Government Formally Accepts Conditions Of ITV Merger
Carlton and Granada have today cleared the final hurdle in their proposed £4.5 billion merger after securing formal approval on the undertakings of the deal from Trade and Industry Secretary, Patricia Hewitt.
The two broadcasters are now free to proceed with their plans to create a single ITV company capable of competing more effectively against well-funded BBC and an increasingly powerful BSkyB.
The ITV partners will have to abide by a number of conditions proposed by the Competition Commission to prevent the merged entity from using its dominant position to monopolise the multi-billion pound market for airtime sales.
Patricia Hewitt said: “The Office of Fair Trading has advised me that they have obtained the undertakings which I have asked them to seek from Carlton and Granada. I believe they satisfactorily address the concerns identified by the Competition Commission in its report, and have therefore decided to accept the undertakings offered.”
The most controversial condition is the contract rights renewal remedy, which allows advertisers to roll over the discounts on their current ITV contracts for the next three years. ITV will also be required to offer other licensees terms similar to those in effect on 1 November for the sale of commercial airtime and programme sponsorship.
The Government’s decision to allow Carlton and Granada to merge without selling off their sales houses has received a mixed reaction from advertisers, who are concerned that a single ITV will exercise too much power in the television advertising market.
It is also understood that some media agencies are unhappy with the terms of their existing 2003 contracts and are unwilling to have them set as the base year for the contract rights renewal remedy (see Advertising Industry Consulted On ITV Merger Remedy).
Earlier this week ITV confirmed that Graham Duff has been appointed managing director of its merged sales operation. Duff is understood to be in the process of finalising his management team, which could include Carlton’s current sales director, Gary Digby, take on the role of sales director at ITV plc (see Duff Appointed To Head Up Merged ITV Sales House).
ITV: 020 7843 8000 www.itv.com
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