Brooke gives green light for TV bid wave: Owners of the biggest regional franchises cleared to make offers for smaller companies

PETER BROOKE, the Secretary of State for National Heritage, fired the starting gun for a wave of takeovers and mergers among television companies yesterday when he announced his long-awaited liberalisation of the franchise ownership rules.

Once the legislation is passed by Parliament, the owners of the nine biggest television franchises will be allowed to bid for each other. At present, they can target only the six smallest.

But Mr Brooke stopped short of allowing any company to own more than two franchises - a reform sought by the biggest groups. The two London stations, LWT and Carlton, will also be barred from bidding for each other, although Scottish and Welsh franchises are not to receive special protection.

Groups will still be able to hold a stake of up to 20 per cent in a third ITV company and up to 5 per cent in other franchise holders, in addition to a second licence.

The announcement caused havoc among the share prices of television companies, as market makers struggled to second-guess the ambitions of the main players. Shares in Central were the biggest gainer, adding 77p to 2,170p.

The three largest groups - Carlton, Meridian and Granada - are expected to bid as soon as the legislation is in place, probably after Christmas. LWT, Central and Scottish are also thought likely predators, although they may in turn be targets for the big three. Anglia and HTV are also probable targets.

In anticipation of the legislation, a number of companies have taken strategic stakes in other groups. This has led many to expect a bid from Granada for LWT. Central is also thought to have its eye on Anglia and Carlton on Central.

But Mr Brooke's announcement puts a question mark over LWT and Yorkshire-Tyne Tees. LWT's decision to take a stake in YTTV was widely seen as an attempt to block Granada from bidding for the London station. The thinking was that a combined LWT-YTTV would be too big for Granada to swallow. But LWT will now find it awkward to bid for YTTV as that would give the group three licences, one of which would have to be divested. As a result, shares in YTTV, already considered a troubled group that paid too much for its franchise, slipped 17p to 194p.

The relaxation, which means that the 14-company regional system could shrink to eight, followed pressure from the largest companies, led by Central and Carlton. They argued that the rules handicapped UK media groups by leaving them too small to compete internationally.

They welcomed yesterday's decision. Leslie Hill, chairman and chief executive of Central, said: 'This is where the 21st century starts for ITV.' Peter Ibbotson, a Carlton director, said: 'I think it is a modest but sensible step.' Granada said it was delighted with the change, and Gus MacDonald, managing director of Scottish Television, said a measure of consolidation was 'both inevitable and desirable'.

The relaxation takes some pressure off the smallest and least profitable ITV franchises - Grampian, Border, TSW, Ulster and Channel. Analysts said if they were only allowed two licences, the big companies would want to target the largest companies.

Michael Grade, chief executive of Channel 4, who had lobbied hard against a merger of the two London franchises, said he was delighted that the Government had ruled that the capital should be served by two licensees. But he warned that no advertising sales house should be able to sell airtime accounting for more than the present limit of 25 per cent of ITV revenue. The Independent Television Commission ruling comes up for review in February.

Mr Brooke emphasised that: 'The statutory provisions on regional broadcasting and conditions on regional programmes in the Independent Television Commission licences remain in force.'

This means the regulators at the ITC will be able to enforce the licence conditions rigorously in areas such as regional news and current affairs.

It also means that a publisher- broadcaster such as Carlton, which buys in its programmes, would not be able to dismantle a big broadcaster and programme producer should it, for example, buy up Central.

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