The media landscape has changed dramatically over the last quarter of a century with increased privatisation and commercialisation of the media sector, as well as an increased number of channels over a range of platforms. Changes in attitude towards the media and the level and mechanisms of regulation have also altered. One of the assumptions, which has had currency since the introduction of satellite television (Commission 1984, p. 35), about this media environment is that more channels give greater choice and an increase in channels, if not operators, is therefore a good thing. Choice of channels and technological developments are viewed as empowering the viewer. Technology gives choice by facilitating more channels, as well – it is claimed – as giving the viewer more control (Recital 42 Audiovisual Media Services DirectiveFootnote 1 (AVMSD)).Footnote 2 In the words of the Association of Commercial Television, technological change “leads to an unprecedented increase in empowerment of the consumer, who is able to choose not only from a vast array of electronic content, but also potentially to choose the time of viewing and the level of interactivity of viewing experience” (ACT 2003, p. 6). These comments concern programme content, yet there is another aspect of content that affects the viewing experience: advertising, and the appropriate balance between what might be termed “editorial content” (programmes) and “commercial content” (Harrison and Woods 2007, pp. 194–195).

Advertising typically has been controlled by the Member States (Commission 1984, p. 209) although limits have been relaxed as advertising has been accepted as a major source of finance for the broadcasting sector (Commission 1984, pp. 48–49). Advertising is now accepted as necessary (or even desirable) to fund the continued expansion of commercial television. Whilst the argument at the time of the Green Paper on Television without Frontiers (COM (84) 300 final) concerned, in part, the artificially created shortfall in advertising time available, the sector has changed. The broadcasting sector now claims that there is less money spent on advertising airtime (ACT 2003, p. 8) and that the economies of programme making are increasingly fragile (House of Lords 2007, p. 21). It is this argument which now drives claims for deregulation of the quantity and frequency of advertising, as well as for greater freedom to choose when and how to advertise. In an environment in which television content is seen as a product, cultural and social justifications for restricting advertising seem less significant. Despite this, there are still differences in approach towards the regulation of broadcasting between the Member States. Harmonization seems thus to be necessary to maintain the internal market in television services, as it was in the days of the Green Paper on Television without Frontiers and the Television Without Frontiers DirectiveFootnote 3 (TWFD)Footnote 4.

In taking a business oriented and free movement approach to the design of a regulatory scheme, however, to what extent are the wants and needs of viewers taken into account? Essentially, this question comes down to the reality of whether viewers really have choice to switch to something different, as suggested by industry and accepted in the UK (House of Lords 2007, p. 22), or can use new technology (such as personal video recorders (PVR)) to avoid advertising. An alternative hypothesis states that a viewer in a commercial environment wanting to watch particular editorial content in real time has to put up with the advertising breaks chosen by the broadcaster disseminating that content. Further, in a commercialised environment, a viewer is likely to have a choice of editorial content interrupted by advertising whichever channel she or he is watching. Finally, the possibility of product placement undermines the possibility of any such choice as well as threatening the integrity of the editorial content, a worrying possibility given that the protection of such integrity has been recognised as an important function of the original rules in TWFD (TWFD, Recital 8).

This paper aims to assess these competing visions in the light of the changes to the advertising regime made by the AVMSD (2007/65). Simply put, it aims to identify the balance between the commercial interests of broadcaster and advertiser and the interests of the viewer, as well as programme makers. In assessing the viewers’ position, this paper takes the view that a viewer’s primary purpose in watching television (with the exception of teleshopping) is to see editorial content rather than commercial content.Footnote 5 The discussion outlines the provisions of the pre-AVMSD regime and its main weaknesses. In doing so, it focusses on the placement and frequency rules rather than the content rules, as the former are unique to the broadcast media, whereas the latter have much in common with advertising regulation generally. Furthermore, it was this aspect of the rules which proved contentious during the revision process. Finally, this paper considers the compromise reached to agree the AVMSD, before weighing up the strengths and weaknesses of the regime so as to determine to what extent viewers are protected under the new regime. Quite apart from concerns that arguing that consumers (or viewers) have the freedom of choice makes a number of assumptions about the capacity of consumers – aggregating individuals into a concept of reasonably intelligent, circumspect and informed people, with adequate resources (Howells and Wilhelmsson 1997, p. 18) – the central question is whether viewers really have the choice that is claimed for them by those in industry and by policy-makers and legislators to avoid unwanted commercial content.

