Carlton's HTV buy heralds further links with Granada

Carlton Communications and Granada Media yesterday launched a period of cooperation intended to lead to ITV becoming "one wholly-owned company within two to three years".

Carlton Communications and Granada Media yesterday launched a period of cooperation intended to lead to ITV becoming "one wholly-owned company within two to three years".

The pledge to cooperate came as Granada Media sold its HTV franchise to Carlton in return for £181m plus HTV's 20 per cent stake in the Meridian franchise, which analysts value at around £180m.

Granada's chief executive, Steve Morrison, said the deal "brings Carlton and Granada closer together in a strong partnership to work together for the future strength of ITV".

He added: "This is the first step in a two-step process, which brings the prospect of one wholly-owned ITV company after the next Communications Act." Granada owns the other 80 per cent of Meridian, the highly prized franchise for the south coast of England.

Under yesterday's sale, Granada will retain HTV's production facilities. "The whole deal is worth around £390m," said one analyst. "It is a high price, which reflects Carlton's ambition to be an equal player with Granada at ITV." Carlton now accounts for 40 per cent of ITV advertising revenues against Granada's 52 per cent.

Carlton shares gained 4.3 per cent to 560p, while Granada jumped 8.3 per cent to 417p

The acquisition brings to a conclusion a year-long period of consolidation at ITV, during which Lord Hollick's United News and Media sold its ITV television companies to Granada for £1.75bn.

When ITV was dominated by the three companies it had been continually weakened by disagreements among the partners. The new duopolistic ITV is designed to be more collaborative both on promoting ITV as a brand and through a joint expansion strategy for digital television.

"We are now well placed to optimise the value of ITV and ONdigital and to move forward speedily with a unified and clear strategy," Charles Allen, chairman of Granada Media, said yesterday.

ONdigital, the digital television company, is jointly owned by Carlton and Granada.

The first test of the detente will be the development of the website ITV.co.uk. The network site has fallen seriously behind its BBC rival, as Carlton and Granada have each developed their own sites at the expense of promoting the ITV brand.

"ITV.co.uk ought to be one of the strongest online brands, but it's not," says an ITV executive. "That's because, up to now, ITV has been run by a set of warring baronies and the three big players could never agree about anything."

The new cooperation will, said a Carlton spokesman, "allow us to look at where there is duplication of costs, and to put more money on to the screen".

Currently, Carlton and Granada run separate operations for transmission, marketing and various other areas of business - all of which could be rationalised.