SMG’s unpopularity paves the way for Granada takeover bid

You have to feel sorry for Scottish Media Group. In the past few years it has evol-ved rapidly from a small, regional ITV company, famous only for Taggart and Take the High Road, into a fully-fledged media conglomerate. First Scottish Television acquired its smaller northern neighbour, Grampian. Then it bought one of Scotland’s main newspaper companies, Caledonian, which publishes the Herald and the Evening Times in Glasgow, and boldly launched a new paper, the Sunday Herald. And in the past few months it has been scattering that colourful Scottish paper money like confetti, buying the poster company Primesight in the Midlands, trade magazines for pharmacists and electrical retailers (to add to a portfolio which already includes titles such as Scottish Farmer, Boxing News and The Actuary), and the cinema advertising company Pearl & Dean. The strategy: to build a UK-wide group of complementary businesses in the information and entertainment sector, with strongly-branded assets, and all controlled not from London, New York or Los Angeles but from Glasgow. Then the other day, in an attempt to increase its share of lucrative ITV network programme commissions, SMG announced that the three most senior staff in its production subsidiary, Scottish Television Enterprises, would be moving to London so as to be nearer their main customer, the ITV Network Centre. You’d think Scotland would be proud of its home-grown media conglomerate, at a time when the newly-devolved nation is flush with the self-confidence and sense of identity which comes from having its own parliament. Not a bit of it. SMG’s standing with the Scottish chattering classes is so low that it seems it can do nothing right. The decision to base programme-makers in London was roundly condemned by the Scottish National Party: “At a time when we should be developing our broadcasting infrastructure and expertise here in Scotland, SMG is in effect taking skills and jobs out of Scotland and strengthening the London-centric obsession of the media,” said the party’s media spokesman. Now speculation is rife in Scotland that Granada may soon mount a takeover bid for SMG – and it’s hard to find anyone to deplore the notion, even though it would mean Scotland’s television company being controlled from London. I’m not sure quite what SMG has done to deserve this lack of support. Perhaps it is because it’s perceived as being more interested in its profits than its products – especially the quality of its TV programmes. Then in the north of Scotland they accuse STV of asset-stripping Grampian. And although the companies broadcast more locally-produced programmes than any other ITV company, their budgets have been squeezed (along with regional programme budgets in the rest of ITV, it must be said). The advertising community is also uncomfortable with the group’s control of both ITV north of the border and a leading newspaper. “It is so focused on being commercially successful it hasn’t worked hard enough to ensure viewers and readers are happy,” says one veteran observer of the Scottish media. Of course, speculation about a Granada bid is simply that. When Granada bought an 18.6 per cent stake back in March it told the Stock Exchange it had no current intention of acquiring more or making a bid. Under Stock Exchange rules it must stick with that for at least six months – a period which expires this month – and formally the Granada position remains that it isn’t interested. But no one in Scotland seems to believe Granada will pass up the opportunity of strengthening its position in ITV by acquiring two more regional franchises, while remaining just the right side of the limits on how much of the TV airtime market one company can control. If Granada did bid for SMG, analysts believe the newspapers would be sold. In Scotland they don’t mind which company buys them – Associated Newspapers and a merged Trinity/Mirror Group have been mentioned – provided it isn’t the Barclay brothers, who already control the Herald’s Edinburgh-based rival, The Scotsman. When a merger of the two papers was suggested a few years ago (before STV took control of the Herald) there was fierce resistance from the advertising community and elsewhere. “That would be an absolute bloody carve-up,” in the words of one agency, alarmed especially at the stranglehold a combined Scotsman-Herald group would have over Scottish recruitment classified advertising. A Granada bid for SMG would undoubtedly provoke political controversy. But it helps Granada that its chief executive, Charles Allen, is a Scot, as is Steve Morrison, who runs the group’s TV arm, and that the company generally has a good reputation for the quality of its programmes. What’s more, responsibility for both broadcasting and competition policy lies with Westminster and Whitehall, not with the new parliament at Holyrood and the Scottish Executive. Scottish politicians might huff and puff, but there’s little they could do directly to prevent the takeover if the UK competition authorities allowed it. In the words of one Scot who thinks a Granada takeover, coupled with the sale of the newspapers, would be generally a good thing: “The Scots Parliament hasn’t proved wildly exciting so far. There’s always a temptation to latch onto something where the rhetoric comes cheaply. “You underestimate at your peril the sheer insular stupidity of Scottish politicians.” Nick Higham is media correspondent for BBC News


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