Guidance enquiries | The Office of the Adjudicator

Guidance on the CRR remedy

»A basic summary of advertisers and buyers' rights under the CRR remedy

»Technical background guide to advertisers and buyers' rights under the CRR remedy

Guidance enquiries*

1. Can I CRR a ‘burst’ deal if the deal dates change only marginally year on year (e.g. if the contract in 2004 ran from January to March, and in 2005 runs from January to April)?

Whilst the Undertakings do not specifically address burst deals, they should have the same level of protection as any other deal with ITV for airtime on ITV1.

In order for the contract to be CRR’d, it would need to cover the exact same period as the previous deal.

If you decide to change the contract period and are looking to negotiate a new contract, ITV must offer you fair and reasonable terms.

2. Can you define Fair and Reasonable?

Clause 10(a) of the Undertakings states:

“[ITV] must offer Commercial Airtime on fair and reasonable terms to any person, including any person seeking to vary a contract”.

Advertisers / Media Agencies and ITV should make every attempt to reach mutual agreement as to their terms. However, if Advertisers and Media Agencies do not agree with ITV’s interpretations of what is ‘fair and reasonable’, they are within their rights to challenge them.

As stated in the Technical Guide:

“Carlton and Granada are obliged to offer you fair and reasonable terms for any new contract, or any variation to an existing contract … Fair and reasonable does not mean that it the price will become the lowest price in the market, nor does it mean that it will become the average price in the market. It means that, based on your current contract, historical data, other contracts in the market, and the prevailing market conditions that the price that Carlton/Granada offers you is fair and reasonable within that context. This means that there is likely to be a wide range of prices for any given contract that could be fair and reasonable”.

Subsequently any decision made in a specific dispute as to what is fair and reasonable cannot be presumed to set a general standard, either for other Advertisers / Media Agencies or in relation to other changes to the same contract (Technical Guide, page 16).

3. If ITV amends its ratecard terms and conditions in the middle of a deal period, am I necessarily bound by them for the purposes of my current deal?

No. ITV’s ratecard terms and conditions are contractual terms and conditions in the same way as the terms and conditions in the main body of your contract with ITV (e.g. such as any SOB commitment). Contractual terms and conditions cannot generally be introduced or amended unilaterally by one party. The ratecard terms and conditions governing your contract with ITV will generally be those that were in place at the time of the deal season when your contract was agreed. If ITV purports to introduce new or amended ratecard terms and conditions in the middle of a contract period, they will form part of your contract with ITV only if you have agreed to the changes.

4. If ITV amends its ratecard terms and conditions, do I have to accept the changes in my next deal agreement?

No. As with other terms and conditions, ITV’s ratecard terms and conditions will form part of your contract with ITV only if you agree to them. If you are unable to reach agreement with ITV in relation to one or more of the ratecard terms and conditions, it would be open to you to agree with ITV that the ratecard terms and conditions should form part of your contract except for the contested provisions. If you considered that one or more of the ratecard terms and conditions were not ‘fair and reasonable’, and ITV insisted that the relevant provisions must be incorporated into your contract, you would be entitled to bring a dispute to the Adjudicator.

5. How do I take a holiday from ITV1 (and can I only do it once)?

Clause 6 of the Undertakings provides:

“Carlton and Granada shall offer to each person that holds or has held a Protected Contract the option of contracting for the purchase of Commercial Airtime on the same terms (including duration) as those contained in such Protected Contract. Carlton and/or Granada shall make this offer to each such person at least two months before any contract with that person for the supply of Commercial Airtime expires. Each such offer shall remain open until accepted or a new agreement for the sale of Commercial Airtime with Carlton and/or Granada enters into force.”

ITV will issue its CRR offer two months prior to your contract expiring. You then have the option to roll forward your Protected Contract (accept CRR) or negotiate a new contract. If you accept CRR or have negotiated a new contract you cannot ‘take a holiday’, i.e. choose not to advertise ITV for a period of time.

