LONDON — Britain’s Granada Group is drawing up plans to sabotage the proposed $13 billion merger between Carlton Communications and United News & Media, possibly by launching a hostile bid for United.
The three companies dominate the U.K.’s ITV network, but Granada is determined to keep the upper hand in any further consolidation of the web’s ownership.
Granada execs have been exploring all options since the merger was announced Nov. 25, and sources say that a bid for United is fast emerging as the most likely outcome.
The Carlton/United deal values United at $6.2 billion, but Granada is believed to be preparing an $8 billion counteroffer.
The situation is complicated by the legal restrictions governing the ownership of ITV stations.
Checking it out
Granada is currently sounding out the Office of Fair Trading to discover how many of United’s ITV stations and other assets it would need to sell in order to gain regulatory clearance for a takeover. Granada could try to bring in a U.S. investor as a partner to help get around these restrictions. It is already understood to have sounded out Disney/ABC, which owns 25% of ITV breakfast station GMTV.
Granada, which has a market value of around $16 billion, owns four ITV stations — Granada, Yorkshire, Tyne Tees and LWT.
United owns Anglia, HTV and 78% of Meridian, along with 29% of Channel 5.
Carlton owns Carlton TV, Central, Westcountry and the remainder of Meridian.
Partners for now
Granada and Carlton are also 50/50 partners in the digital terrestrial platform ONdigital, and Granada is arguing it has the right to buy out Carlton’s stake in that enterprise under their shareholder agreement if Carlton’s ownership changes through a merger with United.
The OFT is deciding whether to refer the Carlton/United merger for investigation by the Competition Commission. Granada and Rupert Murdoch’s BSkyB are both lobbying hard for a referral, which would delay the deal until the middle of next year.