ITV Merger Set For Competition Commission Referral
Carlton and Granada’s proposed £2.6 billion merger is expected to be referred to the Competition Commission this week by the Office Of Fair Trading.
The two broadcasting giants agreed the terms of the deal last October following months of speculation about the future of the ITV Network (see Carlton And Granada Enter Advanced Merger Talks).
It is estimated that the proposed merger will generate around £35 million worth of cost savings for Carlton and Granada by the end of the first year (see Carlton And Granada Move Closer To £2.6bn Single ITV Company). However, the deal is subject to the approval of the Competition Commission, which is likely to focus on the issue of ITV television advertising sales under the control of a single company.
Despite losing audience share to its multichannel competitors (see Insight Analysis: ITV1 Share Further Eroded In 2002), ITV is still expected to secure more than 50% of all UK television advertising this year. This has caused concern amongst advertisers, who claim that this could potentially distort competition in the market for airtime sales (see ITV Merger Must Clear Regulatory Hurdles).
Advertisers are keen to see a strong ITV capable of delivering mass market audiences, but are concerned that a merged Carlton and Granada would dominate the market, exerting too much power over customers.
Speaking at last year’s MediaTel Question Time event, ITV’s marketing director, Jim Hytner, acknowledged that the future of Carlton and Granada’s sales houses would be key to the success of the merger (see Carlton And Granada Merger Will Aid Dysfunctional ITV).
Irrespective of the Competition Commission’s decision, a merger between Carlton and Granada cannot go through until the Communications Bill becomes law later this year (see Government To Press On With Communications Bill).
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