Granada in Scottish bid

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The Independent Online
GRANADA is poised to launch a full bid for Scottish Media Group, valuing its fellow ITV broadcaster at more than pounds 600m, even though relations between them have been soured recently by SMG's pounds 225m bid for Chris Evans's Ginger Media Group.

The bid for SMG has been forced on Granada chairman Gerry Robinson by Friday's announcement of an pounds 8bn merger between United News & Media and Carlton.

Granada is thought to be wary of a direct challenge to its rivals' merger with a hostile bid for either United News or Carlton. That would almost certainly involve the forced sale of at least one prime ITV franchise.

Instead, Granada is likely to focus its opposition on a revised submission to the Office of Fair Trading, which is conducting a review of the rules governing the ownership of ITV franchises. Granada is expected to call for a wholesale review of the regulatory framework in an attempt to hasten the creation of a single ITV broadcaster.

Carlton and United, which between them will control 36 per cent of advertising sales should the deal go ahead, are anticipating that the OFT will relax the current threshold of 25 per cent to allow the deal to take place.

BSkyB, the pay-TV company 40 per cent-owned by Rupert Murdoch's News Corporation, is also thought to be furious about the implications of the merger. BSkyB's anger centres on the fact that the merged outfit will be in a position to control six ITV franchises, 50 per cent of ONdigital, three national newspapers and have a 29 per cent stake in Channel 5. BSkyB may use its revised OFT submission to argue for a relaxation of the rules preventing it from owning more than 20 per cent of an ITV franchise.

Meanwhile, Steven Cain, the Carlton chief executive who will lose his job after the merger, is likely to leave with a payment of pounds 600,000 for barely a year's work. The former Asda marketing director is tipped to fill one of the high-profile vacancies now open in the retail sector.