The implications: television

The merged Carlton/United will become the UK’s largest terrestrial broadcaster and the deal is a step further down the road to a single consolidated ITV company.

Firstly, the new entity will become the dominant constituent of ITV, controlling around 60% of the ITV regions, pooling together Anglia, HTV, Central, Carlton, Westcountry and Meridian. Consequently the combined group will supply a huge percentage of ITV programming, including hits like Oliver Twist and spending about £250 million each year on new progra-mmes It will also have a 29% stake in Channel 5, a 20% stake in GMTV, and a 20% stake in ITN.

Secondly, it will provide crucial impetus for ITV’s digital strategy. ITV executives working on new digital projects for ONdigital – currently owned by Granada and Carlton – have been keen for all three ITV company’s to have a stake in the digital terrestrial broadcaster.

With the “closer alignment” of ONdigital and ITV the merger document claims Carlton/United will be able to present a strong financial front to bid for key sports rights such as the all important Premier League. However, while the positive ramifications for the TV industry were at the heart of Friday November 26’s announcement, the downside has been pounced upon by many advertisers, media agencies and interest groups.

Media agencies see the deal as something of a double-edged sword – on the one hand a stronger ITV creates a more compelling advertising vehicle, but on the flipside the stranglehold on airtime sales could be financially crippling.

“There is massive concern about this deal,” says Jim Marshall, chief executive of MediaVest, who also sits on the Institute of Practitioners in Advertising’s television board. “One company commanding around 60% of the ITV Network is a worrying representation.”

The Incorporated Society of British Advertisers also disgruntled at the idea that one company could command around 40% of all UK advertising revenue (around £1.2 billion a year), is talking to the major people involved in the deal this week.

It has also used the merger to refresh its call for advertising on the BBC. It argues that if advertising were allowed on the BBC, any Carlton/United tie-up would almost certainly command a smaller share of revenue.

This article was first published on Media Week