LONDON: The regulations governing how much ITV, the UK's largest commercial broadcaster, is able to charge advertisers could be amended in the near future, but will not be scrapped altogether, the country's Competition Commission has ruled.
ITV's ad rates are currently governed by the Contracts Rights Renewal mechanism, which was established in 2003 following a merger between Granada and Carlton, in an attempt to prevent the newly-formed ITV enjoying a dominant position in the market.
Under the terms of the CRR, advertisers can effectively refuse any agreement with the broadcaster if it is sub-optimal compared with contracts signed in 2003, effectively fixing prices at the level recorded in that year.
However, the transformation of the media industry in the intervening period, resulting from the advance of various digital platforms, has led ITV to argue this position is no longer viable.
In a statement on the matter, the Competition Commission said the network's capacity "to reach large numbers of viewers, and the strong bargaining position this gives it with media buyers, requires the retention of the CRR undertakings, although some variations might be justified."
Diana Guy, who headed up the review, added that ITV1, the company's flagship channel, has "seen a decline in its share of both viewers and advertising revenues since 2003 and there are now more alternatives for advertisers."
"However, ITV remains crucial for advertisers looking to reach large numbers of viewers, particularly if this needs to be done rapidly. The media agencies, through whom the vast majority of TV advertising is bought, need access to ITV1 for their advertiser clients."
“As a result they cannot withdraw all their business from ITV1. However, we found that if they try to reduce their proportion of expenditure on ITV1, they could be faced with significantly less attractive terms for their remaining ITV1 business."
ITV's ad rates are currently governed by the Contracts Rights Renewal mechanism, which was established in 2003 following a merger between Granada and Carlton, in an attempt to prevent the newly-formed ITV enjoying a dominant position in the market.
Under the terms of the CRR, advertisers can effectively refuse any agreement with the broadcaster if it is sub-optimal compared with contracts signed in 2003, effectively fixing prices at the level recorded in that year.
However, the transformation of the media industry in the intervening period, resulting from the advance of various digital platforms, has led ITV to argue this position is no longer viable.
In a statement on the matter, the Competition Commission said the network's capacity "to reach large numbers of viewers, and the strong bargaining position this gives it with media buyers, requires the retention of the CRR undertakings, although some variations might be justified."
Diana Guy, who headed up the review, added that ITV1, the company's flagship channel, has "seen a decline in its share of both viewers and advertising revenues since 2003 and there are now more alternatives for advertisers."
"However, ITV remains crucial for advertisers looking to reach large numbers of viewers, particularly if this needs to be done rapidly. The media agencies, through whom the vast majority of TV advertising is bought, need access to ITV1 for their advertiser clients."
“As a result they cannot withdraw all their business from ITV1. However, we found that if they try to reduce their proportion of expenditure on ITV1, they could be faced with significantly less attractive terms for their remaining ITV1 business."
Data sourced from Financial Times; additional content by WARC staff
