ITV Cleared To Merge With Sales Houses Intact
The Government has this morning officially approved the £4 billion merger of Carlton and Granada, in a move that will see the creation of a single ITV capable of competing more effectively with its commercial rivals.
Trade and Industry Secretary, Patricia Hewitt, has decided not to force the two ITV partners to sell off their sales houses to be run separately, a condition which Carlton and Granada had previously described as a “deal breaker”.
However, the merger will only go ahead if both companies agree to a series of tough behavioural remedies designed to alleviate concerns over the power wielded by a single ITV in the television advertising market.
These include the requirement that advertisers can renew their ‘share deals’ on the same terms as their previous contracts. Carlton and Granada will have to agree to price promises that will be overseen by an independent adjudicator appointed by media super-regulator, Ofcom.
Patricia Hewitt said: “I am confident that the merged company will be able to compete more effectively with the BBC, Channels 4 and Five, and BSkyB. Technological and regulatory developments have changed the broadcasting landscape and the position of ITV has become increasingly difficult to maintain.”
The decision has received a mixed reaction from advertisers, who are keen to see the creation of a strong ITV competing more effectively for viewers, but fear that a single company could lead to reduced competition in the market for airtime sales.
The Institute Of Practitioners In Advertising believes the proposed remedies will not be sufficient to limit ITV’s dominance. The IPA’s director of media affairs, Geoffrey Russell, told NewsLine: “It is the concentration of power which is our fundamental concern and we will settle for nothing short of the structural divestment of both sales houses.”
Tess Alps, chairman of media buying group PHD, insists the merger of Carlton and Granada will have series consequences. She said: “The money that would be squeezed out of the television advertising market would come directly from Channel 4, Channel Five and multichannel operations, which would damage them possibly irreparably and would certainly stop them competing with ITV.”
Following the completion of the merger, Carlton and Granada plan to create three distinct divisions focussing on news, broadcasting and production. The merged ITV company is expected to make high-quality news a platform on which to compete with the BBC and BSkyB.
DTI: 020 7215 5000 www.dti.gov.uk
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