Thames' eyes on ITN: The franchise loser is ready to step in if Carlton's offer fails, writes Jason Nisse

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The Independent Online
THAMES TELEVISION, which lost its ITV franchise and failed in its bid for the new Channel 5 services, is waiting in the wings to rescue Independent Television News if the pounds 41m bid led by Michael Green's Carlton Communications falls through.

The possibility of the Carlton-led bid failing has emerged during negotiations with Stanhope Properties, owner of the ITN building in London's Gray's Inn Road.

Carlton, which leads a consortium including LWT, Reuters, Granada and Central TV, has let it be known that buying the freehold of the building, designed by Norman Foster, is essential to ITN's future.

It has hinted to Stanhope that it might pull out of the ITN deal if Stanhope does not sell the freehold, leaving the troubled property group with a financially insecure tenant.

ITN is currently losing around pounds 10m a year. The Carlton group's bid offers only pounds 1.3m for the company, but a cash injection of pounds 40m.

It has emerged that Thames TV, whose managing director Richard Dunn is the current ITN chairman, has said it would be able to step in and lead a rival consortium, backed by Thames' 56 per cent shareholder, Thorn EMI, and the American TV giant CBS. The new consortium would take on the financial liabilities of ITN and would allow the participation of some existing shareholders, such as Yorkshire-Tyne Tees and Scottish TV, which were unhappy about being excluded from the Carlton consortium.

Carlton is understood to be pressing Stanhope to sell the ITN building for a knock-down price of around pounds 50m. It cost about pounds 85m to build and is let to ITN for an annual rent of pounds 8.7m a year.

If Carlton bought the site for pounds 50m it could refinance the property at an annual cost of just pounds 4m a year. ITN has lost a lot of money on the building, because it took on responsibility for the whole site and was at first unable to find tenants for the empty space.

Tenants are now being persuaded to come into the building however, and only one floor remains unfilled. It was recently decided to move the ITV Network headquarters there.

Stanhope is understood to be unimpressed by protestations of ITN's penury. It feels that as ITN has recently signed a five-year contract to supply news to the ITV network - at a price of pounds 53m a year, index-linked - its financial future is secure.

The Carlton consortium faces another potential problem. The deal has yet to be approved by the Sir Bryan Carsberg, Director-General of Fair Trading, despite having been announced in November and having been agreed by all ITN's shareholders on 1 January.

An OFT official admitted that the investigation had taken rather longer than would normally be the case in a takeover. But she would not say whether this meant a referral to the Monopolies and Mergers Commission was more likely.

(Photograph omitted)