The Regime Prior to Revision by Directive 2007/65

Overview

The current regime is found in the TWFD (89/552), as amended in 1997. It contains both content based rules and those which are content neutral.Footnote 6 There are provisions regarding content of advertising (Articles 12–16 TWFD) and placement and frequency of advertising. A separate article, Article 17 TWFD, deals with sponsorship. The former reflect more traditional consumer protection values, as well as more general content requirements prohibiting unacceptable content such as that which incites racial hatred (e.g., Articles 12 and 16 TWFD). It is on the latter group of provisions than this article will concentrate, as it is these rules that have proved contentious.

Two principles found in Article 10(1) TWFD underpin the placement rules: the principle of identification and of separation, principles accepted as good advertising practice (ICC 1997, Article 12). Essentially this means that it should be clear to the viewer when he or she is watching advertisements. In one sense we are dealing with a traditional consumer protection goal – that the individual is not misled.Footnote 7 There is another goal here: the protection of the integrity of the programme, which is arguably protecting another group of individuals: the authors and creators of programming. These principles mean that “surreptitious advertising” is prohibited by Article 10(4) TWFD,Footnote 8 and similarly, subliminal techniques are also prohibited (Article 10(3) TWFD). Likewise, sponsorship must be clearly identified as such. Although the TWFD defines both “surreptitious advertising” and “sponsorship,”Footnote 9 there was a certain amount of uncertainty about the boundaries of the terms. Consequently, the boundary between what was acceptable practice, and what not, was the subject of some debate.

Surreptitious Advertising and Product Placement

The legality of product placement was particularly problematic, especially given the reliance of many broadcasters on American programmes which are notable for containing references to products and brands. Not only is this a term which can cover a range of activities, some of which may be less objectionable than others (see below), but its relationship with the notion of “surreptitious advertising,” prohibited under the TWFD, is not clear. One particularly difficult issue related to the fact the definition of surreptitious advertising required intent on the part of the broadcaster to advertise the products or services referred to in a programme. Quite apart from the generally recognized difficulty in proving intent (Commission 2004, paragraph 33), usually it is the programme maker and not the broadcaster, who makes choices about the inclusion of particular props as well as the references to products and brand names in programmes. The prohibition on surreptitious advertising in the TWFD, however, is effectively directed at the broadcaster rather than the programme maker. Presumably the expectation in TWFD was that the broadcaster would maintain control through commissioning and purchasing decisions. Such an approach does not, however, bring surreptitious advertising introduced by programme makers other than the broadcaster (and, to the degree that it is co-extensive with surreptitious advertising under TWFD, product placement) within the scope of the definition and therefore arguably such activities fall outside the regime. Although in its Interpretative Communication (2004), the Commission suggested that “undue prominence” might be an additional criterion for showing intent for the purposes of surreptitious advertising (para. 33), so as to minimise difficulties with that particular aspect of surreptitious advertising, it did not address the question of whose intent should be relevant.Footnote 10 This gap appears to be a major weakness in the regime, though it may well reflect the industry practice that broadcasters can do little about surreptitious advertising (and product placement) in bought-in programmes, that is, once the decision to acquire the programme or series is made. It was this difference in treatment which provided leverage to argue that the ban, at least on product placement, should be removed (Commission 2005a, p. 4).

From the above, it should be clear that there are two terms, “surreptitious advertising” and “product placement.” Whilst the prohibition on the former in the TWFD was clear, the position of product placement – and its relationship to surreptitious advertising – was less so. The Commission (2005a, p. 4), in its Issues Paper 4, suggested that:

The dual requirement of identification and separation implicitly has the effect of not authorising, within the current legal framework, recourse to product placement in programmes produced by broadcasters covered by the TWF Directive.

This summary of the law from the Commission’s perspective is open to two possible interpretations. The first sees the Commission as merely paraphrasing the prohibition on surreptitious advertising in Article 10(4) TWFD, which suggests that surreptitious advertising and product placement are the same thing. The second perceives the introduction of a category of prohibited behaviour based on the general requirements of Article 10(1) TWFD additional to the express prohibition on surreptitious advertising. The scope and relationship of product placement and surreptitious advertising were thus problematic prior to the review of TWFD, with the law in an uncertain state.

