Watchdog plans ITV licence review

ITV merger partners Carlton Communications and Granada today looked set to benefit from a shake-up of ITV licence renewals.

ITV merger partners Carlton Communications and Granada today looked set to benefit from a shake-up of ITV licence renewals.

Granada Media plc owns a 45% stake in TV3.

British communications regulator Ofcom said it was planning to consult on plans to unify and streamline reviews of licence terms for ITV broadcasters.

The plans include a proposal to align the review timetable for all 16 ITV licences, enabling all reviews to start on December 31 this year. Under the current regime, half the reviews would not have started until early 2007.

The plans also aim to cut the amount of information needed from broadcasters, making the process more simple and transparent and reducing companies’ costs.

Ofcom said the proposals would cut the regulatory burden on firms, while recognising future challenges including the planned switchover to digital broadcasting.

Today’s announcement follows the approval of shareholders in Carlton and Granada of their companies’ plans for a £4.5bn (€6.5bn) merger earlier this month.

The two groups, which own the vast majority of ITV companies currently holding broadcasting licences, have announced a cost-cutting programme designed to save £100m (€145m).

One industry analyst said the proposed changes announced today would be “very positive for ITV”, making the cost reductions proposed by Carlton and Granada in 2005 greater than previously anticipated.

Shares in Carlton appeared to benefit from the announcement, rising in early trading.

However, Granada failed to rally on the news, falling this morning.

Ofcom is required to set financial terms for broadcasters’ payments for ITV licences, based on what it believes each broadcaster would bid in order to win its licence.

The Communications Act 2003 in the UK allows Channel 3 licensees to request reviews of the financial terms of their payments to the British treasury from December 31 this year.

Carlton and Granada said in November that job cuts were likely as a result of their merger.

Granada employs about 6,000 staff while Carlton has some 2,500.

The pair are planning to integrate certain broadcasting activities and to improve operational efficiency.

Also in November, British Trade and Industry Secretary Patricia Hewitt gave conditional approval for the deal and later accepted undertakings from the two companies designed to satisfy competition concerns.

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