IPA Demands Separate Sales House For ITV-Owned GMTV

The Institute of Practitioners in Advertising is threatening to refer ITV’s proposed acquisition of GMTV to the Office of Fair Trading if the broadcaster attempts to merge its sales operations into a single, company-wide entity.

The IPA states that, without such an undertaking, ITV’s purchase of Scottish Media Group’s 25% stake in the breakfast television franchise could potentially be anti-competitive and should be referred to the Competition Commission.

The proposed acquisition of SMG’s stake in GMTV would cost ITV £31 million, giving a controlling interest and a total effective shareholding of 75%. The remainder of the company is owned by Disney. The IPA has voiced concern that a combined sales operation would allow ITV to increase the price of its airtime across the board.

While the advertising carried by GMTV represents only 2% of ITV’s net revenue earnings, the airtime is of particular importance to toy and breakfast cereal manufacturers. The IPA also states that, by using a combination advertising across GMTV, satellite and Channel Five, advertisers are able to play the broadcasters off against each other, ensuring the best possible deal. Should ITV merge its sales operations, this alternative to ITV daytime advertising will effectively collapse.

Geoff Russell, the IPA’s director for media affairs, explained the need for GMTV’s advertising to remain separate from ITV. He said: “The maintenance of open competition in the airtime sales market is a real source of concern to media agencies. Any consolidation of sales forces by media owners reduces that competition and when one of the players already holds such a powerful position in the sector it is clearly going to set alarm bells ringing.”

The IPA’s submission forms part of the OFT’s consultation period on ITV’s purchase of the GMTV shares. The watchdog has invited feedback from any interested party about competition or public interest issues and is due to make a judgement within the next month (see GMTV Purchase May Be Judged By Competition Commission).

IPA: 020 7235 7020 www.ipa.co.uk ITV: 020 7843 8000 www.itv.com
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