Whilst it is tempting to conclude from this quotation that product placement is not permitted, some caution is required. In particular, the Commission in this discussion limited the scope of the prohibition to those programmes produced by broadcasters, mirroring the terms of the TWFD, which does not comprise all programmes broadcast. Further, the Commission (2004, paragraph 32) recognized in its Interpretative Communication that not all references to products were illegitimate. The problem is in part caused by the fact that product placement is a potentially wide term, and that there was a lack of clarity about what was thought to be offensive from the perspective of viewer protection, insofar as that perspective was the factor motivating the approach to product placement. Certainly there are different approaches to the regulation of product placement throughout the EU.Footnote 11

Frequency and Placement Rules

The twenty minute rule is currently the basic rule for determining frequency and means that each advertising break during a programme (apart from the first) should follow its predecessor no sooner than twenty minutes later. This rule does not apply if the programme falls into “autonomous parts.” An example of a programme in autonomous parts is a broadcast of a football match. In such a case, advertising breaks occur between the autonomous parts. Special rules also apply to certain categories of programme: films; news, and current affairs; religious programmes and children’s programmes, though these programme specific rules do not constitute a single, uniform, or coherent regime.

This section of the TWFD is complex and leaves many questions open to interpretation.Footnote 12 Industry practice in this area has challenged many of the rules, as we have seen it did in respect of surreptitious advertising. Industry voices pushed for a relaxed and non-textual interpretation of the rules in the name of economic reality. There were two main areas of contention. One area related to the impact of new technologies, particularly split screen broadcasting, which permits the broadcasting of advertising at the same time as editorial content and interactive television. Rules which envisaged a linear environment would clearly have difficulty accommodating these developments, were the letter of those rules adhered to. In its Interpretative Communication, the Commission (2004, paragraph 46) suggested a pragmatic response: that visual separation for split screen advertising would suffice.Footnote 13 While one might argue that this interpretation respects the basic principle of separation and identification, it is indicative of an approach which listens to the voices of the industry lobby and does not give much, if any, consideration to the question of the impact of split screen advertising on the integrity of programming. It also ignores the fact that with split screen advertising it is difficult, if not impossible, for the viewer to avoid commercial communications. It seems that the desirability of commercial free environments is being increasingly downplayed, and the viewers’ choices in this regard are limited, if not entirely removed.

The second main area of concern related to broadcasters’ desire to broadcast more advertising so as to increase their revenues. Some broadcasters therefore behaved in a way that tested the limits of what would acceptable under Article 11. This tendency manifested itself in particular in two cases.Footnote 14 The first, ProSieben,Footnote 15 concerned the interpretation of rules which required programmes to be of a certain length before they could be interrupted by advertising. The question before the European Court of Justice (ECJ) was whether the advertising could be taken into account in determining whether the programme was long enough to have an advertising break or not. The ECJ determined that advertising could be taken into account. This judgment is, in this author’s view, illogical. Essentially, advertising time is taken into account to determine whether it is legal to broadcast that advertising in the first place. Illegitimate action is here legitimising itself. With its focus on industry needs and the internal market, this judgment is hardly one that considers the preferences of the viewer.

The second case, RTL,Footnote 16 arose out of a broadcaster’s desire to circumvent the limitations on advertising frequency. As noted above, films fall into a category of programming awarded particular protection, that is, a minimum gap of 45 min is required between internal advertising break rather than the normal twenty minutes. The broadcaster argued that the special rule for films did not apply to the made for television films (TVM) it was broadcasting for two reasons. First, TVMs had been made with the need for advertising breaks in mind and therefore the artistic integrity of the film was not affected. Secondly, as the TVMs were all based round a similar theme, they constituted a series, a category of programme which did not receive special protection under the “film rule.” In a seeming reversal of its attitude in ProSieben, the ECJ rejected these arguments. It emphasised the need to maintain the balance struck in the TWFD between the claims of industry and those of viewers. It is hard to tell whether RTL can be seen as a more general change in approach towards the control of advertising and the appropriate balance to be found between conflicting interests, or whether it relates just to the specific provision in issue in this case. In any event, the confused approach towards Article 11 is not helpful in ensuring that the provisions are correctly implemented and enforced within the various Member States.

