Advertisers greet ITV merger proposals with scepticism

LONDON - Advertisers and media agencies have greeted the new proposals on the £2.6bn ITV merger, relating to the key sticking point of TV ad sales, with scepticism.

Key advertisers and groups, including Procter & Gamble and the IPA, in their submissions to the Competition Commission will say they fear that they might have to pay more if Carlton and Granada are allowed to go ahead and merge their respective sales houses and control more than 50% of the TV airtime sales market.

They are not impressed by the new remedies put forward early last week that could allow Carlton and Granada to keep their controversial advertising share deals in place.

The hostility displayed by advertisers and media buyers could help persuade the commission that the ITV companies must sell off the sales houses if they want the merger to go ahead.

However, Michael Green, the Carlton chairman, has already said he will walk away from the deal if this happens.

ISBA, the voice of British advertisers, does not believe the new remedies solve any of the problems: "There is some doubt as to whether specific technical remedies would solve the fundamental problem of the dominance in the airtime market that a single ITV would have."

The IPA will also say it does not believe that the new remedies work and a spokesman for Procter & Gamble said that the remedies do not address the key issue of the 50%-plus control of the airtime sales market.

One of the new proposals, made by ITV, would enable advertisers to renew share deals, but based on the same terms as previously agreed. Advertisers would also be allowed to reduce the number of ads shown if ITV's share of viewers decreased, without losing their discounts.

Share deals give advertisers discounts over a period of time if they agree to spend a certain amount of money.

The other new proposal allows for a minimum amount of ITV's airtime auctioned off each year to a third party, which would then be sold to a secondary market.

The new remedies were issued on the same day the commission announced that it would delay its decision on the merger by a further two months, allowing it to consult the TV and advertising industry about additional remedies suggested to allow the merger to go through.

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