Will ITV be shackled by the Bill?

It is ultimately the BBC’s fault. If the corporation took advertising, there would be no discrepancy between the Broadcasting Bill’s proposed 15 per cent of viewing limit on ITV ownership and the 25 per cent of commercial revenue limit on the size of ITV’s sales houses.

As it is, there is a discrepancy. Estimates suggest that if an ITV company were to grow to own 15 per cent of all viewing, it could control 40 per cent of commercial revenues.

As Channel 4, satellite and cable amount to about 20 per cent of commercial revenues, this rather neatly leaves room for only two ITV sales houses. The two-sales house scenario has been predicted by many observers since the last change in the regulations in 1994. However, a lot of those industry observers were the heads of the sales houses.

At a meeting with the Incorporated Practitioners in Advertising last week, Secretary of State for the National Heritage Virginia Bottomley said that she was “minded” to keep the 25 per cent limit. This confirmed the statement to the House of Lords by broadcasting minister Lord Inglewood during the second reading of the Bill two weeks ago. He said: “I can confirm that the provisions we are discussing in the cross-media ownership parts of the Bill are subordinate to competition policy matters. We do not seek to exclude anyone from these rules.”

Although the IPA has been pleased by the Department of National Heritage’s assurances, it remains worried that the 25 per cent limit will be left out of the Bill itself. It is concentrating its lobbying on the Office of Fair Trading, the Department of Trade & Industry and the Independent Television Commission, to convince them that the 15 per cent of viewing limit need not mean a revision upwards of the 25 per cent sales limit.

“I don’t think the Government knows what its plans are,” says Nick Phillips, the IPA’s director general IPA. “But it is probably not intending to put the 25 per cent limit (which we would like to see included) in the Bill.”

The IPA likes to maintain that it remains supportive of a strong British TV industry, but feels that less than two years after the limit on the sales houses was raised from 25 per cent of ITV revenues to 25 per cent of all commercial revenues, it is a bit soon to change.

Its opposition to the creation of a two-sales house ITV is based on worries about conditional selling and rate hardening, although it admits that agencies would soon report such practices. The IPA’s argument concentrates on the need for competition and choice for advertisers, to prevent imbalances of market power.

The broadcasters counter that they cannot be expected to take over companies and then be prevented from managing their revenue. Application of both the 25 per cent and 15 per cent limits could, for example, lead to MAI’s sales operation handling the sales for a Granada regional broadcaster.

The ITV companies also stress that without a strong home market, no UK media companies will be able to compete with the Disneys and Murdochs of the world. This is something which could strongly influence the DTI, which, although it has responsibility for competition policy, also has responsibility for expanding British industry.

Added to this are rumours that the DTI wishes to squeeze some responsibilities for broadcasting from the heritage department. If the 25 per cent limit is left out of the Bill, lunch with Bottomley could turn out to be lunch with the wrong person.