ITV consolidation

Outlook

ITV consolidation

SHOULD A further round of consolidation be allowed among the ITV franchise holders? Already the number of owners has been reduced to just three "biggies", a medium-sized also ran in the form of Scottish Media Group, and two minnows, Ulster and Border. There is nothing in the broadcasting rules to stop any of these companies getting bigger; even the big three fall comfortably below the 15 per cent ceiling the Government imposes on ITV companies for share of TV viewing in the UK.

However, separate competition rules restrict the share of TV advertising that can be held by any one player to no more than 25 per cent. Both Granada and Carlton are quite close to this ceiling, and as a consequence prevented for the time being from growing any further through acquisition. Both of them believe this is silly and that they will eventually convince the Office of Fair Trading, which this week launched a review of the ceiling, to that effect.

On the Continent, advertising market shares of more than 25 per cent are quite common, and though both Carlton and Granada seem big by UK standards, they are relatively small set against the BBC or even Channel 4. By international standards they are tiny. Both believe they need to get a lot bigger to compete adequately for TV rights and fund big budget TV production.

Gerry Robinson, chairman of Granada, has gone so far as to suggest consolidation into just one, national ITV franchise holder, such, he believes, is the degree of competition now being mounted both for advertising and viewers from other broadcasters and the fast growing pay-TV sector. This is a nice try, but unless ITV's combined share of TV advertising shrinks significantly from its present 60 per cent, it's not going to cut much ice with the Government.

Digital TV and the Internet are blurring the edges between what were once thought of as separate and distinct areas of the advertising market, but for the time being ITV remains the most powerful medium for mass advertising around and to allow the formation of a monopoly provider would be wholly inappropriate.

But there may be a case for consolidation into two, with perhaps Granada hoovering up Scottish, Border and Ulster, and Michael Green's Carlton buying Lord Hollick's three ITV franchises. This might seem a reasonable compromise between the demands of the big tycoons and the requirements of advertisers to maintain some degree of competition and diversity in the market. That case would be further enhanced if the present review of how to fund the BBC recommends it be allowed to compete for TV and radio advertising.

However, the stock market would be unwise to count on ministers agreeing such a compromise. Just because most continental countries allow much larger advertising and audience shares doesn't mean Britain will follow suit. Most other European countries would also have allowed Sky's bid for Manchester United, but just look what happened to that endeavour.

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