`Merger will create stronger ITV`

Merger partners Granada and Carlton have pledged to create a "bigger and stronger" ITV after the pair's £4 billion tie-up won Government backing.

The media giants remain on course to join forces in January after Trade & Industry Secretary Patricia Hewitt attached less stringent conditions to the deal than many analysts had been anticipating.

Ms Hewitt said the merger, which unites the owners of 12 of the network's 15 regions, would create an enlarged ITV that is more equipped to compete with rivals, including BSkyB and the BBC.

The two companies welcomed the terms today, adding that the end result would be better television for viewers and advertisers.

Granada executive chairman Charles Allen said: "Today's announcement brings closer the opportunity for a bigger, stronger ITV to compete on an equal footing with the other UK broadcasters."

Following an inquiry by the Competition Commission, Ms Hewitt said the pair must agree to conditions including "behavioural" remedies that maintain rates for existing advertisers and offer discounts if ratings fall.

An independent adjudicator will oversee the application of the system, while the new ITV must agree to further proposals to safeguard other licensees, including Scottish Media Group - owner of Grampian and STV.

There had been fears that the pair would be forced to sell their sales houses in order to allay worries a merged broadcaster would have too much power. The two companies currently hold around 52% of the television advertising market.

But selling off the two advertising houses would have cut the estimated £55 million annual cost savings from the merger by as much as £20 million. The company has already said job cuts would result from the creation of ITV plc, although it has not specified how many posts would go.

Under the proposed tie-up, which was first announced last October, Granada is likely take a 68% stake in the new dominant ITV company.

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