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[Overview] [Granada
Media] [Carlton Communications]
[United News and Media]
[ITV2] [(ITV Digital (ONdigital)]
[ITN] [Channel 4]
[Channel 5] [Others]
Feature page: [The Proposed Merger] [The Outcome]
The independent television (ITV) companies are commercial franchise holders to broadcast to a particular region in the UK. Licences are awarded by the regulator, the Independent Television Commission (ITC). In March 2001 the ITC slashed the licence payments to the Treasury in a move designed to increase the roll-out and uptake of digital TV (see regulatory). From the original 17 separate ITV franchises, ITV is now dominated by Granada Media (6 franchises) and Carlton Communications (with 4 franchises) who between them cover the whole of England. Other franchises are Ulster TV covering Northern Ireland, Scottish Media that owns both Scottish TV (STV) and Grampian TV franchises, Border TV, the 3rd Scottish station, and Good Morning TV (GMTV). Since the original franchises other TV channels have been issued with licenses: Channel 4, Channel 5, ITV Digital (was ONdigital) - the digital broadcaster - as well as a few local area franchises.
Whilst the franchises do make and broadcast their own programmes, and sell them amongst themselves, increasingly independent companies are creating programme content or complete channels. One of the most notable is ITN that provides the news programmes to ITV companies.
Following the merger of Granada Media and the television franchises belonging to United News and Media, ITV became dominated by Granada and Carlton. They then re-organised the ITV management, encompassing ONdigital that was renamed to ITV Digital. ONdigital's chief executive, Stuart Prebble, became the chief executive of ITV and Jim Hytner, poached from Channel 5, was brought in as marketing and commercial director. The ITV channels are to be called ITV1 with the free-to-air digital channel named ITV2. The launch of ITV Sport, a subscription channel, will launch in August 2001 at an initial cost of £140m (shared between Granada and Carlton).
Granada Media is one of the two largest UK commercial TV companies with a market value of £10bn. It owns the following TV franchises: Granada (NW England), Tyne Tees (NE), Yorkshire (NE), Anglia (east), London Weekend Television (LWT), and Meridian (south). Headed by Charles Allen. It has nearly a third of the ITV advertising revenue.
Along with Carlton Communications, it has a 50% share in and provides content to ITV Digital, the independent terrestrial digital TV service. It also has a 20% in GMTV (Good Morning TV), a 20% stake in Scottish Media, and a 20% stake in ITN (see below).
Granada Media had a war chest of £2bn from when it was part floated off from the Granada Group who still own 80%.
Prior to 28 July 2000
In June 99, Granada Media announced a 3 year £30m investment in an on-line business to include interactive entertainment services based on its well known TV brands, an on-line educational service, and e-commerce. Whilst these are internet based, ITV Digital customers will be a prime target and this raises the possibility of linking ITV Digital's programmes to the internet. Granada also owns 50.5% of Granada Sky Broadcasting, a joint company with BSkyB. GSkyB distributes its programmes over all 3 mediums to 95% of the UK's multi-channel homes and is taken by 3m of them. In August 1999 Granada announced a joint venture with BBC Worldwide to be called GB Productions with the aim of selling UK programmes to the US. In November 99, Granada was in a takeover battle with Scottish Media Group for control of Ginger Media but lost. In April 2000 Granada obtained the option to acquire Border TV following Border's acquisition by Capital Radio. This is yet another step in the consolidation of the ITV companies.
In June 2000, Granada announced that it was spinning off Granada Media in a £7bn flotation with 20% being placed initially. The media company will also receive a further £400m to £500m cash injection when its TV rental business is merged with Thorn to create Box Clever. Granada has made no secret that it would buy either of Carlton or United News and Media if their proposed merger failed to go through.
The Proposed
Merger and
the final outcome.
In October 2000 Granada Media and the Boots health care chain set up a £50m joint health and beauty channel to be available via interactive TV and the internet. See Interactive Services for more details.
Whilst Granada Media has a 50% stake in ITV Digital, it is also pursuing its own interactive media deals. In September 2000 it took a 5% interest in Arsenal Football Club as part of a 47m deal. £20m will be used to invest in a joint venture called AFC Broadband that will provide delayed match coverage and an internet site called arsenal.com.
Like Carlton, a sudden slump in ITV advertising revenues in the first half of 2001 hit the company hard. On top of this was the continuing need to invest in ITV Digital (£121m half year losses and a further £250m needed up until 2004) and in the new ITV Sports channel (£140m start-up cost). In the 6 months to March 2001 the company made a £69m loss compared to a pro-forma £289m pre-tax profit for the same period the previous year. Advertising sales were down 18% to £58m and there were short term costs as the company re-organises and rationalises itself from the acquisition of the TV interests of United news and Media. These should save £600m p.a.. The company will be re-organised as 2 divisions. Granada Content will manage content creation across all divisions including the internet, international distribution, the ITV Digital joint venture with Carlton, and the Wellbeing TV channel with Boots. Granada Platform will manage the company's ITV franchises including ITV2 and ITV Sport, the latter to be launched in August 2001.
