Stephen Byers has published the assessment and recommendations he received from John Bridgeman, the director general of fair trading, in regard to the ITV mergers.
He agreed with the Competition Commission’s decision that it would be undesirable to allow a merger which created a single company with a dominant position within the ITV network. The Competition Commission found only one of the proposed mergers between the three main ITV players to be against the public interest – that between Carlton and United – and the bulk of the report looks at the theoretical concerns surrounding the potential effects of the three main ITV companies becoming two.
Its main concerns are the effects of such a merger on the remaining smaller ITV franchisees, and the minimisation of national advertising revenue from two ITV companies. The recommendations are as follows:
The upper limit of national advertising revenue (NAR) which one company is allowed to control has now been waived. In its place is an agreement that if two major ITV companies are created the proportion controlled by each will be according to a ratio of 1.27 to 1.
The limits placed on ownership of the most successful ITV franchises – Carlton, Granada, LWT, Meridian – should be maintained as a means of limiting the scope for creating a dominant position in the advertising market. Thus United must divest its Meridian franchise for a merger between Carlton and United to be completed.
These two directives will allow the creation of two balanced ITV companies and also retain the right by advertisers to continue to make price comparisons between similar franchises when negotiating deals.
The choice of sales houses for small independent ITV franchises has been considered. Currently the sales houses of United and Granada sell airtime for third parties, while Carlton Sales sells only its own airtime. In the event of a merger between either of the major players, smaller ITV franchises which sell through these houses will given the flexibility to change their sales house within six months of the date of notification of their wish to change.
ITV networking arrangements have been found to be sufficient to address theoretical concerns surrounding the commissioning or scheduling of programmes in the light of a merger.
John Bridgeman said: “I am pleased that the secretary of state has felt able to publish my assessment and recommendations in this case. Further consolidation of ITV companies will affect the overwhelming majority of television viewers and advertisers and is of great interest to us all. I hope that people will find my views of interest – they are intended to inform the debate about the way forward in this complex situation.”
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