Agencies want quick merger

Media buyers are prepared to deal with the consequences of ITV consolidation – provided the process doesn’t turn into an all-out war.

That’s the message from media agencies as Granada Media prepares to launch a hostile takeover bid for either Carlton Communications or United News & Media.

MediaVest chief executive Jim Marshall, a member of the Institute of Practitioners in Advertising’s (IPA) media policy group and the person with responsibility for the future of television, says: “The IPA understands the need for consolidation.

“But it is important at this stage in the development of ITV and UK broadcasting that one element doesn’t become too powerful. We [the IPA] were probably not articulate enough in getting that point across.”

He adds: “The last round of franchises in the early Nineties created years of uncertainty and upheaval. Programme quality and ratings suffered because management was distracted by other concerns. We don’t want a similar situation to develop.”

The Government last week cleared the way for a merger between Carlton and United, but Trade Secretary Stephen Byers cast doubt over the deal by insisting United sells off its most profitable franchise Meridian to avoid a North/South split in the market.

The United and Carlton boards will meet this week to consider their next moves as Granada bides its time. Newly-formed pan-European television group RTL, in which Pearson has a stake, is also interested in making some kind of bid, according to industry rumours.

Whatever the outcome, the balance of power is likely to shift significantly towards the broadcasters, leading to bigger bills for advertisers. Media buyers are sceptical about the ITC’s ability to prevent two larger ITV companies exploiting their collective domination of the airtime market, as outlined in last week’s Competition Commission report.

One observer says: “The ITC has a poor track record in that area.” Most observers also believe that further consolidation among media agencies is inevitable, as smaller players struggle to make their presence felt in tough negotiations.

CIA broadcast director Tim Nelligan says: “If you are a good negotiator, you will get a good deal. If not, you will be pushed around by the big sales houses. The Incorporated Society of British Advertisers (ISBA), which has campaigned hard for an end to ITV consolidation, accepts that it has now lost the argument. In the long term, there will be four major players selling TV and fewer players buying it.”

ISBA director of public affairs Ian Twinn says: “It is clear the Government’s assessment is that the interests of advertisers are secondary to the promotion of the UK media industry on the global stage.”

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