Magazine article Marketing

OPINION: Granada and Carlton Have Their Work Cut out to Justify a Merger

Magazine article Marketing

OPINION: Granada and Carlton Have Their Work Cut out to Justify a Merger

Article excerpt

Three years ago the Granada executives played a blinder. They took the competition authorities to see just how television advertising was bought and sold on the shop floor and they persuaded them that it would create far too dominant a player if Carlton was allowed to merge with United News and Media.

The argument was so powerful that the OFT was completely convinced and scuppered the merger by requiring the disposal of Meridian. It will be interesting to see how Granada now copes when reminded of the impeccable arguments deployed last time.

What precisely has changed since 2000? The fact that Carlton and Granada made poor investment decisions in digital terrestrial is hardly relevant to the workings of a competitive television market. Nor is the fact that there is an advertising recession. Haven't Carlton and Granada both insisted that advertising is cyclical rather than structural and will eventually bounce back?

Multi-channel has, of course, grown in the interim, but the fact remains that ITV's grip on television advertising in the UK has not been loosened.

The decline has been from around 57% then to 54% now - not exactly catastrophic.

When the planned Carlton-Granada merger goes to the Competition Commission, it is very difficult to imagine that it will give the straight go-ahead to a deal that will give anyone unfettered control of more than 50% of the market.

The only hope for Granada, as the new company will undoubtedly be called, is to find a way of appeasing advertisers and the marketing community. …

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