Competition Commission rules CRR will remain

LONDON - The Competition Commission has ruled Contract Rights Renewal, which regulates advertising trading on ITV, will remain in place despite lobbying from the broadcaster to abolish the system.

In a provisional decision announced today, the commission said the UK's largest commercial broadcaster's "continuing ability to reach large numbers of viewers, and the strong bargaining position this gives it with media buyers, requires the retention of the CRR Undertakings".

However, the commission did say it would consider some variations in the system in light of the changed circumstances since CRR was brought in following the merger of Carlton and Granada to form ITV in 2003.

ITV welcomed the commission's "recognition of the case for the reform of CRR".

In response to the CC announcement, ITV said: "With the uptake of digital broadcasting the number of multi-channel households has more than doubled from 42% in 2002 to over 88% by the end of 2008. This means ITV1's airtime is now substitutable and that the market can self regulate."

Michael Grade, executive chairman of ITV plc, said: "We look forward to engaging with the Competition Commission over the next three weeks to identify which post-CRR option best serves the interests of ITV Plc, its viewers and advertisers."

He added: "We would like to put on record our appreciation of the time and effort the Competition Commission has put into this review to date and we look forward to the completion of the review in time for the upcoming deal season."

The CRR system was implemented to prevent ITV abusing its dominant position when negotiating with advertisers following its creation in 2003.

Diana Guy, the commission's deputy chairman and chairman of the CRR review group, said: "ITV1 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."

Guy said media agencies still needed ITV1 to hit large scale audiences and suffered if they tried to reduce spend on the channel and therefore a remedy is needed.

But she added that changes to CRR could be justified due to the different broadcasting landscape, when compared to 2003, and also "possible unintended effects of the CRR undertakings in practice".

Guy said: "Although there may be a case for change, exactly how we do it is far from clear cut. We are wary of any measures that will increase complexity or will depart from the transparent and measurable virtues of the current system."

The CC has now launched a consultation to take views on possible variations to CRR with a final decision expected by the end of the year.

Potential changes include widening CRR to include a possible time-shifted channel ITV+1 or an HD service from the broadcaster.

Views are also being sought on the commission's concerns over "unintended effects" of the system.

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