IPA concerned about OFT decision to relax CRR

LONDON - The IPA has expressed disappointment at the Office of Fair Trading's decision to provisionally recommend the relaxation of contract rights renewal, the rules governing how much ITV can charge advertisers for airtime on its channels.

It said that while it welcomed the publication of the OFT's review of contract rights renewal undertakings it was disappointed with the outcome and disagreed with the observation that "the detrimental effects of the merger on the market appear reduced".

CRR was introduced after the merger of Carlton and Granada in 2003 to prevent ITV wielding unfair market power.

It gives advertisers and media buyers the right to renew their contracts on a rolling annual basis, adjusted for changes in ITV's audiences, with no reduction in the discounts they receive.

The Institute of Practitioners in Advertising claims that a significant proportion of clients continue to be reliant on ITV's flagship channel ITV1, which is home to soaps 'Coronation Street' and 'Emmerdale' and that, in these circumstances, any relaxation of the mechanism holds dangers for advertisers.

The OFT is now consulting the industry on its provisional decision and the IPA stressed that it will be pressing for retaining as much of the historical safeguards as possible.

The IPA said that it will now be waiting until it has had the opportunity to study the paper more fully and to hear the OFT and Ofcom's presentation to stakeholders on the review on January 20 before making any more detailed comment.

According to analysts, changes to CRR could increase ITV's profits by £30m to £40m from 2011, depending on the details of the relaxation.

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