Granada chief 'prepared to divest both sales houses'

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The Independent Online

Charles Allen, the chairman of Granada, has admitted that the company will have to go through with its proposed merger with Carlton, almost regardless of the conditions imposed on the deal.

It is the first time that a senior executive of Carlton or Granada has conceded that, even if the Government demands the most far-reaching structural concessions to clear the deal, the companies will probably have to proceed with the merger.

In the past, both companies, the two big ITV players, have argued that the rationale of the tie-up would be destroyed if they were made to separate off their respective sales houses. However, Mr Allen, who would be chief executive of the merged company, said in a newspaper article that the merger may still be worthwhile. "If the Government requires divestment of both sales houses, we will have to look very carefully to see if we can make that work," Mr Allen said.

However, the TV mogul Haim Saban yesterday warned such a move would quench any interest he had in bidding for ITV. "Our level of interest if they have to divest ad sales goes down to zero. We will not invest one dollar," he told delegates at the Royal Television Society conference in Cambridge.

The Competition Commission has sent its verdict on the Carlton-Granada merger to the Department of Trade and Industry, which is expected to rule on the deal early next month.

Few expect the transaction to be blocked altogether but, as the combined companies would have more than half the television advertising market, conditions are anticipated. Carlton and Granada have pushed for a "behavioural" remedy rather than structural solution such as the separation of their sales houses. However, Mr Allen suggested yesterday that independent sales houses could be made to work. "As ever, the devil will be in the detail," he said.

It is understood ITV executives believe that, as long as the network is allowed some level of control over advertising - the source of most its revenues - independent sales houses would be workable.