P&G Sends in Sheriff to End ITV Ad Rate Controls

14 June 2006

Procter & Gamble is used to calling the shots. Even at government level, decision-makers tend to heed the views of the planet's largest advertiser.

Which makes it likely that Ofcom, the Blair administration's media and telecoms regulator, will have promptly lent an ear to the opinions of Bernard Balderston, associate director for UK and Irish media at P&G.

Balderston is not enamoured of the Contact Rights Renewal scheme, a deal brokered in 2004 by the Competition Commission between UK advertisers and agencies and the newly merged ITV to prevent the latter from abusing its 50%-plus share of Britain's TV ad market.

Since when, ITV's audiences have fallen significantly, a decline accelerated by media proliferation and the broadcasters own penny-pinching programming policy.

ITV. however, agues that the true cause of its plight is the CRR, which ensures advertisers and agencies pay lower rates in line with ITV's declining ratings. Thanks to CRR, claims the broadcaster, its flagship channel ITV1 stands to lose upwards of £150 million ($276m; €219.5m) in the next trading season.

Which is why P&G's local deputy-sheriff Balderston has galloped into the fray to defend the impecunious ITV homesteader from big chief Ofcom and the circling band of media agency warriors.

"Drop yore CRR - or else," deputy Balderston has told Ofcom, demanding that the regulator set a timetable to end the rate control mechanism before it does irreparable dame to ITV.

Said the sheriff: "At some point, advertisers are going to have to bite the bullet and realise that ITV is going to have to be given a bit more freedom in the marketplace to continue providing the sort of mass market programming that it wants."

Directing his steely gaze at Ofcom and the whooping band of agency braves, his eyes narrowed to glinting slits, Balderston drawled: "People may be looking around and wondering why ITV1 has knocked £150m off its programming budget."

The sheriff, however, could be pointing his Colt in the wrong direction.

Some analysts and media observers believe the real guys in the black hats are lurking in the canyons of Wall and Leadenhall Streets, pressurizing ITV management to slash budgets to maximise its share price or - better yet - or talking-up a takeover bid.

Data sourced from Media Week (UK); additional content by WARC staff