ITV Duo Float Merger Concessions as Elstein Makes Move

26 August 2003

Carlton Communications and Granada, Britain’s two dominant terrestrial commercial TV companies, have offered last minute merger concessions to Patricia Hewitt, secretary of state for trade and industry, who is currently mulling last week’s recommendations from the Competition Commission.

It is thought that the commission has adopted a hard line over a key element of the merger – the melding of Carlton and Granada’s respective sales organizations into a single entity that would control over 50% of the nation’s TV advertising market.

Such a union is vehemently opposed by advertisers, agencies and rivals alike. But without it, the merger makes no commercial sense, argue the two companies. Carlton chairman Michael Green has threatened publicly to abandon the deal if sales unification is denied – although many observers believe this to be a bluff.

Among the eleventh-hour “behavioural” solutions proposed by the TV twain are (a) the pegging of advertising rates for a set number of years; or (b) to hive-off ad sales for London’s weekend TV output – accounting for around 30% of the capital’s overall advertising market.

• Meantime, former broadcasting executive David Elstein, a curious blend of academe and Mammon, has called for sweeping changes in the management of a merged ITV. The former chief executive of minority Channel 5, Elstein posits that radical cultural revolution within a merged ITV might be more effectively implemented if there is “regime change”.

Preaching last week to a salivating audience of professional investors and institutions, Elstein estimated that up to £150 million ($236.3m; €216.77m) could be saved as a result of the merger – more than three times the £35m suggested by Carlton and Granada.

Many TV insiders fear that such massive savings can be made only by decimating programme budgets. Elstein, whose diet of imported sex shows, obscure movies and minority sports failed to push Channel 5 into the black during his four years tenure, is currently peddling to the City of London an alternative ITV management structure.

A structure, many believe (despite Elstein’s denials), at whose apex he sees himself.

Data sourced from: and Times Online (UK); additional content by WARC staff