This morning Carlton was up 6.82% to 270.2p, while Granada was up 7.48% to 136.5p at one stage.
Capital Radio was also boosted, its shares rising 6.37% to 835p on the news that the ban on ownign more than one national commercial radio licence would be lifted.
The long-awaited bill, announced in the House of Commons last night by the secretary of state for culture, media and sport Tessa Jowell, gave the go-ahead for a merger between Carlton and Granada.
The communications bill will lift rules standing in the way of a single ITV company. Under current legislation, broadcasters are prevented from owning more than 15% of the market.
The merger would create a media company worth around £5bn and would lead to a number of cost savings.
The move is sure to please the City after the debacle surrounding ITV Digital, where the two ITV companies have lost around £1bn.
However, there was speculation at the weekend that Granada chairman Charles Allen was facing calls for his resignation. Major shareholders in Granada, including the Capital Group, Barclays Bank and Legal & General, are said to want Allen to step down from the company.
Allen has come under fire for trying to bury ITV Digital's problems by reigniting speculation about a merger between Carlton and Granada.
Last week, just days after ITV Digital was officially put up for sale and its digital licence put out for tender, Allen announced that he wanted to rekindle merger talks with Carlton to create a single ITV company.
Carlton has made it clear that if Granada, the bigger of the two companies, wants to take over Carlton it will have to pay a hefty premium for the firm. So far, Allen has failed to address the issue of how much Granada would offer for its smaller rival.
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