Ofcom’s Airtime Sales Ruling Receives Mixed Reaction
The advertising industry has given a mixed reaction to Ofcom’s decision to lift the rules banning the joint selling of television airtime, as it looks likely that the move will trigger a further round of sales house consolidation.
The Incorporated Society Of British Advertisers has expressed “disappointment” at the move, which follows the Government’s decision to allow Carlton and Granada to merge and form a single sales house controlling more than 50% of the television advertising market (see Advertisers Give Mixed Reaction To ITV Merger).
A spokesman for ISBA said: “We are sceptical that competition law alone will necessarily provide significant protection against further consolidation in the airtime sales market. We will now be monitoring very closely moves by any of the commercial broadcasters to try to merge airtime sales operations.”
The Institute Of Practitioners In Advertising has adopted a more conciliatory stance and despite pressing for the retention of the old regulations, has expressed satisfaction at Ofcom’s “clear concern” to prevent anti-competitive arrangements emerging between ITV’s main commercial rivals.
Jim Marshall, chairman of the IPA’s media futures group, said: “We appreciate Ofcom’s desire to see consistency in the way in which the market is regulated and are now content that the competition and enterprise acts will give the regulator the power to block moves which it deems to be against advertiser interests.”
Ofcom has advised the Office Of Fair Trading that it should no longer take the view that combined shares of up to 25% of the television advertising market will not have an appreciable effect on competition. Instead, it claims that shares of less than 25% could unfairly effect the airtime sales industry.
Industry insiders claim it is unlikely that Channel 4, BSkyB, Five or GMTV will immediately make moves to consolidate their sales operations. However, advertisers and agencies remain concerned that a reduction in competition could push up the price of television airtime.
Andrew Canter, broadcast director at Media Planning Group, said: “The issue of constricting the sales options further is a bad thing from a advertiser’s point of view because it means you have less choice and less choice generally means that you pay more for what you buy.”
He added: “Ofcom is obviously there to see that fair trading practices are put in place. ITV will be overseen by an independent adjudicator, but there will not be the same sort of safety net put in place to prevent price increases on the other channels – so it remains to bee seen what happens.”
Earlier this week Graham Duff, the new managing director of ITV Sales, named Gary Digby, the Carlton Sales managing director, as his new right hand man, in a move the brings him close to completing his senior management line-up at the newly merged sales house (see Duff Names Carlton’s Digby As ITV Sales Director).