Junk food ad ban could hit ITV and other broadcasters hard

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ITV PLC (LON:ITV) and other broadcasters could suffer a hard hit to their revenues as a result of a UK ban on junk food advertising that is due to come into force in 2023.

The plans, drawn up by the government, will mean adverts for foods high in sugar, salt and fat will not be allowed on TV before 9pm. There will also be new rules around advertising junk food online including in Google search results and on social media sites such as Facebook.

READ: ITV tipped as winner as ad market roars back

The new rules will apply during live and on-demand TV but will not affect companies with fewer than 250 employees. Certain foods that are considered high in sugar, salt and fat but not major contributors to child obesity rates such as olive oil, honey and avocados, will also be exempt.

Audio advertising as well as out-of-home ads such as posters and billboards, will not fall within the new rules.

While the move has been welcomed by health and anti-obesity activists, the new rules could put a dent in broadcaster ad income, with the likes of ITV, Channel 4, Channel 5 and Sky potentially losing £200mln in annual revenues as a result of the plans.

Tech companies that rely heavily on online advertising such as Facebook Inc (NASDAQ:FB), Google parent Alphabet Inc (NASDAQ:GOOGL) and Twitter Inc (NYSE:TWTR) could also lose out on a portion of the estimated £400mln that is spent every year on online food ads in the UK.

In early afternoon trading in London, ITV shares were down 0.2% at 126.6p, while in pre-market trading in New York Facebook was up 0.6% at US$342.55, Alphabet climbed 0.5% to US$2,455 and Twitter rose 0.5% to US$66.80.

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