CARLTON GRANADA MERGER: Rival broadcasters deny merger after Govt greenlights a single ITV

Commercial TV broadcasters are denying that they will be forced to merge their sales operations after the trade secretary, Patricia Hewitt, gave the green light for a single ITV sales house.

"There's no intention to merge us into ITV and we don't envisage it having an effect on us," Paul Corley, the managing director of GMTV, said. Other broadcasters also said that their offerings were so distinct as to make a merger unnecessary.

Privately, however, rival sales directors have been examining their options since Carlton and Granada announced they would merge last year. These negotiations will intensify following Hewitt's decision, which allows for a merged ITV sales house that will control 52 per cent of the TV ad market.

In particular, the industry is monitoring the movements of five's deputy chief executive, Nick Milligan, who may want to merge his sales department with that of Channel 4 or Sky.

Hewitt took the majority advice of the Competition Commission and permitted ITV to have a full-blown merger, on the condition that it changes the way that it trades its airtime with agencies. The conventional wisdom was that Hewitt would rule that the two companies would only be able to merge if they divested both of their sales houses.

The £4.5 billion merger will result in savings of £55 million. ITV claims it will reinvest this in its schedule to maintain audience share, but next year's schedule investment is likely to remain static.

It brings to an end 48 years of federal ITV broadcasting and finally creates a UK broadcaster that will possess the resources to compete with the BBC and Sky.

In the advertising industry, the news of the merger was met with shock.

As the Granada chairman, Charles Allen, and Carlton's chief executive, Michael Green, celebrated the news at Granada's South Bank headquarters, the mood at Granada Enterprises in Gray's Inn Road and Carlton Sales in St Martin's Lane was rather more muted.

Allen and Green's success in steering a full merger through the Commission has improved their stock in the City. Both suffered damage to their credibility following the ITV Digital debacle.

Following the creation of the single ITV sales house, which is likely to be in place at the beginning of 2004, Mick Desmond will retrench his position as the joint managing director of ITV to run a new broadcasting division comprising the old Network Centre and sales.

The response from advertisers and agencies was also one of surprise.

ISBA, which has lobbied hard against the merger, claimed to have won a victory for its members. But one sales director said: "Having read ISBA's pathetic response, we're all wondering why we fought so hard against this in the first place."

The ITV companies now have one month to alter their trading systems to the one permitted under the Competition Commission's ruling. This will be in time to trade for the 2004 deal season.


Michael Green, chairman - A flamboyant businessman, he grew Carlton from a small company employing just four people into one controlling half of ITV.

Charles Allen, chief executive - The son of a Scottish hairdresser, Allen's first step on the corporate ladder was as a trainee accountant at British Steel.

Gerry Robinson, non-executive director - Robinson is a former Granada chief executive who orchestrated the Forte takeover alongside Allen.

Sir George Russell, non-executive director - A graduate trainee at ICI, Russell rose through the ranks of manufacturing before becoming deputy chairman of Channel 4. A variety of TV jobs, including at the ITC, followed.

John McGrath, non-executive director - A former chairman of Boots, McGrath was appointed to the Carlton board in May. He was previously a chief executive of Diageo.

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