Ofcom has today fined GMTV £2,000,000 for misconduct in viewer competitions between August 2003 and February 2007. The premium rate phone services were provided and run by Opera telecom, who ICSTIS fined £250,000 earlier this week over the same competitions.
In this case Ofcom’s investigation found the following types of misconduct in GMTV competitions:
- Early selection – picking competition finalists before lines had closed. This meant that substantial numbers of viewers who entered the competition stood no chance of being entered into the competition;
- 15/5 method – selecting 15 competition finalists between 06.00 – 08.30 and the remaining five at 09.00 after the lines had closed. Viewers calling between 08.30 – 09.00 therefore had significantly less chance of being selected as a finalist than those who entered before 08.30; and
- Final Five – selecting the final five competition finalists before the lines had closed.
GMTV admitted they had dropped the ball over the competitions but argued that they had no knowledge of the corner cutting Opera was doing in relation to picking competition finalists, except where the 15/5 method was concerned, when GMTV staff were aware of, and had informally agreed to its adoption. GMTV admitted it had been negligent but denied its actions amounted to gross negligence. They also argued that a fine of no more than £500,000 would be the appropriate amount, after taking into account there actions since the code breaches came to light.
The Ofcom sanctions Committee did not agree, questioning GMTV’s lack of oversight and control of its competitions, and its seemingly unquestioning , unaudited use, of a PRS service provider who had been on the end of a number of ‘serious’ or ‘very serious’ ICSTIS code breach adjudications during the time of the contract (this weeks was the 23rd between 2005-2007, with the total fines amounting to just under £500,000).
“The Committee was particularly concerned by the Licensee’s admission that, despite the considerable financial importance of these competitions to GMTV (representing as they did 35-40 per cent [£63.3 Million] of its annual profit), there was no audit of Opera’s processes and procedures by GMTV’s management or its Board, and there also appeared to have been no assessment of any risks associated with the conduct of these competitions at any point during the extensive period of time in which the competitions took place. Rather, the evidence was that GMTV had focussed heavily on the contribution that the PRS competitions made to its revenues and profitability, whilst paying comparatively little attention to its compliance responsibilities”. They go on, ” despite the importance of this revenue to its profitability, it had no adequate oversight of this operation … This, in the Committee’s view, was such a serious and fundamental failing as to represent evidence of gross negligence on the part of GMTV”.
On this issue of not questioning Opera’s ICSTIS compliance record the Committee stated: “GMTV’s trust in Opera was evidently misplaced and misjudged in this case given the number and seriousness of the breaches by Opera of the Icstis Code between 2003 and 2006. The Committee was strongly of the view that GMTV’s handling of its relationship with Opera was both irresponsible and negligent … Even when GMTV was made aware of Opera’s record of failing to comply with the Icstis Code, it relied solely on Opera’s own explanation for the many breaches. The Committee did not consider that GMTV’s conduct in this respect could be described as anything but grossly negligent”.
The Committee also called grossly negligent the failure to deal with the GMTV staff participation in the 15/5 method, even after the head of legal and business affairs became aware of the practice.
The Committee did accept that GMTV had no intention to mislead its audience for financial gain but concluded “the Licensee’s disregard for the need to operate any reasonable compliance procedure, verification, oversight or management of the arrangements for the conduct of these competitions over such a long period of time could not, in the Committee’s view, be described as anything other than gross negligence as to GMTV’s compliance with the relevant Codes”.
Things could have been worse for GMTV, as the Committee admits the fine would have been even greater had GMTV not already taken a number of steps to rectify the breaches including:
- the decision by its Managing Director, Paul Corley, to take full responsibility for GMTV’s failures and therefore to resign from his post, along with the Head of Competitions, Kate Fleming;
- offering refunds on a potential 25 million entries, a number which it believed was “certainly far higher than the number of people who would have actually been disenfranchised”;
- setting up a Freephone number for viewers to request a claim form, which could also be downloaded from its website. Those claiming a refund would have to provide proof of ownership of their telephone number;
- promoting the refunds every day on GMTV for a five-week period and taking out advertising for the refunds in national and regional newspapers;
- holding 250 new free prize draws, each with a £10,000 prize, for all entrants on the refund database, at a total cost of £2.5 million;
- making a £250,000 donation to the children’s charity ChildLine, to take account of the data it had not been able to retrieve.
- the decision not to hold premium rate prize competitions featuring a same day reveal;
- insistence on all finalists being selected by GMTV staff on its own premises, rather than by any service provider;
- the appointment of a dedicated compliance officer with specific responsibility for compliance on premium rate services; and
- regular compliance inspections of any nominated service providers.
The fine of £2 million is the largest financial penalty to be imposed against a broadcaster by Ofcom.
I must admit the size of the fine here surprised me, not because I don’t think it was warranted (frankly the laissez-faire attitude to managing their contract with Opera could justify that), but, because I thought Ofcom would be more swayed by what GMTV had done since. It was, but only in the sense that it produced a lower fine than would have been imposed otherwise. In that sense, I think GMTV may have been looking at a fine closer to double what was handed down.
I also think it was right that Ofcom ignored GMTV’s argument that calling its actions ‘grossly negligent’ was ‘unduly harsh’ due to an ‘ambiguity’ in broacasters’ understanding of PRS compliance.
GMTV has issued a statement accepting the decision “GMTV accepts Ofcom’s judgement and, as broadcaster, we take full responsibility for the breaches of the Ofcom Broadcasting Code” and announcing it will broadcast a statement of Ofcom’s findings on three specified occasions in tomorrow’s show