Agencies Voice Support For Contract Rights Renewal
The majority of media agencies and advertisers believe the controversial contract rights renewal system set up to prevent the newly merged ITV from monopolising the market for airtime sales is working well.
Media super-regulator Ofcom yesterday published its first report on the contentious behavioural remedy, which allows advertisers to roll over the discounts on their current ITV contracts for the next three years (see ITV Merger Receives Final Green Light From Shareholders).
An industry-wide consultation carried out by independent adjudicator, David Connolly, shows that agencies, advertisers and broadcasters believe the CRR system is running smoothly and that ITV has behaved in a fair and reasonable fashion (see Starcom Motive’s Connolly To Oversee ITV Airtime Sales).
However, concerns were raised over the newly merged broadcaster’s leverage of ITV2 as a ‘deal breaker’ when renegotiating contracts with media agencies. ITV also came under fire over its rigid approach to price and share of broadcast where advertisers were switching between agencies.
The allegations have been raised on an informal basis by several parties and have not yet resulted in a formal complaint. But if Connolly decides there is a case to answer he can report the broadcaster to the media regulator himself.
The adjudicator handled just three disputes in the first quarter of this year from agencies unhappy with the terms of their existing ITV contracts. He said this was not excessive given the number of negotiations taking place.
Commenting on the report, Ofcom chief executive, Stephen Carter, said: “The independent adjudicator is now established and the CCR system has worked. The true acid test will be its role and value in a full and normal trading year.”
The findings were also welcomed by Graham Duff, managing director of ITV Sales, who added: “The adjudicator has acknowledged the steps ITV has taken to comply with the undertakings and has recognised our contribution to the successful introduction of CRR.”
Ofcom will continue to keep the CRR remedy under review for the next few years after concluding that the system has removed some of the competitive dynamic of the market for television advertising, making airtime trading more inflexible than in the past.
Ofcom: 020 7981 3000 www.ofcom.org.uk
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