Ban Lifted on ITV Rivals' Melding of Airtime Sales Ops

02 December 2003

British commercial broadcasters BSkyB, Channel 4 and Five have received a green light from new supra regulator Ofcom to integrate their respective airtime sales operations in certain circumstances.

The trio floated the idea of a sales merger in response to last year's move by dominant ITV duo Carlton Communications and Granada to meld their own sales operations -- now a fait accompli commanding over 50% of the nation's TV advertising market.

Hitherto, such an integration of ITV's rivals would have been deemed anticompetitive, but in the wake of an industry-wide consultation, Ofcom has lifted the prohibition.

Ofcom, which assumes its responsibilities on December 29, is empowered by the Competition Act to police behaviour deemed anticompetitive -- unlike any of the five different regulatory bodies it replaces.

Says the new regulator in a joint statement with its predecessor: "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."

But it won't be Liberty Hall for the broadcasting trio. Ofcom reiterated a recent Office of Fair Trading statement referring to the previous convention: that any combination of ad market share exceeding 25% would adversely affect competition.

But things have changed in the wake of Carlton and Granada's merged sales operations. The OFT now opines: "There will be some circumstances where this 25% guideline does not apply. [However] in some markets the OFT may conclude that combined market shares of less than 25% could still harm competition".

Given that Channel 4 controls some 24% of the UK TV ad market, any sales merger with either rival could trigger an investigation -- although the trio's combined market share still falls well short of that enjoyed by ITV.

Data sourced from: BrandRepublic (UK); additional content by WARC staff