MEDIA PERSPECTIVE: Advertisers ready to accept case for ITV's merger plans

"Advertisers to fight ITV tie-up," screamed one national newspaper headline last weekend. But the reality is likely to be very different.

Instead, according to ISBA, advertisers are already asking for Carlton and Granada to find some time in their diaries to make the case for the merger. "Advertisers are open to being persuaded," ISBA says. But the UK's largest advertiser, COI Communications, among the most demanding in terms of accountability and buying efficiencies, has already backed the merger.

It can see the possible benefits of the merger in creating a single ITV in terms of moving the network out of a period of decline and creating a stronger offering for advertisers. However, ISBA and the IPA are concerned about a possible consolidation of ITV's sales operations that would lead to it controlling 54 per cent of TV ad sales (competition rules permit control of up to 50 per cent).

Observers suggest ITV will attempt to get around this by creating an independent sales operation via management buyouts of its existing sales houses, technically severing the link with sales while keeping its placemen in charge.

Whatever ITV's solution, and by early 2004 its share will probably have dipped below the magic 50 per cent mark (the first time in history it will be advantageous to have a lower share), the competition authorities are likely to scrutinise it closely.

ISBA and IPA concerns centre around reduced competition and the potential manipulation of advertising rates by a merged ITV. I'm left asking whether these are the same bodies that have spent the past few years educating their members about media fragmentation? Channel 4, Channel 5, Sky (which advertisers are genuinely concerned about monopolising digital platforms) and Flextech. How much competition do you need?

The IPA seems concerned with the creation of a single sales operation to the exclusion of all other issues. A bit odd from an organisation that represents media agencies far-sighted enough to have consolidated their own buying systems into super-groups such as Magna and Zenith Optimedia in anticipation of similar moves from media owners.

No-one would deny that, in the past, ITV has been breathtakingly arrogant in its treatment of advertisers and agencies, and its Teflon-coated management line-up of Michael Green and Charles Allen hardly inspires confidence.

The ITV Digital debacle alone would have cost more gifted executives their jobs.

There are well-founded criticisms to make of Carlton and Granada's behaviour but, ultimately, they have a clear business case for the merger. They should be allowed to get on with their plans, subject to Office of Fair Trading and Competition Commission scrutiny, even if they are just adding value ahead of foreign predators such as AOL Time Warner swooping on the new entity.

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