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Power, money and the pursuit of profits.

When the British government deregulated the ITV network at the start of this year, little did it realize that it was in the process of creating a Frankenstein-like monster.

Today, the commercial network has dropped most of its public service broadcast obligations and embarked upon an aggressive profit-making business. But a few months after deregulation, the government finds on its hands a willful creature it cannot control.

The 15 independent broadcasters that serve different regions within the ITV network are asking for extra regulatory concessions to nourish an insatiable appetite to earn more cash for their respective shareholders.

The loudest proponents of change are among the largest companies. They are led by Carlton TV and LWT, which serve London; Central TV for the Midlands; and Granada TV for northwest England. Carlton and Central want an extension to the moratorium that at present blocks foreign takeovers of ITV until 1994. Afterwards, media giants on the European continent will for the first time be allowed to control the ITV companies.

Peter Brooke, Britain's Department of Heritage secretary who is responsible for broadcasting, is debating whether to relax the broadcast ownership rules. These currently prevent any of the nine largest ITV companies from swallowing up each other.

Carlton TV chairman Michael Green and Central's Leslie Hill argue that, by consolidating resources and decreasing the number of companies operating ITV, the broadcasters would be in a stronger position to fight off any foreign hostile bids.

Confident that changes are imminent, the big ITV companies spent this summer undertaking some of the most bizarre share acquisitions in the network's history. LWT bought a 14.9 per cent stake in Yorkshire-Tyne Tees Television (Y-TTTV), itself the result of a merger late last year. While Granada acquired 14.9 per cent of LWT for 1.67 million, 30 per cent above the shares' market value.

Obviously, these moves are the first step toward takeover sprees. But, regionally, London-based LWT has nothing in common with Y-TTTV in the North. Granada was expected to buy part of neighboring Y-TTTV, but LWT got there first. Past rumors include Granada buying into Scottish TV, Central TV joining forces with nearby Anglia TV.

But the dark horse that is expected to be extremely ambitious is Carlton TV, which already has shares in Central (19.2 per cent), in the breakfast service GMTV (20 per cent), in the news provider ITN (18 per cent), and is joint owner of London News Network. Carlton is also linked to Meridian Broadcasting through its Central shares. Should it buy out LWT, said to be a possibility, Carlton will also have access to Y-TTTV. And Granada, anticipating this, is expected to use its LWT shares to gain a n edge when bargaining for Carlton's support should it wish to acquire Y-TTTV.

Inevitably, these developments a re creating conflicts within broadcasters as each one pursues individual ambitions that do not necessarily correspond to the needs of the network.

The less powerful companies such as Anglia and HTV are potential takeover targets and, understandably, they are unhappy about potential changes. They want time to settle down shortly after winning their 10-year franchises. They treat, with disdain, Carlton's argument that consolidation of the companies would lead to economies of scale and save ITV 100 million pounds in annual costs. Some, especially HTV, are feeling the strain of the huge price they paid to buy or regain their licenses.

In fact, apart from Carlton and the equally financially strong Granada, the rest of the ITV companies are feeling decidedly nervous about their future.

Advertisers also fear that each ITV company, which sells its airtime regionally, will centralize the service, leading to massive rises in ad rates. Greg Dyke, chief executive of LWT, has said: "In five years' time, we shall be the country's most dominant commercial channel and will be in a position to form an 'ITV public limited company' to sell time centrally."

The government, which is to earn 200 million a year from broadcast license fees, is confronted with problems it did not foresee. An ITV spokesman has declared that if the government is that unhappy with the network's actions, "there should be a 1995 Broadcasting Act to clear up the mess left by the 1990 Act."
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Title Annotation:British television industry
Publication:Video Age International
Date:Oct 1, 1993
Previous Article:Will Phillis call the cavalry to save the BBC?
Next Article:Can ITV function with 15 different owners?

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