ITV Ad Rules to Stay in Place

LONDON: The U.K.’s Competition Commission has issued a provisional ruling on ITV’s Contract Rights Renewal (CRR) Undertakings, arguing that the limitations on how the British broadcaster sells ad time on ITV1 should stay in place for now.

The CRR mechanism was put in place following the merger of Carlton and Granada and limits ITV’s ability to raise ITV1 ad rates, in order to stop it from abusing its market position. The system links ITV1’s ad rates to its share of advertisement viewing, measured in the form of "commercial impacts". In reviewing CRR, the Competition Commission stated: "ITV1’s continuing ability to reach large numbers of viewers, and the strong bargaining position this gives it with media buyers, requires the retention of the CRR Undertakings, although some variations might be justified."

Announcing the provisional decision, the commission’s deputy chairman, Diana Guy, said: "ITV1 has seen a decline in its share of both viewers and advertising revenues since 2003 and there are now more alternatives for advertisers. However, ITV remains crucial for advertisers looking to reach large number of viewers, particularly if this needs to be done rapidly. The media agencies, through whom the vast majority of TV advertising is bought, need access to ITV1 for their advertiser clients. As a result they cannot withdraw all their business from ITV1. However, we found that if they try to reduce their proportion of expenditure on ITV1 they could be faced with significantly less attractive terms for their remaining ITV1 business. Because of this the changes in the market since 2003 have not increased the bargaining strength of agencies. It is therefore our view that a remedy needs to stay in place. However, we are considering whether some variations might be justified in light of the changed circumstances since 2003, and possible unintended effects of the CRR Undertakings in practice."

The proposals being considered including allowing ITV to widen the definition of ITV1 to include a +1 or HD channel. A final decision is expected later this year.

ITV in a statement said that it welcomed the Commission’s announcement. The British broadcaster noted the increase in multichannel homes in the U.K., stating: "ITV1’s airtime is now substitutable and that the market can self regulate." Michael Grade, executive chairman of ITV plc, added:  “We look forward to engaging with the Competition Commission over the next three weeks to identify which post-CRR option best serves the interests of ITV plc, its viewers and advertisers. We would like to put on record our appreciation of the time and effort the Competition Commission has put into this review to date and we look forward to the completion of the review in time for the upcoming deal season.”