Carlton close to decision on offer for MAI

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The Independent Online
Michael Green's Carlton Communications is to decide this week whether to proceed with a pounds 1.8bn bid for MAI, the media and financial services company, as the radical restructuring of Britain's media sector reaches fever pitch.

Mr Green and his senior executives have been closeted with advisers since the announcement 10 days ago of a proposed merger between MAI and United News and Media.

That merger, along with last week's dawn raid on Yorkshire Tyne Tees Television by Granada, marked the start of intense jockeying among the country's leading media moguls, triggered by proposed new rules relaxing cross-media ownership limits and liberalising restrictions on the control of ITV licences.

Speculation was growing over the weekend that Mr Green would push ahead with an offer of at least 500p a share for MAI, having decided that regulatory and competition hurdles were surmountable.

All the same, Mr Green is believed to be concerned about the valuation of MAI's moneybroking arm, which Carlton would sell following a takeover.

While highly cash-generative, the operation might not fetch a full price if Carlton were perceived to be a forced seller. Analysts also warn that the money-broking business is volatile and completely dependant on highly mobile senior staff.

Advisers, including Hambros, are believed to have convinced Mr Green that a bid could be mounted in advance of the passage of the Broadcasting Bill later this year. MAI and United had recourse to a controversial warehousing scheme to lodge United's newspaper holdings in a deadlocked company over which the merged entity would be deemed to have no voting control, thus allowing national newspapers and TV franchises to be owned by one company.

Such cross-holdings are currently illegal but would be allowed once the bill was passed.

A similar structure would allow Carlton to warehouse its existing ITV licences, Carlton and Central, freeing it to bid for MAI's Anglia and Meridian.

Mr Green's advisers have also said that competition rules limiting ITV companies to a maximum of 25 per cent of advertising revenues could be avoided by setting up independent sales houses.

A final decision on the MAI bid is expected to be made at a Carlton board meeting tomorrow. Less likely would be a move on HTV, the Wales and West of England ITV company. Less likely still would be a bid for United's Express Newspapers.

Media analysts point out that either strategy would leave Mr Green far behind Granada in the race to emerge as the big British media player.

Conservative and risk-averse, Mr Green is still believed to be intent on retaining pole position in the restructuring now underway, and television looks the most likely avenue.

Under the Broadcasting Bill, a single company will be able to control up to 15 per cent of total television audience. Taking on MAI would give Carlton about 14 per cent of the market.