CLOSE-UP: LIVE ISSUE/GRANADA AND CARLTON - A user's guide to the new ITV ad sales duopoly. Fighting rival channels, not each other, is best for ITV's owners, Claire Beale writes

1. What's happened?

ITV's ownership and sales structure has consolidated down into two powerbrokers: Granada and Carlton. Granada bought United News & Media's ITV assets (Meridian, HTV, Anglia and the sales house TSMS) back in July this year. Last week, Carlton bought HTV from Granada, as Granada was obliged by the Competition Commission to sell HTV on. Carlton also won the contract to handle airtime sales for STV and Grampian, which had previously been handled by TSMS.

Between them Carlton and Granada now control most of the ITV franchises and control ITV's entire airtime sales market.

2. So who is more powerful now, Carlton or Granada?

In terms of the numbers, they're pretty evenly matched. Carlton now controls 46.5 per cent of ITV revenue and Granada has 53.5 per cent. But, apart from Carlton's London weekday and Central franchises, Carlton's sell is more on the fringes of ITV. Granada has the strong English spine of the network.

3. What about the sales teams? Which one is the best?

Buyers say that the best individual operator, by a long way, is still Steve Platt, the managing director of Carlton Sales. Over the years, though, Carlton hasn't done itself many favours with buyers by being aggressive and inflexible. On the other hand, Granada Enterprises, headed by Mick Desmond, is considered more user-friendly. However, buyers think Granada has made a bit of a fudge in the way it handled the old TSMS sales teams.

Observers say that Granada spent too much effort protecting its own sales people rather than most effectively integrating the best of TSMS into the new sales structure. Jerry Hill, the former chief of TSMS, is considered a great loss to ITV. Overall, Carlton has the slicker operation and the strongest people, buyers say.

4. Where is the up-side for advertisers and agencies in the new ITV duopoly?

The consolidation has actually been swiftly and tidily resolved (although it's getting quite late to be tackling negotiations for next year's deals).

The new structure will allow Granada and Carlton to concentrate on how they work together for the good of ITV and its advertiser customers. Hopefully, that means a focus on programming and scheduling. On the advertising side, two sales houses means less administration for agencies.

But TV buyers are now looking for the new ITV to sort out its sponsorship sales into a centralised unit, take a more coherent approach to break structure and the slotting of programming promotions, and enhance ITV-wide research initiatives.

5. And the downside?

ITV still represents around 50 per cent of the commercial audience and is still the only place to reach really big audiences in a single hit.

With the new duopoly, that is potentially a dangerously powerful position for ITV to be in. Big advertisers still need ITV and some buyers worry that the sales duopoly means ITV will have a better chance of hardening rates for those key peaktime audiences. They may still be fierce rivals within ITV, particularly in the London, region but there's no doubt that the best policy for Carlton's and Granada's sales teams is to concentrate on fighting rival channels rather than each other.

There were suspicions about collusion among the three old ITV sales houses.

With only two, the opportunities for collusion are disproportionately greater, although collusion remains illegal and the Independent Television Commission is ever vigilant. Nevertheless, buyers are concerned that the two sales houses will compare notes on share deals and both drive a hard line when it comes to demanding a share of total broadcast spend.

6. Will the consolidation affect advertising deals for next year, then?

Around 80 per cent of all long-term ITV deals are up for renewal this year (they usually run for three or five years). However, it is unlikely that Carlton and Granada will have sufficiently bedded down their new sales contracts to maximise their consolidated sales approach and policy.

Many contracts are expected to be rolled over for another year.

7. What does it all mean for the rival commercial channels?

There has been speculation that Channels 4 and 5 might push for the abolition of rules preventing national channels from being sold together. If such sales consolidation were allowed, the two might look at setting up a single sales point, although both are still in relatively strong positions as standalone operations. In the meantime, both channels are aggressively getting their 2001 deals in order in a bid to make the most of ITV's disarray.

8. How long before ITV's two become one?

It is inevitable that ITV will eventually be run by a single company, but that's unlikely for the foreseeable future (five years, perhaps).

The advance of digital will have an important role to play in the timing of further consolidation. As ITV's share of the audience slips, so arguments against a single ITV company will be eroded.

9. And who will win out?

The smart money is on Granada. It might have been badly wrong-footed by Carlton and United's original merger plans last year, but the way it's played the deal process since then has proved it to be a formidable machine.

In terms of its infrastructure and, crucially, programming product, Granada looks in better shape than Carlton.

However, when the ultimate consolidation does come, it's likely to be an agreed deal rather than a hostile shoot-out.

10. So, what should be top of ITV's agenda now?

The two broadcasters need to move quickly to restore the confidence and the credibility of ITV's Network Centre, which has taken a knock this year (a chief executive would be nice). It needs to have a clearer focus on where the real competition for audiences is coming from - definitely BBC1 - and train its scheduling guns in that direction. ITV2 and ONdigital also need sorting out to give ITV a real franchise on the digital future.

That should be easier now that United is off the scene.

Crucially, though, ITV needs to get to grips with its primetime schedule, use ITV2 more effectively as a testing ground and focus on developing the next generation of high-rating peaktime programming.

Perhaps then the two sales houses will have something better to actually sell.

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