Rule changes will open the gates for ITV bids: Jason Nisse reports on plans to amend the 1990 Broadcasting Act that will allow British publishers to own television companies

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The Independent Online
CARLTON Communications, the television group run by Michael Green, yesterday announced that its pounds 758m offer for Central Independent TV had gone through, so bringing together the two largest ITV regions.

Later this month Granada Group will learn whether its pounds 600m hostile bid for LWT is successful, so creating another massive power block within the ITV network.

The takeovers are being allowed because of rule changes that have only just come into force. Yet before the ink is dry on the amendments made to the 1990 Broadcasting Act, Peter Brooke, Secretary of State for National Heritage, has indicated that he is willing to tear up the rule book and start again.

It seems that Mr Brooke's hand has been forced by Michael Heseltine, President of the Board of Trade, who recently met leaders of the British broadcasting industry to discuss the worsening deficit on the trade of TV programmes. The deficit plunged to pounds 144m in 1992 from an effective balance of trade between 1982 and 1989.

As the rules stand, two ITV companies may be owned by one company - but no more. But a British national newspaper or radio station may only own a 20 per cent stake in a television company. This means that Bertelsmann, the most powerful publisher in Europe, could buy Yorkshire-Tyne Tees TV but Pearson, which publishes the Financial Times, would not be allowed to buy the tiny Channel TV.

Most analysts envisage a framework along the lines proposed by Marjorie Mowlam, the Labour heritage spokeswoman. She suggests that all rules governing television takeovers should be lifted and that the only restrictions should come from the Monopolies and Mergers Commission and the Independent Television Commission, ensuring that ITV companies stick to the promises made in their licence applications.

Given that scenario, there are at least six British publishers expected to fight for a foothold in ITV. Pearson leads the hunt. It already has a 14 per cent stake in the troubled YTTV and a 16 per cent holding in British Sky Broadcasting. In addition it owns Thames, the production company, and was recently thwarted by Rupert Murdoch's News Corporation in its attempt to take over the Hong Kong-based Star TV. It could be a saviour for YTTV and is interested in Channel 5, should it get off the ground.

Associated Newspapers, publisher of the Daily Mail, Evening Standard and Mail on Sunday, is not far behind. It has 20 per cent of Westcountry TV, 14 per cent of the comedy producer SelecTV, and recently won the contract for a London-wide cable TV station. It is keen to buy a broadcaster and might swoop for Anglia if it is free.

The Guardian Media Group's ownership of 20 per cent of the loss- making GMTV has not put it off investing in television. But its interest may be held back while it gets to grips with the Observer, which it bought for pounds 27m last year.

David Montgomery, chief executive of Mirror Group Newspapers, has always preached the gospel of multimedia. The group was pipped by Associated in the battle for the London cable TV station but is rumoured to have earmarked up to pounds 100m for expansion in television. It is also keen on Channel 5, should plans be revived.

Emap, which has extensive radio interests in addition to its newspapers and magazines, has previously shown interest in television by joining in a bid for the Anglia TV franchise, but has shown little interest recently. Similarly Reed Elsevier, which was part of the original BSB satellite TV consortium, has been quiet about television but cannot be assumed to be uninterested.

Foreign groups could bid today. Bertelsmann and Compagnie Generale des Eaux, which owns part of the French satellite group Canal+, are making noises about bidding for an ITV group. The Luxembourg operation CLT, which owns the Atlantic 252 radio station, is also known to be interested.

View from City Road, Market Report, page 26