Competition Commission publishes provisional CRR conclusion
The Competition Commission (CC) has today proposed a modest relaxation on ITV’s Contract Rights Renewal (CRR) system.
In a statement, the CC said it will allow ITV to launch additional channels such as ITV1+1 and ITV1 HD without being “inadvertently penalized” as the broadcaster would have been under the current restrictions.
However, the Commission has retained its view that certain CRR undertakings should remain in place to protect advertisers, “given ITV1’s continued advantage in delivering large audiences for advertisers” with high-rating programmes such as The X Factor.
The broadcaster, and in particular its outgoing chief Sir Michael Grade, has been campaigning against the CRR restrictions, which were established in 2003 following the Carlton and Granada merger, for three years.
ITV has consistently argued that CRR is an out of date solution, which distorts the market and the relationship between advertisers and free-to-air broadcasters, and should be removed.
However, the broadcaster proposed an alternative remedy, which would effectively introduce greater flexibility into negotiations whilst retaining some protection for advertisers, as a middle ground to appease the CC after it unveiled its provisional findings from the CRR review last September.
Since then, the CC has been considering ITV’s proposed variations to the current CRR system, which uses a complex formula to govern how much the broadcaster can charge advertisers.
However, in today’s report, chairman of the CRR Review Group, Diana Guy, said: “We found there is a strong case for widening the definition of ITV1 in the CRR Undertakings to include both ITV1+1 and ITV1 HD and this has been largely supported by ITV and other parties. We believe that this change will go a considerable way towards reducing the unintended costs to ITV of the current system.
“It has, however, become clear that other variations are not likely to be either practicable or effective. We looked carefully at a new proposal from ITV aimed at introducing greater flexibility into negotiations whilst retaining some protection for advertisers.
“We found that it would not provide adequate protection for advertisers and its practical application would raise too many uncertainties and questions. We will now carefully consider responses to this provisional decision before publishing our final decision later next month.”
The CC was expected to publish its final report on CRR by Christmas, but had to delay its conclusions due to the “significant” number of submissions it received from ITV and other industry parties.
At the time, the commission admitted that there was a case for change but said “exactly how we do it is far from clear cut”.
In response to today’s statement, ITV said: “This decision confirms the urgent need for a thorough and comprehensive review of the cumulative impact of regulation on the independent broadcasting sector.”