Carlton and Granada’s proposed £2.6 billion merger to form a single ITV company (see Carlton And Granada Enter Advanced Merger Talks) is due to be referred to the competition commission this week for a full enquiry.
The decision by the Department of Trade And Industry, which has been expected for some time, will end hopes that a lengthy investigation in to the intricacies of the deal could be avoided.
Although a single ITV company would control around 54% of the television advertising market, some had predicted that Carlton and Granada’s plans to create a separate advertising sales house might have convinced the Government that a full inquiry was unnecessary.
However, reports suggest that the Office of Fair Trading has recommended that the merger be referred to the Competition Commission. The Government is expected to approve the decision within the next five days and the inquiry could take up to take up to four months, while the views of interested parties are considered.
Despite being keen to see a strong ITV capable of delivering mass market audiences, advertisers have expressed deep concern that a merged Carlton and Granada could potentially distort competition in the market for airtime sales (see ITV Merger Must Clear Regulatory Hurdles).
However, Carlton and Granada argue that a merger, which would generate up to £35 million worth of cost savings by the end of the first year (see Carlton/Granada Move Closer To £2.6bn Single ITV Company), is vital if they are compete against an increasingly commercial BBC and the growing number of cable and satellite channels.
Speaking at the MediaTel Question Time event, ITV’s commercial director, Jim Hytner, insisted that a merger between Carlton and Granada would be the best way forward for ITV, but recognised that the future of the two companies’ sales houses would be key to the success of the deal (see Carlton And Granada Merger Gets Agency Backing).
A merger between Carlton and Granada cannot go through until the Communications Bill becomes law later this year. However, the merged company would be chaired by Carlton chairman, Michael Green, with Granada chairman, Charles Allen, taking on the role of chief executive.
