Green warns against a 'more dysfunctional' ITV

Michael Green, the chairman of Carlton Communications, which is trying to merge with Granada, has warned that if the competition authorities force a separation of the combined companies' sales operations, the logic of the deal disappears.

Reporting better-than-expected interim figures, Mr Green, who would be chairman of the merged companies, said that keeping the sales houses would be vital to creating a coherent ITV. Anything else would be going "backwards". Carlton and Granada are the two main ITV companies.

"ITV is dysfunctional. It needs to be one [company]. All its competition is. If you separate ITV into four companies, you are making it even more dysfunctional," Mr Green said.

The Competition Commission, which is currently investigating the deal, has stated in two "hypothetical remedies" letters that a solution to the concerns raised by the deal would be to make both the sales operations of Carlton and Granada independent.

Referring to the separation of the sales divisions, Mr Green said: "We find it difficult to understand how it would be a step forward rather than a step back."

Most of the revenues of ITV come from advertising. Putting Carlton and Granada together, including their sales operations, will yield cost savings of £55m, according to the companies. However, together, Carlton and Granada would have more than 50 per cent of the television advertising market and advertisers have complained that this would give the combined business too much power. Carlton and Granada maintain that, as ITV is split into discrete regional franchises, there is no competition issue.

Carlton reported profits from continuing operations up to £26m, from £3m last year, in the six months to 31 March. Advertising revenues were up 1 per cent.