Attention turns to C4, Five and BSkyB sales house plans

LONDON - With the ITV merger given the green light, concerns have been raised about plans by rival broadcasters BSkyB, Five and Channel 4 to launch their own combined sales house in response to the merger.

The three broadcasters are reported to have held talks over the last year about what the outcome of the possible merger of ITV would mean for them.

It is not known how far their plans have advanced, but with a single ITV airtime sales house on the way, the three broadcasters will be forced to respond swiftly.

The creation of a combined BSkyB, Five and Channel 4 sales house would reduce the TV airtime sales market down from the current five players, including Carlton and Granada, to just two, raising fears among advertisers and media agencies that advertising prices will rise.

In its response to the ITV merger, the Institute of Practitioners in Advertising voiced concern about possible Channel 4, Five and Sky plans to create a consolidated sales house.

Geoff Russell, the IPA's director for media affairs, said: "There is still a danger that unless the DTI and OFT are able to convince the other broadcasters that they will not suffer unfairly as a result of the merger of ITV, the marketplace could be reduced to just two sales forces -- with all the risk to open competition which that implies."

ISBA has already said that a full Carlton/Granada merger, which included a merger of their airtime sales operations, would have considerable implications for the competitiveness of that TV airtime market.

Malcolm Earnshaw, ISBA director general, said: "There is significant devil in the detail of how the merger conditions will be enforced if they are to be effective in ensuring a fair and competitive marketplace for advertising airtime sales. We are now extremely keen to work closely with the OFT and Ofcom and, in due course, the appointed adjudicator to clarify the details of their enforcement."

In its statement, Channel 4 made no mention of any sales house talks, instead it cautiously welcomed the merger news. "We are confident that a smaller, independent player like Channel 4 can continue to prosper, because our financial success in the last decade has been built on delivering an upmarket and younger alternative to the mainstream audiences for ITV."

If a deal can not be agreed between the three companies, there is still a possibility that it could just include Channel 4 and Five, which initiated the talks in which Nick Milligan, Five director of sales and deputy chief executive, is thought to have been involved.

Milligan would likely be the man who oversees the creation of the venture if, that is, he stays at Five and does not opt, as reports suggested earlier this year, to leave the channel to run ITV's sales operation.

The knock-on effect of the creation of a single ITV company and sales house is one that is also shared by major advertisers, including the COI Communications, which controls the government's £85m ad budget.

A COI spokesman said earlier this year: "The possible knock-on effect of other broadcasters following suit and merging their advertising sales is of concern."

If you have an opinion on this or any other issue raised on Brand Republic, join the debate in the Forum here.