Ofcom to allow TV channel sponsorship under strict criteria

The media regulator said today that no TV channel that carries news bulletins or current affairs programmes can be sponsored, effectively ruling out terrestrial broadcasters ITV, Channel 4 and Five's chance of benefiting from alternative sources of funding. 

Further restrictions include that  a sponsor, which is prevented from sponsoring a programme, is not allowed to sponsor a channel.

For example, a channel carrying children's programmes may not be sponsored by an alcohol brand, and betting and gaming companies may not sponsor channels carrying content aimed at under 18s.

In addition under the proposals, an existing channel will not be able to add the name of a separate sponsor into the service because Ofcom believes audiences will "be unsure of which party retains editorial control of the service's content."

Ofcom uses commercial TV channel Hallmark TV and radio station Saga FM, where a brand is better known in other fields, as extraordinary examples. Ofcom explains the branding was allowed because the organisation applied for and was granted the licence and as such is wholly responsible for its editorial content.

Broadcasters, advertisers and viewers have until April 20 to comment on Ofcom's proposals.

The news comes as the European Commission is preparing to liberalise rules on television product placement, as alternatives are sought for the declining 30-second TV ad spot.

Ofcom said in its review in December that a "cautious approach" to the introduction of product placement to help fund commercial television "has merit".

It said that the widespread use of personal video recorders and increasing audience fragmentation has challended the traditional 30-second TV spot, and more revenue streams need to be explored for future funding of programming.

The regulator has published a consultation seeking views on how the product placement laws could be applied in the UK broadcasting arena, while informing the viewer they are being subjected to advertising and ensuring editorial standards are not compromised.

The media watchdog says regulatory measures may be required for a number of issues, including what types of programme will be allowed to carry product placement, safeguards to ensure viewers know they are watching ads, and determining to what degree there needs to be consistency with the Broadcast Advertising Code in product placement situations.

If the EC's 'Television Without Frontiers' proposals are approved, the current ad hoc form of advertising could become more formal with production companies being paid to feature specific products on commercial television.

The proposals will need the approval of the European Parliament and EU member states before becoming law.

Product placement in the US is estimated to be worth over $3.5bn (£2bn), with the majority of US sitcoms like 'Will and Grace' and reality shows including 'American Idol' signing deals with big name brands like Subway and Coca-Cola to show their products.

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