values Central at T758 million ($ 1.12 billion).

The takeover will also tighten Carlton’s grip on Independent Television News, the monopoly news supplier to ITV and Channel 4, in which both Carlton and Central own 18%. Carlton chairman Michael Green is also chairman of Independent TV News.

According to a statement, the group plans to use the combined weight of the two ITV stations and Independent TV News to further its international ambitions.

“Carlton has been investigating potential opportunities for broadcasting English-language channels in other parts of the world and believes that the output of Carlton TV and of Central and its library, in conjunction with the associated company ITN, can be the basis for exploiting ITV programming in fast-growing markets,” the statement said.

Carlton already owns the film processing and video duplication giant Technicolor, pan-European video distrib Pickwick, a 10% stake in U.S. theatrical distrib Savoy and a small stake in Carolco. It also runs one of the world’s leading TV post-production tech businesses.

In addition, Carlton owns 20% of GMTV, ITV’s loss-making breakfast TV station , while Central holds a 20% stake in Meridian Broadcasting, the ITV station for southeast England.

The Carlton/Central deal depends upon parliamentary approval of the ITV ownership rule changes proposed Nov. 24 by the British government. These will permit one company to own any two of the 15 regional ITV broadcasting licenses, except the two London licenses.

Further deals are expected to follow. Granada is tipped to bid for London Weekend TV. MAI, parent of Meridian Broadcasting, is thought to be linking up with Anglia TV in a deal also rumored to involve Time Warner. Meanwhile, some reports suggest that European media groups Bertelsmann, Compagnie Generale des Eaux and Compagnie Luxembourgeoise de Telediffusion are also sniffing around for an opening in the U.K. (A Bertelsmann spokesman declined to comment on reports in the British press that it had retained media consultants to advise on a possible ITV station acquisition.)

Central will remain a stand-alone regional broadcaster under executive chairman Leslie Hill and managing director Andy Allan. Central Television Enterprises, the international program sales arm, already distributes on behalf of Carlton and so will be relatively unaffected.

But it is unclear whether Carlton chairman Michael Green will think it worthwhile to maintain Central’s in-house production business or its loss-making Nottingham studios.

When Carlton TV launched last January, Green decided it was more cost-effective to set the company up as a publisher/broadcaster, buying programs from indie producers rather than making them itself. Central is an old-style integrated producer/broadcaster, one of the ITV network’s largest program suppliers.

Separately, Carlton on Monday announced a 26% increase in pretax profits to T 126.1 million ($ 187 million) for the year ended Sept. 30, with sales up 56% to T1.09 billion ($ 1.57 billion).

This included the first nine months of broadcasting by Carlton TV, which contributed net sales of T189.1 million ($ 280 million) and an operating profit of T8.6 million ($ 12.7 million), ahead of the company’s projections.

Central TV recently posted a T16.4 million ($ 33 million) six-month profit through June 30 (Daily Variety, Sept. 30).

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