However, if you have not accepted anything, the offer of rolling terms (CRR) remains open while you take a holiday. As an example, if you took a holiday from ITV1, and spent on other broadcasters during this time, you would have no Share of Broadcast obligation to ITV1. If you were to return to ITV1, and accept CRR to roll over the terms of your last protected contract, or negotiate a new contract, your new deal would run from this date forward, and would not include the holiday period. Any SOB commitments in the contract would run over the new deal period and would not include the holiday. The SOB commitments would not need to be backdated to include the holiday period (although it would be open to you to agree with ITV that they should).

You are not limited to taking a holiday only once. You have the right to take a holiday each time you receive a CRR offer from ITV, two months prior to your current contract expiring.

Pages 6 to 7 of the “Technical background guide to advertisers and buyers rights under the CRR remedy” provide further guidance in relation to this issue (see under the heading “How do I take my protected contract?”).

6. What is the Adjudicator’s view on the correct method to calculate the ARM factor?

The Audience Ratchet Mechanism allows you to reduce your Share of Broadcast (SOB) in line with ITV1’s loss in Share of Commercial Impacts (SOCI) for the period, regions and audiences detailed in your protected contract.

The method below details the Adjudicator’s view on calculating ARM factors:

The Base year is the 12 months prior to the protected contract period, or 2002 if the protected contract came into force prior to 1st January 2004.
The Current year is the 12 months prior to the date the new revised SOB will take effect.
For each Share of Broadcast figure, calculate the percentage of expenditure over the protected contract period by audience.
Calculate the change in SOCI (Current Year/Base Year) by audience for each SOB figure.
If you have one national SOB figure, then the SOCI will only be weighted by audience expenditure. Shares of ITV do not apply to the ARM calculation.
If you have regional SOB’s, then the ARM calculation should be applied individually to each region.
Weight the regional change in SOCI by expenditure by audience in that region.
Any positive change in SOCI is capped at 1, once all weighting has taken place.
If you have both regional SOB’s and a national SOB, it is the Adjudicator’s view that the regional SOB’s are adjusted first and then totalled to get the new national SOB (if all purchased regions are covered).

Pages 9 to 15 of the “Technical background guide to advertisers and buyers rights under the CRR remedy” provide further guidance in relation to this issue (see under the heading “The CRR Ratchet”).

7. Arm calculations for 2 year deals

» Download the calculations (PDF)

8. ITV 2004 standard terms and conditions

» Read more

9. I want a new ITV1 contract but the Advanced Booking Deadline (“ABD”) for the first planned activity is approaching and I have been unable to negotiate agreeable terms with ITV. What can I do?

In these circumstances you have the option to either bring a dispute, or alternatively to approve, subject to negotiation, the planned campaign to ITV at the relevant ABD, by provisionally agreeing to ‘fallback terms’ and continuing negotiations with ITV and retaining the option of submitting a dispute if you are unable to conclude agreeable terms. In these circumstances, you should make it clear to ITV that you consider the offered terms not to be fair and reasonable and expressly reserve your right to bring a dispute in relation to them if satisfactory terms cannot be negotiated. If negotiations are successful and satisfactory terms are agreed, you will be bound by these new terms. If negotiations are not successful, you may then submit a dispute in relation to those terms. If you are unsuccessful in such a dispute, or choose not to raise a dispute, you will be bound by the ‘fallback’ terms.

In the event that you choose to bring a dispute and the campaign has started prior to the dispute determination, your attention is drawn to the final paragraph of guidance 12. below which deals with the backdating of terms.

10. If I want to book airtime after the ABD, do the Undertakings apply?

Yes, the Undertakings do apply to bookings after the ABD.

The Undertakings require that ITV1 must offer commercial airtime on fair and reasonable terms. This applies to airtime booked after the ABD. However, in considering whether terms are fair and reasonable, the fact that the airtime is being booked after the ABD will be a relevant consideration. The meaning of fair and reasonable is discussed in the Technical Guide and above in section 2 of this guidance.

When booking airtime after the relevant ABD, the first point of reference should always be your contract with ITV. The standard ITV1 terms and conditions relevant for the year of your Protected Contract will also generally form part of the contract (unless you have negotiated something different). It is important to note that the contract in force at the time of booking may not be the Protected Contract, and therefore a different set of ITV’s standard terms and conditions could apply to the booking. Where an inconsistency exists between a specific clause of your contract and ITV1’s terms and conditions, the specific clause within your contract would in principle prevail – if that clause specifically and explicitly covers the issue in question.

