As the industry waits to hear whether the proposed merger between Carlton and United will be referred to the Competition Commission, Peter Keighron looks at the state of play, while key figures give their views on ITV's future.
For ITV it's the final solution: one ITV, one company. It's become a 'when, not if' question. All that's left are the legal niceties and a quick arm-wrestle between Messrs Robinson, Hollick and Green to determine who will be the capo di capo. But if the destination of ITV has never been more certain, the route and timetable have never been less clear.

Last November, Hollick and Green launched an£8 billion merger plan.

Gerry Robinson responded by declaring Granada's intention to launch a bid for either Carlton or United, although he was not sure which, and urged Carlton and United shareholders to wait for a better offer.

The proposed mergers triggered a regulatory nightmare. The Independent Television Commission's consultation on the proposals closed on Monday (7 February). 'You've got a hierarchy of illegality,' says Paul Richards, media analyst at West LB Panmure. 'Granada-Carlton has got the two London licences so you break the 15 per cent audience and 25 per cent advertising limit. With Granada and United, you break the advertising and audience limits, but you don't have both London franchises, and with United-Carlton you get very close to the audience limit and go through the advertising limit.'

The Office of Fair Trading has sent its yet-to-be-announced recommendations on the Carlton-United merger and the 25 per cent ad revenue limit to the government. As the proposals have serious consequences for the industry as a whole, particularly Channel 5 and digital terrestrial TV, the OFT is almost certain to refer the issue to the Competition Commission.

So why did Hollick set this ball rolling? 'United thought that if Granada made moves on one, then it would just be a matter of time before they got the other one,' says one insider.

Carlton's poor performance - on the screen and in the city - left it vulnerable. The iron wasn't exactly hot, but it wasn't going to get any hotter. While Green was set against the merger, Carlton's non-executives told him jump into bed with Hollick or be dragged into a less accommodating bed by Robinson.

A United-Carlton merger would establish a virtual duopoly within ITV with two reasonably balanced pillars of power and a level of stability for perhaps a year or two before the next Broadcasting Bill and Chris Smith's promised 'fundamental reassessment' of the industry.

For now, Hollick's position seems strong. As a special friend of Tony Blair he will have taken reliable soundings on the government's likely reaction to all this. But his gamble is that the 25 per cent ad limit will be raised, while the 15 per cent audience share limit will be maintained, allowing the United-Carlton merger while disallowing Granada's bids. 'Granada has got two hurdles to jump over - the United-Carlton merger has only got one,' says John Willis, chief executive United Productions. However, Granada could put some of its smaller ITV acquisitions in temporary storage with a friendly buyer, thereby lowering its audience share percentage and leaving it with just one hurdle to clear.

With the Competition Commission involved there's a possibility that there'll be no real decisions until the autumn, which introduces another factor. The longer the commission takes to decide - and there are even suggestions that, rather than fiddle with the regulations now, it will wait for a new Broadcasting Bill to sort it all out properly - the more likely it is that European media businesses will act. 'Carlton, Granada and United have all indicated that they don't think their Channel 3 businesses are big enough to stand alone,' says Richards. 'Either the UK companies will put their house in order or the Europeans will come in.' The only thing that's certain at this stage is that if you have a penchant for convoluted dramas about massive egos struggling over politics, power and money, keep watching ITV this summer.

Peter Bazalgette, creative director, GMG Endemol: 'How parochial our media obsessions are. Pay-TV is exploding, broadband services are imminent and dotcom companies are buying content providers. This is a sideshow. There will be no legislation until the summer of 2001, when a single company, ITV, will be permitted. Prior to that, we can sit back and enjoy a number of great British fudges aimed at allowing ITV's three to become two this year. Fudge one: the OFT concludes that the NAR 25 per cent limit for TV advertising can be relaxed. Fudge two: Carlton and United are kept below the legal 15 per cent limit on audience share by ignoring shareholdings in Channel 5 and On Digital. Fudge three: Granada wins its lobbying campaign to prevent a north/south split. Instead, two groups emerge with the regional companies currently owned by the Big Three being dealt out between them in two new corporate configurations. Faites vos jeux mesdames et messieurs.'

John Billett, chairman, Billett Consultancy: 'The planned merger owes more to a desire to increase their investment in e-commerce businesses, reinforce On Digital, reduce overheads and share costs, than it does to improving programme audiences for their main funders, the advertisers.

We can trace no evidence of increased programme investment. If Carlton and United merge, Granada will be the minor ITV player but the major ITV programme maker. So Granada cannot allow the merger to occur. Instead of an integrated, outward-facing ITV network, we have the prospect of factions and vested interests looking inwardly at their competitive position in a drawn out skirmish to maximise their shareholder value at the expense of the advertiser who pays them. This has nothing to do with creating a world broadcaster; it's a self-centred domestic game that won't take place as currently envisaged.'

