Revisions to ITC Rules Regarding Advertising Sales Arrangements
This statement replaces the ITC statement of 15 July 1996, which consolidated the ITC statements of 22 March and 27 April 94.
The revised rules will be effective from 17 May 2001 and will apply to any agreements made after this date.
The ITC has a statutory duty to “ensure fair and effective competition” in the provision of licensed services. As part of this duty, it issues rules governing licensees’ airtime sales arrangements. This statement sets out revised rules, following a recent public consultation.
Relaxation of existing rules regarding Channel 3
The previous requirement whereby the ITC’s prior written consent is required for any sales arrangement involving more than one of the nine largest regional Channel 3 licensees has been removed, as has the limit of 25 per cent of total UK television advertising revenue previously placed on consent for sales organisations (whether in-house sales forces or separate sales houses) to sell advertising on behalf of television licensees.
Prohibition on joint selling of airtime by Granada and Carlton.
The joint selling of airtime between Granada and Carlton, or any informal arrangement with the same effect, is prohibited. This prohibition may be subject to further review, following the passage of the Government’s Communications Bill.
The ban on the two London Channel 3 licensees selling their airtime together will remain.
Because of the additional concentration of ITV’s advertising market share in the London region, the advertising time for the two London franchises must continue to be sold separately.
National licensees with a NAR share of 5% or less may sell airtime jointly with each other or with any other national licensee.
This represents a relaxation of the ITC’s current rules, and will ensure continued competition for sales of national airtime between the large national commercial broadcasters, while allowing smaller licensees to sell jointly with each other or with any one of the larger broadcasters.
National licensees with a market share equivalent to GMTV or less may resell their airtime jointly with either of the two main Channel 3 airtime sales houses.
This is an amendment of the existing rule, to allow GMTV to sell airtime jointly with either of the main Channel 3 airtime sales houses, if it should choose to do so.
Small Channel 3 licensees, that is, with 5% or less of UK NAR, may sell their airtime with any national licensees.
This will offer an alternative to the main Channel 3 sales houses for the smaller Channel 3 licensees, such as SMG, Ulster and Channel.
‘Share for ITV’ deals are prohibited.
The ITC considers that ‘share for ITV’ deals, which commit a share of the buyer’s total budget to ITV in return for preferential rates, are likely to have an anti-competitive effect. Accordingly, such deals, or any arrangement having a similar effect, are prohibited.
The ITC will not permit the objectives of the above policy to be circumvented by a person controlling or having an interest in more than one sales organisation, where the sales organisations together handle business which could not be handled by a single sales organisation under the above rules.
The ITC will not permit any sales arrangement whereby the sales organisation includes a shareholding by an advertising agent, which would not be permissible under the Broadcasting Act 1990 in relation to a shareholding in an ITC licensee. The ITC also reserves the right to withhold consent for any sales arrangement involving a shareholding in a sales organisation (other than an ITC licensee) by a non-licensee who is a television advertiser.
The TV advertising market is undergoing rapid change. Over time, as more competition develops and as the market position of the main terrestrial players is eroded, it will be possible to reduce or remove the use of specific rules, and rely on general competition law. For this reason, the ITC, working with the competition authorities, will keep both the market and the revised rules under periodic review.
The policy outlined in this statement will be implemented, as necessary, by directions to the ITC licensees under the terms of their broadcasting licences.
- Revisions to ITC Rules Regarding Advertising Sales Arrangements