NewsLine Column: The ITV Merger – A Game Of Two Halves

Following the Government’s decision to clear the way for the £4.2 billion merger of Carlton and Granada, James Papworth, ad marketing manager at IPC Prospector, considers the implications for advertisers…

For months now the question of ‘will Granada and Carlton merge’ was as much in the balance as the question of ‘will Glenn Hoddle get the boot’. We all knew it was going to happen, it was just a case of when, where and what’s the pay-off.

The difference between the two is that while the ‘players’ in Glenn’s deal are having a post- match drink in the bar, the ITV deal has moved into yet another period of extra-time.

By 7 November, Granada and Carton will have had to have ‘sold’ to the Trade and Industry Secretary, their ‘behavioural’ remedies for ensuring that their airtime prices don’t rocket.

Assuming these are ok – and given that Granada and Carlton will both write and implement their own rules – the chances of the DTI not blowing the final whistle are slim. Before too long ITV United (plc) will top the Broadcasters Premier League.

As for the fans a.k.a. the advertising market, well we’ve had plenty of time to get used to the idea that admission prices at the merged channel could rise.

Controversial perhaps, after all that’s what the ‘behavioural’ remedies are there to prevent, but let’s be honest. If you had a 52% share of an industry’s revenue, if you had customers who you knew really relied on you, if you could tell customers it to like-it-or-lump-it, wouldn’t you be tempted to try it on, just a little bit?

Am I just being cynical or am I really an astute observer of human nature? The PR tells us that advertisers’ season ticket deals will be rolled over for the next couple of years, implying that if advertisers promise to keep committing to ITV, then ITV promise to keep prices flat.

But will either of those positions be held? Merged or not, ITV viewing figures are in decline. Their share in multi-channel homes is in the late teens percent and multi-channel homes continue to increase – just reached 49.8% of all homes according to the ITC.

Switching TV money from ITV to other stations already lags behind viewers switching over. If an advertiser decided to play catch-up, to renegotiate their TV deals for next year and ‘naturally deliver’ their TV spend across channels, will they be penalised?

Or if new research suggests to an advertiser that while their advert is merrily playing on ITV, a large proportion of their customers are actually reading Woman’s Own, listening to Radio 2 or have nipped down the pub, wouldn’t they want to invest a bit more in magazines or beer mats?

And what about contract changes resulting purely from business activities – a change of target customer; a reaction to a competitive launch; a brand extension? Most media plans are in version 50 plus by the time the year is out and it is not ‘media’ that has caused them to change.

In short, is ITV’s claim of maintaining the status quo really a golden handcuff, ring-fencing money, which, pre-merger, would have left the building?

ITV merging should of course be a good thing for viewers. The £55m projected savings being ploughed back into programming should bring us more along the lines of cup-winners Cold Feet and Inspector Morse, and fewer relegation battlers like Surprise Wedding and Drop the Celebrity.

In time, viewers will hopefully return, advertisers will perhaps be happy and prices, maybe for a while, will reduce. Perhaps a return to the days when a centre break spot in News at Ten was a must-have for the launch of new campaign. When did a TV buyer last demand one of those?

But finding those cost savings will take time. Writing, commissioning, producing and broadcasting those programmes will take time. How much time has ITV got?

Fortunately for most advertisers, even those after mass audiences, buying around ITV, to at least some extent, is now actually a possibility. Other TV channels and other media channels now abound in such numbers, with such good evidence of advertising effectiveness, that with a little creative planning, and creative ‘creative’, there are fewer and fewer ‘must have’ media routes.

And yes, I’ll blow my own media trumpet and put magazines up there as a viable option for disenchanted ITV users. They have similar audience profiles, advertising awareness per 100 ratings is exactly the same (IPC AdTrack) and they are closer to the reader than any other medium (PPA Absorbing Media). And anyway, as you are reading my column, I, like ITV, will try it on, just a little bit.

Ultimately, probably after penalties, the ITV deal will be finalised. Will it be a case of ITV being over the moon while advertisers are sick as a parrot?

If you would like to respond or make further comment on this or any other NewsLine article, please email [email protected].

Subscribers can access previous articles by NewsLine columnists in the Columnist Archive – click button on left.