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The deal to buy SMG's 25% stake is part of a wider commercial agreement that also sees ITV take control of the Scottish broadcaster's airtime on its Scottish Television and Grampian Television licences.

With 75% of GMTV now in its hands it is obliged, once it has been given the regulatory go ahead, to make an offer at the same price to Walt Disney.

SMG, which as well as the two Scottish ITV licences also owns Virgin Radio, originally bought a 20% shareholding in GMTV in 1991 and increased this to 25% in 2000. However, it now says that since the Carlton/Granada merger gave ITV 50% of the station, its board takes the view that the investment is no longer strategic.

Charles Allen, CEO of ITV, said: "GMTV is an excellent business and in 2003 grew its share of viewing from 1.58% to 1.61%. ITV plc's acquisition of an increased stake in GMTV at a reasonable price will simplify the ownership structure and enable more agile decision making, which will benefit both ITV and GMTV as we work even more closely together."

Other parts of the deal include the rights to use the ITV name for the ITV plc corporate identity. SMG and ITV had been at loggerheads over Carlton and Granada appropriating the ITV name when they merged last year.

Andrew Flanagan, chief executive of SMG, said:"The ITV name has significant value to all ITV franchise-holders and is synonymous with high-quality British television. I'm pleased that we have reached this agreement with ITV plc which clarifies the use of the ITV brand by Scottish TV, Grampian TV and ITV plc."

The two have also agreed the cross-promotion of ITV2 and the ITV News Channel on Scottish Television and Grampian Television.

Allen said the move was another step in delivering the strategy to develop further the single ITV business.

"We have reached agreement with SMG on a number of points confirming the operation of the ITV Network, the digital transmission in Scotland of ITV channels including ITV2 and ITV News Channel and the sale of all SMG's national television airtime through our single ITV sales house," he said.

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