There is a view that Patricia Hewitt and the Competition Commission have been craven in imposing such minimal restraints upon a merger between Granada and Carlton. A dozen years of arrogance and serial mismanagement, culminating in the &£1bn ITV Digital fiasco – and this is Michael Green’s and Charles Allen’s reward, say the critics, caustically.
They are right, but they are irrelevant. Retribution should have no place in decisions of this kind, which must reflect on the future, not make judgements on the past.
The future is not going to be a nice place for ITV, already weakened by the uncertainties of the past two years and irreversible structural changes in the broadcast environment. Poleaxeing the merger, by introducing punitive constraints, would have served few interests – certainly not advertisers’.
The figure ever before advertisers’ (and media buyers’) eyes is 51: the percentage of the airtime sales market that will be controlled by ITV post-merger. If that’s not domination of a market, what is? – some ask; and go on to castigate the competition authorities double standards over Safeway, where the monopoly benchmark is 24 per cent. But the parallel is misleading. The figure of interest is indeed 24: but another 24: the fast-dwindling percentage of ITV viewing, which has halved in 20 years. Contrast this with the 37 per cent of the two main BBC channels. And then add BSkyB to the equation. On one reckoning BSkyB, already accessing 7 million users, will be the UK’s biggest broadcaster by 2010. In these circumstances, advertisers have every reason to prop up their tottering colossus, although they should be relentless in their demands for improvement in the quality of ITV programmes.
That said, it’s reasonable to question whether the conditions imposed on ITV have strayed too far towards leniency; whether, indeed, they will be effectual in preventing Granada and Carlton laughing all the way to the bank at advertisers’ expense. And to further ask what effects the “behavioural changes” imposed on ITV will have on its competition at Channel 4, Five and BSkyB.
Mystery surrounds the nature of the rebates that ITV will have to give advertisers if ratings tumble. An annual contract renegotiation seems clumsy, and biased not only against advertisers, but other television sales houses, especially when the nature of the existing benchmark ‘contract’ with advertisers is so obscured by current trading practice. One prominent TV sales executive even believes that, once the annual negotiation is done, the proposed guarantees will shut out tactical competition, forcing rivals to compete on annual ratings assessment alone. Whatever, there is now a compelling reason for Channel 4, Five and BSkyB to re-examine their ingrained hostility to a merged sales house.
One other thing. Is the revitalised ITV more or less of a tempting target for would be ‘foreign’ predators? Advertisers could be back to square one if it is. We’ll find out shortly.