Channels 3, 4 and Five - a TV merger that does not add up
ITV describes its plan to merge with Channel 4 and Five as “blue sky” thinking. Well what does BSkyB think of it? Sky was blocked by the Competition Commission for a far smaller link with ITV.
BSkyB bought a 17.9 per cent stake in ITV in 2006 to save the commercial broadcaster from takeover by Richard Branson’s empire. Yet the competition watchdog ordered it to be sold because the combined market share – even through this minority link – could exceed 30 per cent.
Well, uniting ITV with its two advertising-based terrestrial rivals would give it 40 per cent of viewers – enough to put ITV ahead of BBC again - and 70 per cent of ad revenue. Surely the Competition Commission could not allow that?
We have already seen the separate English ITV companies combine into one business run by Michael Grade but clearly neither the synergies nor the economies of scale are working. Even before the recession, advertising revenue was falling.
The proposed solution is a series of further proposed mergers and unions. ITV wants to combine its local news production with the BBC’s. The state-owned but commercially-funded Channel 4 is fighting for survival and has mooted mergers with the Five channel or BBC Worldwide.
A link between ITV, C4 and BBC Worldwide to provide video-on-demand has just been vetoed by the Competition Commission. The chance of a merger between channels 3, 4 and 5 thus looks an unlikely starter.
But desperate times warrant desperate solutions, we are told. If big bank mergers can be waived through because of the economic crisis, should we worry about maintaining competition between the broadcasters of Coronation Street and Neighbours? Does it matter if Pop Idol and Big Brother have the same owner?
The evidence so far is that while ministers will bend the rules to achieve their aims, the Competition Commission shows no compromise.
BSkyB paid £940m for the stake that preserved ITV’s independence; it is now worth just £168m but the watchdog is determined it should be sold, despite the enormous loss. There is no sentiment for parties with deep pockets.
