Media Forum: Is CRR a blight on TV sector?

The 'temporary' remedy shows no sign of being lifted.

You'd think that the very least we should expect from television's regulatory lords and masters was an occasional attempt at joined-up thinking? Perhaps we could instigate a system by which semaphore signallers could be stationed on the roofs of, say, the Competition Commission and Ofcom - and on a clear day, using a complex system of mirrors, they could try to communicate with one another. Just as a temporary measure, while a team of carrier pigeons is trained up.

Take last week. A week in which the Commission rejected compromise proposals that would see Contract Rights Renewal made more flexible as a first step towards being phased out altogether.

CRR was introduced as a temporary advertising market remedy, enabling Granada and Carlton to merge in 2003 to create a unified ITV. Almost a lifetime ago, you might think - but the Commission argues the market conditions that pertained in 2003 are still relevant.

This despite last week's other big regulatory news - a separate report from Ofcom acknowledging what many will regard as a statement of a blatantly obvious truth - that we're in the middle of the worst media downturn in living memory and that, as such, the market is clearly different to the market of 2003.

Last but not least in a regulatory triple-play last week was a reminder that BSkyB still holds the 17.9 per cent stake in ITV it acquired in 2006. This, clearly, is strategically debilitating for ITV; and Sky has been told on a handful of occasions that it must sell most of this stake. Which it continues to avoid doing.

So, all in all, not a good week for good governance. We can surely expect better. In particular, isn't it time to acknowledge that CRR, which depresses prices generally, is doing irreparable damage not just to ITV but to the television medium as a whole?

Undoubtedly, yes it is, Rupert Howell, ITV's managing director of brand and commercial, says. He argues that, for as long as CRR remains the driving force behind the TV ad market, any beneficial deregulatory changes promoted by Ofcom can have little effect in practice - for ITV or any other broadcaster. ITV, in particular, cannot adapt to provide the flexibility its customers want when it is forced to keep delivering impacts to meet contractual commitments dating from 2002 or earlier.

Howell adds: "Since 2003, with the success of Freeview and the explosion in digital channels, the ad market has been completely transformed. Increasingly, internet advertising - which is almost entirely unregulated - is also taking money away from television, leaving less money for programme investment. ITV must be free to compete on a level playing field in order to sustain investment in high-quality programming in the future."

Unfortunately for Howell and ITV, Bob Wootton, the director of media and advertising at ISBA (which has a hugely influential lobbying voice), doesn't see the world that way. He states: "Our belief - one we have agonised over - is that advertisers are working in the same economy, under the same difficulties, as the TV medium is.

Of course, there might be events in the future that might nudge that view in a different direction. But until that happens, advertisers are not going to call for pre-emptive change. There is no doubt in our minds that in the short to medium term, CRR is good for advertisers."

But Phil Georgiadis, the chief executive of Walker Media, says it's time we all looked at the bigger picture. He explains: "I agree with ITV - and I believe most media agencies would say so too if they weren't hidebound. If the objective is to create a level playing field for advertisers, there are other things we should be looking at too. Let's look, for instance, at the fact that agency deals now represent over 25 per cent of the commercial airtime market. What do the regulators and ISBA think of that? My view is that the CRR issue has to be addressed within the context of a much wider market review."

Chris Locke, the trading director of Starcom MediaVest Group, agrees about the importance of that bigger picture. But he adds that until the trading system is sorted out, it's difficult to see anyone on the buying side of the fence being happy with the prospect of losing CRR - tragic though that might prove to be. He concludes: "There's a huge problem in the TV market in that no-one knows what success looks like any more. Currently, anything that ITV does effectively helps money walk out of the television medium. And eventually if that keeps on happening, we'll reach a point when the market just can't sustain itself any more."

YES - Rupert Howell, MD, brand and commercial, ITV

"The ongoing requirement from CRR for ITV to maximise share of commercial impacts at all costs will stop ITV from investing in the things people want - high-quality, diverse, original content that delivers large audiences in peaktime."

NO - Bob Wootton, director of media and advertising, ISBA

"We are vigilant as to any information likely to impact on the health of the medium. It is not in our interests to see it fall over. And it is our conclusion that if CRR remained in place, it would not."

YES - Phil Georgiadis, chief executive, Walker Media

"If CRR were altered in ITV's favour, it might force individual advertisers to take individual decisions about how they spend their money - as opposed to allowing their money to be spent according to the blanket policies pursued by their media shops."

MAYBE - Chris Locke, trading director, SMG

"You have to use ITV because of the unique peaktime audiences it delivers. They'd be bad people without CRR. They're bad enough under restraint. It's a bit like Clarice talking to Hannibal Lecter in his cell."

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