For Broadcast June 06, 2008

ITV's £1 billion programming budget is under intense pressure if Ofcom does not loosen certain regulations on the broadcaster, Rupert Howell has said.

Speaking at an RTS dinner, ITV brand and commercial managing director Howell laid out a laundry list of onerous regulations that he believes must be relaxed or abolished if ITV is going to continue to invest in programming at the level it does today. They included the end of the contract rights renewal system (CRR), product placement restrictions and any further ads bans. He also called for more flexibility in where ITV is allowed to place ads in its programme schedule.

"We will protect the programming budget for two years but clearly if we are not getting the flexibility in product placement and such, it puts more pressure on that," said Howell.

He added that discussions with Ofcom are progressing. "Ofcom is acutely aware of the urgency so things are moving apace and nobody is sitting on their hands," said Howell. "I think there will be a lot of clarity before the end of the year."

At the top of Howell's list for reform, unsurprisingly, is the system of contract rights renewal (CRR) which automatically reduces the amount advertisers spend on ITV advertising if its audiences fall.

"CRR should be abolished. It takes tens of millions off our revenue even when we are doing well and it inhibits our ability to invest £1 billion in programming, 90% of which is in UK production. It must go," said Howell.

In the wake of the junk food ad ban, which ITV calculates has cost the TV industry some £400 million in lost advertising, Howell said that any further ad bans would be "crippling". He said that the hit to ITV from the junk food ad ban was "equal to ITV's entire public service budget."

ITV calculates that its PSB licence will reach a "crossover point" by 2010 when its £40m value will be offset by the cost of providing ITV's current PSB commitments, including national and regional news, current affairs and children's TV. "We have reached a tipping point where unless we get deregulaton we cant continue to do a lot of these services," said Howell.

The restrictions on where ITV can put its allocated advertising minutes is also putting pressure on the broadcaster. Howell claimed that one reason why ITV couldn't continue the Parkinson talk show was because ITV would run out of ad minutes by that late at night.

Howell also called for a level playing field with the likes of Google. "We need equal treatment. Google is unregulated and it is allowed to do product placement. We need equal treatment before it is too late."

John McVay, chief executive of Pact said that ITV wants to "have its cake and eat it ." He said that if ITV found the public service obligations of its license too onerous "it should hand it back and let someone else have a go."