The position as the TWFD was reviewed was that the current system was complex and, in response to technological and industry developments, lacking in consistency. The difficulties found in the text of the directive seem to have been compounded by the varying approach of the ECJ to questions relating to the balance between the interests of broadcasters and advertisers on the one hand and viewers (and possibly programme makers) on the other. In its attempts to clarify the position, the Commission, in its Interpretative Communication, highlighted the importance of advertising revenue to the broadcasting industry. Its response to the challenges posed by new practices and new technologies was pragmatic rather than principled. Its approach was underpinned by the maxim in dubio pro libertate, giving industry players the freedom to advertise more frequently and in ways that were less easy for the viewer to avoid, such as by the use of split screen broadcasting. The Commission thus accepted a limitation on the viewer’s freedom of choice about whether or not to watch commercial material. Of course, the Commission’s communication does not have the same legal status as a directive, although, in the absence of a clear ruling from the ECJ to the contrary, it would clearly be influential. It remained to be seen whether the legislative institutions of the EU would follow the Commission’s approach.Footnote 17

Audiovisual Media Services Directive (2007/65)

Overview

We now come to the review of the TWFD and its transformation into AVMSD. The treatment of advertising was a major issue, especially with the proposed extension of the regulatory regime to non-linear service providers as well as traditional broadcasters. In sum, the AVMSD extends some of the content based rules to non-linear services (Article 3e AVMSD),Footnote 18 replacing the term “advertising” with the definition of “commercial communications” (Article 1(h) AVMSD). Placement rules are, as we have seen, problematic in a digital, non-linear environment (see also Harrison and Woods 2007, pp. 211–212). Sidestepping difficult issues about the appropriate level of advertising on the basis of viewer choice and control, placement rules will not apply to non-television services.Footnote 19 They will, however, continue to apply to “television advertising.” Even for the traditional broadcasters, the frequency and placement rules have been simplified: In particular Article 11 TWFD has been reduced from five paragraphs to just two. Further, the pragmatic approach found in the Commission’s Interpretative Communication appears in AVMSD. A flexible approach which allows for the development of new advertising techniques is to be adopted (Recital 55 AVMSD). Nonetheless, for all commercial communications the key principles of separation and identification remain. Whether the political compromise adequately protects viewers or whether flexibility undermines those principles is another question.

Surreptitious Advertising and Product Placement

Product placement was one of the difficult issues of the review process and one that seemed to polarise views. On the one side, there was the view that product placement contravened the separation and identification principles and contravened the European internal market model based on consumer choice (BEUC 2006, pp. 14–15). On this view product placement was, like surreptitious advertising, prohibited and should remain so. One the other, it is argued, as Bazalgette, the chairman of Endmol UK did, that the broadcasting sector was changing and it was necessary to protect the revenues of the programme makers and broadcasters (Bazalgette 2005).Footnote 20 This view is reflected in the pragmatic response found in Recital 61 to the AVMSD. Whether one accepts the view that product placement was entirely prohibited by the TWFD or not, this is an example of industry voices seeking to change the law on the basis that they did not comply with it anyway. The AVMSD clarifies matters, at least to some degree. The recitals recognise that product placement is a reality and, further, state that since the various Member States deal with the matter differently, some regulation is necessary in the interests of the internal market – at least the internal market as seen from the perspective of industry players.

Article 3g(1) AVMSD specifies that “product placement shall be prohibited,” though Article 3g(2) contains some exceptions to this rule. Further, the AVMSD contains a definition of product placement (Article 1(m) AVMSD), in addition to what is now known as “surreptitious audiovisual commercial communication,” which remains prohibited. The crucial difference between the two terms is that the intent to have a reference to a product or service serve as advertising and the requirement that there be a danger of misleading the public, discussed in relation to TWFD (above), are found in the latter but not the former. The essential requirement for product placement is that the brand or product reference be “featured within a programme” (Article 1(m) AVMSD).Footnote 21 This approach removes the difficulties noted above regarding intent and seemingly distinguishes between the two concepts. Product placement is likely to be easier to prove than surreptitious advertising. The requirement that product placement takes place within a programme also distinguishes it from sponsorship (Recital 61 AVMSD). The provisions regarding product placement are not, however, entirely unproblematic. These difficulties in drafting perhaps reflect the tensions between the different views held about the desirability of permitting product placement, or the necessity of accepting it as a legitimate practice in the modern broadcasting environment.

