Broadcasting Code Review: Commercial references in television programming

Summary

Executive Summary ^(-1-)

To date, Ofcom's Broadcasting Code has prohibited product placement. This prohibition was based on the requirements of European legislation. Changes to EU law, and resulting amendments to UK legislation, now allow for the placing of references to products, services or trade marks in television programmes in return for payment.

As a result of these changes, we intend to amend the Code to remove the prohibition on product placement. This consultation therefore sets out proposed new rules reflecting the new UK legislation that enables product placement in television programming.

The introduction of product placement impacts on the regulation of other types of commercial references during television programming, such as sponsorship. We are therefore also proposing revisions to those rules we consider are impacted by product placement.

Introduction

1.1 Under the Communications Act 2003 ("the Act"), Ofcom is required to draw up and, from time to time, revise a code for television and radio services, covering standards in programmes, sponsorship and fairness and privacy. This Code is known as the Ofcom Broadcasting Code ("the Code") and it came into effect in July 2005 ^(-2-), following extensive public consultation and research during 2004.

1.2 Ofcom made a commitment in the 2008/9 Annual Plan to review the Code and consider whether it still reflected the consumer, industry and regulatory environments in which it operates. In response to these commitments, in June 2009 Ofcom launched its Consultation on the Broadcasting Code Review ^(-3-).

1.3 As part of this consultation, Ofcom proposed revised rules relating to: the protection of under-eighteens; harm and offence; and sponsorship and commercial references in programming.

1.4 The rules relating to sponsorship and commercial references proposed in 2009 were drafted in light of the UK's longstanding prohibition on product placement (i.e. the inclusion of references to products and services within programmes in return for payment) that was in place at the time of the review.

1.5 In September 2009, the Government announced that it was minded, subject to consultation, to permit product placement in specific television programme genres, with certain limitations.

1.6 Following this statement, Ofcom announced that it was going to extend its review of Sections Nine and Ten of the Code to allow it to take into account not only the outcome of the Government's consultation on product placement, but also the potential wider implications of any change in this area on other rules relating to commercial references in television programming (e.g. rules relating to sponsorship).

1.7 In December 2009, Ofcom published an updated Code ^(-4-) containing revised rules relating to the protection of under-eighteens and harm and offence.

1.8 Following the Government's consultation, it issued a statement ^(-5-) setting out its intention to legislate to permit product placement, subject to certain restrictions. The Audiovisual Media Services (Product Placement) Regulations 2010 ("the Regulations"), the statutory instrument that amends the Act to enable product placement on television, came into force on 16 April 2010. The revisions to the Act require Ofcom to set standards in respect of product placement.

1.9 The purpose of this consultation is therefore to propose new rules to allow product placement in the permitted programme genres and to make clear when product placement will not be permitted. We are also proposing revisions to existing rules that we consider are impacted, directly or indirectly, by the decision to allow paid-for commercial references within television programmes.

1.10 The consultation covers commercial references that feature in television programming only. A separate consultation has been published in relation to commercial references in radio programming ^(-6-).

Overview of our proposals

1.11 The Act (as amended by the Regulations) contains a number of specific requirements in relation to regulation of product placement. Ofcom is now required to amend its Code to implement these requirements.

1.12 The Act sets out those programme genres in which product placement is permitted: films; television series; sports programmes; and light entertainment programmes. However, it expressly prohibits product placement in all children's programmes, and in religious; current affairs; and consumer affairs programmes that are produced under UK jurisdiction ^(-7-).

1.13 It prohibits the product placement of cigarettes or other tobacco products and prescription-only medicines in all programmes, and further prohibits in programmes produced under UK jurisdiction the paid-for placement of products associated with smoking (such as cigarette lighters and papers), alcoholic drinks, foods or drinks which are high in fat, salt or sugar, gambling services, all medicinal products and infant and follow-on formulae.

1.14 It sets general requirements and safeguards in relation to the impact product placement can have on programmes. It also specifies when audiences should be made aware when a programme contains product placement.

1.15 The rules we are proposing in this consultation therefore reflect these requirements, providing further guidance where we consider it is appropriate.

1.16 In addition to reflecting the requirements set out above in rules within the Code, we are proposing additional rules that we consider: i) clarify the requirements of the Act; or ii) are appropriate to ensure that audiences are afforded adequate protection; or iii) are appropriate in light of the changes to the regulatory landscape resulting from the introduction of product placement.

1.17 In summary, our proposals are:

Product Placement

1.18 Scope of product placement rules: the Act defines product placement as being "for a commercial purpose". We are proposing to apply the rules to all instances of paid-for placement, regardless of whether the placement is intended to serve a commercial purpose (see Part 4, Proposal 1).

