Media Viewpoint: Why we must end ITV's merger muddle: Nigel Walmsley opposes Clive Hollick's call on this page last week to extend the ban on TV takeover bids
Wednesday 14 April 1993
The debate turns on two questions. Should European companies be prevented from taking over any or all of the 15 regional television companies that make up ITV; and should the nine 'large' ITV companies be allowed to merge with each other?
The present rules are a wonderful British muddle. The Independent Television Commission (ITC) can allow a friendly takeover of any ITV company by any British or European company. As good Europeans, the Government could not frame the Broadcasting Act in a way that treated British and European companies differently. But to prevent undue concentrations of media ownership, it cannot permit one of the large ITV companies, such as Carlton, Central, Granada or LWT, to merge with another large ITV company, such as Anglia, HTV, STV or Yorkshire.
However, from January 1994 the ITC will have less discretion in preventing unwelcome or hostile takeovers by European companies. Perversely, it will also continue to be prevented from allowing a friendly merger between two large ITV companies. In theory, therefore, a German steel-making company could buy Anglia Television by making an offer to its shareholders over the heads of the Anglia Board; but Carlton and Anglia could not merge even if their shareholders, boards and management desired it.
Unless the rules change, two large companies, say Central and HTV, could not merge because their combined revenues of pounds 450m and audience coverage of more than 12 million would be undue concentration; but Central and the Berlusconi empire, with combined revenues of pounds 1.8bn and audience coverage conservatively estimated at more than 60 million, could merge. Even stranger, under a different set of rules, Rupert Murdoch's interests can encompass five national newspapers and six satellite television channels in the UK without that being regarded as excessive concentration.
The Government does have the power to change the rules, and allow two large ITV companies to merge. It could make this change at the end of this year when the moratorium expires. This would give British broadcasters the chance to compete with others on a more equal footing, improve the likelihood of UK television remaining in UK hands, and help ITV remain competitive in a world of fast-changing technology. Above all, it would help British broadcasters to maintain their investment in home- grown television programmes.
What would happen if, as Clive Hollick suggests, we tried to keep the Europeans out for longer, while freezing the UK ownership restrictions?
There must be some doubt whether an extension of the moratorium would work. There is no guarantee that it would prevent a friendly takeover in which a European made an offer that an ITV company could not, in all good conscience, reject, and to which the ITC had no reasonable grounds to object. Second, the world will not stand still long enough to
allow a protected ITV to sort out all the unfinished business that Clive Hollick lists. Satellite and cable will bring more imported programmes and erode ITV's market share. Meanwhile ITV, which invests more in British programme-making than any other single channel, would still be carrying 15 sets of ownership overheads. Even the largest ITV companies would be dwarfed by European media groups.
We cannot decouple ourselves from Europe or from changing technology. We must give British commercial broadcasters a reasonable opportunity to compete with Europeans who have no inherent loyalty to domestic television programme production attuned to British viewing tastes and interests. This means allowing the larger ITV companies to merge or rationalise.
This proposal poses no threat to regional programming - one of the great strengths of the ITV system. The licences that the ITC issued in 1991 guarantee the continuing provision of 15 separate regional programme services, and give it teeth to protect them, irrespective of any changes in ownership.
The ending of the moratorium and lifting of the ownership restrictions in January 1994 would not solve all of ITV's problems at a stroke - but it would be a start. Several of the ITV companies, including Carlton, Central and LWT, have already called for changes in the ownership rules. The sooner this happens, the better.
The writer is Chief Executive of Carlton Television.
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