Carlton-Granada merger in jeopardy

U.K. commercial broadcasters Granada and Carlton are like star-crossed lovers, desperate to be together but thwarted at every turn. The companies are part of the ITV, a federation of television companies holding licences from the Independent Television Commission to broadcast in 14 regions across the U.K. A merger between Carlton and Granada would place almost 92% of the ITV network with a single company.

The latest setback to the companies' planned union came when the Queen delivered her speech outlining the government's legislative program (following the re-election of Prime Minister Tony Blair), without mention of the crucial communications bill. The bill would remove two rules that stand in the way of the merger: one sets a limit on audience share, and the other bars a single company from owning the weekday and weekend ITV franchises in London.

According to a report in The Guardian, Granada chairman Charles Allen immediately fired off a letter to the government (which was leaked to the press), warning of dire consequences for ITV, specifically in the form of foreign investment, if the communications bill is put off. Carlton chief Gerry Murphy reportedly dissented with Allen's assessment, and was quoted in The Guardian as saying, "We disagree fundamentally that a slippage of a few months in the timetable for the communications bill is unduly threatening to ITV or its shareholders."