ITV Gets Go Ahead For £31 Million GMTV Acquisition
ITV has been given the all clear to go ahead with its proposed £31 million acquisition of the majority stake in GMTV, despite wide-spread concern from the advertising industry.
The Institute of Practitioners in Advertising had been calling for the Office of Fair Trading to refer the acquisition of Scottish Media Group’s 25% stake in the breakfast television franchise to the Competition Commission for further investigation.
However, the deal has now been given the go ahead with no further investigation, in a move that will give ITV a total effective shareholding of 75% in GMTV. The UK’s largest commercial broadcaster now plans to bid for the remaining 25% stake owned by the Walt Disney Company.
The IPA was objecting to the deal on the grounds that ITV could attempt to merge its sales operations with those of GMTV. It claimed this could lead to a reduction in competition in the market for airtime sales, which could push up prices for advertisers.
Advertising carried by GMTV represents only 2% of ITV’s net revenue earnings, but the airtime is of particular importance to toy and breakfast cereal manufacturers. Brands currently use GMTV as an effective alternative to ITV’s premium airtime, but the IPA claims this option will cease to exist under the proposed deal.
Geoff Russell, the IPA’s director for media affairs, said: “The maintenance of open competition in the airtime sales market is a real source of concern to media agencies. Any consolidation of sales forces by media owners reduces that competition and when one of the players already holds such a powerful position in the sector it is clearly going to set alarm bells ringing.”
It is not clear whether ITV plans to merge the sales houses or continue to run them separately to take advantage of the unique nature of the breakfast market. However, the deal is far from complete and the matter could still be referred to Ofcom.
The OFT ruling comes in the same week as ITV agreed to sell its 5.5% stake in French multimedia group, Thomson SA, to Citigroup Global Markets and UBS Limited, as part of its ongoing £600 million programme to sell-off non-core assets. The 15.5 million shares held in Thomson originated from Carlton’s sale of manufacturer and distributor Technicolor to Thomson in 2001 (see ITV’s Sell-Off Continues With Stake In Thomson).
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