Good and bad news for ITV advertising revenue

ITV shares took a fall yesterday when the Competition Commission found that the set of advertisers’ rules that were first placed on the company in 2003 should remain in place.

The commission found that while advertisers may be able to build campaigns with other broadcasters, the channel has too much dominance to be considered part of a level competitive playing field.

The main issue at stake was the Act rights renewal system which ranks the prices of advertising on ITV by the amount of viewers. The system was formed for use by ITV when the broadcaster was originally formed to keep it from abusing its power as a dominant player in the market.

The good news for ITV is that the commission did state that ‘some variations’ of the current system may be open for change such as a proposal to widen what is classified as ITV1 and the inclusion of ITV1 high definition channels.

Additionally, the commission is also looking at the best way to determine competition matters by splitting air time into normal viewing audiences and special viewing audiences such as when a sports programme is being broadcast or a major entertainment show such as X Factor. Its final decision will be released by the end of 2009.

In the mean time, ITV has also been engaged in its own battle to keep consumers as they are leaving to choose digital channel broadcasting and the internet as an advertising competitor.

Since 2007 ITV has watched its shares decrease from 100p down to 50p last night when word of the decision started to float around.

Media analyst stockbroker Paul Richards of Numis Securities said that it was expected that the commission would not remove the CRR system but that the wording of the statement of the commission was much harsher than most people expected to hear at this stage in the decision making process.