Agency: Bartle Bogle Hegarty
By Alasdair Reid, campaignlive.co.uk, Friday, 04 December 2009 12:00AM
Last week, the shadow culture secretary, Jeremy Hunt, stated that, should his party win the next General Election, it might consider relaxing rules governing how much advertising the UK's three main terrestrial channels - ITV, Channel 4 and Five - can and cannot sell.
All very hypothetical at this stage, clearly - and his fine words may have been absorbed with a certain amount of ennui by some buyers and sellers in the market. After all, the past couple of years have been witness to a stream of reviews and consultation processes directly concerning or touching upon the TV airtime sales market.
The main regulatory initiative predicted by many for 2009 - an amendment of the Contract Rights Renewal rules restricting how much ITV can charge for its airtime - hasn't happened (yet). As a consequence, the predicted sales house mergers didn't happen either.
But Hunt's proposals strike out in a different direction - though the central idea is hardly new. He is open to the idea that ITV, Channel 4 and Five, which are more constrained in this respect than digital-only channels, shift a greater proportion of their airtime inventory into peaktime, where demand is greater and rates are higher.
He'd also let them manage the balance between supply and demand in their favour by removing the obligation to sell every last scrap of inventory on their books.
The notion is that this would help kickstart the TV airtime market - or help to put a brake on deflation. Does it all add up? Steve Huddleston, the head of media at BT, has arguably benefited from the low cost of TV - which is currently trading at about the same level it was in the late 80s. But he's very well aware that this situation is untenable for all concerned.
He says: "As Hunt points out, it's crazy that the UK's broadcast industry, which is one of the best there is, is also one of the cheapest. That's just nuts. And we've created a situation where the likes of ITV and Channel 4 aren't in control of the price that the end user takes their product at. Which other industry has to work in that way? All other media, after all, are able to take inventory off the market if it suits them. It's also crazy that some shows in peak run with virtually no advertising because it has all been pulled into The X Factor."
John Davidson, the group TV trading director at Starcom MediaVest Group, isn't convinced, however. He argues that an increase in supply could drive further deflation - and this would be in no-one's interest. He adds: "Increased commercial impacts on the back of even more airtime minutage will only serve to further dilute the commercial health, impact and quality of TV as a medium."
He'd much rather see a more modest harmonisation of the rules covering ITV, Channel 4 and Five on the one hand and the digital multi-channel market on the other. He states: "We all want a simplified common sense media regulation which does not stifle growth and innovation in the market."
But Richard Oliver, the managing partner, investment, at Universal McCann, isn't convinced at all. He maintains: "The mechanism by which advertisers have come to value peaktime slots over the past few years isn't quite so straightforward. Recently, peaktime audiences have been going up but revenues have been going down - so the assumption that, if there was more quality airtime out there, people would pay more isn't entirely safe."
Meanwhile, although Andy Zonfrillo, the exchange director at Mindshare, wants to keep an open mind, he admits he's a little sceptical, too. He concludes: "Over the next few years, we're going to see a continuing shift in the way that people watch television, not least because of the growth of video-on-demand. That will make some of these questions about airtime inventory slightly irrelevant. As for these proposals, I think we'd first have to see a reform in the way that airtime is traded. The current station price mechanism would have to change."
YES - Steve Huddleston, head of media, BT
"These proposals, if carefully implemented, could be a benefit for the whole TV industry. TV is falsely priced currently, full stop. It would be foolish for anyone to expect that situation to continue indefinitely."
MAYBE - John Davidson, group TV trading director, Starcom MediaVest Group
"We strongly support a more flexible TV sector and we accept that sometimes you have to cut the market some slack. But let's not get in a far worse situation, where too much is given away."
NO - Richard Oliver, managing partner, investment, UM
"We'd be interested in a complete review including CRR, minutage and the way TV is traded generally. We're prepared to believe that there might be a better way of doing things. But we're not sure this is it."
MAYBE - Andy Zonfrillo, exchange director, Mindshare
"It might seem fair to allow channels to shift more into their premium programmes. But they also need to think about the engagement viewers have with programmes. The more ads, promotions and sponsorships you have, the less engagement you might have."
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This article was first published on campaignlive.co.uk