SMG threatens court action in ITV dispute

SMG is seeking millions of pounds in compensation from the merged Carlton and Granada for their use of the ITV name and is threatening to go to court over the issue. The news emerged as SMG, which owns two ITV licences, provided the first real evidence of a strong rebound in ITV advertising revenues.

SMG is seeking millions of pounds in compensation from the merged Carlton and Granada for their use of the ITV name and is threatening to go to court over the issue. The news emerged as SMG, which owns two ITV licences, provided the first real evidence of a strong rebound in ITV advertising revenues.

Reporting results for 2003, SMG said its ITV business had seen revenues up by 5 per cent for the first four months of 2004 - much stronger than the figures indicated by ITV plc itself.

Counting forward ad bookings up to the end of April, the company's radio business was up 7 per cent, billboards 20 per cent and cinema 5 per cent.

Andrew Flanagan, the chief executive, said: "The advertising recovery is pretty much in full swing. This will provide a strong kicker to the bottom line." He added that, given the high fixed cost base of the company, every £1 in extra revenues meant 80p more in profits.

"Even 3 per cent top-line growth is very good for us. If this [current trading] continues for the whole year, we'd be in a very nice position," he said.

For 2003, which saw revenues fall, SMG reported that underlying pre-tax profit dropped to £17.5, from £24.2m previously.

SMG is in dispute with ITV plc, the company created this year from the merger of Carlton and Granada, over the use of ITV as its corporate name.

Don Cruickshank, SMG's chairman, said the company must be "properly compensated" for the name which "belonged to the ITV network as a whole". Four ITV licences, including the two owned by SMG, remained outside the ITV plc corporate entity.

Mr Flanagan said: "There is no dispute over the fact that the network collectively has the right to the ITV name. The only dispute is how much they have to pay [for taking it]. They have no right to the ITV name."

He said the capital value of the brand was "millions". SMG tried and failed to win a court injunction last month to stop the combined Carlton and Granada using the ITV plc name. However, SMG said the judge "agreed we had a case".

"We are in discussions [with ITV plc]. They are perfectly amicable. But we will resort to the courts if we have to."

Separately, Sir Brian Pitman, the ITV plc non-executive director, visited investors in the City yesterday to address concerns over the £15m payout to Michael Green, the company's former chairman-designate. He is believed to have told fund managers the company had "no discretion" over the amount.