TV firms reach deal on advertsing income

The owner of ITV franchises Grampian and Scottish Television today said it had done a deal with the newly-merged ITV group to insulate itself against falls in advertising income.

Scottish Media Group said it had reached a formal agreement with ITV on the sale of its national television airtime.

SMG said the deal, when combined with existing arrangements, would protect it against the consequences of any fall in its share of ITV net advertising revenues.

It means the company’s network costs have been capped by inflation while its share of national advertising revenues has been underwritten at its current level.

National advertising income accounts for 85% of SMG’s existing TV advertising revenues and television airtime sales represent about half its revenue.

SMG’s national TV airtime sales were contracted to Carlton Communications before the latter’s merger with Granada in February.

The new deal means ITV will handle SMG’s national sales on improved terms to the Scottish company, with SMG continuing to serve local Scottish advertisers through its own sales operation.

The group declined to give financial details of the deal.

But SMG chief executive Andrew Flanagan said it secured the group’s “long term position within the ITV landscape”.

“As the advertising recovery continues to gather pace, Scottish and Grampian TV will continue to benefit alongside ITV as a whole,” he said.

SMG also said today that it had agreed the £31m (€46.5m) sale of its 25% shareholding in ITV breakfast channel GMTV to ITV.

It said changes in the structure of GMTV’s shareholder base since 2000 had caused SMG’s board to take the view that the investment could no longer be regarded as strategic.

Mr Flanagan said the group was focusing on driving and exploiting the operational performance of its wholly owned media assets.

“The ITV merger created a 50% shareholder in GMTV and we don’t want to have a minority interest in someone else’s business,” he said.

SMG also said today that it had reached agreement with ITV over compensation owed to it by the latter following ITV’s adoption of the ITV brand as its corporate identity.

The group, which holds rights to the ITV name under its two franchise licences, declined to reveal the value of the compensation, but said it was a six figure sum.