ISBA has today underlined the case for a Competition Commission review of the proposed merger of Carlton and Granada.
A submission to the OFT outlines advertisers’ concerns over the impact that a merger would have on the market for airtime sales in the UK, and makes clear their belief that the proposals should be referred to the competition authorities.
According to ISBA, a merger of ITV’s airtime sales houses would lead to other broadcasters such as Channel 4, Sky, Five and GMTV attempting to unite their own sales operations to compete for greater overall share of advertising revenue. Prices would inevitably rise if there were just two sales houses.
It is also argued that a merger would give the companies an effective monopoly of TV market airtime. ISBA calculates that a combined organisation would control 50% of UK commercial TV viewing and 54% of all UK television ad revenue (based on 2002 figures).
The society also questions the assumption that a merger would lead to cost savings, greater expenditure on programming and larger audiences. This would make ITV more attractive to advertisers but ISBA remains unconvinced, stating; “Whilst advertisers remain open to being persuaded on this, neither Carlton nor Granada has yet put a clear case as to how exactly advertisers might benefit from a merger.”
Ultimately most media analysts are in agreement that the current structure of ITV is completely unworkable, and a merger has been on the cards for some time. A case was put forward by Jim Hytner, ITV’s commercial director, at the recent MediaTel Question Time event. In addition, ITV sees the merger as essential if it is to compete effectively in the increasingly crowded multi-channel environment and with the well-funded BBC.
According to Michael Green, chairman of Carlton, the merger could be completed as early as next June if it is not referred to the Competition Commission. However, if ISBA gets its way and the merger is passed to the authorities, the investigation could drag on throughout 2003, costing time and money when the television industry is already under pressure from advertisers.
