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UK Competition authorities rule on contract rights renewals
Date: 16/09/2009
ITV's hopes for the abolition or wholesale overhaul of Contract Rights Renewal, the rules which dictate how much ITV1 can charge advertisers, have been dashed by the Competition Commission.
Instead, in its provisional report into CRR today (15 September), the watchdog has proposed "variations" which, for example, could allow ITV1 to capture more commercial impacts, such as rolling in high-definition and time-shifted channels into the definition of ITV1.
However, the overall changes to CRR might not be substantial. The commission warned that although there "may be a case for change, exactly how we do it is far from clear cut." It added that it is "wary" of measures that will increase the complexity of TV ad trading.
In its provisional report into CRR, itself a follow-up report to a probe by the Office of Fair Trading, the commission said that 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".
However, the commission has also published for consultation, a process which will run until 6 October, suggested variations to CRR. These include a proposal to widen the definition of ITV1 to include any ITV+1 or ITV1 high definition channels that ITV decides to launch.
The Commission is also seeking views on or "other possible variations". While it did not set out in detail what these changes could be, it stated that there could be "ways of addressing the competition concerns and possible measures to address the unintended effects which may have arisen as a result of [CRR]."
The Commission will consider responses to its proposals and will publish a final decision by the end of the year.
CRR was established by the OFT to protect advertisers from potential loss of competition in the sale of TV advertising, following the merger of Carlton and Granada in 2003.
Competition Commission deputy chairman and chairman of the CRR Review Group, 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."
Source: MediaWeek
For more information on this story, please refer to the ISBA website here: http://www.isba.org.uk/isba/news/570
