Industry divided over bid to relax CRR

LONDON - Industry opinion is split over the prospect of a relaxation of contract rights renewal - the mechanism designed to stop ITV dominating the TV ad market.

Michael Grade, executive chairman, ITV
Michael Grade, executive chairman, ITV

Last week, after a year-long probe into CRR, the Office of Fair Trading advised the Comp­etition Commission to relax CRR - a move ITV believes would reduce its fixation on commercial impacts and free it up to improve programming. The OFT will make a final recommendation this year.

But ITV's rivals and the larger media agencies are calling for CRR to be upheld and, in some cases, even strengthened.

The OFT concluded the most appropriate relaxation would be to remove ITV's obligation to roll over contracts - which has allowed media agencies to keep the same terms from one year's deal to the next.

Despite certain proposed safeguards if this went ahead, industry experts are concerned that any relaxation is not appropriate while the ITV family of channels still accounts for 45% of all commercial impacts.

Chris Locke, trading director at VivaKi, explained: "ITV's position, for the majority of major television advertisers, has not materially changed since CRR was put in place in 2003. Any significant relaxation in CRR, and certainly the removal of rolling contracts, will result in ITV being able to leverage its power unfairly and to the considerable damage of advertisers seeking to use ITV1 and its digital channels."

Andy Barnes, Channel 4's sales director, added: "The fundamental question remains: is 45% of a marketplace small enough that no one need worry about monopolistic trading? I think not. Although some may say logic dictates there should be some change to the mechanism, the vast majority of the terms of those rolled-over contracts are still relevant. How   many people want to sit opposite a body that accounts for 45% of the market and try negotiating?"

Ian McCulloch, consultant and former commercial director of ITV, disagrees that the rolling over of contracts is still relevant. "Almost all agencies have the same deals that don't really work for clients anymore as they all have different media plans since 2003," he said. "CRR has also constrained ITV's ability to invest in strong programming - which would benefit advertisers in the long run."

Phil Georgiadis, chairman and chief executive of Walker Media, which trades line-by-line as opposed to agreeing group deals with ITV, said: "With the relaxation of CRR you would see a truer reflection of the value of TV airtime and the larger agencies would be forced to think about what works harder for clients."

Carolyn Fairbairn, ITV's director of strategy, argues that the market offers advertisers enough protection now and there is no need for CRR to govern. She said: "The market has changed since 2003."

What the industry thinks...
Future of CRR and ITV


Carolyn Fairbairn, director of strategy, ITV
The relaxation of CRR would allow ITV to take more risks and air an increased amount of diverse programming, which will benefit advertisers and audiences alike.
We can't put a figure on how much ITV would gain from the relaxation of CRR, as our view is more about the longer term and not immediate gain.

James Wildman, managing director, IDS
If advertisers are prevented from rolling over contracts, ITV will be able to unfairly leverage agency deals because there are certain advertisers that really rely upon ITV1 within every agency. The broadcaster will know who these advertisers are and use that knowledge to its advantage.

Bernard Balderston, associate director of UK media, Procter & Gamble
CRR has been a very effective protection method indeed and although ITV1's share [of impacts] has declined since 2003, the issue now is just how advertisers can be afforded protection from the ITV family. ISBA is certainly prepared to argue that ITV has tried to apply leverage to stop money coming out of ITV1 and going anywhere else in broadcasting, other than back into the ITV family.

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