ITV slams decision to keep CRR

ITV says the Competition Commission’s (CC) decision to keep ITV’s Contract Rights Renewal (CRR) advertising sales rules is damaging to the creative industries and fails to take account of the changes in the television advertising market.

The CC stood by the provisional decision it made in September to maintain the CRR rules but says it is likely to be scrapped in the future if a full review of the TV market and airtime sales occurs.

The CC says: “ITV’s unrivalled ability to deliver large audiences on ITV1 means that the Contracts Rights Renewal (CRR) undertakings are still needed to prevent the channel from exploiting this position to the detriment of advertisers and other commercial broadcasters.”

It means that ITV remains bound by restrictions on how it sells its on-air advertising put in place following the merger of Carlton and Granada in 2003 to protect advertisers and rival commercial broadcasters from the loss in competition. It allows media buyers to roll forward their pre-merger contracts.

ITV argues “maintaining CRR in its current form further exacerbates the over-regulation that is stifling the UK media sector.”

The broadcaster also argues that the restrictions limit its “ability to compete globally” and prevents it from investing in “valuable public service programming such as high quality news and drama” and has “reduced the commercial sector’s ability to compete with the BBC”.

The CC’s final report claims that ITV “overstated the costs and distortions” imposed by CRR and that advertisers, media agencies, trade bodies and commercial broadcasters are unanimous that CRR should remain in some form.

It also says it rejected alternative proposals from ITV but called for a full review of the UK’s TV advertising structure and says it has “no wish to see CRR in place forever”.

The report states that despite online and digital channels now available to advertisers, they cannot replicate ITV’s ability to deliver such large audiences.

Adam Crozier, ITV chief executive, says: “Today’s ruling is out of touch and damaging for the interests of creative Britain.  UK media is over-regulated and this has to change if we value and want to sustain a vibrant independent broadcasting sector that can rival the BBC and compete on a global stage.”

Bob Wootton, media and advertising director of advertiser body ISBA, says: “The CC 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.
 
“The competition commission also calls once again – as it did in 2003 when CRR was installed – for an overall review of the system for selling television advertising. ISBA believes that any such review would be conducted by Ofcom, which already has several components of the market’s operation – airtime sales rules and amounts of advertising – under review.”

Broadcast director at media agency PHD Andy Spray says: “The final decision on CRR comes as no surprise and hits the right balance for now. Clearly ITV were not going to be able to support their argument that they were completely substitutable as they continue to dominate the schedule with huge programming such as Britain’s Got Talent and The X Factor. The fact that they can command such high premiums for this programming proves it.

“The inclusion of ITV1+1 and ITV1 HD makes sense and shows an element of compromise. However, as the Commissions states, a wider review is needed although I would imagine the new government has other priorities for now.”

 

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