ITV shares surge on news of rule review

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The Independent Online
SHARES of ITV broadcasters surged yesterday as it emerged that the Government is to review rules preventing takeovers and mergers in the television industry.

Peter Brooke, the National Heritage Secretary, is to meet the 15 ITV licensees shortly to discuss their complaints about the rules forbidding large licensees combining.

Analysts believe a relaxation of the rules would lead to a series of ITV marriages, with licensees combining to cut costs and give them more financial clout against competition from cable and satellite.

Anglia TV put on 9p to 296p, Carlton Communications gained 17p to 756p, Central TV rose 15p to 1,888p, HTV was up 5p to 51p and Ulster TV rose 20p to 414p.

Until now Mr Brooke and his predecessors have been reluctant to relax the rules, believing the new legislation should be given time to work. But he is also worried that UK operators may be swallowed up by foreign media groups when the blanket ban on takeovers ends on 31 December.

Although he has agreed to no more than a meeting, the invitation suggests he is more sympathetic to rule changes. Relaxing the ownership rules would not require primary legislation, although extending the moratorium on takeovers would.

At present no one is allowed to control more than one of the nine large ITV licensees. Anyone owning one large and one small licensee is limited to 20 per cent of a third licensee and 5 per cent of any further licensees.

Neil Blackley, an analyst with James Capel, said relaxing the rules would be good for shareholders in the short term. In the long term it would create a more harmonised ITV, better able to unite against the real threat - satellite.

Peter Ibbotson, a director of Carlton TV, welcomed the move. He said more than pounds 100m of duplicated costs could be saved by the ITV companies if they were allowed to merge.

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