ITV boss warns of £100m in ad losses

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The Independent Online

Top ITV executive Mick Desmond has admitted that the television channel could face an annual loss of £100m in advertising revenue if it were forced to sell off its two sales houses.

Patricia Hewitt, the Trade Secretary, is due to report on a merger between the two main ITV companies, Carlton and Granada, in early October.

It is widely expected that heavy penalties will be imposed to prevent the merged company becoming too dominant in the television advertising market. The Competition Commission has already floated the prospect of the company having to sell off its two advertising sales departments to be run independently.

The ITV companies initially described the proposal as a "deal breaker", but their position has since softened. Investors are keen to see them get together, while Carlton's chairman, Michael Green, recently described the separate companies as "dysfunctional".

At the Royal Television Society convention in Cambridge last weekend, Haim Saban, the Israeli media entrepreneur who is interested in buying the merged company, said: "We think that this idea of separating the ad sales from the company is absolutely insane. Our level of interest if they have to divest both sales houses goes down to zero."

At the convention, Mr Desmond, joint managing director of ITV, said that selling off the sales houses could lead to a 2-3 per cent cut in the national television advertising market.

Insiders at ITV said this translated into an annual loss in sales of £100m for the combined ITV group. However, the figures are only estimates. The companies are awaiting details of the decision before exact costs can be calculated.

When the merger was originally announced last October, the company identified £55m of annual cost savings, or £35m if they were not allowed to combine the advertising sales houses.

Advertisers have been opposed to the merger because they fear that it could push up prices for commercial slots. Between them, Carlton and Granada have more than half of the television advertising market.