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The following is issued on behalf of the Communications Authority:
This press release summarises the Communications Authority (CA)'s considerations and decisions at its 26th meeting in November 2013:
Serious concerns over indirect advertising in television programmes
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The CA expressed serious concerns over the increasing trend of breaches by broadcasters of the relevant provisions in the codes of practice that govern indirect advertising and product/service sponsorship in television programmes. The CA will consider imposing heavier sanctions on further cases of contravention.
Paragraph 1 of Chapter 11 of the Generic Code of Practice on Television Programme Standards (TV Programme Code) prohibits indirect advertising (i.e. the mingling of television programme and advertising material or the embedding of advertising material within programme), whether inadvertently or by design. For product/service sponsorship, Chapter 9 of the Generic Code of Practice on Television Advertising Standards (TV Advertising Code) clearly states that the core principle is to preserve television programme integrity by not allowing programme agendas to be distorted for commercial purposes (paragraph 2), and the exposure or use of sponsor products/services within a programme should be clearly justified editorially, not obtrusive to viewing pleasure and not gratuitous (paragraph 10(a)).
Against the clear prohibition of indirect advertising in television programmes, and the conditional approval for product/service sponsorship, the CA is very concerned about the increasing trend of contraventions of the TV Programme Code and TV Advertising Code in television broadcasts, in which the CA found that the exposure in television programmes of a number of sponsors' products/services was gratuitous and not editorially justified, and the contents of certain television programmes appear to be intentionally designed and edited to cater for certain sponsors' products/services to create an advertising effect for the sponsors. The CA has taken a serious view over the breaches, and has imposed stiff sanctions commensurate with the nature and severity of each contravention.
The CA wishes to remind all television broadcasters that, under the TV Programme Code, indirect advertising is strictly prohibited. As to product/service sponsorship, broadcasters must follow fully the relevant provisions in the TV Advertising Code. The CA will closely monitor further cases of contravention and will consider imposing heavier sanctions for any further breach of the relevant provisions having regard to, among others, the nature and severity of the breach, and the relevant licensee's past record of non-compliance.
Non-compliance with the licensing requirement to submit annual audited accounts by Asia Television Limited
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The CA decided to impose a total financial penalty of HK$200,000 on Asia Television Limited (ATV) for failing to submit the audited accounts for four accounting years from 2009 to 2012 (Audited Accounts for 2009 to 2012), which contravened Condition 25.2 of its domestic free television programme service licence (the Licence). The HK$200,000 financial penalty comprises HK$50,000 for each contravention per accounting year.
Condition 25.2 of the Licence requires ATV to submit to the CA not later than April 30 in each year or upon request by the CA the latest annual audited accounts of ATV prepared by an auditor. ATV attributed its failure to comply with the submission requirement to a number of factors, including inability to secure approval of the audited accounts by ATV's board of directors (ATV Board) and their adoption by ATV's shareholders; delay in the ATV Board's approval on the appointment of auditor as a result of changes in board membership as well as recent allegations against ATV (including the CA's investigation into the control and management of ATV); and ongoing disputes and legal actions between the shareholders of ATV, which had impacted on ATV's ability in submitting the annual audited accounts. ATV submitted that it endeavoured to strengthen its corporate governance and would furnish the Audited Accounts for 2009 to 2012 to the CA once the ATV Board approved those accounts.
The CA took a serious view over the non-compliance with the licensing requirement to submit annual audited accounts by ATV for a number of reasons:
(a) ATV's failure to submit the audited accounts for four accounting years is a blatant breach of its licence condition;
(b) It is the responsibility of ATV, the licensee, to ensure that it observes the licence requirements. In this case of submission of audited accounts, ATV should have taken into account the time required for completing the auditing procedures and seeking approval for the audited accounts by its board as well as for their adoption by its shareholders. Even though ATV's failure to submit the outstanding audited accounts was attributed to the divisions within the ATV Board which prevented it from functioning effectively, this does not obviate the obligation for ATV to comply with Condition 25.2 of the Licence and submit regulatory returns under the stipulated timeline;
(c) Notwithstanding the repeated reminders by the CA, on six occasions within the past four years, regarding ATV's obligation to comply with the submission requirement, ATV ignored such reminders and the representations of ATV did not address the issue of compliance. To date, ATV still has not rectified the lapse. The non-compliance reflects a serious lapse of the management of ATV; and
(d) Domestic free television programme service licensees are expected to adopt appropriate standards of corporate governance to a level which is expected of a licensee. In this case of submission of audited accounts, the non-compliance reflects an underlying lack of effective governance in ATV and as a consequence the lapse has been allowed to recur and perpetuate. This observation is supported by ATV's representations that it would endeavour to strengthen its corporate governance.
