UK Advertisers Lobby for Retention of ITV Ad Rates Cap

24 November 2008

LONDON: The controversial and constraining Contract Rights Renewal mechanism, concocted in January 2003 when ITV became the UK's largest commercial broadcaster (following the merger of Carlton Communications with Granada) has long been a large and painful thorn in the broadcaster's side.

The CRR ad-rate cap – a set of constraints that tie flagship channel ITVl's ad rates to its audience numbers – was imposed on the then new giant, to ensure it did not unfairly exploit its 50%-plus dominance of the national TV market.

But five years is the equivalent of an eon in today's frenetic digital media maelstrom. And ITV1's market share has now shrunk to under 40%.

ITV executive chairman Michael Grade sees CRR as a "straightjacket", and since joining ITV in January 2007, he has lobbied tirelessly for its abolishment - or at least dilution.

Advertisers, on the other hand regard CRR as the best thing since sliced salami.

Acting on behalf of the heroes who write the cheques, Bob Wootton, director of media and advertising at the Incorporated Society of British Advertisers, has written to communications regulator Ofcom.

He argues that ITV's position in the market "remains clearly dominant" and "regulatory intervention regarding its pricing remains necessary".

Continues his letter: "We are obviously mindful of the unprecedented worsening economic situation . . .  but I still adhere to this principal. The [CRR] remedy appears to be working effectively and smoothly from our perspective."

The Institute of Practitioners in Advertising – the body representing British advertising, media and marketing communications agencies –  is of similar mind.

In a separate missive to Ofcom, it argues that rather than seeking a reduction in CRR, its members would like to see the mechanism extended to include all ITV channels, not just ITV1.

Grade, meantime, counters with the claim that CRR has cost ITV £300 million ($444.48m; €354.7m) in lost ad revenues,  to the detriment of programme quality and – by extension – audience numbers.

Data sourced from; additional content by WARC staff