In July 2001, Charles Allen, who is paid £900,000 for being Chairman, was awarded shares in the company worth £1m. Three fellow directors were also given shares worth a combined £1.4m. The shares are to be awarded in 2 traches over 2 years provided performance targets are met.
Carlton Communications owns the Carlton London (Weekday franchise), West Country, and Central Television (in the Midlands) and the Welsh HTV Independent TV (ITV) regional companies. It also owns 20% of GMTV and 20% of ITN (the ITV News service - see below). It is headed by Michael Green and has a market value of £5.16bn (c1999). It has a 20.8% share of ITV revenue (1999). Carlton owns a 50% share of ITV Digital, the independent terrestrial digital TV service
Its internet interests includes 50% of ONnet the ITV internet service, 25% of the Ask Jeeves search engine, Carlton.com, Popcorn.co.uk, Jamba, TasteNetwork (50%), and Carlton Books.
Carlton pay channels include Carton Cinema, TasteNetwork (50%), and OnSport (50%). These are shown via satellite, cable and terrestrial networks. It also has interests in film libraries, programme making, ITV advertising sales, and cinema advertising.
Prior to 28 July 2000
In early 1999, Carlton purchased the ITC library from Segram. it contains 300 films and 5,000 hours of TV programming. Its total library content will now be 2,200 films and 15,000 hours of TV programming. In May 99 it re-organised and placed all its TV, production, distribution and internet business into a unit called Carlton Media Group. In July 1999 Carlton acquired a 9.9% stake in the Liverpool football club.
Whilst Carlton is a major investor in ITV Digital (investment rose from £27m in first half of 1999 to £69m in the same half of 2000) it is also investing heavily in content. In the same period its investment in digital channels, internet sites and ITV2 rose from £8m to £29m. Total full year expenditure on digital is forecast at over £200m with the aim of 1m digital TV viewers by the end of 2000. All told, Carlton will invest £700m in ITV Digital before it starts generating profit.
The Proposed
Merger and
the final outcome.
Following the Granada - United merger, in which Carlton generally lost out, the company did win the airtime sales contracts for Scottish Television and Grampian Television. With its existing contracts it now controls 46% of ITV's net advertising revenue. It also sold its 20% stake in Meridian and purchased HTV.
Carlton did own Technicolor but in December 2000 sold the company to Thompson Multimedia, the worlds 4th largest consumer electronics maker, for £1.43bn (£515m immediate cash payment; £415m plus interest in 4 years; and a 5.5% stake). Thomson make digital set-top boxes and the two companies agreed a strategic alliance covering digital and interactive television. Carlton will invest about £10m in TAK, Thomson's European interactive joint project with Microsoft. Microsoft and DirecTV each have a 6% stake in Thompson.
A sudden slump in ITV advertising revenues in the first half of 2001 hit the company hard. In the 6 months to March the company only made £92m operating profit but to this was added a £141.5m loss at ITV Digital. The company's share fell further to reach half the level compared to 12 months earlier.
Prior to 28 July 2000
Until this date, United News and Media was third major commercial TV company. It owned Meridian (80%), Anglia, and HTV regional companies plus a 20% stake in ITN (see below) and a 35% stake in Channel 5 (see below). It also had ownership of the Line One internet service provider and the Express newspapers. It is headed by Lord Clive Hollick. The company had a market value of £4.46bn and a 14.7% share of ITV revenue (prior to July 2000).
The Proposed
Merger and
the final outcome.
After its failed merger the company sold its television assets as well as Line One and the Express newspapers in order to concentrate on business publishing. Awash with cash it announced a £1.25bn share buyback. The company renamed itself United Business Media. In May 2001, RTL offered £200m for United's 35% stake in Channel 5. United refused the offer.
ITV2 is a digital channel provided by ITV, the UK independent terrestrial broadcasting consortium of companies individually owning the ITV franchise licenses. ITV is now dominated by Granada Media and Carlton Communications with other franchises held by minor players (see overview).
ITV Digital is the independent terrestrial digital TV service. It is owned 50% by each of Granada Media and Carlton Communications. As of early 1999, ITV Digital takes much of its content from BSkyB, one of it's two main rivals.
For information of the programmes on offer from ITV Digital see TV Services and for its history see Service (Delivery) Providers.
ITN has changed from being a UK news provider into a global media company. Ownership is no longer just the UK commercial TV channels, (Granada Media and Carlton Communications each have 20%), but now includes United Business Media (formally United News and Media) (20%), the Daily Mail & General Trust and Reuters. ITN provides news bulletins to the ITV franchises, Channel 4, Channel 5, to mobile phone operators and to other commercial [radio?] stations. It also runs its own 24 hours news channel.
