Television Advertising Market Set For Wide Ranging Review
The Competition Commission has called for a wide ranging review of the television advertising sales market after expressing ‘disquiet’ at the way the industry currently operates.
The regulator said that Ofcom and the Office of Fair Trading should launch an investigation into the way television companies sell advertising following the Government’s decision to allow Carlton and Granada to merge without selling off their sales houses (see ITV Cleared To Merge With Sales Houses Intact).
The aim of the review would be to find out whether the nature of the deals struck, the trading mechanisms and the overall market structure substantially lessen competition in the sale of airtime on commercial television.
The Competition Commission wants to see how the system of selling airtime could be changed to make it more competitive, after expressing concern that there was potential for price discrimination on the part of both the sales houses and media buyers.
The consumer watchdog also admitted that Sarah Brown, one of the five board members working on the investigation into the Carlton and Granada merger, believed that the divestment of the two sales houses was the only effective remedy to prevent the distortion of competition on the market for airtime sales.
Brown sounded a warning over the complexities of implementing the contract rights renewal remedy, which seeks to limit the dominance of a single ITV sales house by giving planners and advertisers the right to renegotiate the terms of their current contracts without change for at least three years.
Ofcom and the Independent Television Commission yesterday confirmed that they have already launched an inquiry into the existing rules covering advertising sales. The review will cover the entire UK television advertising market, embracing airtime sales on all terrestrial, satellite and cable broadcasters (see ITC And Ofcom Joint Briefing – ITV Merger Announcement).
Advertisers have given a mixed reaction to the Government’s decision to allow Carlton and Granada to merge. The IPA said it was disappointed at the Department of Trade and Industry’s decision to permit the merger subject only to behavioural restrictions (see Advertisers Give Mixed Reaction To ITV Merger).
Competition Commission: 0207 271 010 www.competition-commission.org.uk
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