OFT to consider review of ITV's CRR mechanism

LONDON - ITV has achieved a significant breakthrough in its long-running campaign to persuade the industry regulators to examine Contract Rights Renewal after the Office of Fair Trading said it would agree to consider a review.

Michael Grade: ITV's executive chairman
Michael Grade: ITV's executive chairman
The OFT said it would make decision on whether it would launch a review of the trading mechanism, which limits how much the broadcaster can charge advertisers on ITV1, before the end of the summer. If the OFT decides the trading cap warrants looking at, Ofcom is likely to conduct the review.

A government spokesman said: "The Office of Fair Trading can confirm ITV has asked for a review of CRR and we are expecting a decision on whether to conduct a review before the end of the summer."

The move is the first tangible progress ITV has made in its attempt to persuade the market CRR is unfair.

It also marks an achievement for Michael Grade, the recently installed executive chairman, who called for an urgent review into CRR in March at ITV's AGM, blaming the mechanism for a dramatic slump in profits and advertising revenues at ITV last year.

CRR was proposed by ITV to ensure the merger of Granada and Carlton into ITV went ahead.

It was suggested to counter fears ITV would behave in a monopolistic manner as a result of the merger and the creation of a single ITV and ITV sales force.

At the time, ITV represented just over 50% of commercial airtime sales. Since the merger in 2003, ITV1's audience and revenue have slipped at a more rapid rate than those of ITV overall.

It is believed that rather than propose CRR is abolished, Grade will suggest a modified formula, an idea that will sit far more easily with advertisers and agencies, who will argue ITV will abuse its power in the market if the mechanism is abolished altogether.

 

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