The first problem concerns the scope of product placement and, as a corollary, the precise evil the prohibition on product placement was designed to prevent. The scope of product placement is found in Article 1(m) AVMSD; behaviour which does not fall within its terms will not be prohibited, at least not by Article 3g(1) AVMSD. There are two elements determining the existence of product placement, which can be summarized as: (1) a brand reference; and (2) consideration. Although both elements need to be shown for there to be product placement, the requirement that there be consideration qualifies the requirement for a brand reference. The inclusion of a requirement of payment or some other consideration recognises that there may be legitimate brand references that are included from the independent choice of the programme maker, for example, because of the nature of the characters portrayed. Further, many individuals wear branded goods and thus the presence of branded goods on a programme may also not be the responsibility of the programme maker. The requirement for consideration then constitutes the recognition of the branded world in which we live.

“Consideration” within the meaning of “product placement” seems to be broader than just payment of money from product producer (or service provider) to programme maker.Footnote 22 This approach makes sense given the broad range of circumstances in which we can see what we might term product placement in its everyday meaning, operating. Product placement can take a range of forms, from prop placement through to the situation where the manufacturer pays the programme producer (or an intermediary) to have its product used/mentioned in the programme (Benady 2005). This latter situation falls clearly within the prohibition in Article 3g(1) AVMSD. The scope of consideration is complicated by two issues: the extent to which consideration may be found in the mere provision of a prop itself (prop placement with no extra payment); and secondly by the approach to the exceptions to the prohibition on product placement found in Article 3g(2). Looking at the first point, it seems that the provision of valuable props alone can constitute consideration (Recital 61 AVMSD), but the question of how valuable such props must be to be considered consideration is not yet clear. Thus while we can distinguish between a sports car and a tin of beans, the middle ground has yet to be mapped. Another related consideration concerns repeated provision of lower value props, which may together prove valuable.

Article 3g(2) implicitly recognises that there are different forms of product placement as it specifies that, in relation to children’s programmes, certain types of product placement cannot be acceptable whilst others may be. The basic distinction in the provision is between product placement that is paid for (which in some circumstances could also constitute surreptitious commercial communication) and that which is not, where the products are provided “for free.” Clearly there are similarities between the idea of “paid for advertising” and the requirement that product placement requires consideration. At a drafting level, however, the idea of non-paid for placement gives rise to difficulties. On one view, we can argue that the provisions of Article 3g(2) AVMSD dealing with non-paid for product placement, such as production props or prizes, should be read narrowly to exclude from that exception just those case of placement where money changes hands. This then leaves room in the definition of product placement for a second category of placement, where no money changes hands. It will be this category which may (at each Member State’s option) be permissible in children’s programmes. The difficulty here is that the bright line is blurred by Recital 61 AVMSD which elaborates that:

The provision of goods or services free of charge, such as production props or prizes, should only be considered to be product placement if the goods or services involved are of significant value.

This phraseology suggests that prop placement is not product placement in the first place, rather than permitted product placement under Article 3g(2) AVMSD. It is therefore arguable that, as such placement does not satisfy the definition for product placement, it should not be subject to the regime in Article 3g, rendering the exception in Article 3g(2) superfluous. This matter may be the subject of some dispute. It is unfortunate that the legislator’s intent to deal specifically with the position of children as vulnerable viewers has led to such confusion, as a lack of legal certainty is not helpful for any of the interested parties.

So far the discussion has focussed on the benefit to the programme-maker from receiving payment. Presumably the concern addressed by this is the integrity of editorial decision-making, thereby indirectly benefiting viewers. The concerns underlying the principles of separation and identification were to ensure that viewers were not misled about the nature of the content. This concern links to the viewers’ freedom to choose whether or not to pay attention or give weight to commercially influenced content. Whilst Article 3g(2) does address these issues, we have noted that there are difficulties in determining which product references will be caught; Article 3g(2) will be discussed further below. As far as the definition of product placement in Article 1(m) AVMSD is concerned, it may be that some instances of product references which give the products high visibility will nonetheless fall outside the definition because of the requirement for consideration. Product use occurs in different ways. It may be incidental, used repeatedly (see the use of the AppleMac in Sex and the City), or the extreme situation where the plot is about the product (e.g., the plot revolving around a character’s attempts to date a model in an advertising campaign for a particular brand, again in Sex and the City). It has been noted that Apple products have a very high profile in American programme productions, though Apple deny paying for the coverage (Kehaulani Goo 2006). Arguably, this is “prop placement” and therefore innocuous in payment terms and not paid for product placement, despite its impact. At a conceptual level, it is hard to determine the nature of the evil to be targeted here. Is the legislators’ concern about how much money is changing hands, or about the impact of the placement on the viewer? Whether the distinction between paid for and non-paid for product placement makes sense from the perspective of the viewer is another question, as the result is similar: references to brands and products during a programme.

