It is clear now that the two ITV companies are relying on 'behavioural', rather than structural, remedies to get their way. Their big ideas, unveiled to the Commission last week, focus on the way ads would be sold by a united ITV.
The suggestion is that TV advertising currency should be made more transparent by tying it in more explicitly to programme ratings than net advertising revenue. Produce a good schedule and you get rewarded. Offer crap and you pay the price. There will almost certainly also be a code of practice in there somewhere, probably to be monitored by Ofcom.
Without knowing the details of the Granada-Carlton proposal, it is impossible to judge its weight. But at first hearing it sounds a rather puny weapon with which to take on the assembled might of a Commission panel that includes business and accountancy professors, two former senior Department of Trade and Industry civil servants and a senior lawyer.
The two ITV companies have in effect been forced to rely on trying to reform advertising market mechanisms, because more structural remedies have failed to fly. The firms were prepared to offer up a sales house and float Carlton Sales free. The Commission, however, was convinced that the 'independent' sales house would be like the runt of the litter, unable to offer much real competition.
Likewise, a Commission suggestion - that banning share deals might do the trick - was opposed by the advertising industry because it quite likes getting discounts for a guaranteed share of marketing budgets.
We are now seeing a Competition Commission faced with quite extreme alternatives and nothing much in-between. It can say the merger only goes through if Granada and Carlton get rid of both their sales houses, something that would almost certainly kill the deal. The alternative, which looks like a very soft option, is to wave the merger through, subject to tinkering with the way television advertising is bought and sold.
It does not look good for the ITV bosses and they have only themselves to blame. Through a mixture of foolishness and arrogance they thought they could get a straight win without having to negotiate or compromise.
The advertising industry would love to see one ITV, under the right conditions, and made it clear it was willing to listen. Instead it was rebuffed.
If now Carlton and Granada had the support of the marketing and advertising industries behind an agreed reform of ad sales they might have stood a decent chance. Instead they face the united opposition of their television rivals and the marketing world.
The Commission will soon finalise its verdict. But the outlook for Granada and Carlton appears grim. If the merger does not go ahead, for whatever reason, Michael Green of Carlton and Charles Allen of Granada will have to do a lot of tap-dancing in the City to save their skins.
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