1.19 Single dramas: these are not specifically referred to in the list of programme genres in which product placement is permitted. We are proposing to clarify that such programmes fall within the definition of films and may therefore contain product placement (see Part 4, Proposal 2).

1.20 News: the Act does not explicitly prohibit product placement in news but the Government has made it clear in its statement that news does not fall within the programme genres in which product placement is permitted. We are therefore proposing a rule to clarify that product placement in prohibited in news programmes (see Part 4, Proposal 3).

1.21 Thematic placement: we are proposing to clarify that thematic placement - that is the creation of scripts/storylines as vehicles for the purpose of featuring the aims, objectives, beliefs or interests of a third party funder - is prohibited (see Part 4, Proposal 4).

1.22 Specialist factual programmes: we are seeking views on whether Ofcom should prohibit product placement in specialist factual programmes (e.g. purely factual programmes covering educational, science, medical or arts subjects, or those that are investigative in nature) (see Part 4, Proposal 5).

1.23 Prohibited restricted products/services: in addition to those products, services and trade marks that are prohibited under the Act from being included in programmes as a result of product placement arrangements, we are proposing to prohibit the paid-for placement within programmes of any product, service or trade mark that cannot be advertised on television (see Part 4, Proposal 6).

1.24 Signalling of product placement: the Act includes a signalling requirement for product placement. We are proposing that audiences are made aware of instances of product placement by means of a universal neutral logo, and a universal audio signal (to ensure that both visually and hearing impaired audience members are made aware when a programme contains product placement). Additionally, we are proposing that broadcasters make available to the audience a list (in a programme's end credits or on the broadcaster's website) of products, services or trade marks that have been placed in a programme. We also make a range of proposals in relation to raising audiences' awareness of the product placement signals and what they mean (see Part 4, Proposal 7).

Sponsorship

1.25 The current rules that apply to television sponsorship are based on the principle that paid-for commercial references are kept separate from editorial. The introduction of product placement changes this position. We are therefore consulting on proposed revisions to those sponsorship rules that are underpinned by the separation principle.

1.26 Sponsor references within sponsored programmes: we are proposing to remove the rules that prevent sponsorship arrangements resulting in references to the sponsor within a sponsored programme. We also intend to clarify that where a reference to the sponsor's products, services or trade mark are included in a programme, this will be treated as product placement and must therefore comply with the relevant rules (see Part 5, Proposal 8).

1.27 Identifying sponsorship arrangements (sponsorship credits ^(-8-)): we are proposing revisions on how sponsorship arrangements are announced to ensure that audience members are made appropriately aware when they are viewing commercial messages, and can distinguish between different types of commercial arrangements, such as sponsorship and product placement (see Part 5, Proposal 9).

1.28 Sponsorship credits during programmes: we are also proposing to amend the rules on sponsorship credits to allow credits to be broadcast during programmes. However, to ensure that such credits do not conflict with the product placement rules and are not unacceptably intrusive, we are proposing a number of restrictions on the content and scheduling of credits shown during programmes (see Part 5, Proposal 10).

Other proposed revisions

1.29 We are proposing revisions to other Code rules that we consider are no longer applicable following the introduction of product placement. These include:

1.30 Separation of programming and advertising: current rules are based on an overarching principle that editorial content must be kept separate from advertising. The rules are based on the requirements of European legislation (see relevant legislation below). Changes to EU law mean that advertising no longer has to be separated from editorial but that the two must be distinct from one another. We are therefore proposing to amend those rules requiring separation to ones requiring distinction between such content. We also intend to amend the corresponding principle set out in the Code (see Part 6, Proposals 12 and 13).

1.31 Surreptitious advertising rule: we are proposing a rule prohibiting surreptitious advertising as we consider that the introduction of product placement, and therefore the inclusion of paid-for references within programmes, poses an increased risk that viewers may be exposed to surreptitious advertising (see Part 6, Proposal 14).

1.32 Virtual advertising: this occurs during the broadcast coverage of an event, and involves replacing advertising that is present at a venue with advertising tailored for the television audience. The current Code contains a specific rule about this practice, which provides a limited exemption to the existing prohibition on product placement. The removal of this prohibition renders the rule unnecessary and we are therefore proposing to remove it from the Code (see Part 6, Proposal 15).

