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Last Updated: Tuesday, 6 May, 2003, 08:55 GMT 09:55 UK
ITV giants' merger wobble

By Nick Higham
BBC media correspondent

The merger of Granada and Carlton always faced one big hurdle: persuading the Competition Commission it was a good idea to hand quite so much of the television advertising market to a single company.

The pair between them control 13 of the 15 regional ITV companies and sell airtime on behalf of the entire network - that's 52 per cent of the overall TV ad market, though ITV's share has been declining as competition from Channel 4, Five and the digital channels increases.

The commission is mid-way through an inquiry which started in March and is due to finish on 25 June.

Carlton and Granada confidently assumed the commission would give them the go-ahead provided they sold off one of their two airtime sales houses.

But last week the commission caused something of a frisson when it published a kind of interim report, a "statement of issues and hypothetical remedies", which apparently suggested that the companies would have to sell off both sales operations if the deal were to get the go-ahead.

Granada TV's Coronation Street
Coronation Street's producers have to satisfy competition laws before a merger

"Amongst the remedies that might be considered" if the commission decided the deal were against the public interest, the statement suggested "a complete ban on the proposed merger taking place; or, as an alternative, a divestment of both of the advertising sales houses that the merging parties currently operate, to be run, in future, as independent entities.

Commentators instantly suggested this could prove a deal breaker: the object of the merger was to turn two companies into one, not three; and it would be bad news for ITV if ad sales were to be divorced from the programming commissioning and scheduling function (though of course Carlton and Granada's preferred solution would involve separating at least half the ad sales).

In the event the choice may not be quite so stark.

The Competition Commission is rowing back somewhat from its apparently uncompromising position.

A spokeswoman said the possibility of selling off just one sales house "had got missed out" of the statement, but that the document was not misleading because the phrase "amongst the remedies" suggested other alternatives might be considered - and anyway the commission had yet to conclude that the deal would be anti-competitive, so it was premature to leap to conclusions.

All should become clearer later this month.

The Commission has been busily taking evidence from advertisers and agencies profoundly worried about the implications of the merger - and from rival broadcasters.

The next stage is to take evidence - in confidence - from Carlton and Granada themselves.

The commission will then publish a more definitive statement setting out whether the deal is against the public interest and setting out what it thinks should be done about it.

If it still believes at that stage that both sales houses should be hived off, then the merger could indeed be in trouble.

ITV's slow-motion merger
18 Mar 03  |  Entertainment
Granada and Carlton agree merger
16 Oct 02  |  Business

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