Page last updated at 17:12 GMT, Tuesday, 15 September 2009 18:12 UK

ITV shares fall after ad ruling

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ITV still enjoys a dominant position, said the Competition Commission

Shares in ITV fell by 6% after the Competition Commission decided that rules on how much the broadcaster can charge advertisers cannot be removed.

ITV had campaigned for the rules to be dropped, arguing that new digital channels mean it should no longer be subject to the restrictions.

But the commission found that the broadcaster still enjoyed a dominant position in its marketplace.

It did, however, say it may adapt the rules to reflect increased competition.

As a result of the ruling, ITV shares closed down ITV down 2.97 pence to 49.63p.

'Strong position'

"ITV1 has seen a decline in its share of both viewers and advertising revenues since 2003 and there are now more alternatives for advertisers," the commission acknowledged.

I'm told that the board is worried about the quantum of wonga - or rather incentives - that Ball would like
Robert Peston

"But ITV1's continuing ability to reach large numbers of viewers, and the strong bargaining position this gives it with media buyers, requires the retention of the Contract Rights Renewal (CRR) undertakings," it concluded.

The commission said it was now "considering whether some variations might be justified" in light of the increased competition from digital channels.

The CRR rules were introduced in 2003 to prevent ITV abusing its position as the UK's dominant advertising broadcaster.

ITV asked the Office of Fair Trading to review the rules in 2006. The review began in January 2008.

Cold feet

The need to boost advertising revenue has been brought into sharp focus by the recession, during which ITV has been hit by the worst decline in UK television advertising on record.

In the first half of this year, the company made a pre-tax loss of £105m.

ITV is currently searching for a new chief executive, one it hopes will restore the company to profitability.

Almost four weeks ago, it made an offer to Tony Ball, the former boss of BSkyB.

But the BBC's business editor Robert Peston has learnt that the board of ITV is worried about the level of incentives that Mr Ball would like to do the job.

"I'm sure these aren't small, since Ball is in a rare category of television executive: he has a record of generating profits rather than noise; he has an international reputation; and for the past few years he has worked in mega-bucks private equity," said Mr Peston.

As a result, "negotiations have ground to a halt," he added.

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