The merger of Carlton and Granada to form a single ITV would not be detrimental to advertisers, according to the UK’s largest media buying agency Carat.
Regulators are expected to scrutinise the proposed £2.6 billion merger (see
Carlton/Granada Move Closer To £2.6bn Single ITV Company), following concerns that a combined Carlton and Granada – controlling over 50% of TV advertising – could potentially distort competition in the market for airtime sales.
However, Carat told a collection of its blue-chip clients: “The stark reality is that ITV must merge if it is to survive and we believe the benefits to advertisers and agencies, of a single, efficient, focused and competitive ITV are long overdue.”
Speaking at last month’s Media Question Time, ITV’s marketing director, Jim Hytner, spoke of the benefits of a merged Carlton and Granada for a “dysfunctional” ITV. However, he acknowledged that the future of the two companies’ sales houses would be the deal’s most contentious issue.
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. However, Carat says it does not believe that a united TV sales operation “necessarily means that price structures will be uncompetitive. If pricing becomes punitive there will be a market check,” it says.
Rival commercial broadcasters remain opposed to the creation of a single ITV and Channel 4 and Channel 5 are understood to be preparing to approach competition regulators to prevent the proposed merger. However, Carlton and Granada are expected to ask regulators to broaden the definition of the advertising market in which they operate, in a bid to secure approval for the merger (see Carlton And Granada To Appeal To Regulators Over Merger).
