Should ITV’s recent decline in audience share continue, the broadcaster stands to lose up to £100 million in advertising revenue as advertisers seek to negotiate more competitive deals.
Under Contracts Rights Renewal (CRR), a code introduced to prevent a newly merged ITV from exploiting its dominance over the commercial TV market, advertisers are able to negotiate lower rates based on how much ITV’s audience share declines.
Latest viewing figures from the Broadcasters’ Audience Research Board (BARB) show that, despite recent successes with programmes such as Coronation Street, ITV’s share of commercial impacts for most of its viewing groups is down. If this trend is maintained throughout the rest of 2004, advertisers will be able to negotiate lower prices for 2005.
With 51% of the television market in 2003, ITV received £1.7 billion in advertising revenue. If ITV’s share was to drop by 3% this could cost the broadcaster up to £100 million in 2005.
However, ITV remains optimistic and the forthcoming Euro 2004 football championships should bring increases in audience share and advertising revenue, as will programmes such as ‘I’m a Celebrity…’.
Earlier this year, Merrill Lynch upgraded its ad revenue forecast for ITV after the newly-merged TV giant said it had seen “positive signs” in the market. ITV’s first financial results of 2004 (see Merrill Lynch Upgrades ITV Ad Forecasts) indicated that revenues in the first quarter of 2004 will be up slightly, with combined ITV1 and ITV2 revenues up by around £4m.
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