ITV loses advertising charge ruling

ITV's mass audience appeal means that rules governing how much it can charge advertisers must stay in place, the competition watchdog ruled today.

The broadcaster had called for the scrapping of the Contract Rights Renewal (CRR) system, which was introduced to protect advertisers from the firm's dominant position when Carlton and Granada merged to form ITV in 2003.

The Competition Commission today delivered its formal rejection of the request and said there had been "virtual unanimity" among advertisers, media agencies and other broadcaster that CRR is retained in some form.

Commission chairman Diana Guy said: "ITV remains a must-have for certain advertisers and certain types of campaign. Despite all the changes in this market, no other channel or medium can come close to matching the size of audience that ITV regularly provides."

She said the commission has no wish for CRR to remain in place forever and added it is time for a wider review of the whole system for selling television advertising.

CRR cuts the amount advertisers have to pay if ITV1's audience shrinks, which has hit ITV hard in recent years, adding to an already depressed ad market.

ITV wants the rules to be scrapped altogether, arguing that they are no longer appropriate in a world of digital TV and leads to a risk-averse attitude among programmers and production teams.

The broadcaster - home to shows such as X Factor and Coronation Street - accounted for 982 of the top 1,000 most-watched programmes on commercial television last year, the Competition Commission said.

The watchdog said it believes ITV has overstated the cost and distortions imposed by the CRR mechanism.

Ms Guy added: "When it succeeds in making popular programmes which attract large audiences, CRR does not prevent ITV from reaping the rewards."

However, the commission has agreed that the definition of ITV1 should be widened to include any future ITV1 time-shift channel and high definition.

Ms Guy said: "Many participants have told us that the system of selling television airtime is far from perfect and we repeat our concerns, also raised in 2003, about the potential anti-competitive effects of 'share of broadcasting' and agency 'umbrella' deals between broadcasters and media agencies."