ITV Legmen Burn Midnight Oil Over Merger Detail; IPA Edgy

14 October 2002

Lawyers, accountants and the other species that feed off mergers were hard at it through the weekend, drafting plans to integrate Carlton Communications and Granada Media into a single unit, reportedly to be branded ITV plc.

Full details of the masterplan are expected to be released by the end of this week. Which is when the real work begins as legions of legmen attempt to persuade the Office of Fair Trading and the Independent Television Commission that a merged company - commanding 55% of the UK advertising market (currently limited to 15%, although this is set to change under the draft Communications Bill, now in passage through Parliament) - will benefit the British public and ensure fair competition within the nation’s media and advertising industry.

The Institute of Practitioners in Advertising is far from convinced it will benefit the latter and has reacted to news of the merger “with caution”.

Although the IPA insists it does not object to the concept of the two ITV giants consolidating their backroom functions, it is opposed to any arrangement which would see a merger of their sales activities – on the grounds that this would dramatically reduce competition in the media market and could potentially lead to the manipulation of advertising rates.

Says IPA Media Policy Group chairman Jim Marshall: “From our point of view, unless we are convinced that satisfactory arrangements are in place to prevent the creation of a single sales operation – and thus to maintain competition – we would immediately refer the matter to the relevant authorities.”

Charles Allen [the Granada chairman] has suggested this might be achieved if the companies keep their advertising sales separate, creating one or two independent operations. While we should, ideally, like to see two wholly independent set-ups rather than one - this is a route with which the IPA has some sympathy – and indeed has been suggesting for some time as a way of possibly solving the dilemma of preserving competition in a consolidating marketplace.”

“However, whether we support the move in this instance will depend on the detail.”

“How would the companies propose to handle the London franchises? How would the arrangement be regulated and policed to ensure no collusion? How would it be accountable to advertisers and the ad agency industry?”

“Until we see answers to these sorts of question – we remain to be convinced.”

Advertisers’ body ISBA (the Incorporated Society of British Advertisers) is of like mind, saying it would “strongly oppose any proposals which would reduce competition in the airtime sales market”. In a statement Friday, it warned that the proposed merger would have to overcome “serious regulatory/legislative hurdles before becoming reality”.

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