The television advertising market is undergoing considerable change as a result of last year’s Enforcement Decision by The Competition Authority, which concluded that RTÉ’s practice of granting discounts based on the share of each advertiser’s total television advertising budget could amount to a breach of competition law. As a consequence, RTÉ agreed to end ‘share dealing’ from July of this year.
The Competition Authority investigation took place at the behest of TV3, which has felt for some time that RTÉ has been abusing its dominant position in the market and selling below cost.
RTÉ recently published a new trading policy, which no longer rewards advertisers on the basis of share but does offer discounts based on volume of spend and behavioural factors such as Early Agreement.
In response to this, TV3 has written to the Minister for Communications, Pat Rabbitte, claiming that RTÉ’s new advertising scheme violates the Competition Authority’s Enforcement Decision. In light of this, TV3 has suggested an alternative approach by urging the Minister to eliminate peak-time advertising on RTÉ 1 or remove advertising from RTÉ 1 altogether. By doing so, TV3 believes that the price of advertising will increase across the board.
IAPI’s View
Given this backdrop, IAPI would like to make its position clear:
- IAPI agreed with the Competition Authority Enforcement Decision which removed unfair ‘share dealing’.
- IAPI believes that RTÉ’s new trading scheme is still not structured according to the best interests of the industry. Therefore, we have urged the broadcaster to review the Early Agreement Discount, which is restrictive and requires advertisers to underwrite a budget prior to the start of the trading year. We firmly believe that it would be in the best interests of advertisers and RTÉ to eliminate this clause and have one volume-related pricing structure in its place, with an even distribution of discount across the year.
- IAPI will not support any intervention which would result in artificial price inflation and we strenuously oppose the removal of advertising minutage from RTÉ 1, or any channel, as this would restrict the ability of advertisers to reach customers.
- Finally, IAPI believes that the existing dual-funding mechanism needs to be addressed in order to ensure that independent Television (and Radio) broadcasters can compete on an equal basis with the state broadcaster. The introduction of a household media charge (to replace the existing TV licence fee) could generate €25m extra ‘income’ (from previous licence fee evaders). This additional revenue would provide the Government with the wherewithal to address this problem and provide support to those broadcasters which engage in public service output.
The combined effect of our suggested measures would address the concerns of all parties and ensure that a free and open market exists, where supply and demand decide the price of advertising airtime.
For More information:
Mick O’Keeffe, Pembroke Communications: 01 649 6488 / 087 8854072
Keira Doyle, Pembroke Communications: 01 649 6635 / 086 269 4460
www.iapi.ie
