United News & Media and Carlton Communications have agreed a merger that will create the UK's largest commercial television broadcaster in a deal valued at £7.8 billion.
In addition to the new group's extensive television interests, which include three ITV franchises and a third of Channel 5, the group will have a strong internet holding that will include LineOne and Carlton Online.
The new group will be the largest ITV broadcaster covering approximately 37 million people in 15 million homes.
Carlton owns the London weekday franchise for ITV, Central in the Midlands and Westcountry in the west of England. The company also owns Planet 24 and holds a 50 per cent share of digital terrestrial broadcaster, ONdigital. In new media it owns Carlton Online, which publishes the Popcorn.co.uk movie website among others and has a stake in online recruitment firm Peoplebank.
United owns the ITV franchises Anglia, Meridian, and HTV. It owns Express Newspapers, which publishes the Express and the Daily Star, and online it co-owns the internet service provider, LineOne with BT.
The merger could face regulatory delay, which would leave both companies open to potential hostile bids. Under the current legislation no single company is allowed to control more than 25 per cent of ITV advertising revenue. Together, the two companies would account for around 32 per cent of advertising revenue.
One possible solution would be for to sell off the weaker ITV franchises to satisfy the competition authorities.
The merger is also likely to run into opposition from Granada, which controls key ITV franchises including London Weekend and is Carlton's partner in ONdigital.
The chairman of the new company will be Carlton chairman, Michael Green, while United's Lord Hollick will be chief executive. Based on Thursday's closing share price, they are both roughly the same size, with Carlton worth £3.46bn and United £3.73bn.