ITV's tough stance with agencies may endanger merger

The Communications Bill published this week paves the way for a single ITV. A few years ago, this would have been beyond the imagination of even an intelligent TV trader. Yet the likelihood of a merger between Carlton and Granada now meets with barely a flushed cheek, writes Claire Beale.

Odd, then, that ITV should now risk the goodwill of the agency community by rolling up its sleeves with other broadcasters on the accreditation committee and pressurising agencies to prove their credit worthiness. A row has ensued which has seen the IPA bandy about words such as collusion and cartel, and raising the spectre of the Competition Commission -- hardly the sort of atmosphere in which to push through a previously contentious merger.

The accreditation row is, in any case, farcical. The UK terrestrial TV market is dominated by parochial and one-trick broadcasters that have heated up over the credit worthiness of multidisciplined, multinational, multibillion-dollar communications companies.

The broadcasters' accreditation committee, headed up by Channel 4's Andy Barnes and representing ITV, Channel 4 and Channel 5, is demanding agencies prove their credit worthiness by demonstrating their asset-to-debt ratio is balanced. Well, there are a few problems with this. Unravelling debt-to-asset ratios across multidisciplined international businesses is no day's work. And most agencies are owned by US-based companies with a different definition of "assets".

The simplest solution for an agency is to obtain a bank guarantee to cover the cost of the media they're buying. But that means agencies must shell out about £300,000 to buy the guarantee and not only will they never recoup the cost, the sums also represent a significant slug of profit for most agencies.

Sure, UK broadcasters are under increasing City pressure to tighten their businesses, not least because of the ITV Digital fiasco. And the recent Enron scandal has served as a bitter example of how sweet can turn sour in the blink of a trader's screen, while advertising's holding companies have felt their own cold shiver as recession has whipped round the globe.

What seems to have got the IPA's goat, though, is the sort of bullyboy tactics that were employed last week. As bullies in fear of their bonuses often do, aggressive muscling was rashly employed by a couple of, erm, over-enthusiastic TV sales people threatening to delist one particular media agency (which will remain nameless since the past 12 months have hardly been kind).

Yes, it's possible that this particular agency is running a little stretched, but in incurring the wrath of the IPA, ITV in particular has made another rash, and potentially costly, move. The competition authorities will do well to have a word with Hamish Pringle and his team if Carlton and Granada decide to tie the knot.

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