GRANADA Media is to take over rival group United News & Media's broadcast, production and distribution businesses in a £1.75bn deal.

As part of the deal Granada Media, which controls Tyne Tees and Yorkshire Television, will acquire United's TV interests which include the Meridian, Anglia and HTV TV franchises. The announcement follows months of speculation surrounding the consolidation of the media industry.

But under rules laid out by Trade and Industry Secretary Stephen Byers earlier this month Granada Media will have to sell off, or dilute its interest in, one of its lucrative TV franchises for the deal to be allowed through.

This was confirmed by Granada Media chief executive Steve Morrison who said the company would look to off-load the HTV franchise, covering Wales and the West Country, in order to comply with the competition ruling.

He said the company was in discussions with "a number of parties" regarding the sale of HTV, which would be sold for "considerably more" than the £300 million quoted by some analysts.

Mr Morrison refused to comment on speculation that rival group Carlton Communications was the most likely suitor for HTV.

He added: "The disposal of HTV is not something we wish to do but something we have to do.

"We will find HTV a home that will underpin the quality that its viewers are used to."

He added that following the acquisition Granada Media will have a balanced network of franchises covering a much broader geographical range.

Granada Media said United's strengths in children's, animation and wildlife programmes would complement its own strengths in drama, soap and entertainment and factual genres.

It expected the combined business to generate cost savings of around £30m a year by 2002