Granada, the UK’s largest commercial terrestrial TV company – and senior partner in the planned £4 billion ($6.3bn; €5.78bn) merger with Carlton Communications – has issued a robust response to claims by a former Channel 5 boss that under his tutelage the merger could achieve cost savings of up to £150 million.

The two dominant ITV companies say the merger will yield cost savings of £55 million provided they are allowed to retain and integrate their respective sales organizations – a move opposed by advertisers, agencies and rival broadcasters – and £35 million if they are not.

But David Elstein, ex-chief executive of Britain's smallest terrestrial channel, has been peddling his alternative management plan to ITV investors and City of London institutions [WAMN: 26-Aug-03]. He asserts that in addition to other areas of cost-slashing, a further £30 million could be saved if £100m of inhouse programme-making is outsourced to the independent production sector.

Responds Charles Allen, Granada chairman and ceo-designate of the merged ITV: “We have taken our shareholders through our plan in detail and they are very supportive. Frankly, they now just want us to get on and do it.”

He claimed that Granada is already Europe’s most efficient programme-maker both in terms of in terms of advertising impacts and profit margin, currently 15%. Allen repudiated the Elstein formula which, he charged, failed to compare like with like and was based on double-counting.

Data sourced from: Times Online (UK); additional content by WARC staff