Advertisers fear ITV monopoly if Channel 4 is privatized
TV advertising deals are negotiated in the UK on the basis of the average station price, an advertising cost to target a specific audience that decreases as the number of viewers increases.
ITV also faces regulation of advertising through the Contract Renewal System, which was forged by the merger of Carlton Communications and Granada in 2003.
The rules give advertisers the right to renew their contracts on the same terms.
The ISBA, which has members such as BT and Coca Cola, commissioned a report from media consultancy Enders Analysis which recommends more transparent terms and audience figures for broadcasters’ catch-up streaming services.
“While it can be said that television is traded flawlessly across supply and demand via the average station price, there are already distortions occurring within it, which , we fear, could be manipulated further, âSmith added.
ISBA believes that any attempt to get a higher price for Channel 4 by reducing its public service target of targeting young viewers could also increase advertising costs.
“Any relaxation of the mandate to make selling more attractive, and therefore lead to an accelerated decline in young audiences, will only lead to further inflation.”
According to Enders Analysis, Channel 4 could fetch between Â£ 600bn and Â£ 1.5bn, depending on whether its tenure is protected and whether the buyer can save money.
He said the broadcaster’s success in securing longer broadcast rights made it an attractive buyout target given that its online performance had surpassed many of its rivals.
âThis know-how would be invaluable for ITV and Channel 5, both of which have been slow to develop streaming technologies and move content exclusively online,â he added.
Managing Director Alex Mahon is preparing to take stock on Monday on his digital strategy and potential privatization.
He laid out a five-year plan to wean off TV advertising in favor of doubling the audience for All 4 and securing 30% of sales through digital ads.
ITV and Channel 4 declined to comment.