According to a report in the Financial Times this morning, the merger in its current form could be in trouble if the Competition Commission reaches the same conclusions as the Office of Fair Trading, whose comments on the merger have just emerged.
The issue of most concern is that of airtime sales and the merger of the two ITV sales houses, which would give a merged ITV company more than a 50% share of the TV ad market. It is this issue that has advertisers and agencies most concerned.
The paper says analysts now believe that the Competition Commission inquiry, which began last week, might now run into considerably more obstacles than first thought, following the OFT's dismissal of Carlton and Granada's arguments.
Of chief concern is that the OFT rejected Carlton and Granada's argument that a merger would make no real difference to the existing market, because London is the only market they currently broadcast as competitors in -- with Carlton and LWT respectively -- and that the weekday and weekend licences attract different audiences.
The OFT was not persuaded by this argument and said that there might be "significant competition in the London area between Carlton and Granada that would be eliminated by the merger".
This, the paper said, was worrying analysts. A research note from Lehman Brothers suggests that because of this, Carlton and Granada might have to make more concessions to get the deal through. The two have already said they would consider the creation of an independent airtimes sales house to appease the market and make it more competitive.
However, according to the note issued by Lehman's, this could be the bare minimum that the Competition Commission might be looking for.
"If the Competition Commission reaches the same conclusion as the OFT, the merger, as envisaged by the companies, could be in trouble. Namely the separation of the two sales houses with strict conditions could be the absolute minimum concession acceptable to the commission."
It added: "The Competition Commission might demand that one of the London licences is spun off, which may be a concession that the two parties are not willing to contemplate."
However, despite the OFT's comments the two ITV companies appear unconcerned pointing. A spokesman for ITV said that the OFT report had not been "unhelpful".
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