Media Perspective: Will we ever see the merging of TV sales houses? Maybe ..

Something's got to give. Consolidation in the crowded TV sales market has been tipped to happen for months, with Channel 4 and Sky Media taking the headlines. This ramped up a notch last week with reports that C4 and Sky have agreed to merge sales teams.

Talks have taken place but sales house sources say that while there might be a willingness to merge, no firm "agreement" has been reached between C4 and Sky to merge sales.

One interpretation is that C4 wants to be seen to be in control of its destiny and that such stories do not harm its standing as it negotiates a partnership with BBC Worldwide, having failed to secure direct handouts from the Government.

A C4 and Sky Media merger would create a sales house with a share of TV revenue of around 39 per cent against ITV's 45 per cent, but talks seem to have gone beyond this.

Senior sources say conversations are ongoing between all the major sales houses, not just C4 and Sky, and that a potential merger involving ids and/or Five or one between all of ITV's rivals is as likely, if not more so, than a simple C4 and Sky sales merger.

In any case, all this seems contingent on the Competition Commission's decision, due in September at the latest, on whether or not it lifts Contract Rights Renewal restrictions on ITV. As one sales director puts it: "If CRR goes, then expect all this to spring into life. If not, then it won't."

Should CRR go or be watered down, the favoured solution from non-ITV sales houses seems to lie in a mega-merger or series of mergers to create one or, at most, two sales houses to rival ITV - creating a duopoly along the lines of ITV and non-ITV.

Sure, there would be significant competition issues but then, ITV's rivals would argue, ITV has been let off the hook on this so why shouldn't the same apply to us?

But the benefits for the advertiser in all this are hard to identify. Cheaper ad rates? Unlikely. These are already rock bottom in TV and this manoeuvring is driven more by motives of self-preservation from ITV's rivals, even if the logic that creating greater scale inevitably leads to revenue creation is dubious. Yet the need to deliver cost savings to their bosses will override any desire to help advertisers.

This means that advertisers and agencies should hope that the Commission maintains CRR in some shape or form, if only to retain a status quo of relative choice and competition in the market. TV certainly needs investment but the abolition of CRR and the knock-on effects of a non-ITV sales house merger could lead to advertisers footing more than their fair share of this massive bill.

Topics