Ofcom has lifted the rules banning Channel 4, Five and BSkyB from selling advertising airtime jointly, in a move that paves the way for a merger of their sales operations.
The regulator has decided to withdraw the Independent Television Commission’s rules on the joint selling of airtime, which prohibit the large television sales houses from collaborating. The move is the result of its consultation on the rules governing the UK television airtime sales market, following the merger of Carlton and Granada (see
Television Advertising Market Set For Wide Ranging Review).
The ITC and Ofcom believe the robust provisions of the Competition Act and the increasing body of competition case law provide sufficient mechanisms to prevent distortions of competition in the joint selling of airtime. The decision follows speculation that BSkyB and Channel 4 are planning to merge their sales house to adequately compete with the newly-merged ITV, which will control more than 50% of the airtime sales market.
However, the regulators have emphasised that the removal of the rules governing joint airtime sales will not necessarily equate to further consolidation in the market. The Competition Act provides strong rules which prevent joint selling where it is ‘anti-competitive’. Ofcom’s preliminary analysis suggests that a merger of two larger sales houses could easily damage competition, even if the combined sales houses has a market share of less than 25%.
The new regulator also reaffirmed its commitment to prohibit the practice of conditional selling, whereby broadcasters require media buyers who wish to purchase airtime on one channel buy another of the broadcaster’s products to ensure the sale. However, the bundling of channels will be permitted under the rules of the Competition Act.
The rules governing the withholding of airtime, whereby broadcasters artificially inflate prices through restricting supply have also been reaffirmed and will be kept under review.