Relevant areas of legislation

1.33 Part 3 of this document outlines Ofcom's statutory duties and other areas of legislation relevant to this consultation. These include, in particular, sections 319(2)(fa), (i) and (j) and 319(4)(a), (c), (e) and (f), section 321(1) and (4) and section 324(3) of the Communications Act 2003; Articles 9, 10, 11, and Chapter VII (Articles 19 to 26) of the Audiovisual Media Services Directive; regulation 3(4)(d) of the Consumer Protection From Unfair Trading Regulations 2008; section 21(1) of the Financial Services and Markets Act 2000; paragraph 3 of the Investment Recommendation (Media) Regulations Act 2005; and Article 10 of the European Convention on Human Rights.

Approach to Impact Assessment

1.34 The consultation document does not contain a separate impact assessment document. Instead the consultation document as a whole assesses the impact of the proposed changes on stakeholders (including citizens and consumers; and television broadcasters). This assessment has been informed by the responses to the 2009 Code Review, our 2010 pre-consultation discussions with stakeholders and the Government's most recent consultation on product placement ^(-9-).

1.35 Further, this consultation document does not include assessments of the potential impacts of those proposed product placement rules Ofcom considers to be direct requirements of the Act, which Ofcom has a statutory duty to implement in the Code. Where Ofcom has scope to decide between different ways of implementing policy, considerations in relation to consumer, regulatory and economic impacts are addressed within Parts 4 to 6 of this document.

1.36 In relation to equality, Ofcom is required by statute to have due regard to any potential impacts its proposals may have on race, disability and gender equality, as well as the other groups protected by legislation in Northern Ireland ^(-10-). To fulfil this obligation, we have completed an Equality Impact Assessment (EIA) screening form (attached at Annex 11), which takes the form of an initial analysis of whether the proposals we are making raise equality issues, and if so, what their potential impacts might be. In particular, this focuses on the signalling of product placement and sponsorship.

1.37 Following completion of the consultation and consideration of stakeholder responses, we will review whether, on the basis of stakeholder responses received, there are, in fact, equality impacts and/or considerations that we have not, to date, accounted for. Should we find evidence to support this we will proceed to a full Equality Impact Assessment. Our published statement representing the conclusion of this consultation process will detail whether Ofcom did progress with a full Equality Impact Assessment and if so the conclusions drawn from this assessment. Such considerations will also inform our final revisions to the Code.

Guidance

1.38 Because product placement will be a new practice in programmes produced or commissioned by Ofcom licensees, we intend to issue additional guidance to assist broadcasters. This will accompany the revised Code and be issued alongside it, as an update to the existing guidance ^(-11-). In view of these circumstances, we request stakeholders' views on specific areas or issues on which they would welcome Ofcom guidance. As the product placement market becomes established, this guidance will be kept under regular review.

Next steps

1.39 The following parts of this document set out our proposals and invite stakeholders' views on them. In responding to the questions for stakeholders, please see Part 3 which sets out Ofcom's regulatory objectives and statutory duties. The consultation responses will enable us to consider our proposals in light of stakeholder comments. We will publish a summary of responses and statement in response when the revised Code is published at the end of 2010.

1.40 Stakeholders should note that, until Ofcom has issued its statement and the revised Code, following the closure of this consultation, the current Code rules remain in force.

Footnotes:

  1.- Please see the Glossary at Annex 5 for the meanings of terms used throughout this document.

  2.- The Code was revised subsequently in October 2008 and December 2009.

  3.- http://www.ofcom.org.uk/consult/condocs/bcode09/main.pdf

  4.- http://www.ofcom.org.uk/tv/ifi/codes/bcode/

  5.- http://www.culture.gov.uk/reference_library/minister_speeches/6624.aspx

  6.- http://www.ofcom.org.uk/consult/condocs/bcrradio2010

  7.-"programmes produced under UK jurisdiction" means any programme produced or commissioned by either: a) the provider of the television programme service or any person connected with that provider (except in the case of a film made for cinema); or b) any other person with a view to its first showing taking place in a television programme service under the jurisdiction of the United Kingdom (for the purposes of the AVMS Directive). For further details on these requirements and their meanings, see Part 4.

  8.-Sponsorship credits are announcements informing the audience when a programme is sponsored and by whom.

  9.-A summary of the responses to the Governments consultation on product placement is at: http://webarchive.nationalarchives.gov.uk/+/http://www.culture.gov.uk/images/consultation_responses/Consultation_Report_final.pdf

  10.-In addition to race, disability and gender, equality legislation in Northern Ireland also covers age, sexual orientation, carers, marital status, religious belief and political opinion.

  11.- http://www.ofcom.org.uk/tv/ifi/guidance/bguidance/