ITV Chief Exec Slams CRR
ITV chief executive Charles Allen has criticised the CRR, warning that advertisers are “taking things for granted” and saying the ad community must choose between the contract and allowing the broadcaster to continue investing in programming that attracts advertisers.
In his presentation on ITV’s strategy, Allen said the broadcaster could not guarantee big audiences for advertisers if it continues trading airtime through the system designed to ensure it does not abuse its dominant position in the TV ad market.
As a result, advertising revenue from ITV1, which accounts for two thirds of company revenue, has fallen over the past two years and has declined by 8% in the first half of the year, exacerbated by a general malaise in the ad market.
Allen warned that ITV was running out of options for compensating the financial loss from CRR, with ITV1 forecast to lose up to £180 million in ad revenue this year (see ITV Ad Revenue To Tumble).
However, the chief exec added that ITV was not threatening advertisers, but had to plan its future up to digital switchover in 2012. He said ITV was also talking to Ofcom and the Office of Fair Trading.
CRR was imposed on ITV more than two years ago, when the competition commission cleared the merger of Granada and Carlton. Ofcom has warned ITV that it will need to produce “substantial evidence” if the restrictions are to be abolished.
The criticism comes after the broadcaster announced it will deliver “efficiency savings” of £100 million by the end of 2008 through “business re-engineering and operational reviews” (see ITV To Undertake Cost-Cutting Restructure).
Market analyst group Merrill Lynch has downgraded its ITV advertising growth forecast for 2006 to -9.0% from -6.0%. It said share of impacts also continues to be weak (-9.6% year-to-date), downgrading full-year to -7.3%, which impacts 2007 advertising (reduced to -5.5% from -2.1%).
Recently, some of the UK’s biggest television advertisers called for an end to the CRR, saying it is in danger of destroying ITV (see CRR May Destroy ITV Say Advertisers). ITV is also expected to suffer if a pre-9pm ban on junk food advertising aimed at children is introduced (see Channel Revenue To Fall With Junk Ad Ban).
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