Ofcom conclusions on cross-promotion rules

Ofcom statement setting out conclusions to its review of the rules on cross-promotion (92 pages, PDF). The conclusions follow the consultation launched in December 2005, which proposed lifting some of the restrictions contained in the legacy code inherited from the ITC and replacing the 30 per cent shareholding rule with a slightly more flexible test. These proposals are to be taken forward, with some changes made to the guidance that accompany the new rules. In particular, Ofcom has amended its guidance on the the types of ownership links that would need to exist between two broadcasters in order for Ofcom to presume that one broadcaster would cross-promote the channels/services of another broadcaster without receiving any payment or other consideration. The new code will come into effect on 10 July 2006.

The main area of competition regulation within the new code concerns neutrality between digital TV platforms and pay-TV retail services. The ITV companies, Channel 5 and Five must ensure that promotions mentioning digital TV platforms/retail services treat all major digital TV platforms/retail services in "an equal and impartial manner". Thus, promotions that mention Freeview must also mention digital retail services such as Sky's. This rule reflects Ofcom's desire for competition between digital TV platforms (presumably competition amongst suppliers of digital hardware and suppliers of pay-TV subscriptions) not to be distorted by the analogue terrestrial broadcasters choosing to use promotional airtime to promote particular digital TV platforms or services. More specifically, Ofcom is concerned that, in the absence of regulation, each of the commercial analogue broadcasters and the BBC would be motivated to push Freeview/DTT at the expense of satellite and cable platforms. Whilst Ofcom's rules do not apply to the BBC, the recent white paper on the BBC Charter 2007-2016 would require the BBC Trust to draw up a code of conduct in respect of its own cross-promotional activities.

As with the initial consultation, Ofcom does not discuss whether it is necessary for all broadcasters to be prohibited from selling some promotional airtime to third parties (outside of their advertising minutage allowance). This would seem compatible with the TWF Directive in the case of the analogue terrestrial broadcasters, which currently face tougher limits on their "paid for" advertising minutage than required under the TWF Directive. The logic for such an approach is discussed in a Reckon note of August 2004 (2 pages, PDF).

Filed under BBC, Media, Ofcom.

Reckon LLP is an economics consultancy with expertise in data analysis, economic regulation and competition law.

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