This lack of certainty about how to approach product placement can be evidenced in other ways. Whilst Article 3g in its prohibition is clear, Recital 55 starts from the position that product placement should be allowed in some circumstances. Despite the absolute terms of the prohibition in Article 3g(1) AVMSD, Article 3g(2) provides exceptions. Member States may choose to opt-in to product placement. Reversing the emphasis once again, there are some limitations on the extent of the Member States’ freedom in this regard. As suggested above, the limitations fall into two main groups: different types of product placement; and programmes in which product placement is more or is less acceptable (Article 3g(2) AVMSD). Thus product placement seems to be possible in programmes that are broadcast for entertainment, rather than information purposes: cinematographic works, films and series, sports programmes and light entertainment. This derogation does not apply to children’s programmes, although as noted above, there are special rules for “free” product placement.

This “white” list (or positive list) (Recital 62 AVMSD) has some similarities with the programmes which may be sponsored,Footnote 23 though there are some interesting discrepancies between the two regimes. Implicitly there is a “black” list too, of programmes in which product placement may not take place: news, documentaries, and current affairs. Religious programming, as it is not included in the white list, would also seem to be protected from product placement. By contrast the black list in respect of sponsorship lists news and current affairs programmes, whilst religious programmes, children’s programmes, and documentaries may be sponsored. There is no explanation given for the difference in treatment, but the implication must be that product placement is thought to be more damaging to the viewer than sponsorship. Nonetheless, in distinguishing between different types of programming, the AVMSD implicitly recognizes that the independence of some programming is more important than that of others. However, irritating stray references to certain brands of footwear are in the film, I, Robot, the viewer’s experience is not protected from the intrusion of commercial references.Footnote 24 By contrast, we see particular protection being given to the types of programming which could be considered significant in terms of the public sphere: news, documentaries, and current affairs, and also protects to some degree a vulnerable group: children. In this regard, the AVMSD does take into account viewers’ interests, at least in part, though how effective the regime will be, given the confused approach to drafting the relevant provisions, is uncertain.

Despite the flexible nature of the prohibition, the possibility of allowing product placement is not entirely left to the individual choices of each of the Member States. We have seen limitations imposed through the white lists and through types of product placement. Certain products, namely tobacco and medicinal products,Footnote 25 cannot benefit from the product placement rules.Footnote 26 Additionally, all instances of product placement must, meet at least all of the following requirements according to Article 3g(2) AVMSD:

  1. (a)

    their content and, in the case of television broadcasting, their scheduling is in no circumstances influenced in such a way as to affect the responsibility and editorial independence of the media service providers;

  2. (b)

    they do not directly encourage the purchase or rental of goods or services, in particular by making special promotional references to those goods or services;

  3. (c)

    they do not give undue prominence to the product in question;

  4. (d)

    viewers are clearly informed of the existence of product placement. Programmes containing product placement are appropriately identified at the start and the end of the programme and when a programme resumes after an advertising break in order to avoid any confusion on the part of the viewer.

These provisions are clearly aimed at protecting the viewer from being misled as to the nature of the material broadcast and its intentions. Some comments may be made about their effectiveness or novelty. Paragraph (a) is aimed at the audiovisual media services providers. In many instances, for example in the case of the ubiquitous CSI franchise, audiovisual media services will not be the maker of the programme and therefore the rule is missing its target. As we have noted with regard to the TWFD, it is not the independence of the audiovisual media service provider that we should be worried about, but the programme maker.

Paragraph (c) suggests that the limit of acceptable product placement is reached where the product is given undue prominence. Undue prominence served to mark the boundary of surreptitious advertising even under the TWFD. The introduction of the concept here reinforces the similarities between illegitimate product placement and surreptitious advertising. Indeed, might it be suggested that surreptitious advertising, despite its distinct definition, is effectively the term for product placement which does not satisfy the criteria for legality set down in the AVMSD? This view is supported by one reading of the text of Recital 60 which states that:

The prohibition of surreptitious audiovisual commercial communication should not cover legitimate product placement within the framework of this Directive, where the viewer is adequately informed of the existence of product placement.

