ITV’s stock price fell by more than 5% in early trading Tuesday after U.K. regulators opted not to lift restrictions on how much it can charge advertisers.
The cash-strapped commercial terrestrial web has campaigned vigorously for the removal of contract rights renewal, a system that means advertisers pay less when ratings fall.
Provisional findings by the Competition Commission said the rules would remain in place because ITV’s flagship web, ITV1, remained the most-watched private channel by a considerable margin — even though auds had dropped.
“ITV1 has seen a decline in its share of both viewers and advertising revenues since 2003, and there are now more alternatives for advertisers,” said the Competition Commission.
“But ITV1’s continuing ability to reach large numbers of viewers, and the strong bargaining position this gives it with media buyers, requires the retention of the contract rights renewal undertakings,” it concluded.
However, the regulator said it was “considering whether some variations might be justified” because of the huge increase in the number of digital channels.
Regulators and ITV’s then-management agreed to the contract rights renewal system in 2003 as a precondition for the merger of TV companies Carlton and Granada to form ITV as a company listed on the stock exchange.
“We look forward to engaging with the Competition Commission to identify which option best serves the interests of ITV, its viewers and advertisers,” said ITV executive chairman, Michael Grade.
ITV shares closed down 5.7% at 49.6p (82¢) on the London Stock Exchange.