EDINBURGH TV FESTIVAL: Single ITV sales point 'uncompetitive'

Carlton and Granada will have to abandon their plans for a single sales house if they want to merge.

With three weeks to go until the trade and industry secretary, Patricia Hewitt, can make her decision on the future shape of ITV, this is the most likely scenario if the £4.1 billion merger is to go ahead.

Following representations from the advertising and media community, it is believed that proposals for a single ITV sales house will be considered uncompetitive and that the behavioural changes proposed, such as auctioning off a portion of airtime or maintaining current discount levels, could be unworkable.

Although Charles Allen, the chairman of Granada, and Michael Green, the chief executive of Carlton, have previously said that a single and wholly owned ITV sales house is vital for the merger to go ahead, it is likely that they will have to concede.

Insiders have dismissed reports that the ITV companies came up with an 11th-hour compromise proposal that would see sales for London Weekend Television hived off. The Competition Commission has not asked for submissions from any interested parties regarding the proposal.

David Elstein, the former chief executive of five, has been widely linked to a senior role in a merged company. He was originally believed to be planning a management take-over of the ITV companies, but because of increases in the two companies' share prices this seems unlikely.

However, Elstein has continued to unsettle the City's faith in the current management regime at Carlton and Granada, and claimed that savings can be made through restructuring ITV. He has said that £20 million of savings can be derived from changing to a national sales model.

Hewitt is due to make her decision on the merger after 18 September.

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