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Review of the cross-promotion rules

Summary

Introduction

1.1 Ofcom has reviewed the cross-promotion rules that currently regulate the cross-promotional activities of all television Broadcasting Act licensees. Ofcom inherited these rules from the Independent Television Commission (‘ITC’)^(-1-) and Ofcom had a duty to review them in order to ensure that they remained relevant and appropriate.

1.2 Ofcom has sought to reduce the rules to the minimum required to clarify what is, and what is not, advertising; and the measures needed to ensure an appropriate competitive environment in the run up to digital switch-over.

1.3 Television, and advertising, is changing rapidly. In television, channels aimed at large audiences are complemented by niche channels aimed at smaller audiences with specific editorial interests. The same programmes appear on a variety of different channels, and there is an increasing desire by TV broadcasters to be able to promote their own services, but without using up valuable advertising time. Meanwhile, advertisers are also complementing their mass audience approaches by finding ways of addressing audiences in narrower, more specialist ways, using new forms of advertising and different ways of aligning commercial messages with editorial product.

1.4 The EU directive^(-2-) that requires television programmes and advertising to be kept distinct needs to be reviewed against those changes; and in this context, the rules around cross-promotion are of added significance. The same EU directive constrains the amount of advertising any television channel can show. Whilst a review of the EU Directive is underway^(-3-), and it appears that there is likely to be some liberalisation of these constraints, it will nevertheless retain a degree of control over the amount of advertising television broadcasters can sell. Any promotion can only be excluded from the calculation of advertising minutage if it is not advertising.

1.5 This statement sets out Ofcom’s conclusions for the regulation of cross-promotional activities going forward and includes the new Cross-promotion Code.

Cross-promotion by television broadcasters

1.6 Promotional airtime on television arises as a result of both the advertising rules that limit the amount of advertising that can be shown and programme lengths. Broadcasters are often left with remaining airtime between advertising and programmes, which they use for self-promotion (promotions for programmes on the same channel) and cross-promotion^(-4-).

1.7 Cross-promotion by television broadcasters is the promotion on one television channel of another channel or service, such as ITV1 promoting programmes on ITV3 or Channel 4 promoting E4 or E4’s availability on cable, satellite and Freeview.

The current cross-promotion rules

1.8 In January 2002, the ITC issued rules regulating the promotion of programmes, channels and related services on commercial television (‘the current rules’)^(-5-). The current rules were adopted by Ofcom on 29 December 2003^(-6-). The current rules address both competition and content issues, such as the potential impact of excessive cross-promotion on competition between channels and digital retail TV services^(-7-) and also on the viewer in terms of ‘clutter’ (excessive quantity of logos, on-screen graphics and other messages).

The December consultation

1.9 Ofcom consulted on 6 December 2005 on proposals for a new, deregulatory Cross-promotion Code. The consultation closed on 24 February 2006. There were 18 responses to the consultation and the majority of respondents were supportive of Ofcom’s proposals^(-8-). Ofcom has considered the responses carefully and taken them into account in publishing this statement and the new Cross-promotion Code.

Conclusions

1.10 The conclusions of Ofcom’s analysis are that, with the exception of two specific areas, it is appropriate to de-regulate and remove the current rules.

1.11 The new Cross-promotion Code contains the following two rules that apply to promotions outside programmes only, i.e. not within programmes:

a requirement on all television broadcasting licensees and S4C^(-9-) to limit the subject of cross-promotions to broadcasting-related services
This is necessary in order to protect consumers from promotions that provide no benefit to their viewing experience and to ensure the separation of television programmes from advertising; and
a requirement on Channels 3, 4 and 5 to maintain neutrality between digital retail TV services and digital platforms
Discrimination by the commercial terrestrial broadcasters in favour of one particular digital retail TV service or digital platform has the potential to have a material impact on competition between digital retail TV services. This is of particular importance as analogue-only homes must make choices about digital TV services in the run up to digital switchover and consumers should have the ability to make informed choices. It is therefore appropriate, in these particular circumstances, for Ofcom to put in place this precautionary measure.

1.12 In addition, Ofcom will remove the strict 30% shareholding requirement and replace it with non-binding guidance which is based on presumptions created by 30% shareholding or voting power relationships. This non-binding guidance is set out in the new code and will be reviewed from time to time in light of individual cases considered by Ofcom.

1.13 Ofcom will provide separate guidance on Rules 10.3 and 10.4 of the Broadcasting Code^(-10-) to make it clear that these rules are not intended to prohibit or constrain a licensee from self-promoting or cross-promoting in breaks between programmes.

