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Lords to review ITV1's CRR mechanism

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The House Of Lords has confirmed plans to launch an inquiry into the television advertising market, including the contract rights renewal (CRR) system controlling advertising on ITV1.

Yesterday, the Lords' communications committee put out a call for evidence for the inquiry, which will "pay particular attention" to the CRR mechanism introduced in 2003 to protect advertisers from the loss of competition when Carlton and Granada merged to form ITV plc.

ITV chairman Archie Norman and chief executive Adam Crozier have called for an end to the CRR system, which Crozier has described as being "out of touch and damaging for the interests of creative Britain".

In May, the Competition Commission opted to retain the CRR after judging that ITV had "overstated the cost and distortions" imposed by the mechanism.

However, the competition body did say that ITV1 HD and the long-planned ITV1+1 channel should be factored into future CRR calculations, while the system should be removed completely at some point in the future.

The Lords committee will investigate the declining revenues that commercial broadcasters gain from the sale of advertising across their networks.

The members will also consider possible changes to current ad market regulation, including the CRR system, product placement rules and the scheduling and sale of advertising.

The committee wants to hear evidence on the current levels of regulation and what impact a relaxation of the rules could have on the commercial broadcasting sector.

"The advertising-funded broadcasting model has served public service broadcasting well. It is important that, as the media develop, the regulation of television advertising adapts to the times and that the right regulations are in force for the benefit of the industries as well as for the public," said the Earl of Onslow.

"In this inquiry we want to see how potential regulatory changes and the increasing competition from the internet and other media might affect commercial broadcasting. CRR has significant commercial implications for the sector and will form an important part of our discussions."

Speaking to The Guardian, an ITV spokeswoman said: "ITV warmly welcomes [the] announcement by the House of Lords select committee on communications that it is to carry out a new inquiry into the regulation of TV advertising in the UK.

"Since 2003, audiences have fragmented as viewer choice has increased and internet based platforms have grown exponentially.

"New channels, together with internet advertising, are strong and effective competitors to ITV and the CRR remedy is no longer required and is not in the public interest."

Interested parties must submit written evidence to the inquiry by September 24, with oral evidence to be heard in October. A written report is expected to follow in late 2010 or early 2011.

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