Code on scheduling of TV advertising

Statement published 26|05|09

Please note that the most recent version of the Code can be found at http://stakeholders.ofcom.org.uk/binaries/broadcast/other-codes/tacode.pdf

Summary

Introduction

1.1 This document reports on the outcome of the second stage of Ofcom’s review of advertising regulation^(-1-), which dealt with rules on:

1. the overall amount of advertising permitted on public service broadcasting (PSB^(-2-)) channels and non-PSB channels;
2. peak-time advertising on PSB channels;
3. the number of advertising breaks permitted on PSB and non-PSB channels;
4. the length of breaks within programmes on PSB channels; and
5. the amount of teleshopping^(-3-) permitted on PSB and non-PSB channels,

Background

1.2 Section 2 summarises the background to the review. In brief, Ofcom has carried out a comprehensive review of the advertising rules, partly in order to give effect to the Audiovisual Media Services (AVMS) Directive and partly to update rules that had not been substantively revised for many years. The outcome of Stage One of the review was a new Code on the Scheduling of Television Advertising (COSTA), which can be found in Annex 1. This replaced the former Rules on the Amount and Distribution of Advertising (RADA) with effect from 1 September 2008^(-4-).

Consultation

1.3 In October 2008, Ofcom published a consultation paper on Stage Two of the review. This set out a range of options relating to the issues set out in paragraph 1.1, including an initial impact assessment. Section 3 of this statement sets out consultees’ responses in relation to advertising breaks, teleshopping and related issues, as well as Ofcom’s decisions on these issues. Section 4 summarises responses in relation to the overall and peak-time amounts of advertising on television, and Ofcom’s decisions, and explains why Ofcom considers that a further review of the rules on advertising minutage will be needed next year.

1.4 Comments on Ofcom’s initial impact assessment are addressed in the revised impact assessment in Annex 3. All non-confidential submissions have been posted on our website.

1.5 In formulating our conclusions, we have had regard to a variety of factors, including:

1. the regulatory objectives published in the October 2008 consultation document, and reproduced in section 2 for ease of reference;
2. the evidence available to us that was summarised or referred to in the consultation document, as well as the outcome of deliberative research published in October 2008;
3. consultation submissions, including those that were confidential, and points made to us in meetings with stakeholders;
4. the outcome of Ofcom’s PSB review, published in January 2009; and
5. the repercussions of the recent drop in television advertising revenues, and the longer-term structural changes to the television market.

Ofcom’s decisions

Advertising breaks, teleshopping and other issues

1.6 Ofcom has decided:

1. to maintain the number of advertising breaks permitted on PSB channels at the current levels for programmes with a scheduled duration of 60 minutes or less, but to increase the number of permitted breaks in longer programmes to the same level as permitted on non-PSB channels. This change does not affect the particular rules applying to specific types of programme, such as films, news and children’s programmes;
2. to allow PSB channels to schedule up to 6 hours of teleshopping between midnight and 6am;
3. to remove the restrictions on the amount of teleshopping that non-PSB channels may schedule; and
4. to remove the ‘peak-time’ designation for the period from 7am to 9am on PSB channels and to regulate this period in accordance with the rules applying to non-peak periods.

Advertising minutage

1.7 Pending the outcome of a further review, we do not propose to make any changes to rules on the overall amount of advertising permitted on PSB and non-PSB channels, or to the limits on how much may be scheduled during the evening peak (6pm to 11pm) on PSB channels.

1.8 At present, the rules applying to the amount and usage of advertising minutage are significantly more restrictive for PSBs than they are for non-PSBs. For the reasons set out more fully in section 4, Ofcom considers that there is a strong case for harmonising the regulation of advertising minutage (including both overall amounts and peak-time limits) on PSB and non-PSB channels within the next few years.

1.9 We intend to examine the case for harmonisation and how this might be achieved in a further review to be published in Spring 2010. The options discussed in section 4 could contribute to a process of harmonisation, but there may be other options that would also do so. An example is the suggestion made by one respondent that both PSBs and non-PSBs be permitted an average of 8 minutes of advertising an hour. The review will examine this and any other relevant options that come to light, and we shall invite comments on these when we publish the review in Spring 2010.