Certainly, one may question whether there is a completely understood distinction between illegitimate product placement and surreptitious advertising. Presumably the advantage to the media industry is that in formalising the position, it is clear that some product placement is permissible. In terms of principle, then, the change is of great significance. The door of possibility is wedged open and experienceFootnote 27 suggests that the industry will start to push it wider still.

Finally, there are significant exceptions to the product placement warning, as Article 3g(2) specifies that Member States may waive this requirement when “the programme in question has neither been produced nor commissioned by the media provider itself or a company affiliated to the media service provider.” This provision essentially permits the possibility that all bought in programmes (save those in the excluded categories) are exempt from the product placement rules if the individual member state so chooses. In passing, it may be noted that this exception could operate unequally. Obviously Member States may take different approaches under Article 3g(2). Additionally, European audiovisual media service providers broadcasting American imported productions could claim the benefit of this exception, whereas American production houses which have distribution channels in the EU (e.g., Disney), would seem not to be able to so benefit. The needs of the internal market and the free movement of services would not then operate so as to demand complete equality.

Finally, the question must be asked as to whether the warnings as are envisaged by Article 3g(2)(d) adequately protect the viewer in any event. BEUC (2006, p. 15) calls this approach unrealistic, as it does not take into account viewing habits in which the viewing of one programme from start to finish, including credits, is hardly the norm. The EBU (2006, p. 11) also commented that this requirement does not clarify the level and detail of the product placement warning.Footnote 28 The AVMSD, although it identifies different categories of programme as worthy of protection, in this regard does not distinguish between different types of viewers. Although one might suggest that different types of viewer are more likely to watch particular categories of programme, it does seem as though more vulnerable viewers are under-protected in this regime.

In general terms the drafting of the product placement rules is uneasy, alternately placing emphasis on the absolute nature of the prohibition and then the exceptions. The difference in wording between Recital 55 and the terms of the operative part is awkward and is re-emphasised by the terms of Recital 62 which start off by stating that product placement should be prohibited. This lack of consonance can be found again. Recital 60 seems to suggest product placement is acceptable only where the viewers are informed of its existence, although this is contradicted by specific provision in Article 3g(2). We might see these drafting difficulties as a reflection of the difficulties encountered during the legislative process with regard to product placement.

In sum, what has been achieved? To an extent, any assessment of the significance of the changes depends on whether one accepts the view that product placement was prohibited. On one view, the boundary of permitted behaviour always was and still is “surreptitious advertising.” Although that prohibition remains clearly stated, crucially the AVMSD accepts that the distinction between editorial and commercial content may be blurred. At the level of principle, and given the centrality of the separation principle to the regulation of advertising, this step is a huge blow to the protection of viewer interests. A more positive take on the matter suggests that, given the outer edges of what is permissible (via undue prominence) remain the same, nothing more is permitted than hitherto and, moreover, at least now the status of product placement is dealt with by the AVMSD. Whilst this assessment may depend on one’s individual perspective, it is incontrovertible that these provisions are complex and contain some drafting weaknesses likely to lead to further dispute.

Frequency and Placement Rules

We have noted that the frequency and placement rules were challenged by technological and market changes. In response, the AVMSD has removed many of the detailed rules. For example, as Recital 57 recognises, “detailed regulation with regard to the insertion of spot advertising with the aim of protecting viewers is no longer justified.” The change seems only to affect sports programmes (Article 10(2) AVMSD). Furthermore, the pragmatic approach of the Commission with regard to the separation principle and new advertising techniques seems to have been accepted by the AVMSD.

Of more significance, the frequency rules which identified specific genres have been consolidated, such as those relating to news and current affairs programmes. The general principles in Article 11 TWFD have been re-shaped, in their revised version requiring that breaks be inserted during natural breaks so as not to disturb the integrity of the programmes. Given the aggressive manner in which the industry challenged the more specific rules, in seems unlikely that national regulators will substitute their respective views for those of broadcasters, leaving the viewing experience relatively unprotected.

