ITV Squeezes the Onion Over Ad Rate Controls

22 June 2006

ITV - the UK's largest commercial broadcaster, born of a merger between the nation's two biggest TV franchises in January 2004 and gifted with a massive birthright of 52% national audience share - has an "unsustainable business model".

So claims ITV commercial director Ian McCulloch, overseer of the broadcaster's sales and marketing. But this "unsustainability" is not, of course, the fault of ITV's senior management.

Instead, McCulloch points his pinkie at a weak advertising market and his index finger at the broadcaster's number one bogeyman - the Contract Right Renewal mechanism, imposed on ITV by competition regulators as a condition of merger approval.

The CRR is intended to ensure ITV does not abuse its dominant share of the UK TV advertising market - now in significant decline. It links the broadcaster's ad charges to certified ratings, also proceeding in a southerly direction.

Bemoans McCulloch: "Advertisers have been gifted CRR and they have exploited it, but we're now reaching the point where the model is unsustainable."

His howls are not intended to sway the hardened hearts of advertisers and agencies, now enjoying a reversal of negotiating muscle after decades of exploitation by "arrogant" ITV sales houses. Instead the breast-beating is aimed squarely at media regulator Ofcom, charged by the government with implementing and maintaining the CRR.

  • Further indirect pressure on the CRR front was exerted Tuesday when ITV announced it is to close its inhouse children's programme-making department, which it hopes to sell it as a going concern. Earlier this week the broadcaster also confirmed plans to shutter its Bristol factual unit with the loss of fifty jobs.

    All of which sits sourly alongside a concurrent announcement that ITV chief executive Charles Allen has been granted shares worth £118,440 before tax, after meeting performance targets. [The italics are WAMN's.]

    This follows last year's garnishing of Allen's £1m-plus annual salary with an £845,000 bonus for performing in accordance with his job specification. Quite an achievement in the face of the pernicious CRR.

    Data sourced from The Times Online (UK) and; additional content by WARC staff