Granada, the ITV broadcaster for north-west England, paid a hefty premium to buy its stake, offering institutions pounds 5 a share, or 33 per cent above LWT's closing market price on Monday. The move, which has brought a pounds 12m paper windfall to 44 LWT executives, fuelled expectations of a shake-up in Britain's ITV network, currently split among 15 broadcasting companies.
Only last month LWT paid pounds 14m for a 14 per cent stake in Yorkshire- Tyne Tees, itself created by the merger of two north of England broadcasters last year.
The deals have come at a time of growing speculation that the Government might relax regulations contained in the Broadcasting Act that prevent Britain's nine largest ITV companies from buying more than 20 per cent of their counterparts.
Some industry experts argue that Britain's commercial television companies are too small or inefficient to compete in the global media market. They believe that relaxing the share ownership laws would prompt a radical consolidation.
With LWT's share price rising 91p to 466p, the total paper value of share options held by the company's 44 top executives jumped from about pounds 55m to pounds 67m. The scheme, put in place to stop key executives leaving during last year's auction of Channel 3 licences, has already been widely criticised inside and outside the industry for its generosity.
The options allow the managers to obtain a stake of up to 15 per cent in the company if LWT's shares average 278p or more following its half-year results, due in September. Each option, granted at 83.2p, is convertible into about four ordinary shares.
At yesterday's closing price, options held by Sir Christopher Bland, LWT's chairman, were worth about pounds 9.1m. Greg Dyke, chief executive, and Melvyn Bragg, presenter of LWT's South Bank Show, hold options worth pounds 6.8m and almost pounds 700,000 respectively. In total the scheme is expected to create about 15 millionaires among its managers.
Gerry Robinson, Granada's chief executive, said the purchase reflected the company's long-term ambitions. 'We are the longest-standing ITV company and are going to be a major player in the broadcasting sector for a long time. But exactly what form it takes remains to be seen.
'LWT is a bloody good company and serves the largest television market in the UK. It is a business we know well and there are always benefits to be had from cross shareholdings of this kind.' He refused to say whether the company planned to lift its stake in LWT further.
The purchase, believed to have been made from several institutional investors, was welcomed by Sir Christopher. 'We are extremely relaxed about the purchase.'
However, it has made the future shape of Channel 3, still hardly settled down from the disruption caused by last year's auction, even more difficult to predict. Mark Beilby, media analyst at Warburg Securities, said: 'This will probably accelerate the industry's consolidation but it is not going to be easy, clear or painless. It will be more difficult to cut costs if the companies do not have any geographical synergy.'
While several of the leading broadcasters, including Carlton and Central, are pressing the Government to relax the takeover rules, cross-ownership is already becoming commonplace in the industry. Apart from its stake in Yorkshire-Tyne Tees, LWT owns one-fifth of GMTV, the breakfast channel, along with Carlton and Scottish Television. Carlton owns 20 per cent of Central while Granada owns a stake in BSkyB, the satellite network controlled by Rupert Murdoch's News Corporation.
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