The two big independent television companies Granada and Carlton have announced that they are in advanced merger talks.

A single ITV is within sight

Michael Green Carlton chairman

If the deal were to go ahead, Granada would own two thirds of the combined business.

Granada's boss Charles Allen would become chief executive of the new company.

And Carlton's founder Michael Green would become chairman.

Advertising woes

Mr Green, chairman of Carlton, said: "A single ITV is within sight.

Granada's Charles Allen would run the merged firm

"In a rapidly changing broadcast industry we need to combine to compete effectively.

"Delay is not in the interest of viewers, advertisers, stakeholders or the future of British broadcasting."

Both companies have suffered from a downturn in advertising revenue, and their television ratings have been under pressure.

The two broadcasters' finances have also been hit by the costs of propping up their loss-making digital terrestrial service ITV Digital, which collapsed in May this year.

Hurdles

A combination between the two broadcasters would have to be approved by the UK competition authorities.

And the two companies warned on Friday that "there can be no assurance" that they will reach a final agreement.

A previous merger attempt between the two companies came unstuck in February this year.

But news that the tie-up could be on again cheered City investors, with Granada shares closing up 6p, or 9.0%, at 72.5p on Friday.

Carlton stock ended 15.5p, or 13.7%, higher at 128.5p.