TV product placement to be allowed in U.K.

Gov't u-turn could raise as much as $166 mil for webs

LONDON -- Broadcasters are rubbing their hands with glee at the prospect of the U.K. government relaxing product placement rules on television.

The media was alive Monday with the prospect of brands being allowed to show sponsored products on television screens for the first time here.

The British government is expected to announce the changes in rules later this week.

The rule change is expected to boost falling revenue streams at the major commercial channels currently hard hit by a slump in advertising revenue streams.

U.K. commercial web ITV's shares rose Monday on the back of the reports that culture secretary Ben Bradshaw will launch a three month consultation on product placement rules Wednesday.

City analysts think the uptick in revenues for commercial webs could be a welcome fillip amid the advertising gloom.

"We estimate that this [relaxation] could lead to an uplift of £25 million ($41.5 million) to £30 million ($50 million) per annum long-term for ITV," said UBS analyst Polo Tang.

Tang also noted that benchmarks from the U.S. suggest a "figure of up to £100 million ($166 million) per annum on a best case" basis. The figure, says Tang, will likely fall somewhere between the OFCOM suggested £30 million and the U.S. figure.

ITV, which has led the charge for a loosening of the rules, said revenue from advertisers would ease financial troubles as revenues fall during the recession.

The commercial web said such a relaxation would mean "better funded content" and said viewers would benefit.

The relaxation of any rules would be seen as a u-turn on the matter by the British government.

It was only in March this year that the then culture secretary Andy Burnham said lifting the ban raised "very serious concerns" and was "blurring the boundaries between advertising and editorial."

Bradshaw, his successor, is expected to announce a three-month consultation on the changes in a Royal Television Society speech this week largely because the climate has changed.

Under current rules, products can be shown as long as they are used as props -- so-called free placement -- but broadcasters are forbidden from receiving payment for their use.

Rules are expected to remain in place barring product placement from children's programming, the reports said.
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