Ad agencies threaten to cry foul if Mail buys The Telegraph Group

The Daily Mail & General Trust's hopes of buying The Telegraph Group have been dealt a blow after media-buying agencies threatened to appeal to media regulator Ofcom if the deal went ahead.

The Daily Mail & General Trust's hopes of buying The Telegraph Group have been dealt a blow after media-buying agencies threatened to appeal to media regulator Ofcom if the deal went ahead.

Advertisers are concerned that a media group which owned both sets of titles would be able to demand higher advertising rates.

The Telegraph Group is made up of The Daily Telegraph, The Sunday Telegraph and The Spectator magazine.

The readership of a combined group would cover almost 35 per cent of total ABC1 newspaper readers (the highest in the UK), whose high income makes them most attractive to advertisers. ABC1s would make up 69 per cent of the combined group's readers.

The Daily Mail & General Trust (DMGT) publishes the Daily Mail and The Mail on Sunday, as well as the Evening Standard, the free daily the Metro and Northcliffe regional newspapers.

News International, publisher of The Sun, News of the World, The Times and The Sunday Times, has 32 per cent of ABC1 readers, but this represents less than half its readers in total.

Media buyers contacted by The Independent on Sunday indicated that they could appeal to Ofcom if DMGT is successful. One remedy could be to keep the advertising sales forces of DMGT's existing titles separate from those of The Telegraph.

Mark Gallagher, head of press at media-buying agency Manning Gottlieb OMD, said: "The market needs competition for the benefit of readers and advertisers alike ... If DMGT bought The Telegraph, we would obviously consider the ramifications of any policy changes for our clients and take whatever steps necessary to protect their interests."

Another media buyer said: "There is some concern about a tie-up. Agencies would prefer it did not happen."

A senior source at The Telegraph downplayed any competition issues for advertisers if DMGT bought the newspaper group. "Media buyers always want as many options as possible. But the advertising sales teams would be separate - I can't see them being joined at the hip."

DMGT is one of the three remaining bidders for The Telegraph, which is worth around £700m. Investment bank Lazard, which is handling the auction for parent company Hollinger International, drew up the final shortlist on Friday. A winner should be selected next month.

The other two bidders are the Barclay Brothers - owners of The Scotsman newspaper and the Ritz Hotel - and private equity group 3i. It is thought that private equity groups Candover and Apax, who had made a joint bid, could agree to buy the newspapers from DMGT if it is forced to sell parts of The Telegraph by the competition authorities after a successful bid.

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