ISBA concerned over ITV 'merger by stealth'

The Incorporated Society of British Advertisers (ISBA), which represents all the major companies including Procter & Gamble and Unilever, has welcomed the first public statement of acceptance by ITV bosses that consolidation between Carlton and Granada would almost certainly face further regulatory hurdles even if the Government's forthcoming Communications Bill was to clear the way for the creation of a single ITV.
In an article in the Financial Times on August 19, Gerry Murphy, Carlton's Chief Executive, is quoted as saying that regulatory hurdles 'damped the prospect of reopening merger talks for up to three years'. ISBA has long maintained that even if legislative barriers to a single ITV are removed in the forthcoming Communications Bill (as looks likely), the Competition Authorities would be unlikely to wave through a merger while ITV controls some 50 (plus) percent of the UK airtime sales market. It is the first time that a senior ITV representative has publicly recognised this key point.
More generally, ISBA has reacted with suspicion to the related news that Carlton and Granada are to combine parts of their operations and to pool back-office operations. Advertisers represent important stakeholders in ITV. While they welcome any moves which could lead to improved performance of ITV1, they have also long expressed concerns over ITV's dominance in the market for airtime sales. There are concerns that closer working ties between Carlton and Granada could represent an attempt to 'merge by stealth' and that the pooling of operations could lead to information sharing between Carlton and Granada on their advertiser-customers. Such practices could, conceivably, represent a form of collusion which would hold negative consequences for competition in the airtime sales market and give Carlton and Granada's sales houses opportunities to manipulate advertising rates.
While advertisers do not object to the joint promotion of ITV as a whole, nor to the pooling of functions such as marketing, commissioning and scheduling - which are already ITV network centre functions in any case - ISBA is very clear that any moves between ITV's airtime sales operations to collude in their airtime trading would result in formal opposition by advertisers, who would undoubtedly raise the matter with the relevant regulatory authorities.
Questions are also being raised amongst advertisers over the 'target audience' for today's announcement. Whilst the claimed aim of the initiative is to win back advertisers and audiences, Carlton and Granada's choice of the Financial Times suggests the move could be more about impressing city analysts than truly addressing ITV's advertiser customers directly.
(GB)