Taking into account the nature, gravity and duration of the breach identified in this case and the absence of effective corporate governance within ATV, the CA has decided to impose a financial penalty of HK$50,000 on ATV for the contravention in each accounting year, totalling HK$200,000 for the four accounting years. As ATV has yet to furnish the Audited Accounts for 2009 to 2012 to the CA in accordance with Condition 25.2 of the Licence, ATV is directed under Condition 25.1 to submit the outstanding audited accounts by December 13, 2013, and any failure to do so will lead to the imposition of heavier sanction by the CA.
Non-domestic television programme service licence
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The CA approved the application by Star China Media Limited (Star China) for a non-domestic television programme service licence. The period of validity of the licence is 12 years, from November 20, 2013, to November 19, 2025 (both dates inclusive). Including Star China, there are 19 non-domestic television programme service licensees in Hong Kong providing more than 200 satellite television channels targeting viewers in the Asia Pacific region.
Other licensable television programme service licence
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The CA approved the application by Goodnews Communication International Limited (Goodnews) for the renewal of its other licensable television programme service licence for the provision of television programme service to hotel rooms in Hong Kong for a period of three years. Including Goodnews, there are now 27 other licensable television programme service licensees providing services to more than 90 hotels in Hong Kong.
Complaint cases
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The CA has considered seven complaint cases in respect of broadcasters' non-compliance with the relevant licence conditions and codes of practice on programme and advertising standards:
(a) Complaints against the television programme "Triumph in the Skies II" broadcast on the Jade and HD Jade Channels of Television Broadcasts Limited (TVB) and the TVB Encore Channel of TVB Network Vision Limited (TVBNV) in August and September 2013. The CA decided that a financial penalty of HK$100,000 should be imposed on TVB and a warning be issued to TVBNV for breaching the relevant provisions in the TV Programme and Advertising Codes;
(b) Complaints against the television programme "All Men Are Brothers" broadcast on the HD Jade Channel of TVB on May 16 and 17, 2013. The CA decided that TVB should be strongly advised to observe more closely the relevant provisions in the TV Programme Code;
(c) A complaint against the television advertisement for "Wu Liang Ye" broadcast on the Jade Channel of TVB on March 29, 2013. The CA decided that TVB should be strongly advised to observe more closely the relevant provision in the TV Advertising Code;
(d) A complaint against the television advertisement for "Gucci Guilty Black" broadcast on the Children Channel of Hong Kong Cable Television Limited (HKCTV) on March 20, 2013. The CA decided that HKCTV should be strongly advised to observe more closely the relevant provisions in the TV Advertising and Programme Codes;
(e) Complaints against the television programme "6:00 News" broadcast on the Home and Asia Channels of ATV on July 22, 2013. The CA decided that ATV should be advised to observe more closely the relevant condition in its domestic free television programme service licence;
(f) Complaints against the television programme "FIFA Confederations Cup 2013 Kick Off Carnival" broadcast on the Jade and HD Jade Channels of TVB on June 16, 2013. The CA decided that TVB should be advised to observe more closely the relevant provisions in the TV Programme Code; and
(g) A complaint against the television programme "News" broadcast on the I News Channel of TVB on January 16, 2013. The CA decided to classify the complaint as a minor breach and TVB is reminded to observe more closely the relevant provision in the TV Programme Code.
Details of the above cases are at www.coms-auth.hk/filemanager/en/content_713/appx_20131203_en.pdf.
Ends/Tuesday, December 3, 2013
Issued at HKT 17:50
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