CRR removal would let ITV diversify schedule, Crozier tells Lords

As part of the Committee’s review of TV advertising regulation Crozier gave oral evidence yesterday alongside senior ITV colleagues including Fru Hazlitt, managing director of commercial and online, and chairman Archie Norman.

When questioned about ITV’s performance this year, Crozier said: "[ITV] was 18% up in our half year results in terms of revenue. The market has remained strong in third quarter, and we are due to report in a couple of weeks’ time.

"That’s year on year increases on a fairly dreadful year last year but all it has really done is returned to 2008 levels. Over the last 10 years the TV ad market has been in decline."

Earlier this year the Competition Commission ruled that Contracts Rights Renewal, the rules put in place following the merger of Carlton and Granada to protect against ITV’s dominance in the marketplace, was still necessary.

Under the terms of CRR advertisers and media buyers can reduce their spend on ITV1 if the audience delivered by the channel falls. This offers protection to advertisers and buyers, as well as a powerful incentive to ITV to produce programmes which will get high audiences.

Advertisers and agencies, with a pre-merger relationship with ITV, can reduce their ad spend on ITV1 and still get the same discount, giving them an advantage over new entrants to the market.

However, in July the House of Lords Communications Committee announced it was to hold an inquiry into the regulation of television advertising, and it issued a call for written evidence on issues such as CRR and product placement.

Norman criticised the Competition Commission review for being "very narrow" and looking at the "large audience TV ad market", which ITV dominates with shows such as ‘The X Factor’, rather than the wider "ad market".

Crozier said: "Those advertisers looking to build mass coverage over a 24 or 36 hour period, [such as publishers advertising Sunday papers on a Saturday night], only accounts for 1.65% of our revenue."

When questioned, Crozier suggested the culture secretary, Conservative MP Jeremy Hunt, introduce secondary legislation to allow him to intervene in the case of CRR but dismissed the CC’s suggestion of a full market review.

Hunt has made no secret of his desire to deregulate the TV ad market. Crozier said the removal of CRR would allow ITV to have a "much more diverse schedule" and invest in content with a lower ROI, such as regional news which has a return of minus 80%.

Norman agreed and said: "We need to move away from the ratings rat race. We are driven to look for mass audience so it drives us to the lowest common denominator every time."

This article was first published on mediaweek.co.uk