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This week the Competition Commission (CC) published its
provisional decision following the review of ITV's Contract
Rights Renewal (CRR) undertakings. The CC has provisionally
concluded that the CRR undertakings should remain in place although
some variations may be justified.
In October 2003 Carlton and Granada, the UK's two largest
commercial television companies, merged to create ITV. The CC
allowed the merger to proceed but, in order to protect advertisers,
imposed the CRR remedy given ITV's strength on the television
advertising market. The CRR caps the amount that ITV can
charge advertisers, effectively freezing the terms of the
contracts.
In May 2009, at the initiation of ITV, the CC carried out a
review of the undertakings to determine whether the competitive
environment has changed sufficiently since 2003 to justify the
removal of the undertakings. It was noted that ITV's
market share has declined since 2003, with the penetration of
digital television having increased significantly and a
corresponding increase in the number of channels available (leading
to an increased fragmentation of viewers across
channels).
ITV argued that media buyers can now achieve their campaign
objectives without using ITV1. The CC however, concluded that
although there had been some increase in the substitutability of
ITV1 since 2003, ITV1 still retains the key advantage of reaching
large audiences within a short amount of time. Media buyers
are generally not able to switch all expenditure away from ITV1 as
coverage is reduced for certain key demographics and certain
clients may insist on access to ITV1. For these reasons the
CC has provisionally concluded that the CRR should
remain.
Some variation to the terms of the CRR undertakings could
however be justified due to certain differences in the broadcasting
landscape (and possible unintended effects of the undertakings in
practice) - and the CC is now consulting on possible
variations. The CC notes that although there may be a case
for change, exactly how that manifests itself is far from clear
cut. The CC is particularly wary of any increase in complexity or
loss of transparency.
The CC has suggested possibly limiting the scope of the CRR to
focus on ITV1's advantage in reaching large audiences.
Another possibility is to remove elements of the CRR but require
ITV to offer airtime on fair and reasonable terms.
The CC has asked for views on possible variations by 6 October
with a final decision expected by the end of the year.
Ofcom Launches Consultation On Regulation Of Video On Demand
Services
As part of the implementation of the EU's Audiovisual Media
Services Directive, the UK media regulator, Ofcom, this week
launched a consultation into the future regulation of Video on
Demand (VoD) services. As of 19 December 2009, any VoD
content available on services such as BBC iPlayer, 4OD, ITV Player,
SkyPlayer and Demand Five will be regulated (whether available
through the internet or through a service provider).
The EU directive covers all VoD services that are "TV
like", with the UK government planning to hand the overall
duty to regulate these services to Ofcom. Ofcom is proposing
that the majority of the regulation should be carried out by two
bodies on its behalf - the Association for Television on Demand
(ATVOD) as regards VoD services, and the Advertising Standards
Authority (ASA) as regards VoD advertising. Ofcom said that
it would retain "back-stop powers" to intervene in the
event this new regulatory regime did not work. Ofcom will
also retain the power to impose sanctions against service
providers.
Under the proposals, VoD programming will not be subject to
Ofcom's Broadcasting Code; however it will have to adhere to a
number of "minimum standards" specified in the directive
with a view to creating a level playing field for emerging
audiovideo media services in Europe and to impose some basic
content standards. In particular, VoD content should not
contain incitement based on race, sex, religion or nationality;
impair the development of minors; it must comply with the
sponsorship rules laid down in the directive as well as the
conditions set out for product placement.
Electronic versions of newspapers, private websites and
unmoderated user generated material such as YouTube will not fall
under the scope of the new regime. It is proposed that any
complaints that viewers have relating to VoD content will be
assessed by ATVOD or the ASA.
The government has stated that, as far as possible, industry
should be allowed and encouraged to set up and manage its own
regulatory arrangements in this area. Interested parties have
until 26 October to make their views on the proposed regulatory
regime known to Ofcom.
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