Carlton and Granada urged to sell off stake in GMTV

LONDON - SMG, the Scottish television group, has called on Carlton and Granada to sell their stakes in the UK's biggest breakfast television station, GMTV, and said it is interested in buying them.

SMG, which owns Virgin Radio and Scottish Television and Grampian north of the border, wants the Competition Commission to force the sale of the combined 50% stake the two will hold once their £4bn merger goes through.

Carlton Communications and Granada each own 25% of the morning ITV station, as does Walt Disney Television, with the final 25% stake being held by SMG, which is interested in taking control of the station and expanding its business south of the border.

As well as being the UK's number one morning television breakfast show, GMTV is also one of the most profitable ITV franchises. GMTV had a record 2002, with its share of the breakfast audience up 2% on the previous year and it was the only part of ITV to experience any sort of growth.

It also finally paid off its last loan stocks to shareholders and was profitable for the third consecutive year.

Andrew Flanagan, chief executive of SMG, told the Financial Times: "We would be interested in buying GMTV. You need a trigger to try to do something and that's what we have tried to engineer."

SMG is concerned that, with the creation of a single ITV sales house, a controlling stake in GMTV will give it effective command of a second national sales channel. GMTV's share of ad revenue has been consistent over the past few years, despite the fluctuations in the TV market.

GMTV is famous for its couches and presenters Eamonn Holmes and Lorraine Kelly. The station recently celebrated its 10th birthday since replacing TV-AM as the morning ITV franchise.

There was no mention of GMTV earlier this week when the Department of Trade and Industry green-lighted the £4bn merger of Carlton and Granada to create ITV plc, and the Competition Commission has yet to respond to SMG.

However, SMG is unlikely to get it all its own way. Walt Disney is also said to be interested in expanding its stake. As part of its holding, Disney provides programming to the station, mostly in the form of children's cartoons.

A spokesman for Walt Disney said: "If any other shareholders were forced to divest we would be very interested at the right price."

If you have an opinion on this or any other issue raised on Brand Republic, join the debate in the Forum here.