Carlton looks a takeover target

ITV group Carlton played down talk it will soon jump into bed with Granada, but said it is open to alliances with other media firms. 'We are revisiting our list of options,' said chief executive Gerry Murphy, who reckons proposals to relax media ownership laws 'open up the prospect of relations which might previously have been off-limits'.

This could include overseas firms or radio groups such as Capital. Murphy said Granada had made no attempt to reignite merger talks since they were abandoned in February, but analysts reckon it is only a matter of time before Carlton is swallowed up by someone. 'They are just touting themselves around for the biggest premium,' said one.

Evidence that advertising sales are improving brightened Carlton's dismal first half results. It lost £179.4m after £99m exceptional charges for the closure of its disastrous ITV Digital joint venture. Last year, it lost £277.3m.

In a world-class understatement Carlton, maker of the TV series Survivor, described its £600m total investment in pay-TV as 'unsuccessful'. Murphy said: 'With the benefit of hindsight, there are things one could have done differently.' But he insisted 'there has been no pressure or criticism' from shareholders for him to resign. Competition in the pay-TV sector is 'fierce and not entirely fair', he said in a swipe at BSkyB.

Ad revenues were down 13% for the six months to March, but Murphy expects 'modest' growth this quarter. The dividend is held at 3.275p as a sign of confidence. Carlton fell 3p to 256p, down one third on the year. Buy, said Merrill Lynch.