British television companies Carlton Communications and United News & Media called off their planned merger yesterday, clearing the way for a possible takeover bid for either from rival Granada.

Carlton and United said they were already talking to other parties, swinging the spotlight on to Granada - the third of the three main shareholders in Britain's top TV channel, ITV, which has been mulling a possible bid for one of its rivals.

The British government last week opened the way for consolidation that will see the big three ITV players reduce to two.

But Carlton and United said they had decided to ditch their proposed merger after the government demanded United sell one of its prize television franchises as a condition for clearance - a move they said entirely undermined the rationale of the deal.