Rules requiring ITV1, Channel 4 and Five to sell all their advertising airtime, and restricting the way in which all broadcasters sell bundles of advertising airtime across their portfolios of channels, could be scrapped following consultation proposals launched by Ofcom today.
The rules last reviewed in 2003, were designed to ensure fair and effective competition in the sale of TV advertising airtime.
Ofcom believes that these rules may no longer be appropriate as a result of significant developments in the TV sector. A substantial increase in the number of channels has led to increasingly fragmented TV audiences across many channels and enabled media buyers to purchase airtime across an extensive range of channels.
In 2003, Ofcom found that ITV1, Channel 4 and Five had the potential to withhold advertising airtime in order to increase prices. However, taking account of how the market has developed since 2003, they may no longer have any incentive to do so since such conduct would be unlikely to deliver more revenue and profits. Ofcom is therefore proposing that this rule should be removed, bringing the commercial PSB channels into line with other UK commercial broadcasters.
Bundling occurs when media buyers buy advertising airtime across multiple TV channels rather than on a single channel. It can yield benefits to broadcasters and advertisers, such as reduced negotiation costs.
In certain circumstances bundling could also give rise to competition concerns. But given the possible benefits and sector developments, Ofcom is proposing that the current industry-wide ban on a particular type of bundling - i.e. conditional selling - is no longer appropriate and should be removed. Any anti-competitive effects from bundling, should they arise, would then be best dealt with on a case-by-case basis.
The consultation period runs for ten weeks and closes on 7th June.
In the spring Ofcom will publish proposals on whether to amend the rules which set the maximum amount of advertising minutes and determine break patterns for commercial PSBs and other channels.
Ed Richards, Ofcom's Chief Executive, said:
"In the last few years the TV sector has moved on with substantial increases in the take-up of digital services and in the number of available channels."
"We are proposing that these rules be removed in light of broader developments in the sector. Underpinning all of our work this year on advertising is a commitment to reduce and simplify regulation whenever there is no clear evidence of a public interest which requires regulation."
NOTES FOR EDITORS
1. Ofcom is reviewing the Airtime Sales Rules under Section 318 of the Communications Act.
2. Ofcom is the independent regulator and competition authority for the UK communications industries, with responsibilities across television, radio, telecommunications and wireless communications services.
3. The withholding rule applies to the commercial analogue channels i.e. ITV1, C4 and Five. The conditional selling rule applies to all broadcasters (who have channels licensed by Ofcom).