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ITV News Feature

By The Drum | Administrator

November 8, 2002 | 6 min read

It’s not unheard of for national newspapers to carry media-related stories on their front pages. In recent years there have been several industry stories worthy of coverage in mainstream titles and television/radio stations. Observe the furore over the increasingly bitter Express/Daily Mail rivalry, the eager coverage of Naomi Campbell’s lawsuit against the Mirror and any number of Rupert-Murdoch-related mishaps/investments and/or takeovers.

However, few have commanded the sheer volume of column inches that have been dedicated to the ongoing negotiations between Granada and Carlton.

Should the two merge the combined entity, reportedly to be called ITV Plc, will be the largest terrestrial broadcaster in the UK and, most importantly, will control more than half of the UK terrestrial television advertising market.

This latter has been the point picked up on by the majority of media stories. Although revamped media ownership laws will permit Carlton and Granada to merge their broadcast businesses, the strength of the two combined sales departments will be in breach of the Competition Commission, which states that no single sales company should command more than 25 per cent of UK television ad revenue. The merger has also brought uproar from rivals Channels 4 and Five. It’s an argument that will bring the Office of Fair Trading, the Competition Commission and the Secretary of State knocking on Carlton and Granada’s doors long before dotted lines are signed.

Current speculation is circulating mainly around the fates of the two sales departments. As the Competition Commission is unlikely to allow both to continue trading under an ITV Plc banner, it seems some changes will have to be made.

These changes, of course, will impact on more than just the teams themselves. The North’s media buying fraternity is also waiting with bated breath.

“I expect Granada will become the in-house sales team and Carlton will be an out-house team servicing the outlying regions,” muses Julian Cooper, head of TV at Mediaedge:cia Manchester. “This will be important, to keep them separate, because I can’t see the Office of Fair Trading allowing them to operate as a single team.”

The ITV companies, however, plan to argue the case for keeping their increased share of the market. David Croft, director of regional sales for Granada, says: “We will argue that, in the scale of things across all media, we’ll not be the dominant player, and I think if you look at the Murdoch empire there’s a good argument for that.”

Yet just as important to the success of the merged company, aside from the sales house issue, will be the perception by those who will keep the company afloat – the advertisers.

Already there has been dissent over the rising rates of ad space on ITV, with DIY retailer B&Q threatening a boycott of the station over its pricing.

Matt Hatton, head of broadcast at Feather Brooksbank Manchester, said: “There is a lot of red tape for this merger to get through in order for it to actually happen. What really concerns myself is that we look to the future and yet again take our eyes off the present. Our clients’ concerns are not how many TV contractors there are now, or in the future, but how is our present campaign performing? October’s ITV revenue is up by 13 per cent. ITV do nothing for it, just demand it, while their impacts (adults) are down by 7 per cent (10 per cent ytd), giving us a potentially massive 20 per cent inflationary headache. No matter how much additional monies ITV put into their schedule next year (£90m extra) they cannot seem to stop the rot and I’m not overly convinced that a single ITV will stop it either. Dawn Airey must have thought so, hence her sideways step to Sky TV.”

Hatton is backed by Sarah Mills, television account director at Brilliant Media: “Instead of competing with each other, they can concentrate on competing against the BBC and BSkyB, and, hopefully, regain audience share. However, we are understandably concerned as to the airtime price implications of a single ITV sales house. There simply has to be a competitive element in terms of ITV sales. The real challenge is how the merged business will persuade agencies and advertisers that such competition can exist in a real and not artificial way, against the backdrop of a single ownership ITV network.”

Already Northern giant Procter & Gamble has stated that if the merger goes through then it will stop advertising on ITV. According to Cooper at Mediaedge:cia, however, this is not expected to be a common opinion.

He says: “It depends on the audience you’re tracking. If you’re targeting 16-34-year-olds you can probably leave ITV out of your schedule anyway, because they are not strong in that area. I think with brands like Procter & Gamble it’s going to be difficult to leave ITV out of the schedules, as it’s still the big player with the big numbers. I think the vast majority will still spend there; it’s just not realistic to construct a comprehensive schedule without ITV. I think it would be almost inconceivable to consider a big brand launch without including ITV.”

Rising revenues aside, the issue of which sales team will be left when the smoke clears remains. At present, it is unsure whether one sales team will split from the company or whether elements of both will be merged. Croft, for one, is confident about his regional team. He stated: “I think that from where we sit, in terms of regional sales, we operate where Carlton don’t and vice versa, so there’s no direct interface. Obviously, this is different in Manchester. I think we’re comforted by the fact it’s Granada taking over Carlton. We are the bigger player and we have had a very strong year.”

James Rice, regional sales director at Carlton, declined to comment on the situation.

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