ITV plays down £100m shortfall talk as ratings decline

LONDON - ITV has played down reports that it could face a shortfall in advertising revenues of £100m because of falling audience share.

ITV could lose out on revenues because of Ofcom's Contracts Rights Renewal remedy, which gives advertisers the right to pay less for advertising if audiences fall.

Campaign magazine reported last week that ITV faces a shortfall of £100m because of shrinking audiences, saying that if the current decline continues for the rest of the year, there could be a fall of as much as 3.5% in ITV's advertising revenues in 2005.

However, ITV told the Independent on Sunday that the figure of £100m was overblown and that, with a decline in audience share from 42.7% to 41.9%, the shortfall was more likely to be £30m.

Viewing figures are likely to rise as the European Football Championships begin this week and another season of ratings winner 'I'm a Celebrity... Get Me Out of Here!' is scheduled for later this year. Soap opera 'Coronation Street' is also doing very well for the network at the moment and ITV had done very well out of Gordon Ramsay's celebrity chef show 'Hell's Kitchen'.

The purpose of the CRR remedy is to protect the advertising community by guaranteeing that advertisers and media buyers are no worse off following the merger of Carlton Communications and Granada, and to put in place an automatic "ratchet", which reduces the amount advertisers have to commit if ITV's audience shrinks.

Last week, Ofcom published its first periodic report on the activities of the independent adjudicator of the CRR. It claimed that the system had been successfully established, although admitted that so far it had only had to deal with a small number of disputes.

Stephen Carter, chief executive of Ofcom, said: "The adjudicator is now established and the system has worked. The acid test will be its role and value in a full and normal trading year."

The Competition Commission has recommended that Ofcom review the advertising market again, with the regulator saying that it plans to conduct the review in 2005/06, with the benefit of the experience of another full dealing season.

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