Carlton and Granada call off merger talks

Granada and Carlton Communications have ended talks to merge.

Granada and Carlton Communications have ended talks to merge.

The pair say they had been in talks regarding a possible combination of their businesses, in step with proposed changes in the law.

But now, they say: "The two boards have decided not to pursue these discussions".

A merger between the two biggest shareholders in ITV has long been mooted as a way of taking on the global media players.

A source close to the talks says the decision not to pursue discussions is understood to have been mutual, with no rows or fallings out involved.

The talks between the pair, which together own ITV Digital, were held ahead of this year's expected Communications Bill.

The Bill will follow November's consultation paper on media ownership rules, which cleared the decks for the creation of a single ITV company.

Analysts still expect a merger between the pair to go ahead at some stage, creating a single ITV company ultimately owned either by Granada - which has a market value of about double that of Carlton - or by an outsider such as Bertlesmann.

Paul Richards, media analyst at specialist broker Numis, says: "They have said no for now, but I'm sure Carlton and Granada have had merger talks before, and I'm sure they will have them again."

Mr Richards adds that it makes sense to consolidate ITV ownership.

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