Whilst, the ACMA continues its review of Australian commercial radio standards and the regulation of commercial arrangements, the UK is in the throes of implementing a momentous decision – namely to allow product placement on commercial television. For an Australian (or US) television viewer, accustomed as we are to infiltration of commercial references in programming – radio and television - this may not seem especially momentous. However, in the UK it overturns a prohibition which has existed since the commencement of commercial television broadcasting in 1954. The process of reaching that decision is evidence itself that it was seen as a significant transition.
How has this change come about? As noted, the UK has had a long-standing prohibition on product placement, but UK television broadcasting is also governed by EU law. Since 1989, a directive has been in place setting minimum standards for television in the EU. This directive was thought to provide a de facto prohibition on product placement although practices varied between the member states. However, in 2007 a new directive – the Audiovisual Media Services Directive (AVMS Directive), revising the 1989 directive, came into force. The AVMS Directive permits product placement in certain types of programming. Once a directive comes into force, a member state is required to implement its terms into domestic law. The UK Government launched a consultation in July 2008 canvassing its proposals for implementation.
The treatment of product placement in the Directive allowed each member state some flexibility regarding implementation. Essentially, the Directive requires each member state to prohibit product placement, but permits it to allow product placement in certain types of programs; namely, feature films, television films and series, sports, and light entertainment programs. However product placement is not permitted in these types of programs if they are made for children.
The UK Government’s initial preference was to maintain a complete prohibition on product placement. This was confirmed when, following the consultation, the Government announced in March 2009, its plans for implementation. Despite a strong preference for product placement from industry, “[o]n balance, and mindful of the need to maintain public trust in television broadcasters and British television’s reputation for high standards, the Government has concluded that no conclusive evidence has been put forward that the economic benefit of introducing product placement is sufficient to outweigh the detrimental impact it would have on the quality and standards of British television and viewers’ trust in it”.
Notwithstanding this seemingly strong commitment, a change of Government minister heralded a revisiting of the issue. A new consultation was launched in November 2009 and in February 2010, the Government announced that it would permit product placement subject to strict limitations. Why the change? The main trigger had been the need to ensure the competitiveness of the UK television industry which it considered was under threat given the general economic situation and the competition from other EU countries, which had decided to permit product placement, as well as the US.
The restrictions on product placement to safeguard against undue commercial influence are more severe than those required under the EU rules. So, in addition to the EU restrictions, the UK will also prohibit product placement of alcoholic drinks; foods and drinks high in fat, salt, or sugar; gambling; smoking accessories; over-the-counter medicines; and infant formula. (EU rules already prohibit product placement of tobacco products and prescription medicine.) In addition, the UK rules make clear that product placement is not permitted in news, current affairs, consumer and religious programming.
The necessary legislative changes having been effected, Ofcom, the UK communications regulator, is now consulting on the specific rule changes to the Broadcasting Code. Product placement will not be permitted until the Broadcasting Code rule changes have been completed. Ofcom is also taking the opportunity to devise new rules for radio which will relax rules on paid-for references.
As can be seen, despite the significance of this change to UK television regulation, the relaxation of product placement is partial only. Two other important safeguards remain – principles which have been at the heart of UK regulation of broadcast advertising: transparency and editorial independence. The principle of transparency means that where product placement has been used, that must be signalled to the audience. The proposed Ofcom rules suggest that there should be visual and audio signals to the presence of product placement. A transparency principle is one which is familiar even in the US and Australia which have much more liberal approaches towards commercial references in programming.
However, what has set and will continue to set the UK apart is the principle of editorial independence. So, product placement, even where allowed to be used, will not be permitted to influence the content or scheduling of the program. The rules also prohibit undue prominence of the products or any direct encouragement to purchase. The principle of editorial independence is a means of ensuring that commercial interests don’t have an inappropriate degree of access to broadcasting space compared to the public. The separation of advertising and program content also means that the audience is not misled by the format into believing that what is really promotional material has a greater substance or credibility. The UK/EU rules by excluding programs such as news and current affairs from product placement will minimise these risks.
It might be thought that entertainment programs don’t deserve the same type of protection; we can all see the importance of news not being distorted by commercial influences, but why should we care about drama or even a comedy program? Apart from the integrity of the program maker, dramatised programs can also reflect and convey ideas and values, even information – and so, help us to observe and understand our world. The requirement of editorial independence even where product placement is permitted is an implicit recognition of this role and its importance. What will be interesting to see as product placement becomes a reality is how well the principle of editorial independence is maintained. Would a company be happy to pay for product placement if there is a risk that the product could be subject to a critical story line? (See my post on the ABC and Commercial Conundrums.)
Ofcom, despite a mission of lighter touch regulation, has maintained close regulatory supervision over broadcast advertising especially sponsorship and commercial references and its current consultation on product placement indicates a similar approach. This may be important if the public is to have confidence that standards are being maintained. But the future of communications regulation and Ofcom’s role is up for discussion. The new UK Coalition Government has just announced its plans for structural reform which include the possibility of scaling back the role of Ofcom and deregulation of the broadcasting sector. Will standards of transparency and editorial independence be at risk in a future deregulated environment as commercial pressures intensify?
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