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Ofcom fines ITV $326,000

Broadcaster fails to shift production to regions

LONDON — The U.K.’s biggest commercial terrestrial web, ITV, has been hit with a £220,000 fine ($326,000) for failing to make enough shows outside London in both 2006 and 2007.

Media regulator Ofcom said the situation was a “serious breach” of the quota system that stipulates ITV must meet certain targets concerning the volume of programs made in the U.K. regions and how much it spends on them.

The timing of the fine is significant because it comes as Ofcom prepares to announce the final findings of its second public service broadcasting review, to be published Jan. 21 ,which may reduce regional quotas.

ITV, hit by a double whammy of structural change and the economic downturn, is lobbying hard to be relieved of most of its public service obligations.

The broadcaster’s executive chairman Michael Grade, said: “This fine is yet more clear evidence that the regulatory burden on ITV is 20 years out of date.

“Our duty is to invest as efficiently as possible in U.K. production, not to be an instrument of governmental industrial policy or social engineering.”

On Thursday, another U.K. regulator, the Office of Fair Trading, signalled that the system that forces ITV to charge less for advertising slots when audience numbers fall, known as Contract Rights Renewal, could be scrapped or amended.

ITV claimed CRR, introduced to prevent market abuse when Carlton and Granada were allowed to merge to form ITV plc in 2003, is a serious drag on its bottom line and discourages it from investing in risky shows.

However, rivals webs like Five maintain that any changes to the formula would hit their own advertising take.

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