Broadcasters face IPA legal threat

The IPA is threatening to take legal action against commercial broadcasters after a heated row over agencies' credit-worthiness.

The dispute centres on the levels of bank guarantees and insurance that ITV Network Limited - a consortium of broadcasters which includes ITV, Channels 4 and 5 and GMTV - is demanding agencies secure in order to cover the cost of their clients' TV spend. Despite on-going talks over the issue, ITVNL this week tried to delist one media agency and pull its clients' ads because it felt that the agency could not provide it with the necessary financial reassurances. The additional insurance ITVNL is demanding could add hundreds of thousands of pounds to agencies' costs.

The IPA has responded to the demands by accusing ITVNL of breaching the terms of 1998's Competition Act by using unfair financial restrictions it claims has effectively created a cartel.

The ITVNL companies have been in talks with the IPA over levels of agency accreditation for some time. Observers have speculated that the ITV companies Granada and Carlton are trying to reduce their exposure to debt to make themselves more attractive to the City for a possible merger.

This has led to accusations of crass hypocrisy, as ITV has just extricated itself from the ITV Digital debacle leaving a number of creditors.

The IPA director-general, Hamish Pringle, said: "If ITVNL insists on acting in a way that damages our members' interests then it risks a massive and very public debate about its anti-competitive behaviour, and possible legal actions by both individual agencies and by the IPA."