1.14 Within programmes, Ofcom has decided that references to broadcasting-related services do not need separate rules. Instead, they will be subject to the provisions of Section 10 of the Broadcasting Code, which deals with commercial references in programmes, in the same way as references to any other services or products. This is reflected in the Cross-promotion Code.

1.15 In addition, Ofcom has decided that, in certain circumstances, a broadcaster may be able, by means of the Broadcasting Code (more specifically, the ability to promote ‘programme-related material’), to inform viewers that a programme it is showing is also available on another, unrelated channel.

1.16 Ofcom considers that it is unnecessary to retain the rule that promotions in centre breaks must not exceed 20 seconds, which is currently contained in the Rules on Amount and Distribution of Advertising (‘RADA’)^(-11-), and therefore this will be removed.

Digital Switchover communications obligations

1.17 Ofcom is currently discussing with the commercial terrestrial broadcasters how they will fulfil the Digital Switchover (‘DSO’) communications obligations which are set out in their Digital Replacement Licences (‘DRLs’). Nothing in this Statement on the Cross-promotion code should be read as limiting the DSO communications obligations placed on the commercial terrestrial broadcasters under the provisions of the DRLs, or the associated platform neutrality requirements.

Cross-promotion by the BBC

1.18 Ofcom has no powers to regulate the BBC’s cross-promotional activities and therefore this review does not include proposals in respect of the BBC. The Government’s White Paper published on 14 March 2006 stated the following:

“Ofcom has identified a potential area of concern in the case of cross promotion between digital platforms. This is an example of where we expect the Trust, in consultation with Ofcom, to formulate an ex ante code to ensure that effective regulation might be extended across the whole broadcasting sector.”

1.19 Ofcom considers that the analysis and proposals for regulation set out in this document have equal relevance to the BBC as to the commercial terrestrial broadcasters. Therefore, in line with the Government’s White Paper, Ofcom considers that it is important that an ex ante code based on similar principles is formulated for the BBC.

Cross-promotion by radio broadcasters

1.20 There are no rules that currently apply to cross-promotion by radio broadcasters. Crucially, and in contrast with television, there are no advertising minutage restrictions for radio and radio contains ‘programming’, rather than clearly delineated ‘programmes’. Therefore, issues that arise with promotional airtime on television do not arise in radio broadcasting in the same way.

Timing of the new cross-promotion code

1.21 The new Cross-promotion Code will come into effect on 10 July 2006. Ofcom intends to issue amended guidance on the Broadcasting Code and to remove the 20 second rule from RADA on the same date.

Footnotes:

1.-The current rules, which are replaced by Ofcom’s ‘Cross Promotion Code’, are available at: http://www.ofcom.org.uk/tv/ifi/guidance/rules_promo_prog/

2.- The EU Directive on Television Broadcasting 89/552/ EEC, 3 October 1989 (as amended by Directive 97/36/EC, 19 June 1997), and the 1989 Council of Europe Convention on Transfrontier Television (‘Television Without Frontiers Directive’).

3.- Further details on the European Commission’s review of the Television Without Frontiers Directive is available at: http://europa.eu.int/pol/av/overview_en.htm

4.- In the absence of advertising minutage rules, it is likely that TV broadcasters would still self- and cross-promote, although there may be a reduction in quantity and promotions may appear at a different place in the schedule.

5.-The current rules which are replaced by Ofcom’s ‘Cross Promotion Code’ can be found at: http://www.ofcom.org.uk/tv/ifi/guidance/rules_promo_prog/

6.-For further information please see: The Office of Communications Act 2002 (Commencement No. 3) and Communications Act 2003 (Commencement No. 2) Order 2003, S.I. 2003/3142.

7.-Digital retail TV services include free-to-view multi-channel TV (such as Freeview on DTT and Sky Freesat on digital satellite) and pay-TV services (such as Sky subscription services on satellite, ntl and Telewest subscription services on cable, Top-Up TV on DTT and Homechoice over DSL).

8.- Copies of the non-confidential responses to the consultation are available at: http://www.ofcom.org.uk/consult/condocs/promotion/responses/

9.- Although S4C is not licensed by Ofcom, the Communications Act 2003 places a duty on the Welsh Authority, which is responsible for S4C, to comply with any code put in place by Ofcom pursuant to Section 319 of the Communications Act 2003. For further information please see paragraph 12 of Schedule 12 of the Communications Act 2003.

10.-The Broadcasting Code came into effect on 25 July 2005 and is available at: http://www.ofcom.org.uk/tv/ifi/codes/bcode/. The Broadcasting Code replaced the Programme Code which was produced by the ITC and inherited by Ofcom.

11.- http://www.ofcom.org.uk/tv/ifi/codes/advertising/rules/?a=87101

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