Relations between Carlton and Granada hit a new low

LONDON - Relations between Granada and its ITV partner have hit a new low following comments by Carlton Communications chief executive Gerry Murphy that a merger between the two should be delayed for three years until regulatory hurdles can be overcome.

The comments have angered Granada chief executive Charles Allen, and industry watchers are saying that the deterioration in relations between the two chief executives could stop them working together in the future.

Granada is denying that the long-anticipated merger between the two companies would face regulatory hurdles, and is reported to believe that the main barrier is the companies' valuations on the stock market.

Another a bone of contention is the fact Carlton looks set to bid for Scottish Media Group, which also holds an ITV franchise. Granada holds a 29% stake in SMG, but Carlton is looking to buy its ITV licences.

It had been previously reported that Carlton was set to walk away from a deal with SMG because the two could not agree on price.

Last week, Granada and Carlton announced they were pooling their back office resources and marketing efforts to save money. The advertising industry reacted to the move with suspicion, saying that it could be the first step in a "back door" merger.

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