Guidelines and rules relating to the running of promotions and advertising on commercial television.
In May 2001, the ITC launched a public consultation on cross-promotion in commercial television, including a set of proposed new rules to regulate this area. As a result of the responses to this and of the importance of the issues raised, it was thought that, exceptionally, a further round of consultation was warranted. A revised set of proposed rules was therefore drawn up for a second public consultation. These proposed rules were presented, along with the main points arising from the initial consultation, with a full explanation of the recommendations on each.
Our overall aim throughout this process has been to achieve a balance between supporting the real benefits for viewers that cross-promotions can bring, especially in the new multi-channel digital environment, and the disbenefits that arise if cross-promotions are excessive, affect editorial integrity by misusing programme time for advertising, or threaten fair and effective competition in the provision of ITC-licensed services and services connected with them.
The second consultation was published in October 2001. We received 16 responses to the second consultation paper, with contributions from all the key broadcasters, channel providers and industry interest groups. These responses were, in general, positive and in agreement with the principles motivating the proposed rules. The main proposals consulted on were:
The main points of debate arising from the consultation concerned the proposals to limit the promotion by analogue terrestrial broadcasters of digital platforms or platform service providers (for example, the promotion on ITV of ITV Digital). We outline the arguments made and our conclusions on this point, as well as some more general arguments which arose in the consultation, before setting out the new rules in full.
The second consultation paper included analysis and rules on the extent to which analogue terrestrial channels could promote pay-TV channels, platforms and platform service providers.
Firstly, we examined the possibility that promotion of pay-TV channels by those broadcasters could adversely affect competition in the channel market and identified several factors that might give rise to competition concerns. Secondly, we examined the extent to which analogue terrestrial broadcasters, and particularly ITV, might through cross-promotion, distort competition in the platform services market.
It was put to us by some respondents that there are no competition law grounds upon which ex-ante regulation of cross-promotion can be made. It was argued, for example, that ITV is not in a dominant position in any of the relevant economic markets, and that even if it were, it is not in a position to lever its market power to distort competition in a related market. Furthermore, it was maintained that existing prohibitions in EC and UK competition law are sufficient to deal with any possible problem of this nature, should one arise.
We have been explicit throughout this consultation that the proposed rules were written under our competition duty as set out in the Broadcasting Act. The ITC has previously made clear that, in fulfilling this duty, it would follow the approach of the DGFT and other competition authorities, so far as was practicable. In this case, we have considered the structure of the market and its inherent competitive pressures to determine the extent to which competition is working less effectively than it would within a truly competitive market. Our aim has been to assess the need for any ex-ante rules of conduct, rather than to conduct an ex-post competition assessment.
In addressing the first matter of channel cross-promotion, and as set out in the second consultation document, we noted that analogue terrestrial channels have varying but important audience shares in the relevant market (i.e. multichannel households). In recommending some modest limitations on the extent to which such promotions could be carried out on Channels 3, 4 and 5, we noted several points. Firstly, these channels have relatively high audience shares, compared with pay-TV channels (for example, ITV’s share in multichannel households is 20 per cent; Sky One’s is 3.6 per cent). Secondly, ITV in particular is in a strong position, with a share of peak time viewing in multichannel households of 27.5 per cent. Thirdly, as promotion is of such importance in launching new channels in pay-TV, especially as the number of such new channels grows over time, the promotional advantages accruing to channels owned by analogue terrestrial broadcasters could represent genuine barriers to entry.
We concluded, therefore, that the audience and coverage positions of the free-to-air analogue terrestrial broadcasters could give any new channels they launched a clear advantage, and that possible competition between these analogue-promoted channels and existing or potential new entrants would be affected if excessive cross-promotion were allowed. Although we note the arguments presented to us, we regard it as both reasonable and proportionate that indicative limitations (though certainly not any outright ban or even explicit time limit) be placed on the use of such promotions.
On the second matter, the cross-promotion of pay-TV platform service providers, in our view, the market position of ITV (with an average audience share of around 27 per cent in all TV homes over the past year, and 31.5 per cent in terrestrial-only homes) could give it an unfair advantage in attracting customers to the ITV Digital platform service. We are concerned that this could distort fair and effective competition in the platform services market. The relative sizes and positions of the platform service providers in the UK pay-TV market mean that it is important that such distortions be kept to a minimum, in order to maintain a healthy number and variety of competing platform service providers. We have, therefore, proposed a limited restriction on the way in which non-advertising promotional time can be used, such that platform service providers may not be promoted directly. Again, all broadcasters remain free to use paid-for advertising time to promote channels, platforms, platform service providers or any other associated service.
