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Mega-merger to reshape U.K. TV landscape

Two of the U.K.'s largest media companies, Carlton Communications and United News & Media, stunned onlookers by announcing plans for a US$11.3-billion merger. If the deal gets the go-ahead from U.K. regulator the ITC, it will reinvent the domestic media landscape....
January 1, 2000

Two of the U.K.’s largest media companies, Carlton Communications and United News & Media, stunned onlookers by announcing plans for a US$11.3-billion merger. If the deal gets the go-ahead from U.K. regulator the ITC, it will reinvent the domestic media landscape. The two companies are key players in the U.K.’s leading commercial network ITV. In addition, UN&M is a shareholder in Channel 5, while Carlton is a 50/50 partner in the ONdigital platform with Granada, ITV’s other major player.

Both companies are extremely active in the children’s TV business. Carlton head of kids Michael Forte has recently produced kids shows such as Grizzly Tales and Mopatop’s Shop (with the Jim Henson Company) for ITV. United head of kids Dan Maddicott has overseen hit drama The Worst Witch and is finishing off a major new preschool franchise called Dog & Duck—also for ITV.

Of the two, UN&M is stronger on the international kids scene, thanks to investments made by its distribution arm ITEL (owned 50/50 with HBO) in shows like Animal Shelf and Foxbusters. UN&M also owns leading animation studio Cosgrove Hall, which is making new Noddy episodes for the BBC.

Carlton’s distributor Carlton International is less well placed than ITEL in the kids market, but it is a much bigger operation with an established licensing division and a recently launched production arm in the U.S. The merger would probably favor CI and place a question mark over previously announced plans for UN&M to acquire HBO’s half share of ITEL.

While distribution may come under one roof, it is unlikely that Carlton and UN&M will move quickly to physically merge or relocate production. To date, the U.K.’s larger TV players have chosen to maintain geographically distinct production bases in post-merger shakeouts. In this case, the merged group would have a strong commissioning HQ in London and studios in Bristol and Manchester (Cosgrove Hall).

There is no guarantee that the bid to merge will succeed. Granada Media Group has already announced its intent to bid for one of the merging companies. Based on past record, Granada’s aggressive management team would stand a good chance of succeeding.

In a separate move, Rupert Murdoch’s satellite platform BSkyB is likely to ask the regulator for concessions if the deal goes through. This may involve letting Sky take stakes in terrestrial networks like ITV.

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