Easing restrictions could ‘dampen revenues’ for smaller channels, industry body says
Channel 5 is spearheading a bid to scupper longer television ad breaks on ITV over concerns the move would hand its rival a £150m revenue boost.
Regulator Ofcom is reviewing whether to relax limits on advert breaks for public service broadcasters (PSBs) from an average of seven to nine minutes per hour to reflect growing competition from streaming services,
The Telegraph is reporting
The current rules, which were imposed more than 30 years ago, are tougher for the public service broadcasters – ITV, Channel 4 and Channel 5 – than for their commercial rivals.
However, Channel 5, which is owned by US media giant Paramount, is among a group of channels opposing the easing of restrictions, citing concerns the move could push down prices and give ITV a competitive advantage.
In a submission to Ofcom, industry body COBA, which counts Channel 5 among its members, warned that ITV “could potentially increase its volume of advertising in order to dampen revenues for the rest of the sector and thereby derive a competitive advantage”.
COBA added: “This would in turn risk harming viewer choice by undermining the ability of smaller channels to compete, as well as reducing their ability to raise investment for new UK content.”
In its own submission, Paramount said: “We would anticipate that the proposed changes… will simply move ad-spend away from smaller broadcasters towards the largest commercial PSBs,” adding that the move “would likely reinforce the position of ITV’s main network”.
COBA cited estimates showing the market as a whole could be £300m worse off a year due to deflation, with the non-public service broadcasting sector taking a £186m hit.
Channel 5's latest filings show revenues of £295m in 2020, compared to the £3.5bn ITV pulled in last year.
ISBA, another industry group representing brand owners, added that the change could result in a two percentage-point swing in the share of advert viewing from Sky’s media arm to ITV, equating to as much as £150m of market share.
ITV dismissed these concerns, saying it only wanted to increase advertising during peak times, with the overall length of breaks staying constant over the day.
The I’m A Celebrity broadcaster said that while longer ad breaks would push down prices for PSBs, price and demand on other commercial channels would remain constant. It added that the changes could initially be introduced for a trial period.
ITV said: “The current rules are acting as an unnecessary barrier, reducing the efficiency of the commercial PSB model to no audience benefit and hampering commercial TV’s efforts to compete with global streamers and other global players.
“Put simply, reform of the rules could help both the PSBs and the wider television industry to better compete in this new landscape.”
ITV also argued that the changes would allow PSBs to invest more in original content amid tough competition from deep-pocketed streaming rivals.
Yet other commercial broadcasters insisted the resulting fall in ad revenues would hit their own ability to invest.
UKTV, a subsidiary of the BBC’s commercial arm which operates channels such as Gold and Dave, said the impact on ad revenues would be equivalent to cutting up to 20pc of its annual commissioning budget – or eliminating original commissioning for one or two of its channels.
The row opens up a new battleground as regulators and broadcasters grapple with changing viewing habits and the rise of the likes of Netflix, Disney and Amazon.
ITV this week launched its new streaming platform, ITVX, which it hopes will capture new and younger audiences, whilst Paramount launched
Paramount+ earlier this year, bringing a mountain of local and internationally-produced entertainment to audiences of all ages.
The Government is also expected to overhaul rules in its delayed media bill to protect public service broadcasters from streaming rivals by ensuring they have a prominent position across digital platforms.
Channel 5, which broadcasts programmes including
All Creatures Great And Small, and the morning preschool programming strand
Milkshake!, was bought by Nickelodeon owner Viacom - now Paramount Global - former owner Richard Desmond
in a £450m deal in 2014.
The takeover marked a major move into the UK free-to-air TV market for the US broadcaster, which also owns MTV and Comedy Central.
Paramount+ UK & Ireland is HERE! Stream a Mountain of Entertainment, including your Nickelodeon favourites! Try it FREE at ParamountPlus.com!
