The number that decides the Sky–ITV deal

Sky and ITV have agreed terms. What happens next will not be decided by either company. It will be decided by how the Competition and Markets Authority chooses to draw a line around the word "market", and that choice is worth more to British commercial television than any synergy the two sides have put in a spreadsheet.

Sky's argument is already visible in the shape of the deal. The combined entity, it will say, accounts for something like seven per cent of total UK advertising spend. Seven per cent is not a monopoly; it is barely a rounding error next to the three American companies that now take roughly three quarters of everything spent on media in this country, a concentration meaningfully higher than the United States and half again the global average of around fifty per cent.

That is the entire case, and it is a good one. It is also the case that regulators have historically refused to accept.

Why the definition is the deal

The orthodox position treats television as its own market. On that reading, Sky and ITV are two of a very small number of sellers of a specific thing, which is reach at scale against professionally made content, and combining them concentrates a market that is already concentrated. Project Kangaroo died on precisely this argument in 2009, and the industry has been carrying the scar tissue ever since.

The heterodox position treats advertising as one market with many delivery mechanisms. On that reading a media buyer choosing between a spot in Coronation Street and a placement in a Reels feed is making a single decision about where to put money, and any definition that pretends otherwise is describing 2005.

Both readings are defensible. Only one of them lets this deal through.

What has changed is not the economics but the politics. Broadcasters are increasingly discussed as national infrastructure rather than as commercial entities that happen to be large, and a regulator that blocks a domestic consolidation while the spending drains to Menlo Park and Seattle now has to explain what exactly it has protected. TF1 and M6 were refused in France. It is not obvious they would be refused today.

Scale is not the strategy

The more interesting argument was not about the deal at all. Consolidation buys cost savings and a stronger negotiating position. It does not buy a reason for an advertiser to come back.

Norway is the example worth studying. Broadcasters there stopped competing on the same shrinking pitch, aligned on data and measurement, dropped the victim framing that has characterised so much of the European trade conversation, and went out to sell the positives of television as a category. They took share back. That is a collaboration story rather than a consolidation story, and it required no regulatory approval whatsoever.

The out-of-home sector learned the same lesson earlier and more painfully. So did the Australians, where Seven has combined sales forces rather than balance sheets. Buying each other is the expensive way to reach an outcome that better coordination reaches for nothing.

None of which means the Sky–ITV deal is wrong. It means that if it completes and nothing else changes, the combined company will have bought itself a larger share of a market that is still shrinking.