In applying any late booking fees, ITV must not discriminate between advertisers in similar positions. However, this does not mean that ITV must necessarily charge all advertisers precisely the same late booking fee. ITV is allowed to take into account the circumstances of each booking and to consider whether different bookings are meaningfully different.

11. If I have an urgent need to book airtime after the ABD, but do not consider the terms being offered to me by ITV are fair and reasonable, what can I do?

If an advertiser has an urgent need to book airtime after the ABD, you may feel under pressure to agree to whatever terms are offered by ITV, even if you do not consider them to be fair and reasonable. In this situation, along with the options of choosing not to book or of accepting the terms, or of bring an immediate dispute, you can choose to agree the terms with ITV making it clear that you do not consider them to be fair and reasonable and that you intend to submit a dispute in relation to those terms.

12. Can I bring a dispute at any time?

If you wish to submit a dispute, then generally, you should submit this well before the campaign start date, allowing time for the dispute process to be completed and for the possibility of further negotiations with ITV after the determination.

However, circumstances may not always allow for this, particularly if you are either booking airtime late, or if negotiations have been protracted or delayed for some reason.

If the campaign has started (or potentially finished) before the Adjudicator has determined the dispute, and the Adjudicator determines that the terms offered are not fair and reasonable, the Adjudicator may indicate whether any subsequently agreed terms should be backdated to the start of the campaign. Whether the new terms must be backdated will depend upon all the prevailing circumstances, and the Adjudicators assessment of what would be fair and reasonable in those circumstances.

13. Guidance in relation to food and drink advertising ban

On 17th November 2006, Ofcom published details of a proposed prohibition on advertising certain food and drink products high in fat, salt and sugar in and around TV programmes of particular appeal to children (“the Prohibition”). The Prohibition is likely to come into effect from the end of March 2007. Further details of the proposed Prohibition are available at:

http://www.ofcom.org.uk/consult/condocs/foodads_new/.

The Prohibition may have an effect on certain provisions in contracts for ITV1 airtime between ITV and some Media Buyers. Each Media Buyer should therefore, familiarise itself with the details of the Prohibition and consider carefully whether any terms relating to HFSS advertising in its ITV1 contract are capable of being affected. In a small number of cases, some Media Buyers may find that a provision would become impossible to operate following the introduction of the Prohibition. Media Buyers may also find that other provisions would become materially more burdensome for one or both parties.

Where this is the case, it is in the interests of both ITV and the Media Buyers concerned to negotiate variations to ensure that their contracts are workable and appropriate following the introduction of the Prohibition. It is up to ITV and each Media Buyer to agree such variations. One possibility would be to agree a single set of terms relating to HFSS advertising within prohibited programming to apply for the whole of 2007, i.e. both before and after the introduction of the Prohibition at the end of March 2007. Another possibility would be to agree one set of terms relating to HFSS advertising within prohibited programming to operate up until the end of March 2007, and another set of terms to operate after that point.

There are numerous contracts for ITV1 airtime across the market as a whole, and each Media Buyer should consider the terms of its own contract. However, below are three examples of the type of provision which may be capable of being affected by the Prohibition.

Provisions that require ITV to deliver all HFSS advertiser airtime booked against Children as an audience during ITV1 CITV hours.
Provisions that entitle a Media Buyer to place HFSS adverts during specified programmes which will fall within the scope of the prohibition.
Where a Media Buyer has a HFSS advertiser portfolio provisions, requiring that a Media Buyer’s spend against Children as an audience constitutes a specified proportion of its overall spend (on ITV1 as a whole or within an ITV region).

More generally, Media Buyers should be aware that it is possible that the Prohibition may bring about a small reduction in the overall demand for advertising time in and around ITV1 programmes of particular appeal to children, both from their clients and across the market as a whole. Any such reduction in demand may have an impact on the Station Average Price as against certain audiences.

