Ofcom has reminded broadcasters of their obligation to ensure that all programming complies with the Broadcasting Code’s restrictions on commercial references and product placement, even when transmitting a live feed provided by a third-party broadcaster, rightsholder or producer.

An Ofcom-licensed broadcaster will therefore need to take adequate steps to determine whether there are commercial arrangements between any third-party broadcaster or producer and a commercial sponsor which would cause the programme to breach the rules set out in the Broadcasting Code. If there are, the broadcaster will need to drop or alter the feed at the appropriate point to ensure compliance – a significant challenge for production and compliance teams in the context of live broadcasts, and live sports broadcasts in particular.

The rules for commercial references and product placements

The UK is somewhat of an outlier amongst global markets with its stringent restrictions on the inclusion of commercial references in programming. Commercial references can range from overt virtual overlay of on-screen logos to sponsorship of programmes and potentially more subtle product placement arrangements. Examples include the virtual Specsavers branding applied to Hawk-Eye camera angles in cricket (which Ofcom ruled against in 2009 under a previous version of the Broadcasting Code), or the appearance of well-known consumer brands such as Tefal, MaxiMuscle and L’Oreal in Love Island and Big Brother. 

The relevant rules, outlined in Section 9 of the Broadcasting Code, are based on the general principle that commercial references should typically remain separate from editorial content. This ensures that viewers can always clearly distinguish when they are watching content that promotes third-party brands, products, or services. Additionally, to prevent easy circumvention of the rules, these regulations also restrict the volume and placement of commercial content on Ofcom-licensed services. The Broadcasting Code sets out various restrictions on the inclusion of commercial references, including that:

• advertising must not be ‘surreptitious’ – commercial content must be made clear to an audience and be distinct from editorial content (Rule 9.3);
• products, services and trade marks must not be ‘promoted’ in programming (Rule 9.4); and
• where products, services and trade marks do appear, they must not be given ‘undue prominence’ (Rule 9.5).

The compliance challenge for live sports broadcasters

The Sky ruling

Ofcom’s recent ruling involving Sky and a live broadcast feed of New Zealand’s win over Argentina in The Rugby Championship last August demonstrates the practical challenges facing broadcasters in this area.

Sky broadcast the game to a UK audience on its Sky Sports Main Event channel, transmitting a live feed provided by the New Zealand host broadcaster (confusingly named ‘Sky Sport’, but with no connection to the UK broadcaster, Sky). During a break in play, a presenter for the host broadcaster introduced former All Blacks player Israel Dagg, who proceeded to encourage viewers to download the TAB app (TAB is a provider of sports betting in New Zealand) and place a bet on the game. At the same time, an on-screen graphic was shown which set out the live odds which Mr Dagg referred to alongside the text “TAB BET BREAK”.

Ofcom considered that the programme raised issues under Section 9 of the Broadcasting Code and opened an investigation.

The compliance conundrum for sports broadcasters

The interjection by Mr Dagg on behalf of TAB, along with the associated on-screen graphics, were readily accepted by Sky as being ‘promotional’ and as having been given undue prominence, in breach of Rules 9.4 and 9.5.

Sky’s response to Ofcom’s investigation instead centred on the commercial realities of transmitting a live broadcast from a third-party broadcaster, noting that there is often a clear separation between the broadcaster regulated by Ofcom and a host broadcaster or overseas producer from whom programmes are acquired. The regulated broadcaster will not always know, or be able to find out, whether the host broadcaster has entered into a product placement deal affecting the programme, or whether there are any other commercial references included which might engage the Broadcasting Code. Whilst a detailed running order could allow for these types of commercial references to be identified, enabling the broadcaster to drop the live feed at the relevant moment, that will often not be the case. Without introducing a delay, it will generally not be possible for broadcasters to evaluate the content of otherwise live feeds prior to transmission.

This challenge for broadcasters is compounded by the fact that the rules under the Broadcasting Code are some of the most stringent globally.  Put simply, a broadcast feed which is compliant in a host broadcaster’s country may well not be compliant when broadcast in the UK. And only in situations where the UK is a key market might host broadcasters or rightsholders be incentivised to deliver a feed fit for the more restrictive (and therefore potentially less lucrative) UK market compliance that is over and above that required for their home or other less heavily-restricted markets.

The New Zealand rugby feed is not the first time Ofcom have considered the challenges of live sports broadcasting. In 2018, it undertook investigations against both Channel 4 and Sky relating to their respective coverage of the 2016 Singapore Grand Prix, and the inclusion of commercial references to Rolex. In both of those rulings, and in this recent New Zealand rugby ruling, Ofcom accepts that broadcasters may not be able to ensure absolute compliance. It does, however, also make it absolutely clear that licensees remain “responsible for taking adequate steps to determine whether commercial arrangements engage the rules on product placement and therefore to satisfy [themselves] that the content [they transmit] is compliant with the Code”. 

The New Zealand rugby feed is not the first time Ofcom have considered the challenges of live sports broadcasting. In 2018, it undertook investigations against both Channel 4 and Sky relating to their respective coverage of the 2016 Singapore Grand Prix, and the inclusion of commercial references to Rolex. In both of those rulings, and in this recent New Zealand rugby ruling, Ofcom accepts that broadcasters may not be able to ensure absolute compliance. It does, however, also make it absolutely clear that licensees remain “responsible for taking adequate steps to determine whether commercial arrangements engage the rules on product placement and therefore to satisfy [themselves] that the content [they transmit] is compliant with the Code”.

Key takeaways

This investigation was resolved with no finding of breach, but there are a number of key takeaways from Ofcom’s ruling.

• Broadcasters are expected to take adequate steps to determine whether commercial arrangements engage the rules on product placement. Ofcom clearly expects broadcasters to undertake a level of due diligence on acquired feeds, which may require a questionnaire or dialogue with a host broadcaster or producer to identify any product placement or other commercial arrangements in place. 
• Contractual mitigations are important. Broadcasters should try to secure a right to drop or alter a live feed to the extent necessary to comply with the Broadcasting Code, and have a process in place to exercise that right. Requiring a host broadcaster or producer to provide a detailed running order identifying any commercial references may help.
• Limited leeway for live sports broadcasts. Ofcom has previously accepted that there is some leeway given to live sports broadcasts, provided that compliance processes are in place, partly arising out of the practical challenges but also on account of the generally higher prevalence of commercial references in sports programming. However, that leeway is limited to situations in which otherwise adequate processes fail to identify a commercial reference that otherwise breaches the rules, and should not be seen by sports broadcasters as an easy excuse for failures to ensure all programming complies with the Code. Where a commercial reference in a programme is of a prohibited category, or would be prohibited had the programme been produced under UK jurisdiction (gambling being one such category), that leeway will be even more limited.