Granada went on the offensive after executives of the companies met at the weekend but failed to agree bid terms.
Directors of LWT, which owns the franchise and is responsible for programmes such as The South Bank Show and Blind Date, are understood to be hostile to Granada's aims. The board said Granada, which owns the North- west television franchise as well as businesses from television rental to motorway service stations, had 'little to offer' shareholders.
LWT is under pressure to find another way for shareholders to cash in on the recent share price rise. Its options include a possible agreed counter offer by a European company acting as a 'white knight'. Sir Christopher Bland, LWT chairman, said: 'Granada needs LWT. We are less sure that LWT needs Granada.'
Thanks to an incentive share scheme linked to the retention of the franchise, many LWT top executives became overnight millionaires. In all 53 employees, including Melvyn Bragg, the novelist and broadcaster, and Greg Dyke, the chief executive, were granted shares worth pounds 73m. Though some sold, many kept the bulk of their holdings, now worth at least 25 per cent more.
Granada's move comes after last week's agreed pounds 758m bid for Central Television by Carlton. It is certain to fuel a bubbling parliamentary row over the propriety of television groups bidding for each other before MPs have debated necessary legislative changes.
Two weeks ago, Peter Brooke, the Secretary of State for National Heritage, said he intended to relax the rules preventing a single company owning two large franchises. The subject is due to be debated tomorrow, though the change is unlikely to come in before Christmas. The move was widely expected to prompt a flurry of mergers among franchise holders - whose licences run until 2002 - with the companies shrinking from 14 to 8 or 10.
The swiftness of predators has irritated MPs, but Carlton and Granada have emphasised franchise commitments to the Independent Television Commission would stand.
Marjorie Mowlam, Labour's National Heritage spokesman, said concern over the future of quality broadcasting meant the party would oppose the legislation.
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