ITV is set to “break even” on advertising revenue for the first time since Contracts Rights Renewal (CRR) was introduced, according to calculations by rival sales houses and media agencies.
A number of sources have suggested that although ITV1 is expected to lose ad revenue in 2008, its loss will be “matched pound for pound” by investment in the broadcaster’s digital portfolio.
It will mark the first time the broadcaster has maintained the whole of its CRR share since the mechanism was introduced in 2004. It has lost more than £300m through CRR mechanisms over that period.
One media buyer says ITV went into the trading season telling agencies its ambition was to retain 100% of CRR. “That appears to have been successful,” he says.
The news follows the deadline last week for “interested parties” to submit evidence to the Office of Fair Trading after it launched a review of the mechanism with Ofcom earlier this year.
Rival broadcasters say that ITV has found a way to “make CRR work for it”. The mechanism is supposed to protect advertisers and rivals from a dominant ITV and stipulates that falling viewers will lead to an automatic fall in ad spend. However, ITV has been able to offset falls on ITV1 with its growing digital portfolio, which includes ITV2 and CITV.
The Department for Trade and Industry promised a review of the mechanism earlier this year, following lobbying from ITV. Rivals now believe that tougher measures might be needed.
One source says: “CRR is there for a reason: if you take the muzzle off the dog then the dog will bite.”
ITV lost about £60m across its channels last year and £170m in 2006. It has constantly lobbied the regulators to review CRR, despite the measure being put in place, at ITV’s suggestion – a counterbalance to the merger of Carlton and Granada.