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Britain Eases Rules On TV Ownership

Tony Blair's new best friend
London (AFP) May 7, 2002
Britain on Tuesday unveiled plans to overhaul media ownership rules in a move that could pave the way for Australian media tycoon Rupert Murdoch's empire to take over terrestrial broadcaster Channel 5.

The reform of ownership regulations will also enable a single company to take control of ITV, the country's largest independently-owned television network.

The decision is widely seen as paving the way for a merger of regional TV companies Carlton and Granada, ITV's two biggest shareholders.

Carlton shares gained 3.4 percent to 253 pence, while Granada stock share climbed 0.4 percent to 127 pence on news of the changes, which came just before the close of trading.

The recent collapse of ITV Digital's terrestrial pay-TV platform, the increased dominance of BSkyB and the erosion of ITV's audience share, are seen as providing the impetus for a Granada/Carlton merger, according to analysts.

Announcing the changes, Culture Secretary Tessa Jowell told parliament that a rule which prevents companies that own national newspapers with more than a 20 percent share of the market from controlling Channel 5, is to be scrapped.

But rules will remain in place preventing them from taking a significant stake in ITV.

British sattelite broadcaster BSkyB, which is 37.5-percent owned by Murdoch's News Corp, is seen as a potential predator for Channel 5's licence after the changes, as the market for its own satellite television product has been showing signs of levelling off.

The decision to relax cross-media ownership rules came as a surprise, given many British politicians' concern at the power exerted by Murdoch, who owns the top-selling tabloid the Sun as well as the Times and Sunday Times.

Under current rules Murdoch -- or anyone else who owns national newspapers with more than a 20 percent share of the market -- is prevented from controlling an ITV licence or Channel 5.

Jowell also announced a draft bill to create a single regulatory body for the communications industry, Ofcom.

Meanwhile Murdoch main company News Corp was reported Monday to be facing the biggest writedown in Australian corporate history with an expected 10 billion dollar (5.4 billion US) hit on its disastrous investment in Gemstar-TV Guide International.

News Corp Ltd's third-quarter results come out next week and a recent change in the United States' accounting rules forces companies to account immediately for reductions in the value of acquisitions.

The Australian Financial Review said while News Corp has yet to finalise the falling value of Gemstar, it was expected to be at the high end of analysts's expectations.

A News Corp spokesman declined to comment.

News Corp closed down 60 cents or 4.9 percent at 11.71 dollars following the report, dealers said.

Analysts had expected that News Corp would take a tougher approach to valuing assets in its balance sheets after last month's appointment of Ernst and Young as its auditor, replacing Andersen.

The latest hit would bring to almost seven billion US dollars the total writedowns of assets by News Corp this year.

In its December half-year results, News Corp wrote off 909 million US dollars on three big US sports-coverage contracts and wrote down its exposure to the collapsed Kirch media group in Germany by 785 million US dollars.

Media and telecommunications companies across the globe have been booking writedowns and charges since the collapse of the technology share boom in March 2000.

The Gemstar writedown was expected to overshadow what was expected to be an encouraging result from News Corp's US television stations during the quarter.

The profits from movies was understood to be strong, particularly after the good performance of "Ice Age", which was No. 1 at the US box office during March.

It is understood News Corp was starting to see signs of a recovery in advertising revenues. However, newspaper earnings were reported to be looking flat and ratings for the Fox cable network were significantly down over the quarter.

News Corp owns 42.6 percent of Gemstar, an electronic programme guide company that also owns America's TV Guide magazine.

Earlier this year Gemstar wrote down the value of its acquisition of TV Guide by five billion US dollars.

All rights reserved. � 2002 Agence France-Presse. Sections of the information displayed on this page (dispatches, photographs, logos) are protected by intellectual property rights owned by Agence France-Presse. As a consequence, you may not copy, reproduce, modify, transmit, publish, display or in any way commercially exploit any of the content of this section without the prior written consent of Agence France-Presse.

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