Carlton/Granada £2.6bn merger referral welcomed

LONDON - ISBA, the voice of British advertisers, and Channel 4 have applauded the government on its decision to refer the £2.6bn merger of ITV companies Carlton Communications and Granada to the Competition Commission.

Both organisations singled out the impact on the airtime sales industry, if the two ITV sales houses are allowed to combine, as their main area for concern.

ISBA said a full Carlton/Granada merger, which included a merger of their airtime sales operations, would have considerable implications for the competiveness of that TV airtime market.

Ian Twinn, ISBA director of public affairs, said: "TV advertising is a very large and significant market. Advertisers believe it is absolutely right that the Competition Commission should examine these implications in detail."

Channel 4 went a step further and urged the commission to consider the implications of a merged ITV company, even if it has two separate sales houses.

Channel 4 deputy chief executive David Scott said: "We warmly welcome the secretary of state's decision to request a Competition Commission inquiry into the likely effects of this merger. Channel 4 is convinced that allowing a single company to control more than 50% of the television advertising market in the UK, through one sales house or two, is fundamentally anti-competitive."

There are concerns among advertisers and agencies that even if one of the sales houses is spun out of ITV -- to ensure the two companies compete on price -- that they will still collude to push up the price of airtime, because they will both be working for the same company.

The decision to refer the merger to the competition commission was made by secretary of state for trade and industry Patricia Hewitt. Her opposite number in the Conservative Party, shadow trade and industry secretary Tim Yeo said that the decision gave greater evidence that media ownership rules were out of date.

According to Yeo: "The secretary of state's involvement of the Competition Commission shows how unnecessary any special ownership rules in the media industry are. I hope the Competition Commission can consider this case quickly in view of the pressures the industry faces."

Yeo added that the merger should be pushed through once advertising industry concerns had been addressed. "I have long advocated clearing the way for Carlton and Granada to merge, subject only to concerns about the sale of advertising," he said.

Speaking this morning, Carlton chairman Michael Green said the merger will not affect the competition for viewers.

"ITV is already one network and advertisers follow viewers and viewers follow programmes. We look forward to working with the Competition Commission over the coming months," he said.

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