02 Aug 10

Ofcom - Airtime Sales Restrictions

By Sean Japp, Head of TV

In a move that took the TV Market by surprise, OFCOM last week announced that Airtime Sales Restrictions (ASR's) would be lifted as of September 1st.

OFCOM will remove the restriction on the "withholding" of airtime on ITV1, C4 and Five, and the ban on "conditional selling" that has restricted the broadcasters ability to leverage their primary channels to drive investment into digital sibling channels.

It appears that OFCOM's willingness to relax these constraints helps justify the retention of CRR (Contracts Rights Renewal), which will continue to act as a restraint on ITV. CRR incentivises ITV to maximise its inventory - if ITV was to reduce minutage to maintain prices, its competitors would likely continue to maximise their minutage given that this would drive a higher share of commercial impacts into share deals for the following year.

While ITV can already offer bundled deals to advertisers under CRR, it cannot "force" them upon advertisers which also have protected deals for ITV1, making it harder to leverage a conditional sell.

Mediacom and Group M participated extensively in the consultation and concluded that there was no new evidence to support the removal of the rules and as such last week's announcement was unexpected.

Clients will not be directly affected by the relaxation of these rules, as our negotiation position is protected by both CRR and the scale of Group M. OFCOM have clarified to MediaCom that ITV1 will be required to honour any CRR protected contracts, regardless of whether the contract holder accepts or rejects any attempt at conditional selling.

Further muddying the waters, last week's other announcement, that the House of Lords will be reviewing the CRR ruling, will entail ongoing diligence to ensure that MediaCom clients will not be adversely affected through further relaxation of legislation governing the operating process of the ad-sales market.

Scottish only clients should note that STV are not part of the CRR arrangements on ITV and we are currently in discussions with STV on whether they will be maintaining the present status quo. Once these discussions have taken place I will update you further.

If you have any further questions please contact Sean Japp (Head of TV).