Audience and Institution Research Assignment
“Granada was one of the original ITV franchises, and Carlton gained a licence only in 1991, snatching the weekday London rights from “Thames. ” When Carlton and Granada decided to merge, it was for the central reason of increasing their ITV1 programme budget, which increased by 7%. The merger itself, cost i?? 4. 5bn. The companies identified opportunities for making i?? 55m in efficiencies from the deal. The eventual budget is i?? 849m for the current financial year from October 1st to September 30th 2004. This paves the way for a fully consolidated ITV.
The merger brings together two of Britain’s leading distributors of television programmes and films. The main reason behind a merger is that the companies will benefit from what is known as economies of scale, this means the company can operate at lower average costs, e. g. it becomes cheaper for them to produce their product or service. The main efficiencies are likely to be made in support services e. g. finance, human resource and estates divisions. Economic analysts said that the two largest ITV broadcasters who supply 93% of the budget could not have afforded the increase if the merger had been blocked.
The outcome would have been managing a business in decline said Kingsley Wilson an investigative Securities analyst. There will be further comedy programmes and documentaries however; the viewers are likely to have more advertisements at peak viewing times. This of course will pay towards the entertainment. There are many advantages to the merging of Carlton and Granada; the primary advantage is that, they have saved the competition with one another, and now will work together as partners/ as a team; they can share ideas technique (e. g.
programme making), equipment, staff and management. The two companies will be able to promote each other to ensure people are aware of all the products offered by that particular company. Another huge advantage would be that they should make more money through reaching more people. This is down to the fact that if all went to plan; as Carlton and Granada merge, so should their target audiences, thus making a wider audience and making a profit increase. There will be more money to spend on things that would really improve their ratings; such as more show’s that the viewer’s request.
One aspect of the company could help another, like with the merging of Warner Brothers and AOL for example: They both use each other’s resources wisely to promote their products and services; AOL will advertise Warner Brother’s on the internet, and Warner Brothers could show an advert for AOL products before the start of a film. The idea of promoting for one another really helps both companies in a large way; by attracting a wider more varied audience. Granada and Carlton could benefit from this idea immensely.
Carlton and Granada believe that there will be significant benefits for ITV viewers, advertisers and shareholders and that: Carlton and Granada believe shareholders, viewers and advertisers all will benefit from the merger. The shareholders will benefit from a simpler and clearer structure, lower costs and greater efficiency. Should make a greater return to shares they hold through increased profits of the merged company brought about by lower opportunity costs and increased income from advertising, shareholders.
* Shareholders are also likely to benefit from significant synergies together with the increased scale and cash flow of the merged groups; which enables exploitation of future growth opportunities. The growth opportunities far outweigh those that would be available to Granada and Carlton separately. Carlton shareholders will receive 32 per cent of the normal share capital of the merged group upon completion of the merger; which could potentially increase to 34 per cent.
Granada shareholders will receive 68 per cent of the regular share capital of the merged group and i?? 200 million of cash upon completion of the merger. * The merger between Carlton and Granada will offer viewers several benefits such as increased programme quality as money and ideas are shared, enhanced programming investment designed further to improve quality and choice, with more premieres, more event entertainment, more dramas and strong regional identity.
* The benefits for advertisers will be to be able to maximise the value of its programming, thus improving the audience share and commercial impacts, particularly to the key demographic groups. Advertisers have the opportunity to increase the size and efficiency of their reach for the products they are trying to sell. The main losers from the merger will be some of the employees of Carlton and Granada who are likely to lose their jobs as a result of savings made through economies of scale.
Viewers (consumers) will also suffer an overall reduction in the number of TV channels to watch (but hopefully they will be balanced by better programmes). Costs could be fine for the consumer as they can be passed on through lower prices unfortunately when big companies join together they tend to form monopolies which means they are the only or one of a couple of firms operating in a market, if this happens then they can basically charge the customer whatever they like and if the customer wants the product then they have to pay it regardless,
With Carlton and Granada the TV viewers are not considered the customer; it’s the companies who buy advertising off them and these companies are likely to find that their advertising slots are now a lot more expensive. The book definition of “Synergy” is produced by combining two separate products, so that they ‘feed’ each other, e. g. a film and a video game using the same characters. The book definition of “Convergence” is the ‘coming together’ of previously separate industries (computing, printing, film, audio etc.
) which increasingly use the same or contemporary media environment. Convergence is a product of mergers between companies in different sectors as well as a logical outcome of technological development. The following are graphs for some of the questions in the survey: This Graph shows that one person out of a possible twenty is not familiar with Carlton and Granada in any way. 95% of the people I surveyed are familiar with Carlton and Granada in some way. This Graph shows that out of a possible twenty people, six do not consume Carlton/Granada products.
I found this rather surprising as they are supposed to be amongst the largest commercial television broadcasters in Europe. To this question, there were equal results for both yes and no answers. Just as many people didn’t know about the merger of Carlton and Granada, as the amount of people that did . To this question four people answered yes, and 16 people answered no. This shows that the public are conscious of the merger and what could happen for the better or for the worse.
In my opinion, both Carlton and Granada are big commercial broadcasting companies that wished to merge together to unite ITV, the most popular commercial channel in the UK. This would create the largest commercial television production company in Britain according to research. I believe that certain mergers can be beneficial as it may create more quality viewing for the audience. However, in instances where a duopoly or monopoly could occur then it may be bad for the audience in terms of choice.
They may not get as many products to choose from and advertisers may be charged ridiculous amounts because of the lack of competition. It is hard to say whether the merger will be successful, because there are no known outcomes. ITV will always have viewers but whether Granada and Carlton can actually work together efficiently is something very different. I believe the merger will affect competition, as companies will not have to compete with one another for the ITV slots anymore and may settle for less quality programmes as a result.