CRR: “Something must be done about the current state of sterility”
Raymond Snoddy says “the Lords Select Committee might come out with a clarion call to abolish CRR but I doubt it; the CC will not wish to re-open the can of worms anytime soon; and while the idea of a wide-ranging investigation into all the dark workings of the advertising business is superficially attractive it is difficult to find anybody who actually wants such a cumbersome and time-consuming thing to happen.” The answer? A small, informal working group perhaps…
Lord Palmerston famously said of the Schleswig-Holstein question that only three people understood it. One was the Prince Consort who was dead, another was a German Professor who had gone mad and he was the third but had forgotten what the answer was.
Sometimes CRR (Contract Rights Renewal) seems more than a bit like that and it seems foolhardy to even tiptoe into such disputed and arcane territory. But as was made clear at last week’s MediaTel TV Summit, the issue is still very much alive and deeply divisive in the industry seven years after it was dreamed up to allow the Granada-Carlton merger to go ahead.
Yesterday, at the House of Lords Communications Select Committee looking into the issue, the view of the advertising industry was clear. It was not a great system but it was the best there was and it was necessary.
Later, consultant John Billett told their Lordships CRR should be abolished. The television industry had changed so much that advertisers now had a range of alternatives to ITV1- substitutability – and that the market would prevent ITV exploiting any remaining dominance.
The problem with that approach is that after a two and a half year investigation the Competition Commission robustly rejected the arguments of ITV, backed to a considerable extent by communications regulator Ofcom.
“ITV’s unrivalled ability to deliver large audiences on ITV1 means that CRR undertakings are still needed to prevent the channel from exploiting this position to the detriment of advertisers and other commercial broadcasters,” the CC announced in May.
The Competition Commission also noted tartly that ITV had overstated the detrimental effects of CRR. ITV has always had the logical problem of telling advertisers that its programmes are unique and cannot be found anywhere else when looking for custom, while trying to convince competition authorities of the opposite.
It is also a bit tricky arguing you do not have a dominant position when you take around 49% of commercial television advertising in the UK and are responsible for no less than 982 of the top 1,000 most-watched programmes on commercial television.
So where are we now?
The Lords Select Committee might come out with a clarion call to abolish CRR but I doubt it. They are now absolutely appraised of the complexity of the issue and the problem posed by apparently valid but utterly conflicting arguments on both sides.
Culture secretary Jeremy Hunt made abolitionist noises while in opposition but very little has been heard since he came to power. The Competition Commission will not wish to re-open the can of worms anytime soon. And while the idea of a wide-ranging investigation into all the dark workings of the advertising business is superficially attractive it is difficult to find anybody who actually wants such a cumbersome and time-consuming thing to happen.
There were, however, some hints at the MediaTel TV Summit that there might be movement on CRR.
ITV chief executive Adam Crozier said he thought “we will shift CRR soon” without giving any indication of how this might happen. Perhaps he and ITV chairman Archie Norman plan to play the political card.
Bob Wootton, ISBA’s director of media and advertising affairs, revealed that the advertiser body was in talks with ITV on the issue.
If a deal can be done that is satisfactory to both sides and competition authorities then splendid. That is the end of the Schleswig-Holstein question of the media industry.
If not then there is a strong case for setting up a small, informal working group, which would be given three months to come up with practical proposals for reform of the CRR system. The main aim would be to increase its flexibility and remove some of the unintended consequences such as cuts to funding of public service programming.
Lord Bragg came up with a useful starting point when he suggested to the Lords Committee that CRR could be relaxed in return for firm commitments from ITV on public service programming. He wouldn’t have added, though we can – we are talking about programmes like the South Bank Show, disgracefully and unnecessarily axed by ITV. Advertisers want a wide range of programmes from ITV not just The X Factors of this world.
It might also be worth looking at what is currently included in CRR. The Competition Commission allowed ITV1 + 1 and ITV HD to be included. Might it not be worth considering including the other TV digital channels? After all it has been the arrival of hundreds of new channels that has collectively nibbled into ITV’s market share.
The new working group should be chaired by Professor Paddy Barwise of the London Business School, who is also advising the Lords Committee. He is more than capable of cutting through vested interests.
It could report to the Lords, industry bodies, or simply put their ideas into the public domain for discussion.
The group could also include Nick Manning, chief operating officer of Ebiquity, who told the TV Summit: “I don’t see a world where it is CRR or not CRR. We’re stuck in a sterile situation at the moment and neither is right or wrong. We need to come up with a better way.”
The independently minded Mark Howe of Google would be another useful contributor.
It might not work of course. But it is worth trying. Nick Manning is right. Something must be done about the current state of sterility.
Your Comments
CRR made sense five years ago, but the TV landscape (especially looking forwards into 2011 and beyond) has changed considerably. The main reason for CRR was to facilitate the merger of Carlton and Granada whilst at the same time protect advertisers from an overly dominant ITV.
There have been many headlines surrounding ITV and CRR over the last few years, particularly around ITV trying to remove the shackles of this agreement. In the most part the majority have clearly supported CRR, but recently there has been a growing voice suggesting that perhaps it is time for an overhaul.
The TV market is now split into ITV Group, C4 Group and Sky Group, with a smaller Channel five group as well. The reality is that we now have three pretty evenly matched players controlling the UK TV market as both Channel 4 and Sky have absorbed VBS and IDS into their operations. It seems potentially difficult to penalise one TV sales network with CRR (i.e. ITV) and not do something similar with C4 or Sky given the strength of these 3 players in the market.
Each sales group brings something different to the table for advertisers and can command a decent presence on any schedule. However, most TV buyers around town will admit to having the toughest negotiations in recent memory, as these three groups look to battle it out over increased share of market and the inevitable price hikes that will accompany this. We have already seen stand offs with some FMCG’s and Sky over VBS pricing in 2010 – we could expect to see more of the same in 2011.
The message is that advertisers need to be protected from this media owner ‘chest thumping’, but singling out ITV with CRR seems to be potentially a little unfair.
The problem with small working groups is that they can be heavily influenced by one individual’s vested interests (the FIFA Voting committee is a highly relevant example of this at work), however “impartial” they appear to be. The CRR is a problem which requires decisiveness, rather than yet another talking shop.