New ad rules may benefit ITV

Broadcaster ITV may get some benefit from the new ad rules

Broadcaster ITV could gain some breathing space from rules designed to protect advertisers from its dominant position, the Office of Fair Trading (OFT) said.

The OFT has advised the Competition Commission to consider changes to the Contract Rights Renewal (CRR) regime introduced in the wake of ITV plc's creation from the merger of Carlton and Granada in 2003.

The CRR cuts the amount advertisers have to pay if ITV1's audience shrinks, but the broadcaster has argued it is unsuited to the digital era and leads to a risk averse attitude among programmers and production teams.

The watchdog acknowledged that the market share of flagship channel ITV1 has declined since 2003, but said it remained almost the only provider of large audiences prized by advertisers and recommends that some protection be maintained.

OFT chief executive John Fingleton said: "Changes in ITV1's market position and programme delivery since CRR was introduced in 2003 mean it is now time to take another look at it.

"We recommend retaining some protection for advertisers and media buyers so that all parties have an equal playing field in what are challenging economic circumstances."

Shares in ITV - which has called for the regime to be scrapped altogether - rose 5% following the OFT's statement.

Replies to the watchdog's consultation on the CRR warned advertisers "remain dependent" on ITV1 to reach large audiences in a short space of time and want the current system to remain largely in place.

But the OFT added that "a less burdensome remedy" could address concerns following the erosion of ITV1 market position in the past six years.

Friday's comments give some rare good news for beleaguered ITV. The firm has been hit hard by the advertising downturn and made pre-tax losses of £2.73 billion last year after it wrote down the value of assets on its balance sheet.