1.10 In the meantime, the impact assessment at Annex 3 makes clear that harmonising the regulation of PSB and non-PSB channels by removing some or all of the additional restrictions imposed on PSBs would be likely to have a detrimental effect on non-PSB revenues. Thus, even if we were to conclude that harmonisation of advertising regulation was appropriate, we do not consider that it would be sensible to start that process of harmonisation now, as all broadcasters are suffering from the effects of the recession, which has resulted in a sharp decline in television advertising revenues. Moreover, we consider that there may be advantages to phasing any changes over a period of time, in order to allow more time for broadcasters and advertisers to adjust, although the implications of this require further study.

1.11 Accordingly, as part of the review, we shall be considering the economic modelling for options to phase in such an approach. We shall also consider whether or not the Airtime Sales Rules^(-5-) (which require the PSB channels to sell all their advertising minutage) should be modified, retained or scrapped.

Clarifications

1.12 Ofcom has also made some changes to COSTA to clarify that:

1. in accordance with Article 18(2) of the AVMS Directive, the definition of advertising does not include announcements made by a broadcaster in connection with its own programmes and ancillary products directly derived from those programmes, sponsorship announcements and product placements;
2. all local television channels, however distributed, may show local advertising features in teleshopping windows, provided that they are not receivable outside the UK. The previous version of COSTA referred to local television channels distributed by satellite or cable only. Following an announcement made by Ofcom in December last year, it may now be possible for local television channels to be broadcast on digital terrestrial multiplexes with coverage, where suitable spectrum is available^(-6-);
3. consistent with Article 11(1) of the AVMS Directive, the term ‘films’ includes both films with cinematographic releases, and those made for television;
4. as explained in paragraph 3.46 of the October 2008 consultation, the national Channel 3 licensee (currently GMTV) is permitted to average its advertising allowance across the week, as its small daily broadcasting window limits its scope to optimise the scheduling of advertising breaks; and
5. for every additional 20-minute period beyond that in Tables 1 and 2 of COSTA, a further break is permitted.

1.13 The changes to advertising regulation that stem from the decisions outlined above are shown in the revised version of COSTA at Annex 2. For the reasons explained in section 3, Ofcom does not consider that the changes to regulation set out there will have a significant effect on the advertising airtime market. Accordingly, we have decided to bring them into effect from 1 June 2009.

Other matters

1.14 Ofcom has today published a statement on the status of transactional gambling services^(-7-). From 1 June 2009, such content, which has previously been regulated as editorial content, will be treated as teleshopping. One effect of the decisions made in this statement will be to enable those channels (including PSB channels) that have previously scheduled transactional gambling content as editorial programming to do so in the future in teleshopping slots.

Footnotes:

  1.- Review of television advertising and teleshopping regulation – Stage 2, Ofcom, October 2008 (http://www.ofcom.org.uk/consult/condocs/rada08/rada08.pdf) (“October 2008 document”).

  2.- The term ‘PSB channels’ refers to ITV1, Channel 4, Five and S4C1, each of which has public service obligations. The term PSBs (public service broadcasters) includes the Channel 3 licensees (those controlled by ITV plc, as well as GMTV, STV, UTV, and Channel Television), the Channel Four Corporation, Five, and S4C.

  3.- ‘Teleshopping’ means television advertising which includes direct offers to the public with a view to the supply of goods and services in return for payment.

  4.- Parts of COSTA do not come into effect until December 2009. Details are given in Annex 1.

  5.- The background to the Airtime Sales Rules is explained at http://www.ofcom.org.uk/tv/ifi/guidance/ITV_airtime_sales/.

  6.- Statement on making of regulations in connection with the award of licences in the frequency bands 542 to 550 MHz and 758 to 766 MHz covering Cardiff and Manchester, Ofcom, December 2008 (http://www.ofcom.org.uk/radiocomms/spectrumawards/completedawards/
542550_cardiff/Keydocuments/statementcm/)

  7.- The regulation of transactional TV gambling channels: Ofcom regulatory statement on the position of TV channels and programmes that offer gambling services to viewers, Ofcom, May 2009 (http://www.ofcom.org.uk/tv/ifi/guidance/gambling) (‘TV and gambling services statement, May 2009’)