Ofcom announces a review of the TV advertising trading mechanism

15 March 2011

Ofcom today announced a review of the operation of the UK's TV advertising market.

The review will look at the underlying trading model: the way TV advertising is currently bought and sold. The review will seek to assess whether the current method prevents, distorts or restricts competition, and whether this has a detrimental effect on consumers.

If Ofcom's review reveals cause for concern, it will pass the matter to the Competition Commission for a full-scale, formal review of the trading model.

Speaking at the ISBA (Incorporated Society of British Advertisers) annual conference this morning, Ed Richards said:

"The significant recovery in the advertising sector means that the industry is now in a much better position for a review of the trading model.

"The time is now right to consider whether there are reasonable grounds for suspecting that the trading mechanism might be expected to prevent, restrict or distort competition in the sale of TV advertising airtime.

"It is a real opportunity for the sector and others to come forward with views on this very important issue."

The purposes of TV regulation

Against the backdrop of changes in the TV advertising sector and the prospect of more changes in future, Ofcom considers that it is appropriate to take a further look at the underlying rationale for the regulation of TV advertising and consider how best Ofcom can take account of the economic and public interest arguments in this area.

Currently commercial broadcasters are allowed more advertising minutes per hour than Public Service Broadcasters (PSBs). On this point Ed Richards told the IBSA conference that no decision would yet be made about whether this situation should be changed:

"We face a real challenge in balancing our duties in this area.

"The choices we make could have significant repercussions for the public interest objectives laid upon us by statute, as well as for the fortunes of particular stakeholders.

"Any choices we do make must be rooted in a clear understanding of how the relevant public interest objectives in our statutory remit should be weighed against each other – alongside the more specific economic analysis of different options."