Article 11(2) thus remains significant in providing a minimum frequency rule of one advertising break per thirty minutes of programming for certain types of programmes: films made for television (excluding series, serials, and documentaries), cinematographic works, and news programmes. Additionally children’s programmes are also mentioned, though different terminology is used. Whereas the first group of programmes may be interrupted “once for each scheduled period of 30 minutes,” for children’s programmes Article 11(2) reads that they may “be interrupted by television advertising and/or teleshopping once for each scheduled period of at least thirty minutes, provided the scheduled duration of the programme is greater than 30 minutes.” The aim of the distinction would seem to be to move the AVMSD away from the interpretation of Article 11 given in ProSieben,Footnote 29 at least as regards children’s programmes, so that the programme must be half an hour long before advertising may be permitted. By contrast, some groups of programme seem to be awarded lesser protection, notably films and those categories of programme whose only protection was the twenty minute or autonomous parts rules. Thus programmes such as quiz shows, soap operas, and even documentaries may be interrupted as frequently as the broadcaster chooses, the quantity limit on advertising providing the only protection against excessive advertising for these programmes. In general, it would appear that those types of programme seen as significant in public sphere terms, with the exception of documentaries, remain protected to some degree. It is the entertainment end of the programme genres which have lost out.

Conclusions

This paper has reviewed the provisions relating to the placement of advertising in the TWFD and those replacing them in the AVMSD (2007/65). In doing so, it has sought to assess the provisions themselves and the effect of the changes on the broadcasting environment from the perspective of the viewer. The TWFD sought to make a balance between competing interests of viewer and industry. In doing so, it came up with a system that was complex and unwieldy and which, in the end, was open to abuse. The AVMSD seeks to clarify and to simplify whilst maintaining the traditional European broadcasting landscape: as the Commission (2005b) noted in its i2010 Communication, increased legal and economic certainty is desirable for the development of new services. Although the TWFD needed to be revised, the AVMSD’s level of success seems, at best, mixed.

Whilst there has been apparent extension of the regulatory system to audiovisual media service providers through the introduction of the product placement rules which specifically identify some vulnerable groups (children) and particularly valuable types of programming (e.g., news), the level of additional protection these provisions grant is uncertain and difficulties in the drafting are likely to lead to challenges about the provisions’ proper scope. Whilst one might therefore appreciate the greater simplicity of the rules, for example removing some difficulties of genre classification, the worry is that legislators have given in to industry claims, based again on non-compliance and on the alleged impact of technology on their revenues (Recital 59 AVMSD). The simplification of the frequency rules by introducing more flexibility, and removing the twenty minute rule may open the way for increased advertising, especially in popular programmes.

Nonetheless, the recurrent theme of the language found in the review of the TWFD, and the introduction of the AVMSD, has been based in the vocabulary of consumer choice empowered by technology. The use of this vocabulary then allows us to make assumptions about the ability of the consumer and the choices they may be able to make. Insofar as those choices existed, they have been limited by developments in AVMSD, and in the broadcasting environment. Recital 55 argues:

Commercial and technological developments give users increased choice and responsibility in their use of audiovisual media services. In order to remain proportionate with the goals of general interest, regulation should allow a certain degree of flexibility with regard to television broadcasting. The principle of separation should be limited to television advertising and teleshopping, product placement should be allowed under certain circumstances, unless a Member State decides otherwise, and some quantitative restrictions should be abolished.

Thus in the name of a level playing field and commercial interests, basic principles of viewer consumer protection, the principles of identification, and separation, have been breached. The use of PVRs has been suggested as a mechanism which enables the viewer to control what they watch, but the essence of the argument from industry voices has been about the necessity of circumventing that control, so as to maintain advertising revenue. Here lies the importance of advertising integrated into content, such as product placement, sponsorship, and even split screen advertising, rather than kept separate as in traditional advertising, and the significance to the industry of having the status of product placement formalised. The changes in frequency rules have likewise adversely affected viewer choice. Whilst viewers may have a choice of which channel they wish to watch, they have limited options which allow them to avoid advertising breaks and in popular programmes seemingly more frequent breaks. Again, this is no choice at all. What this directive and particularly the recitals, do not suggest, is that the interests of the viewer are given a particularly high weighting. Although clearly some measures for the protection of the viewer remain, the balance has changed, perhaps irrevocably, in favour of a broadcasting environment that is principally commercial. It will thus become increasingly difficult for the viewer to watch television in a non-commercial environment, as product placement, and split screen advertising become accepted and perhaps commonplace. Despite the claims of the AVMSD about viewer choice, it seems likely that the viewer will have no choice as to whether to receive commercial communications or not.