Details emerged over the weekend of 'advice' given by the Office of Fair Trading to the government’s Competition Commission concerning the proposed merger between Britain's two largest commercial television companies.
The OFT revealed it “was not persuaded” by the arguments advanced by Carlton Communications and Granada Media – in particular their assertion that Carlton’s weekday London ITV franchise draws a different audience to that of Granada’s London Weekend Television – and therefore does not compete for advertising revenues.
The OFT report was sceptical: “It seems reasonable to conclude that there might be significant competition in the London area between Carlton and Granada that would be eliminated by the merger.”
News of the OFT’s advice sent analysts into speculative overdrive, exemplified by a Lehman Brothers research note. This hypothesized: “The Commission might demand that one of the London licences is spun off, which may be a concession the two parties are not willing to contemplate.” [Note the two conditional clauses - that's how such 'professionals' earn their lucrative livings.]
But as one ITV insider points out, the OFT would hardly have referred the mooted merger to the higher ‘court’ of the Competition Commission had it accepted the arguments advanced by the ITV twosome. An official statement from Carlton and Granada let it be known that they regard the OFT report as fair and “not unhelpful”.
Data sourced from: Financial Times; additional content by WARC staff