LWT abandons Yorkshire deal: Granada bid now more likely to succeed

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The Independent Online
LWT admitted yesterday that it had abandoned its attempt to set up a merger with the rival ITV company Yorkshire-Tyne Tees, blaming restrictive television ownership rules for its failure.

The London weekend broadcaster had hoped that a deal would help it fight off a hostile pounds 670m bid from the leisure group Granada.

It had been exploring a three-way alliance under which it would have bought the struggling Yorkshire-Tyne Tees and then hived off the Tyne Tees franchise to Anglia, the East Anglian broadcaster.

This would have been necessary because under existing rules no company can own more than two franchises. However, LWT envisaged the alliance would develop and that in the event of a further relaxation of the rules, the four franchises would have formed a giant grouping.

But the proposal was scotched by Anglia's board on Wednesday, and LWT was unable to find another buyer for Tyne Tees, without which it could not proceed. Sir Christopher Bland, LWT's chairman, said: 'Although both boards recognise the commercial arguments in favour of a closer relationship, LWT is currently unable to proceed on a basis that would meet the Independent Television ownership rules.'

The market greeted the announcement by pushing up LWT's share price by 22p to 648p. There had been concern about LWT buying Yorkshire-Tyne Tees, in which it has a 14 per cent stake, as the company had blundered badly over the selling of its airtime.

The deal's failure is widely seen as making success for Granada more likely.

Anglia may also find it becomes vulnerable to a bid from Lord Hollick's MAI/Meridian group as a result.

LWT is due to publish its final defence and profit forecast by next Friday.