UK Competition Commission rules on ITV's ad sales

Date: 31/05/2010

ITV1 is to remain bound by restrictions on how it can sell advertising airtime, the Competition Commission ruled today - but it added that the mechanism should be dropped at some point and that the entire UK TV ad sales market needs a review.

The commission stood by its provisional decision in September to retain the contracts rights renewal system, which controls ITV1's advertising rates to stop the broadcaster abusing its dominant position in the market. ITV has consistently argued that the system, introduced as a condition of the merger of Carlton and Granada in 2003, is a "straitjacket" preventing the company's recovery. The commission said today that ITV had "overstated the cost and distortions" imposed by CRR.

"ITV1 remains a 'must have' for certain advertisers and certain types of campaign," said the chairman of the CRR review group at the Competition Commission, Diana Guy. "Despite all the changes in this market, no other channel or medium can come close to matching the size of audience that ITV regularly provides. So the essential reason for the CRR undertakings remains: to protect advertisers and other commercial broadcasters."

The ITV chief executive, Adam Crozier, said that the ruling was "out of touch and damaging for the interests of creative Britain".

It had hoped that the disclosure last month that Ofcom had told the commission there was a case for dropping CRR might sway today's decision. But the commission said there was "virtual unanimity" among advertisers, media agencies, commercial broadcasters and trade bodies that CRR should be kept "in some form".

"We believe that ITV has overstated the cost and distortions imposed by CRR," said Guy. "When it succeeds in making popular programmes which attract large audiences, CRR does not prevent ITV from reaping the rewards".

However, the commission confirmed that the CRR remedy should be broadened to include ITV+1 and ITV's high definition channels, which will benefit the broadcaster.

"Although we rejected ITV's alternative remedy proposals as ineffective to prevent ITV from worsening we have no wish to see CRR in place for ever," said Guy. "Many participants have told us that the system of selling television airtime is far from perfect and we repeat our concerns, also raised in 2003, about the potential anti-competitive effects of 'share of broadcasting' and agency 'umbrella' deals between broadcasters and media agencies. We continue to believe it for there to be a wider review of the whole system for selling TV advertising."

Crozier said: "We do not have the option of appealing to the Competition Appeal Tribunal and judicial review only allows us a very narrow and technical recourse and it is unlikely therefore that we will use it. "However, in our view today's decision fires the starting gun for a broader campaign for liberalisation to enable creative Britain and the enterprise media sector to compete on a level playing field against global competition in the digital age. Competition law and the regulation of the UK media sector require urgent modernisation to take account of the public interest. A failure to address this will result in lasting damage to the UK's creative industries and their reputation as global leaders in this field."

Commenting on the decision, Bob Wootton, Media and Advertising Director of advertiser body ISBA, said: "The competition commission has recognised advertiser and agency concerns that ITV clearly continues to have significant market power. It has also rightly recognised that CRR should be adjusted to include time-shifted and high definition expressions of ITV1. ISBA now looks forward to working with the Office of Fair Trading and Ofcom on implementation of the adjustments to CRR."

Source: MediaGuardian, ISBA

 


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