U.K. House of Lords Looks to Cut Commercial Airtime

Proposed Lack of Ad Inventory Would Drive up Prices for Advertisers

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LONDON (AdAge.com) -- A House of Lords committee wants to reduce the amount of advertising on British TV to only seven minutes per hour.

Current regulations allow up to eight minutes per hour for ITV, Channel 4 and Channel 5, and up to 12 minutes for other commercial channels. Reducing the amount of advertising allowed would "greatly improve the viewer experience and be fairer to public-service broadcasters," a report on TV advertising from the House of Lords Select Committee on Communications said today.

ITV, Channel 4 and Channel 5, the original broadcast channels, are all public-sector broadcasters, meaning they have agreed to show some programs for the public benefit -- including news and documentaries -- and not purely for commercial benefit. They can now show an average of seven minutes of advertising per hour, but can increase that to eight minutes during prime time (6 p.m. to 10 p.m.).

Newer channels on cable and satellite can average nine minutes of advertising per hour, up to a maximum of 12 minutes in prime time. (In the U.S., broadcasters show 15 minutes or more of commercial time in prime time.)

The Institute of Practitioners in Advertising, a U.K. trade group for ad agencies, said it was disappointed but not surprised by the report. Different limits on commercial time for public-sector broadcasters and their cable and satellite competitors are no longer appropriate, it said, but the IPA argued that reducing everyone's permissible commercial time wasn't the solution. "Drawing inventory from the market would inevitably force up prices, while significantly disadvantaging the satellite operators," the IPA said.

In the same report, the Lords committee made another recommendation that would push up prices for advertisers by proposing an end to contract rights renewal, a plan that limits the amount ITV can charge for its commercial airtime. Contract rights renewal was originally put in place to stop ITV from exploiting its dominance in the marketplace: It has more than 45% share of U.K. TV advertising revenue.

Both of the House of Lords committee's recommendations could be a big boost for ITV.

"We welcome the committee's conclusion on [contract rights renewal], and that the number of advertising minutes per hour should be harmonized down to an average of seven minutes," an ITV spokesman said.

Estimating that ITV could increase advertising revenue by $50 million to $90 million a year if contract rights renewal is abolished, the Lords committee suggested that the broadcaster be required to put half the extra money back into creating original programming.

Bob Wootton, director of media and advertising at the Incorporated Society of British Advertisers, said he was "disappointed and bemused" by the Lords' Communications Committee report. "[This] will not be good for the economies of broadcasters and would have a disproportionately damaging effect on the most commercially fragile," he said. "Removing [contract rights renewal] would be unlikely to improve ITV's performance in generating audiences, yet it could well serve to improve ITV's fortunes at the expense of many others."

The IPA also came out against the Lords' suggestions for scrapping the rights renewal. "CRR has been shown to be the only remedy capable of delivering satisfactory levels of protection for advertisers against the threat of ITV unfairly exploiting its position of strength," it said.

The government will now prepare an official response to the committee report that could take several months to emerge. The British advertisers' trade group, which represents marketers including Procter & Gamble, Unilever and HSBC, has vowed to try its best to convince the government that implementing the report's recommendations would not be a good idea.

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