Ofcom removes ban on airtime sales houses merging

LONDON – BSkyB, Channel 4 and Five are to be allowed to merge their sales houses after Ofcom responded to an industry consultation on airtime sales by lifting a previous prohibition on them combining.

The three broadcasters first threatened to combine their airtime sales operations when ITV companies Carlton and Granada announced their intention to merge their sales houses last year.

The idea caused an uproar among advertisers concerned about the level of consolidation in the airtime sales industry, warning that it would push up the price of airtime.

The regulation has been dropped because Ofcom, which takes over responsibility for TV regulation at the end of the year, will have powers from the Competition Act, whereas current regulator the Independent Television Commission does not.

It is believed that the Competition Act is sufficiently robust to stop companies acting anti-competitively.

Ofcom said: "The ITC and Ofcom believe the robust provisions of the Competition Act and the increasing body of competition case law provide sufficient mechanisms to prevent distortions of competition in the joint selling of airtime."

It is likely that any possible combination between the three broadcasters would be subject to a competition investigation. In a statement today, Ofcom highlighted a statement from the Office of Fair Trading that referred to the previous convention that any combination of ad market share that exceeds 25% would adversely affect competition. The OFT said "there will be some circumstances where this 25% guideline does not apply. In some markets the OFT may conclude that combined market shares of less than 25% could still harm competition".

Channel 4 controls a 24% share of the UK TV ad market, so it is likely that if it joined forces with either rival it would be subject to an investigation.

Rules banning the selling of conditional airtime -- when a deal is dependent on an advertiser booking a slot on another product owned by the same broadcaster, will remain in place.

Ofcom said that although the practice has become widespread, it reduced choice and maintained high prices.

It also said that the rule preventing broadcasters withholding airtime on analogue channels would remain in place, but it will continue to be reviewed.

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