This morning's surprise merger, made possible by the Government's communications bill, came with few details and many questions. ISBA said it wants to see the business case proved and wants to know what the talked of cost savings and efficiencies will be.
ISBA has been wary of a merger between the two because of the implications for reduced competition in the market. A crucial issue for advertisers is the future of the two ITV sales houses owned by Carlton and Granada. ISBA has long worried that a merger of the two would reduce advertiser choice causing a rise in advertising rates.
Bob Wootton, ISBA's director of media affairs, said two issues arose from the merger. "Firstly, benefits to viewers and therefore advertisers. ITV has long claimed that if it merges it will be more competitive in terms of getting large number of viewers, which advertisers are looking for. It would be very good if they could do that. But ITV has only ever made some fairly veiled references to what efficiencies might arise to make it more competitive. What we are still looking for is the clear business case for what those benefits and dividends might be."
The second issue was the fate of the sales houses. Wootton said: "We have some grave concerns. For a long time we were the only voice in the wilderness saying that this is a matter for the competition authorities. But others are now agreeing with us and even Gerry Murphy in the Financial Times recently agreed with this."
The issue of sales houses is likely to be a regulatory sticking point and could trigger a competition enquiry. However, an enquiry could be forestalled by pre-merger talks, which could lead to a deal and a qualified merger being agreed by the ITV companies, advertisers and media agencies.
ISBA will not be drawn on the outcome it is looking for, but it is known that it wants to see an open and competitive airtime sales market. ISBA says it is up to the ITV companies to make the first move on any talks. So far ISBA says there have only been "talks about talks, but no talks" with Granada and Carlton.
"This is a kind of negotiation and it is right and proper that the protagonists should lay out their proposals first. We would then lay down our counter-proposals and the competition authorities would seek to impose safeguards to achieve a qualified merger," said Wootton.
"The only possibility [for the merger to go ahead without an enquiry] is that Carlton and Granada and the advertisers thrash out a scenario where everyone is comfortable...I think there is going to be some kind of merger of ITV, but the interesting question is how qualified that will be. Uncontested it can't go ahead, but once the business case has been made people will see sense. The question is what degree of qualification," he said.
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