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Carlton, Granada in merger talk
LONDON, England (CNN) -- Carlton Communications and Granada, Britain's two biggest independent TV companies, are in advanced talks to merge. Granada shareholders will receive 68 percent of the new company and £200 million ($350 million) in cash once the deal is completed. Shareholders of Carlton, the smaller of the two, will get 32 percent of the company, the firms said on Friday. Both companies have been struggling in ratings wars with state-funded broadcaster, the British Broadcasting Corporation, and advertising has dropped sharply as many companies slash marketing budgets to cope better with sluggish economic growth. Their joint venture, ITV Digital, collapsed this year after losing a battle with Rupert Mudoch's News Corp to win subscribers. Granada (GAA) and Carlton (CCM) lost more than £1 billion though the joint venture. The head of UK broadcaster Granada stepped down in August, ending a troubled reign that included the collapse of the ITV Digital. Carlton and Granada have attempted to formulate a merger before only to be thwarted by restrictive legislation and the structure of the combined group. But in May, the UK government said it would end restrictions on cross ownership by television and radio operators and lift a ban on companies having more than one national commercial radio licence. The government said new legislation, expected to become law next year, would also allow non-European ownership of UK broadcasters. The changes would make Britain one of the most deregulated broadcast markets in the world and clear the way for companies like AOL Time Warner (AOL) -- which owns CNN -- Viacom and Disney to buy Britain's biggest commercial network ITV and rival Channel Five. Changes to legislation would also allow Granada and Carlton to merge, or individually seek foreign-owned partners, to cut their losses and increase revenue. Under the terms of the agreement still being discussed, Granada's executive chairman Charles Allen would become chief executive of the combined group while Carlton's Michael Green plans to extend his role of chairman. Carlton's stock soared 13.7 percent to 128 pence and shares in Granada rose 11.28 percent to 73.5 pence in early London trading on Friday.
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