Regulation

Facts, Analysis and Comment.

Carlton-Granada: ITV:
Contract Rights Renewal (CRR) System

One prominent merger which was allowed to proceed subject to conditions was that of the Carlton and Granada TV stations who merged to form ITV in 2003. The main condition was the the prices paid by advertisers would be subject to a complex price control known as the CRR.

ITV subsequently lost market share and sought to have the CRR amended or abolished, presumably so that it could raise its prices and so lose further market share: a typically monopolistic reaction to adversity. The Competition Commission, to whom the matter was referred by the OFT, was predictably unsympathetic when it reported in 2010. Diana Guy, Deputy Chairman of the Commission, said the power of the company's flagship channel remained undimmed. "ITV1 remains a 'must have' for certain advertisers and certain types of campaign," she said. "So the essential reason for the CRR undertakings remains: to protect advertisers and other commercial broadcasters from the enhanced market position created by the merger of Carlton and Granada."

It was therefore rather surprising to read in the Financial Times on 13 January 2011 that "ITV can look forward to relief from its most onerous regulation after Jeremy Hunt, the culture secretary, said changes in government responsibility gave him power to reform or abolish it. Moments after telling a London audience on Wednesday night that he was unsympathetic to contract rights renewal - a limit on how much ITV can charge advertisers for its airtime - Mr Hunt said it was himself, not the business secretary, who had power to legislate it." (This transfer of responsibility to the Culture Secretary followed an admission by Business Secretary Vince Cable that he had 'declared war' on the Murdoch media empire.) Mr Hunt went on to say that the timetable for change would be linked to the planned Communications Act, which he hoped to have enacted by the end of 2012.

 

Martin Stanley