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Carlton TV - friend or foe?

The buzz story that tripped off every UK TV executive's lips at the end of 1992 was Johnathan Powell's departure from the BBC. After five years as BBCI controller, Powell left the pounds 100,000 -a- year "most prized job in British TV," when he was wooed by a relative newcomer to the scene - Carlton TV.

He was appointed Director of Drama and International Development, a board position which also covers co-productions plus overseas program sales. His suitor is the new owner of the London weekday broadcast 1o-year license. London's huge size has traditionally made its two TV franchise owners the largest of the 15 regional companies that comprise the advertising-supported ITV network.

Carlton began supplying a service to the U.K. capital's 4.4 million TV homes, about 20 per cent of ITV's national audience, on January 1. It is to supply about 90 hours of programs a week, more than 90 per cent of which will be for national transmission.

Carlton TV's owner is the $2.2 billion TV and film services company Carlton Communications, whose chairman, the 44-year-old elusive media whiz-kid Michael Green, has always courted controversy. He had tried to take over the previous franchise Thames Television in 1985 but failed. Observers saw Green's victory in the franchise auction as his long-awaited revenge.

Carlton TV is to be the profitable focal point for consolidating all his other screen media services. These include major post-production houses, the Moving Pictures Company in London and Complete Post in Los Angeles, plus US-based movie duplication giant Technicolor.

Carlton TV, on the other hand, brings Green the Holy Grail of business where owning program rights and transmission are the acme of legitimate power. "Carlton has long regarded terrestrial broadcasting an important area of development, offering the opportunity to strengthen our position across the TV and film industries," Green said.

It does not make its own programs and will thus give the independent production sector gainful employment. Peter Ibbotson, Carlton TV's director of corporate affairs, recently said, "We have already spent more than pounds 30 million on commissioning programs." About pounds 103 million is to be invested in regional and ITV programming. Future commissions would depend on those accepted by ITV's new central program scheduler, and Powell's presence will add prestige.

But the question remains: Will Carlton TV ultimately be good for the British television industry?

The cash-rich company brings to the conventionally cosy and complacent world of UK broadcasting the US-style of survival of the fittest. "It was inevitable from the way the franchise was auctioned that there were going to be strong companies and weak ones. Carlton is going to gain its strength through strategic maneuvers," said Tim Rothwell, media analyst at Barclays de Zoete Wedd, but signs indicate it might be growing too powerful for ITV's own good. Green has expanded his 10-year-old Carlton Communications empire through aggressive acquisition.

Carlton Communications has a 20 per cent stake in Central Independent Television. For the year ending September 1992, Carlton reported a 15 per cent increase to pounds 102 million in total profits - pounds 6.7 million of which came from Central. It has invested pounds 7 million in London News Network (LNN), a joint regional news service with LWT. Carlton and LWT each own 20 per cent of GMTV, new owner of the nation's commercial breakfast TV franchise. Additionally, LNN is to supply news to the South and South-East England franchise holder, Meridian Broadcasting (in which Central has a 20 per cent share).

Green, who is also a director of the international news service Reuters, last year successfully led an acrimonious bid to acquire the financially troubled ITN, ITV's national news service. The bidding consortium included Reuters. Altogether, Carlton's interests give it some influence over 50 per cent of UK, TVHH and ITV ad revenue.

During the previous franchise, analysts complained that the Big Five (ITV companies) were monopolistic. Worries are that Carlton TV, which is to pay pounds 43.17 million a year for its license, is going to act like the bigger one. Nell Blackley, of James Capel, dismissed opinion that the company is grabbing too much too quickly. Yet, the broadcaster has already clashed with other ITV companies over its offer for their ITN shares; it doubled its pounds 6.7 million offer for Thames' movie rights only after the latter had sued; and it lobbied (successfully) against the Thames-led consortium applying for the Channel 5 national franchise, which would have competed for London originated ad revenues.

Ultimately, Carlton Communications structure could also become ITV's Achilles heel. It saw its 1989 share price plummet from 950 pence to 319 pence a year later. With 50 per cent of its sales U.S.-based, investors' perception of Carlton Communications is at the mercy of the fluctuating relationship between the dollar and the British pound and despite impressive 91-92 profits, its shares kept falling. At 702 pence, it is nowhere near its 1989 high.

In Carlton Communications' last annual results, Green complained about the takeover restrictions imposed on the ITV companies. "The current regulations inhibit ITV's ability to compete with other media organizations now able to broadcast into this country." Central, in which he has shares, has never hidden its takeover ambitions. It is evident this insatiable man hungers for more power in UK TV.
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Title Annotation:U.K. Report
Author:Koranteng, Juliana
Publication:Video Age International
Article Type:Company Profile
Date:Feb 1, 1993
Previous Article:A syndication market in the U.K.?
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