John Newbigin, head of corporate relations, Channel 4: 'In 1994, the OFT made a judgement against further concentration of ITV ownership on the basis that it would be anti-competitive. There has been little significant change in the TV airtime sales market since then and the proposed merger between Carlton and United must therefore pose some significant questions for the UK's broadcasting industry. ITV continues to dominate commercial television in the UK with 62 per cent of television advertising and, despite the rapid growth of multi-channel households, this dominance is unlikely to be challenged in the near future. This dominance is currently lessened by the three-way segmentation of ITV sales. But a merger of Carlton and United would create a single company with control of up to 41 per cent of television advertising. There can be no doubt that this would have a major impact on the ability of other broadcasters, including Channel 4, to compete effectively. This, in turn, would affect our investment in programming, which contributes to the diversity and quality of terrestrial television. That is why we believe a referral of this merger to the OFT is necessary.'

Waheed Alli, managing director, Carlton Productions: 'The greatest dividend from a merger between Carlton and United will be the creative one. We have a magnificent, once-in-a-generation opportunity to build on existing strengths to create a world-beating industry in commercial television. Britain can boast some of the best writers, actors, producers and directors in the world. We have to match that talent with ambition and we have to resource that ambition. I want the new company to become the home of the most creative people in the UK. I want to be able to put the skills and resources of the company behind the people with the best ideas and I want to help them turn their ideas into British programmes that can be popular both at home and abroad.'

Andrew Flanaghan, chief executive, Scottish Media Group: 'The proposed merger reflects the need for change across the UK media industry. I am in no doubt that the current regime unreasonably restricts the development and ownership of UK media via its controls on share of audience, readership and advertising. These outdated regulations deprive British media companies of the freedom to grow and as an industry we must work with politicians and civil servants to achieve change. The media and communications industries increasingly need to be looked at as one. Cross-media restrictions are becoming more archaic as the pace of technological change accelerates.

We are getting close to the point where we could see a complete liberalisation of regulations and when each development will be judged on its merits.'

Ray Fitzwalter, chairman, Campaign for Quality TV and executive producer, Ray Fitzwalter Associates: 'A combination of financial pressure, company ambition and government encouragement will eventually bring about a single ITV company.

There will be two serious effects. First, concentrating ITV further in London will distance it from production in the regions. Second, there will be a threat to the independence of the Network Centre. One ITV head has already floated the idea of moving regional programmes to ITV2. With digital, the time fast approaches when the baton for regional programming should be passed under a new licence to a consortium that believes in it, leaving ITV free to concentrate on its global ambitions. The Network Centre was born because too many ITV companies couldn't agree on the conduct of business. With one company, Gray's Inn Road will look irrelevant. Removing it, it will be argued, will save money but also present an opportunity to eliminate competition from the independent sector. It is protected by law. But the barons of ITV are uncomfortably close to those who change the law. Watch this space.'

Malcolm Wall, chief executive, United Broadcasting Entertainment: 'It is fashionable to cynically knock new enterprise, but British television has no option but to change and compete. Why let the Europeans and Americans dominate media industries in this new century when British talent and television are so desired worldwide? What is on offer in the United/Carlton merger is a multi-million investment in television production. We want more high quality programmes like Oliver Twist and Hornblower - output that will really make an impact. It means massive investment in online services, enhanced movie-making potential, a more powerful production arm and stronger commitment to digital uptake, as well as increased exports of British-made programmes. The new company will be big enough to embrace the risks needed to create the best programmes. It does not come cheap to hire or develop talent, build the best conditions for creativity to blossom and take chances on development. With the merger, everyone wins.

It means more choice for viewers, stronger schedules for ITV, great homegrown programmes for export overseas and a stronger platform for us to drive forward new media businesses. A merged United/Carlton in competition with Granada and Pearson cannot be a bad thing.'

Bob Wootton, director of media and advertising affairs, ISBA: 'Advertising plays an essential role in our free-market economy by bringing together business and the consumer. Advertising is a key tool to drive competition, not just in media, but throughout all areas of the consumer economy.

Advertising is also the principal source of finance for all commercial media, including television. UK business seeks a competitive marketplace in which to advertise. Concentration within the commercial sector threatens this - especially in the UK, which is unique in the developed world in that it has a public sector broadcaster funded entirely by a licence fee 'poll tax', but carries no advertising and which absorbs some 40 per cent of all viewing. The further proposals for a Carlton/United merger are allowed to progress, the stronger the need will be for a root and branch review of the whole of British broadcasting, including a thorough overhaul of the successive and piecemeal legislation that currently governs it. Advertisers and UK businesses have every right to demand it.'

Adam Smith, head of knowledge management, Zenith Media: 'The Hollick/Green show was as improbable as the Tiny Rowland/Al-Fayed food hall tryst. Hollick won, booting Green upstairs to chair the putative union. Advertisers are wise to presume that ITV is a recidivist monopoly which will reform only when it has to - years from now when its price leadership has gone. Until then, concentration of power must be resisted, regulated, and negotiated against. Fortunately, ITV has given us plenty of practice in the latter.

ITV spooks us with foreign predators coming to gobble them up unless they are allowed to merge. Chance would be a fine thing. What did Green, Hollick or the Romans ever really do for ITV? A Bertelsmann or Berlusconi could thwart a Granada hegemony and deliver us from the dangers of a single ITV sales point - if any could be persuaded to buy a chunk of desperately yesterday offline media.'