ITV ad deals in jeopardy

U.K. watchdog may ban discounting system

LONDON – In an effort to address competish issues raised by the proposed merger of ITV’s largest shareholders Carlton and Granada, the Competition Commission could ban so-called “share deals” whereby advertisers agree to spend a portion of their budget with the commercial web in return for discounts.

ITV is the only broadcaster in Blighty that offers such deals — rivals Channel 4, Five and pay TV broadcasters set an upfront price for airtime. Share deals are considered an integral part of the current negotiating process and media buyers fear that if the system were scrapped it would lead to higher prices for advertisers.

“There is a sense that the Competition Commission thinks share deals are bad in terms of ITV’s monopolistic approach,” said Andy Zonfrillo, broadcast buying director at MindShare. “But to remove the share deal system would mean clients getting less value for money.”

While city analysts believe that scrapping the system would cause chaos for broadcasters, advertisers and media buyers, it would not necessarily hurt ITV financially.

“If they abandoned share deals other ways would be found to allow Carlton and Granada to incentivize advertisers to use them,” said one analyst.

Earlier this month the Commission warned that Granada and Carlton could be forced to sell off both airtime sales houses before their proposed merger is approved.

Blighty’s advertisers are worried that the merged commercial network could end up controlling 50% of commercial TV viewing and 54% of national television ad coin, much higher than the 25%-30% ad share limit the regulator tends to enforce.

The regulator is attempting to establish whether the pair competes for advertising revenue and whether the deal would reduce competition or lead to a significant price hike for some advertisers.

The Commission, which has not yet ruled out banning the merger entirely, is expected to hand its report to trade and industry secretary Patricia Hewitt on June 25; she’ll have four weeks to make her final decision.

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