In summary, while we have carefully considered the arguments presented to us, we believe that the proposed new rules are entirely proportionate measures in line with our statutory duty to ensure fair and effective competition. They are intended to facilitate, by ex-ante intervention, the better working of the markets concerned through competition in quality and types of service.
Several additional points were raised in response to the second consultation:
The proposals were interpreted by some as imposing a bar on analogue terrestrial licensees from promoting generically any digital platform. We wish to make clear that this is not the ITC’s intention, and that the new rules permit material promoting digital terrestrial television generically to be broadcast outside advertising minutage by analogue terrestrial licensees.
It was suggested that the proposed rule for ITV licensees to be allowed to make non-financial arrangements between themselves for the promotion of ITV network or ITV-branded programmes or channels (footnote 1 in Rule 1) is discriminatory, preferential to ITV licensees and therefore outside the ITC’s powers. The intention behind this rule is that viewers be provided with a uniformity of promotional information in areas where a particular service is available. The structure of the ITV network means that, without this provision, ‘ITV services’ cannot be cross-promoted on ITV in some areas where they are available, whereas they can in others. The rule is a measure to deal with a peculiarity of the ITV system and as such is not discriminatory, any more than are the ITV Network Arrangements.
At present, a refusal by any broadcaster to accept advertising of a generic kind from competing broadcasters is likely to be regarded by the ITC as “unreasonable discrimination”. It was argued that this rule should apply only to broadcasters with market power, since it can only now be insisted upon for competition reasons. However, the ITC still regards the maximum diffusion of information on pay- and digital television opportunities and options, through the appropriate channels, as of primary importance to the success of digital TV, and views the ‘no unreasonable discrimination’ rule as appropriate for ensuring this.
The following issues also arose from the consultation:
The ITC’s new rules on promotions are set out in full below, and will come into effect on January 11, 2002. They replace all existing rules and guidelines on promotions and cross-promotions.
The overall aims of the new rules on programme, channel and related service promotion are to reach a balanced outcome allowing benefits to be gained, while minimising the potential disbenefits. Benefits include:
The disbenefits could include:
In short, promotions should be designed to give viewers information about programmes and services likely to be of particular interest to those watching at the time and should not become advertisements, or threaten fair and effective competition in the provision of licensed services and services connected with them.
ITC licensees may, outside advertising time, and subject to the following rules,
Promotions outside advertising time should provide information of value to viewers and should avoid creating significant viewer annoyance. The amount of promotion on all ITC-licensed channels will be periodically reviewed by the ITC, such reviews being informed by surveys of viewer attitudes and an assessment of the extent to which such promotions might affect competition in the relevant television market.
To promote fair and effective competition while ensuring continuing informational benefits for viewers, there will be special restrictions for Channel 3 licensees, Channel 4 and Channel 5:
Channel 3 licensees will be allowed to make non-financial arrangements for the promotion on the ITV network of ‘ITV-branded’ programmes, channels and related services in ITV regions where such services are available.
The primary place for cross-promotions and other promotions is within promotional airtime and not programmes. In-programme promotions should not compromise the editorial integrity of the programmes within which they are placed by any means, or lead to advertising substituting for programme content. In-programme mention of other programmes or services:
Where it is of general interest to viewers and consistent with the style of the programme, it will be acceptable for programmes to contain:
Additionally, certain multi-item programmes of more than one hour’s duration (including sport, provided the action is not interrupted) may include taped material that is relevant to the subject matter of the programme.
NB Material allowed for in this section will not be deemed to be in breach of Section 8.4 of the ITC Programme Code.
Programme end-credits will not be defined as falling within the definition of in-programme time for the purposes of these rules.
Special guidance for digital channels
Digital channels which can be shown to have market power in their relevant market will, if requested by a particular distribution platform, be expected to provide a feed clean of interactive icons referring to the interactive service, if that interactive service is not available on the platform concerned. It is not intended that this rule will supersede the existing BSkyB undertaking to the OFT on this subject.
To be considered as ‘provider’ of another channel or service, a promoting channel must hold or be beneficially entitled to at least 30 per cent of the shares in the promoted channel or service, or possess 30 per cent or more of the voting power in the promoted channel or service.
Since the public view and general industry opinion are the best indicators of whether or not levels of promotion are ‘excessive’, and since these tend to change over time, no further definition of this term is believed to be useful at the current time. The ITC will monitor and respond to feedback, surveys and complaints which indicate significant changes in these opinions.
ITV, Channel 4 and Channel 5 had shares of 20%, 6.8% and 4.5% respectively of audiences in multichannel homes at the end of November 2001. ITC figures.
 ITC figures. Terrestrial-only figure averaged from May to October 2001