Authorities Chop Clever Sales Plan

Michael Hedges October 13, 2011 - Follow on Twitter

Relations between public and private sector broadcasters are, today, as contentious as ever. Arguments are tough to resolve, both sides deeply entrenched. Selling advertising is one of many that draws out the long knives.

Ireland’s Competition Authority completed its investigation of a complaint by commercial broadcaster TV3 that challenged ad sales practices by public broadcaster RTE. TV3 argued that the “share deal” trading scheme – discounts given to advertisers spending a set percentage of their ad budgets with RTE – constituted an abuse of dominant market position. The Competition Authority seemed to agree and negotiated a change with RTE, which will end the practice by July 1st 2012.

“During the course of its investigation, the Authority raised concerns that the share deal may infringe part of the Competition Act,” said its statement (October 12). “Under the new trading scheme, discounts given to advertisers will not depend on the share of the advertiser's total television advertising budget committed with RTE. These undertakings have been provided in the context of a broader change of RTE's advertising trading scheme.”

Advertising contributes significantly to RTE’s budget, a household license fee makes up the rest, about one-third. In 2009 RTE was close to bankruptcy when the Irish ad market collapsed. The “share deal” trading scheme at RTE has been in place since commercial television arrived in Ireland, an idea ripped from newspaper publishers.

“We believe we have suffered very significant damages,” said TV3 CEO David McRedmond in a statement. “The Competition Authority are very clear that this practice is one that could not continue. We’ll be looking at what the possible options are for remedies. The reality is that we’d have to litigate,”

The decision is resonating beyond Ireland. “It is impossible to overstate the significance of this decision,” said Association of Commercial Television Europe (ACT) general director Ross Biggam in a statement (October 13). “Ireland has long been characterized by an extraordinary degree of dominance enjoyed by the dual-financed public broadcaster RTE, whose advertising sales practices have now been found to be an abuse of their dominant position.” (See the ACT statement here)

“The investigation initiated by TV3’s complaint has closed on amicable and agreed terms,” said the RTE statement. “RTE was happy to agree to change the way it traded. RTE‘s willingness to do this was directly informed by its overall review of its airtime sales method.”

“The world has moved on,” noted RTE TV sales director Geraldine O’Leary, quoted by thejournal.ie (October 12), “and we are moving away from share-based deals. We will do so in mid-year when the systems are fully ready for us to make that change.”

The entire Irish media sector is under examination, ownership and plurality being an issue bigger than ad sales. Irish Communications Minister Pat Rabbitte said “pressing issues” will lead to new legislation on media mergers, perhaps early in 2012. “It is clearly the case that an excessive concentration of media ownership and control involves risks that go beyond those involved in the case of ordinary goods and services,” he said to the National Union of Journalists conference in Dublin (October 8), quoted by the Irish Times. It’s likely the breadth of Irish media will be affected, should a new media bill pass the Irish parliament, including RTE.

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