For all these reasons, it would be sensible for Media Buyers to consider carefully the possible implications of the Prohibition and how, if at all, they should respond to it. It should be stressed however, that the introduction of the Prohibition should not undermine the rights of Media Buyers under the CRR remedy. In any negotiations relating to the introduction of the Prohibition, as in other negotiations, Media Buyers will continue to enjoy the protections offered by the Undertakings. That includes the obligation on ITV to offer fair and reasonable terms, and the entitlement of Media Buyers to roll forward their Protected Contract, including any variations agreed with ITV, should they wish to do so.

14. What are the rules concerning ITV seeking to conduct negotiations on an ITV family basis?

There are potentially three sets of legal rules which could be applicable in this area, and each is enforced by different regulatory bodies.

Ofcom’s airtime sales rules – enforced by Ofcom
General competition law – enforced by Ofcom and the OFT
The Undertakings – enforced by the Adjudicator

Ofcom’s airtime sales rules

Media buyers or advertisers should direct any queries or complaints relating to these rules to Ofcom. A summary and discussion of the airtime sales rules can be found at:

http://www.ofcom.org.uk/tv/ifi/guidance/ITV_airtime_sales/Airtime_sales_rules/

Under these rules: (i) conditional selling by any Broadcaster is strictly prohibited; but (ii) the bundling of channels is permitted.

General competition rules

These rules are enforced by Ofcom and the Office of Fair Trading. If media buyers or advertisers would like guidance about whether the competition rules might apply, then they should contact Ofcom or the Office of Fair Trading to discuss this.

The Undertakings

The Undertakings apply to ITV1 only. ITV must make a “fair and reasonable” offer on ITV1 as a standalone contract if requested. This applies to CRR, contract variations and new contracts. ITV can propose a bundled offer-but the buyer does not have to accept this if they only want an ITV1 deal or if they want separate deals for ITV1 and ITV digital. ITV cannot only offer fair and reasonable terms on ITV1 conditional on accepting terms on ITV digital. Whilst ITV is within its rights to offer a bundled ITV family deal, it cannot demand this.

15. I am a lapsed advertiser, having not advertised on ITV1 for the last two years. I have received a letter from ITV saying ”...we are tailoring any contact more specifically and in a way that is relevant to your business, we have decided to only contact you in future about CRR offers for ‘active‘ protected contract, being contracts that relate to the purchase of ITV main channel airtime in the current 24 month period.”.

Under Clause 6 of the Undertakings ITV is required, at least two months before the expiry of every Protected Contract, to offer the holder of that contract the option of rolling that contract forwards and contracting on the same terms (including duration) for the following period, with any change to the Share of Broadcast calculated in accordance with Clauses 7-9 of the Undertakings and as detailed in Annex 1. Each such offer remains open until accepted or a new agreement for the sale of Commercial Airtime with ITV1 enters into force.

Historically, ITV has made such offers annually to all advertisers and media buyers who hold Protected Contracts, irrespective of whether that advertiser or media buyer has advertised within that year or not. For lapsed advertisers, i.e. those that have not advertised on ITV1 in the previous year or more, this practice (whilst complimentary and comprehensive) was strictly unnecessary as the offers that these lapsed advertisers had received in previous years to roll forward their Protected Contract remained open until either accepted or a new agreement came into force.

For efficiency and having been granted prior approval for this change by the CMA (Competition and Markets Authority), ITV will no longer send annual (in effect reminder) offers to lapsed advertisers. ITV has communicated this to all affected lapsed advertisers via this letter.

If or when a lapsed advertiser wishes to return to advertising on ITV1, they would have the option of either returning to their previous Protected Contract (with any adjustment made to the Share of Broadcast resulting from the ARM calculation) or alternatively they could seek to negotiate a new contract. In either event they would retain all applicable rights contained within the Undertakings.

*These questions and answers should be used as guidance only, and do not bind the Adjudicator in any future dispute. The views expressed represent the current considered opinions of the Adjudicator. However, if any of the issues addressed subsequently arose in the context of a dispute, the Adjudicator would reconsider the issue afresh, in the light of the facts of the case and the arguments of the parties.