Is Granada positioning itself for a full-blown bid for LWT if and when the rules preventing the nine largest ITV companies from taking each other over are lifted? Or is it queering the pitch for its arch-rival Carlton Communications, which may wish to consolidate its hold on the London advertising market by adding the weekend ITV franchise to the weekday franchise it already owns?
One thing you can be sure of. This is not the innocent 'investment in a well-managed company', which is the description given by both Sir Chistopher Bland of LWT and Gerry Robinson of Granada. After all, someone who buys an investment at 30 per cent more than the current market price is not normally considered a canny long-term investor. Granada may find it hard to justify the price to its shareholders.
Assuming Granada has bought the stake because it wants to take over LWT once the takeover rules are lifted, what does the race look like?
For those who have forgotten the current position on the starting block, Carlton (the second largest franchise) has 20 per cent of Central (the largest), which has 20 per cent of Meridian (the sixth largest). LWT (the fourth largest) has 14 per cent of Yorkshire-Tyne Tees (the fifth largest), which it bought after YTT's talks with Granada (the third largest) fell through. Carlton, LWT and Scottish all have stakes in GMTV, the breakfast franchise company, and Carlton, LWT, Central and Granada all have stakes in ITN.
In addition the network is now controlled by a central body headed by the former chief executive of Granada TV and the programme decisions are made by a network controller who just happens to come from LWT. Commercial TV gives a whole new meaning to the word 'networking'. A Granada-LWT link-up would be highly influential in deciding on and making programmes.
There is another pointer to Granada's true intentions. LWT is a well run company which has gone through two rounds of cost-cutting. If Granada thinks there are economies of scale or synergies in LWT in either advertising or administration, it is probably deluding itself.
What it wants is to create a big block in the commercial TV industry to counter the power of Carlton. With its large market capitalisation and 14 per cent stake in BSkyB, it is probably the only company in the ITV system that could do this.
The scramble in ITV reflects the underlying competitive realities of the Government's new licensing system and the threat from satellite TV. But it is also a function of the Government's ownership rules. Paradoxically, some of those rules may undermine the very diversity they are designed to bolster. After all, there are companies elsewhere in the media industry which would like to become involved and which could help to stop the drift to duopoly. Associated Newspapers, The Telegraph, Pearson and Mirror Group Newspapers have all expressed an interest in buying into ITV, but they are restricted by the 1990 Broadcasting Act.
Unless the cross-media ownership rules are reformed, there is a danger of ITV turning into an industry dominated by two players, with the others no more than minnows.Reuse content