Media Perspective: Regulators will have to tread a fine line when reviewing CRR

The issue of Contract Rights Renewal could be filed, alongside oral health and trade relations with France, in a large drawer marked "Deeply tedious, but very important".

At last, though, there seems to be some reason to get (almost) excited. The Office of Fair Trading has finally fired the starting gun on a review of the CRR undertakings that came with the Carlton/Granada merger deal in November 2003.

The review, which will be conducted in partnership with Ofcom, is unlikely to be concluded swiftly. In theory, the regulators could decide relatively quickly the circumstances surrounding the introduction of CRR have not materially changed, and reject ITV's moves for changes to the formula.

This seems unlikely given the OFT's statement that it will consider fully "relevant market changes and industry developments" since late 2003. Those likely to be consulted as part of the review, including Jim Marshall, the chairman of Starcom and the IPA Media Futures Group, don't expect the review to be finished before January 2009, which means any changes won't be introduced before the 2010 trading season.

So it looks like the regulators have bought themselves two years, but how far should they go in changing things?

CRR basically gave advertisers and smaller TV companies protection in a market where ITV commanded more than half of advertising revenues. ITV, hampered by a declining share price and with the private equity vultures circling, argues that this market has changed materially, and that it is fighting with other media for revenues.

If I had to bet, the most likely outcome will be a little bit of tinkering or a few modifications made to CRR, rather than a complete removal. ISBA seems ready for a fight on the issue, with Bob Wootton, its director of media and advertising, saying: "CRR links ITV's revenues to its audience share performance. As long as ITV retains its dominant market position, measures must be in place to ensure the continuation of this performance-based relationship."

Marshall argues that while ITV remains in a "tangibly dominant" position, there may be elements of CRR that need changing. These could include the ceiling that it imposes on revenues even if ITV grows its audience (a possible disincentive for ITV to grow that audience).

One observation. It will be odd if the UK regulators look at CRR and not some of the other market practices such as agency deals. Despite the OFT's statement that it will consider industry changes when reviewing CRR, it doesn't look like this wider market review will happen, with observers agreeing that OFT and Ofcom "don't have the stomach".

By sticking to a simpler brief, though, they might at least reach a decision some time this decade.

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