The Competition Commission has given its thumbs-down to two key merger tradeoffs proposed by betrothed couple Carlton Communications and Granada Media, according to a report in Sunday’s The Observer.
Desperate to retain at least one of their respective sales organizations in the face of vehement opposition from advertisers and agencies, the broadcasters put forward alternative compromises:
1. To extend the period of advertisers ‘share deals’ (volume discounts on airtime) for up to three years with a guarantee that they can reduce their spend without losing the discounts if viewing figures fall. Carlton and Granada argue this would effectively cap ad prices.
2. The merged company to sell its airtime en bloc to a third party which would auction it on to advertisers and agencies.
However, the first proposal has been rejected by the Commission on the grounds that only some fifty per cent of advertisers buy time in this way; while the second bit the dust as ‘unworkable’.
Said the inevitable ‘source’, purportedly close to the situation: “Carlton and Granada's teams were shocked by what the commission decided.”
Carlton chairman Michael Green has repeatedly threatened to ditch the merger if the companies are not allowed to retain at least one sales house: “What would be the point of being divorced from our principal income stream? It would not make commercial sense.” he said in May.
But around London’s media village, word is that Green is bluffing. He is said to have privately assured City institutions he will back the merger even if regulators force the betrothed duo to sacrifice their respective sales units.
Data sourced from: The Observer (MediaGuardian.co.uk); additional content by WARC staff