Media Forum: Is it time to get rid of CRR?

Should ITV now be freed from the shackles of CRR, Alasdair Reid asks.

Every cloud, apparently, has a silver lining. On the one hand, times might be tough for ITV - and the TV market as a whole come to that. But on the other hand, there's surely a golden opportunity here for the network to slip from the shackles of Contract Rights Renewal.

ITV, after all, has been arguing for at least the past couple of years that this measure, introduced when Carlton and Granada merged in 2003 as a remedy to counter ITV's dominance in the airtime market, is now outdated.

This has been a running theme of Michael Grade's regime at ITV, although his pleas have always fallen on deaf ears. As recently as October 2008, he was arguing in a Royal Television Society speech that if CRR wasn't done away with, ITV could hardly be expected to maintain its public-service broadcasting commitments.

The Office of Fair Trading had already begun a review of CRR - but many observers believed ITV was whistling in the wind again, especially as advertisers and agencies were continuing to argue forcibly for the restrictions to remain.

However, the market has deteriorated even further since then and, in these straitened times, regulators, not just in media but in the wider economy as a whole, are clearly prepared to listen more indulgently to all sorts of special pleading. So it was perhaps no surprise when the OFT published a consultation document last week arguing that CRR might be eased in some way.

There are no detailed proposals as yet - but is the OFT right in principle? Absolutely it is, Phil Georgiadis, the chief executive of Walker Media, argues. It has long been his view that the removal of CRR might allow the whole media market to evolve at a healthier pace. He explains: "The argument is always that ITV represents a majority of today's commercial audience. But that market share is no different to the market share dominance enjoyed by other media owners on other markets - such as Global Radio in its medium, CBS in transport and News International in newspapers.

"And, yes, TV is a powerful medium but I'd argue that a removal of CRR might encourage advertisers, for instance, to take a more direct involvement in the deals that are done by agencies on their behalf. It might be harder for the big buying points to do their one-stop deals. It might make advertisers and planners evaluate all aspects of the TV landscape in a more robust way."

But that's not how Bob Wootton, the director of media and advertising at ISBA, sees things. He comments: "We acknowledge that the market has changed - but we question how substantial that change is. The OFT points out that ITV1's share of commercial impacts may have declined, but if you add the digital channels, then the share commanded by the whole family remains significant. You have to look at the OFT's market definitions too - and it concedes that the internet is not at this point a credible alternative. So we'd argue that a wholescale overturn of CRR is unacceptable."

Chris Hayward, a managing partner at VivaKi Trading, tends to agree. He says: "In the past two years or so we've seen ITV becoming emboldened once more and, to my mind, it's extremely possible that ITV will revert to the arrogant behaviour it exhibited five or ten years ago. This whole thing is surprising given ITV's track record and the fact that it hasn't really been suffering under CRR in any case. ITV argues its airtime is extremely substitutable for most advertisers on most campaigns but I just don't believe that's the case."

Perhaps appropriately, Andy Barnes, the Channel 4 sales director, ponders a series of "you decide" rhetorical questions. In conclusion, he asks: "Does a 45 per cent share constitute a monopoly? In most other markets the figure is 33 per cent. Or even 25 per cent. What would happen without CRR, given that ITV's price has risen within CRR? And you have to ask - would that be good for the market?"

YES - Phil Georgiadis, chief executive, Walker Media

"Only those who doubt their ability to negotiate in this market will fear the end of CRR. Its existence is based on a belief advertisers can't do without ITV. I don't believe any media owner should be seen as irreplaceable."

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

"We're not wedded to every single aspect of CRR but we are wedded to the principle at its core - that ITV should not be able to leverage higher prices for a performance that's the same or worse."

NO - Chris Hayward, managing partner, VivaKi Trading

"It's hard not to feel that a relaxation by Ofcom wouldn't be interpreted by ITV as permission to go ahead and extract the highest prices. This whole thing is surprising given ITV's track record."

NO - Andy Barnes, sales director, Channel 4

"You have to ask yourself if a 45 per cent control of a market is a sufficiently small enough share to argue that ITV doesn't enjoy a monopoly. And then ask yourself what will happen if ITV is allowed to exert its power. Would prices rise? Would that be good for the market - and for advertisers?"