Ofcom on United Kingdom Retransmission Fees: “Complicated and Lengthy” Intervention

In terms of drama, Ofcom noted: “The PSB system continues to deliver high profile, big budget drama”.

Ofcom’s review finds that the public service broadcasters continue to make a significant contribution to United Kingdom broadcasting.

It said viewers valued PSB programmes, and audience satisfaction was high.

Over half of TV viewing is to the main PSB channels, rising to 70% when extra channels such as Plus One are included.

The PSBs contribute significantly to programme creation in the United Kingdom. In 2013, the PSBs invested just over GBP 2 billion in new United Kingdom programmes (excluding sports content).

It comes against a background of increasing on demand viewing among the young.

Public-service broadcasters attract most television viewing overall, but only half of 16 to 24 year-olds watch live TV, Ofcom said.

British public service broadcasters (PSB) such as ITV (LON:ITV) and the BBC are serving viewers well but the industry needs to adapt to challenges from the online revolution, watchdogs said on Thursday. For example, companies such as Vice Media are providing news content to younger people, local content is coming from hyperlocal websites and universities are putting their lectures online. “But challenges are emerging, and PSB needs to respond to changes in technology and viewer behavior”.

The report also looks at the internet as a source of United Kingdom news.

Ofcom concluded: “Broadcasters have met this challenge through a mixture of savings and changes to the types of programs they make”.

Otherwise, PSBs are likely to face hard choices about which programming and services they are able to fund, it said.

Ofcom said that in considering the introduction of retransmission fees, regulation would need to be watertight to prevent bust-ups in negotiations between broadcasters to “avoid the risk of channels being withheld and going off air”.

Policy makers will need to consider whether the benefits designed to enable PSB will remain effective in the Internet age.

The BBC, the cornerstone of PSB which reaches 96 percent of the population on a weekly basis, will be soon be the subject of a further review process as its remit and independence are underpinned by a Royal Charter that runs out at the end of 2016. It believes it will be more distinctive than the existing BBC Three channel, whose audience is now falling.

Some PSBs want subscription TV services to pay to carry their channels – so called “retransmission fees”. It also conceded that retrains fees could bring the PSBs additional funding. “There is now no guarantee that all fees would be spent on public service programs”.

While it is ultimately the government that will decide whether to introduce retransmission fees – a decision is expected late this year or early 2016 – Ofcom’s view caused a flurry of analyst notes viewing it as a negative for ITV’s ambitions. “More people are watching online or on demand, and this presents challenges as well as opportunities for public service broadcasters”.