Newspaper article The Evening Standard (London, England)

ITV Pins Hope on Politicians to Axe Advertising Curbs; ON ADVERTISING & MARKETING

Newspaper article The Evening Standard (London, England)

ITV Pins Hope on Politicians to Axe Advertising Curbs; ON ADVERTISING & MARKETING

Article excerpt

Byline: Gideon Spanier

ITV is not breaking out the champagne just yet, but new chairman Archie Norman must be pleased. Tough regulations which control the price of advertising on Britain's biggest commercial terrestrial broadcaster could be swept away after news that both Labour and the Tories would consider axing the regime, known as Contract Rights Renewal.

Labour front-bencher Lord Davies declared last week that the Government "has the power" to amend CRR under existing legislation -- rather than having to pass a new law, as previously thought -- while the Tories have gone further, saying they would review CRR "as soon as possible".

The politicians' sudden change of heart has come as a surprise as it appears to clash with the view of the independent regulator. The Competition Commission has indicated that it wants to keep CRR in place, even before it publishes a long-awaited review next month after two years' work.

If CRR is abolished or dramatically relaxed, the implications could be profound -- albeit that change might not happen for many months and could require judicial review. For ITV, it would be good news as it could charge more for advertising and, it says, invest more in programmes. But some ad buyers and rival TV channels are not happy at the prospect of the X-Factor and Coronation Street broadcaster having greater bargaining power.

Jason Talley, controller of advertising sales at Channel Five, said: "We are absolutely astounded that the Competition Commission can look at this for two years and that politicians say that they could overrule the decision of a respected independent body, as if they, the politicians, are the experts.

"ITV has a product that advertisers can't do without [the ability to deliver mass audiences of 10-million-plus] and is very capable of abusing that market dominance. CRR is essential to go some way to protect advertisers, agencies and smaller broadcasters."

The Commission itself won't comment but is understood to be less than thrilled by the politicians' intervention. Even neutral observers such as Numis Securities media analyst Paul Richards describe the idea of ministers ignoring the Competition Commission as "pretty extraordinary", although he adds: "I think there's a relatively widespread view that CRR is inappropriate."

CRR dates back to 2003 when it was introduced at the time of the Carlton-Granada merger to prevent the enlarged ITV company abusing its dominant position with more than 40% of the TV ad market.

While the mechanics of CRR are complex, the concept is straightforward. Ad buyers have the right to renew their contracts with ITV each year on the same terms as agreed before the 2003 merger. So long as an advertiser commits itself to spending a certain percentage of its TV budget each year with ITV, the broadcaster must continue to roll on the contract and give a set discount. …

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