Brooke to clear way for ITV mergers

PETER BROOKE, the Heritage Secretary, is set to bow to industry pressure and lift the restrictions that stop the larger ITV companies merging with each other. The change will be made before the end of this year.

The chairmen of the 15 ITV companies are to meet with Mr Brooke soon to discuss ownership. However, it is understood Mr Brooke has already indicated privately that he is ready to allow companies to merge, as long as the combined group does not command more than 25 per cent of the advertising revenue of the network.

This would get rid of the rule - contained in the 1990 Broadcasting Act - that stops any of the nine largest ITV companies merging with each other. The rule could be dropped through an order in council at the House of Commons - new legislation would not be needed. The change would mean, say, that LWT could take over Yorkshire-Tyne Tees Television, in which it has just bought a 14 per cent stake, or that Granada could buy HTV Group, or Central could buy Anglia.

However, mergers such as Carlton TV buying LWT or Carlton buying Central, in which it has a 20 per cent stake, would not be allowed.

A change to the law would be welcomed by most ITV companies. They have told Mr Brooke that the rules need to be amended so that they can create a larger grouping before the moratorium on takeovers by companies from outside the network ends on 31 December. The ITV companies fear that if they are not allowed to merge, they will be at the mercy of European companies such as CLT or Bertelsmann.

However, many of the more influential ITV heads believe Mr Brooke should go further.

Leslie Hill, chairman of Central TV, has long lobbied for a review of the rule and believes that a company should be allowed to own two of the nine 'large' franchises in the ITV network. 'The 1990 Broadcasting Act was out of date in 1988,' he said.

LWT, whose influence within ITV far outweighs its size, has lobbied for a change so that companies can merge as long as they do not command more than 25 per cent of the advertising revenue of all terrestrial broadcasting - thus bringing Channel 4 into the equation. This would allow almost all mergers apart from the two largest, Central and Carlton. It is also widely believed that any merger of LWT and Carlton would be stopped by the Monopolies and Mergers Commission on the grounds that it would distort competition for advertising on the ITV network.

Although it is not on the agenda, it is expected that some of the ITV chairmen will use the meeting with Mr Brooke as an opportunity to lobby for British Sky Broadcasting to come under the same regulatory framework as ITV. This would force Rupert Murdoch's News International to reduce its stake in the group from 50 per cent to 20 per cent.

'It is difficult to hold a meeting on ownership without BSkyB coming up,' said Mr Hill. However, there are few in ITV who think Mr Brooke will be as 'responsible' on this issue as he has been on ITV regulation.

(Photograph omitted)