Media reforms open takeover door

A WAVE of foreign takeovers could bring a boost to the battered media sector after the Government announced sweeping reforms to cross-media ownership rules.

Its draft Communications Bill scraps laws preventing non-European Union firms - such as American giants AOL Time Warner and Disney - from snapping up our TV and radio broadcasters. It also clears the way for a single company to own both ITV and Channel 5 and for radio firms to own more than one national licence.

Just hours before Culture Secretary Tessa Jowell outlined the bill to Parliament, Guardian Media Group stepped in with a surprise £41m bid for Jazz FM, where Richard Wheatly is chief executive.

GMG already owns 18.5% and its 180p a share offer has been conditionally accepted by major shareholder Clear Channel. Other radio firms perked up on hopes that they could be next.

'Radio will become a lot more fluid,' said Paul Wignall, at Ernst & Young. 'The bill goes further than we thought and should prompt more overseas interest in UK media firms.'

GWR, Capital Radio and Emap are all keen to grow. Analysts reckon Capital is in the best position to gobble up rivals. SMG has already bought 29.5% of SRH, while Capital has 19% of Choice FM.

The bill, which will become law next year, also makes Carlton and Granada more attractive for overseas bidders. Germany's Bertelsmann, which controls Channel 5 through RTL, has already sniffed around Carlton. Now it could buy both ITV firms without having to sell Channel 5.

Media mogul Rupert Murdoch could also buy Channel 5, but his News Corp empire is barred from buying a big stake in ITV because of its newspaper interests.