MEDIA: SPOTLIGHT ON: GRANADA - Television rivals take stock of Granada’s Scottish ambitions - Cracking the market north of the border will be hard work, Alasdair Reid writes

The Granada empire keeps on growing. There may well have been consternation over the last few weeks about Mirror Group’s decision to sell its 18.6 per cent stake in Scottish Media Group, but there was absolutely no surprise about the identity of the buyer.

The Granada empire keeps on growing. There may well have been

consternation over the last few weeks about Mirror Group’s decision to

sell its 18.6 per cent stake in Scottish Media Group, but there was

absolutely no surprise about the identity of the buyer.



The consternation was, of course, focused in one quarter - Trinity

Newspapers, which is bidding to take over Mirror Group. And yes, Trinity

is the biggest potential loser in all of this. Tellingly, though, it is

not a loser because it is, or was, desperate to get its hands on the SMG

assets. SMG owns two Glasgow newspapers, The Herald and the Evening

Times, as well as its more prominent properties, Scottish Television and

Grampian.



Up until a couple of weeks ago, it was widely assumed that Trinity had

its heart set on virtual ownership of the market up north. Not so,

apparently.



But it did try to block Mirror Group’s sale of SMG because the move

makes it easier for other companies, notably Regional Independent Media,

to mount realistic bids for Mirror Group. The sale reduces the group’s

debt to levels that don’t scare the City quite so much.



But what of the deal’s other implications? Many observers say it

confirms a view they’ve held for the last couple of years - that ITV,

currently dominated by three major players, will soon be owned by two.

That Granada moved for SMG wasn’t half as important as the fact that

Lord Hollick’s United News and Media didn’t. After all, United’s sales

house, TSMS, sells the Scottish stations.



Further evidence, so they say, that United lacks the hunger and

determination of Granada and the other top table player, Carlton. In the

next round of musical chairs, United will be the one left standing when

the music stops.



United doesn’t quite see it that way, of course. And sources point out

that last week’s events remain open to interpretation. Granada’s

position is that it has taken a strategic stake in SMG to stop

international players - like the Canadian broadcaster, CanWest -

gatecrashing the cosy party ITV has become. Granada has given

undertakings that it won’t mount a full bid for at least six months -

unless someone else makes a bid. Granada sources say it’s by no means

certain that it will take full control.



However, few doubt it will happen. The big question is what will happen

to airtime sales on the Scottish station. The TSMS chief executive,

Jerry Hill, says it’s not an issue. He comments: ’The sales contract

runs on for quite some time into the future, irrespective of any

ownership changes.



We are merely flattered that Granada wants to buy into a company that we

generate all the income for.’



Hill won’t reveal details of that contract but it is believed to be

valid for another three to five years. Granada might counter by saying

the lessons of history are there for all to see. Companies tend to want

to sell what they own. It is, of course, possible that Granada could buy

out the TSMS sales contract if it wanted to take on the Scottish

stations’ sales.



Although the Scottish stations would take Granada’s Laser Sales above

the statutory maximum (no sales point can control more than 25 per cent

of the market), Granada is understood to believe that a liberal

interpretation of some of the legislative fine print would forestall

regulatory intervention.



Mirror Group couldn’t leverage anything from ownership of Scottish Media

Group. Even Trinity, apparently, didn’t believe it was possible. It

could turn out to be Granada’s toughest challenge yet. As those north of

the border insist on pointing out, Scotland is a very different market

and you underestimate this fact at your peril. The region is preparing

to pipe in its own devolved Parliament and that difference will grow

more marked.



As Granada prepares to ’take the high road’, its greatest mistake would

be to assume that Scotland’s soap is merely Coronation Street with funny

accents.



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