Allen Calls To End Contract Renewal Rules

According to a report in the Times this morning, ITV chief executive Charles Allen has called for an end to the complex Contract Right Renewal rules, which he says threaten to cost the company £150m next year.

The cap was demanded by the Competition Commission as part of the merger conditions for Carlton and Granada, and is due to be reviewed by Ofcom in 2006. Allen wants the review to conclude that the CRR – which allows advertisers to cut their adspend to reflect any loss of audience share at ITV1 – should be abolished.

ITV1 audiences were down by 9% in the first half of the year, and if this slide continues ITV stands to lose £150m.

Allen’s argument is that the CRR takes no account of growing multichannel audiences at ITV 2, which has now moved ahead of Sky One, and of the launch of ITV3. A further digital station, ITV4, launches on November 1.

“I struggle to see why we have these constraints,” Allen said.

The Contact Renewal Rights were put into place at the start of 2004, after the completion of ITV’s merger of Carlton and Granada. The system was designed to dictate what ITV can charge advertisers and intended to combat increasing prices from an increasingly powerful ITV (see ITV Enters New Phase With Merger Completion).

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