THE BBC was fined £150,000 by Ofcom yesterday following the prank phone calls made by Jonathan Ross and Russell Brand to Andrew Sachs.
The calls to the Fawlty Towers actor were broadcast last October on Brand's Radio 2 show.
The regulator said the scale of the fine reflects the "extraordinary" nature and seriousness of the BBC's failures and the resulting breaches of the Broadcasting Code.
Two episodes of Brand's show breached the Code, broadcast on BBC Radio 2 on 18 and 25 October. Ofcom said the BBC broadcast explicit, intimate and confidential information about Georgina Baillie, Sachs's granddaughter, in both programmes without their consent.
Ofcom said: "This not only unwarrantably and seriously infringed their privacy but was also gratuitously offensive, humiliating and demeaning."
Ofcom said broadcasters should be allowed to enjoy the creative freedom to explore issues and ideas without undue interference.
However it added: "In this case, Ofcom's investigation revealed that despite the Russell Brand show being considered by the BBC to be 'high risk' prior to these episodes, the broadcaster had ceded responsibility for managing some of that risk to those working for the presenter, Russell Brand.
"The presenter's interests had been given greater priority than the BBC's responsibility to avoid unwarranted infringements of privacy and minimise the risk of harm and offence and to maintain generally accepted standards."
Ofcom described the material broadcast as "exceptionally offensive, humiliating and demeaning".
In the furore that followed the calls, Brand resigned and Ross was suspended without pay for three months. The BBC Trust, the corporation's governing body, said yesterday it regretted "that these serious breaches by the BBC have led to a financial penalty being applied by Ofcom and the loss of licence fee-payers' money as a result".
The Trust's Editorial Standards Committee (ESC) concluded the breaches were serious and the content was so grossly offensive that there was no justification for its broadcast.
The ESC found the comments in the broadcast were "an abuse of the privilege given to the BBC to broadcast to its audiences".
It identified three failings: a failure to assert editorial control by Radio 2, a failure to follow compliance systems, and a failure of editorial judgment.
The Trust instructed BBC management to broadcast an on-air apology and strengthen editorial controls around any "high risk" programme.