ITN is preparing to launch an interactive 24 hour TV news channel on digital TV in a joint venture with NTL. Cable companies are said to be keen to take it but it would probably have to be provided free as BSkyB does not charge for its Sky News. ITN News 24 could also transmit via BSkyB's satellite under an existing access licence. ITN's EuroNews channel, in which it has a 49% stake, is said to beating CNN for audience share. ITN is also building a web site to rival the very popular BBC's and will provide this to Orange to enable mobile users to receive not only headlines but also full details. There is even talk of delivering news to large public bill-boards. One of it's major challenges is to change working practices and culture. It needs to change focus from just delivering the single nightly ITN news to delivering news continuously 24 by 7.
In 2000 ITN met controversy when it moved its main evening news from 10 pm to 11 pm. Under government pressure they moved in back for the weekday evenings Monday through Thursday. In 2001 ITN faces a major challenge when it has to bid to renewal its £42m contract to supply news programmes to ITV from the end of 2002. The Channel 3 News consortium led by BSkyB along with the US news group CBS, Bloomberg, Chrysalis Group and Ulster TV will be bidding. The ITV contract accounts for 40% of ITN's turnover. See controversy "Is ITV subsidising ITN?" Bids must be in by the end of July. Channel 3 News was reported to be bidding at 25% lower than ITN's current fee.
ITN is considering a public flotation.This would help United Business Media (formally United News Media) who wishes to exit the televison business (see United News and Media from September 2000) but as of early 2001 the technology stock market was depressed. However a delay may go beyond the date for the renewal of the ITV news contract and a failure to renew this would substantially devalue the value of the company. Granada Media and Carlton Communications would like to increase their 20% each stake but cannot due to the restrictions of the Broadcasting Act. In June 2001 the company said that floation was no longer an option.
Channel 4 is a commercial television company that operates within the public sector. It was established with public funding and is own by the government, and as such has no shareholders. It relies on advertising and pay-per-view for its income. It was until recently headed by Michael Jackson. The government had talked about privatising the company. Pre-tax profits for the last year were almost £36m, less than the previous year due to investment in new ventures such as pay-tv.
Its remit is to be innovative and different but is increasingly seen as more middle of the road. Channel 4 is most famous for its Big Brother programmes which attracted millions of viewers both to the TV channel and the associated web site. But otherwise the channel attracts small audiences. The range of advertisers often seem as equally small.
E4 and Film Four are digital channels provided by Channel 4. E4 is a subscription channel that tends to show first (mostly US) viewing, the second showing being broadcast on the free Channel 4. Film Four is a subscription movie channel. Both channels are heavily promoted on Channel 4 and heavily supported with finance. Both channels are available on satellite, cable and terrestrial. E4 is not expected to break even until c2006.
Channel 4 and EMAP the magazine publisher have invested £5m each to create content for E4 and associated digital products.
Channel 5 is 35% owned by United News and Media and 65% by RTL Group. RTL was created by the merger of the German Bertelsmann, the Belgium Audiofina and the UK Pearson Television. In September 2000, RTL said it was considering an injection of £200m to increase Channel 5's annual programming budget by 50%. In September 2000 it had 6% of the viewing audience and was profitable for the first time after £300m start-up losses. It has a laddish image and a reputation for showing soft-porn films. RTL said it wanted to change all this. United News and Media, having lost its most of its TV empire to Granada Media announced that it wanted to sale the remaining TV assets including Channel 5.
Border TV has the franchise for the Scottish border area.
Channel TV is the smallest of the independent television companies. In September 2000 it said it was planning to make a £450m bid for HTV. Channel TV's top management previously worked for HTV.
Good Morning TV (GMTV) is a channel providing breakfast time programming to ITV.
ITV Sport is a new channel launched in August 2001. It is owned jointly be Granada Media and Carlton Communications. They have invested £140m to launch the channel and the total investment is expected to reach £200m before it breaks even in 2004, if not later. In the first year it is showing a substantial amount of football - see services. It will also be available on NTL's cable network and probably on Telewest's as well.
Scottish Media is branching out. In January 2000 it acquired the privately owned radio and TV group controlled by the disc jockey Chris Evans. Scottish Media owns both Scottish TV (STV) and Grampian TV, the other Scottish commercial channel. It also owns the Scottish Herald newspaper and cinema advertising firm Pearl and Dean. Flextech has an 18% stake in the company. This could be a company to watch.
Television Corporation produces television produces programmes such as Channel 4' cricket coverage. In 2000 it fully acquired Mentorn, another production company. In January 2001 the company bought Offshore Sports Promotions for £15m in shares giving it a 55 year licence to develop Class 1 Worldwide Offshore powerboat Championships.
Ulster TV owns the ITV franchise for Northern Ireland.
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