UPDATE: Carphone Suspends Big Brother TV Sponsorship

LONDON -(Dow Jones)- U.K. mobile phone retailer Carphone Warehouse, Thursday said is was suspending its sponsorship of Channel 4's "Celebrity Big Brother" television program due to concerns of its brand being associated with alleged racist behavior of contestants in the show.

The show produced by Endemol Entertainment Holding NV (34569.AE), which is majority-owned by Telefonica, has received criticism in recent days with contestants being accused of racist bullying.

Earlier Thursday, U.K. communications industry regulator Ofcom said it couldn't rule out intervening in the controversial program, following allegations of racism.

Carphone Warehouse Chief Executive Charles Dunstone said in a statement: "Our concern has rapidly mounted about the broadcast behavior of individuals within the Big Brother house. We are totally against all forms of racism and bullying and indeed this behavior is entirely at odds with the brand values of the Carphone Warehouse."

"As a result, we feel that as long as this continues, we are unable to associate our brand with the program," he added.

Dunstone said the company had already made it clear to Channel 4, the TV operator screening the show, that if the behavior by contestants was to continue, Carphone would have to reconsider its position.

"Nothing we saw last night gave us any comfort. Accordingly, we have instructed Channel 4 to remove our sponsorship name and branding with immediate effect," Dunstone said.

During a press conference following Carphone Warehouse's decision to suspended sponsorship, Channel 4 Chief Executive Andy Duncan said he had no plans to "pull the plug" on the popular reality TV show.

He added that although comments and behavior in the show had been "unpleasant" he said: "we can't say with any certainty that they were racially motivated."

"I think in terms of Carphone Warehouse they have to make the right decision for their brand and them as a company - that's a commercial decision."

Ofcom Chief Executive Ed Richards, speaking at a media industry conference in Oxford, said, "There are extreme cases in which we can look at (intervention)."

Richards confirmed that the regulator had received more than 25,000 complaints about the program, in which celebrity contestants have allegedly bullied and racially insulted Indian film actress Shilpa Shetty.

However, Richards insisted that he didn't want to "conduct a kangaroo court."

He said, "We will look at the issue very carefully using due caution."

Richards added that Ofcom would write to Channel 4 but insisted he wouldn't be rushed into any decision.

An analyst, who requested anonymity, noted that Carphone Warehouse shares were "ticking up" slightly following its decision to suspend advertising. However he added he didn't think the decision would have much impact on the shares.

Carphone Warehouse is not the first company to cancel its sponsorship, noted the analyst. Mobile phone operator 02, a subsidiary of Telefonica, also decided to pull out of the show when it felt program content was unsuitable.

At 1518 GMT, Carphone Warehouse shares traded up 3.75 pence, or 1.2%, at 321 pence.

Company Web site: http://www.cpwplc.com

http://www.endemol.com

-By Daniel Thomas, Dow Jones Newswires; 44-20-7842-9264; dan.thomas@dowjones.com

(END) Dow Jones Newswires "

Posted to the site on 18th January 2007