House of Commons - Culture, Media and Sport

Select Committee on Culture, Media and Sport First Report

5 Future of content in key areas

76. The Voice of the Listener and Viewer told us that the UK has the most competitive market for children's programming in the world, with over 20 dedicated channels.[149] Save Kids' TV pointed out that this had brought a huge increase in the number of hours of children's television broadcast.[150] The Satellite and Cable Broadcasters' Group cited research from David Graham Associates that showed that in one month (October 2006), 8,197 hours of children's programming were broadcast across terrestrial and digital channels in the UK, 6,459 hours (79%) of which was provided by commercial digital multichannels outside of the designated public service broadcasters.[151] Pact, however, argued that the multichannel sector's contribution to UKproduced children's programming was small, estimating that cable and satellite channels invested around £6 million per year on original children's programming.[152] Although the Satellite and Cable Broadcasters' Group originally agreed to provide us with its own estimate of the multichannel sector's investment in UKproduced children's programming, we note that it has since declined to do so on grounds of commercial confidentiality. We find this failure by the Satellite and Cable Broadcasters' Group to release information on their members' investment in UKproduced children's programming very disappointing. In evidence, this body has been one of the most optimistic about the prospects for marketprovided public service content in the digital age, but its failure to provide these statistics could be taken as undermining that confidence. Nevertheless, the Rt Hon Shaun Woodward MP, then Minister for Creative Industries and Tourism, told us that the range of output being provided for children today is "quite extraordinary".[153]

77. Children's programming is provided on both mixed genre channels and dedicated children's channels. The BBC provides two dedicated channels, CBeebies and CBBC, and remains "committed to providing mixed schedules of highquality, British programming for British children".[154] The then Minister told us that the BBC's commissioning of firstrun programmes for children had risen from 477 hours in 1998 to 1,276 today.[155] ITV provides children's content on ITV1 and CITV, its dedicated freetoair children's channel which "includes a high level of originated UK programmes".[156] Five told us that it broadcast 652 hours of original children's programmes in 2006 and that it is the only commercial broadcaster that still broadcasts children's programming every day of the week.[157] S4C stated that it broadcast over 1,100 hours of children's programming in 2006 [158] and has announced plans to launch a dedicated new television channel for children in the Welshlanguage.[159] The then Minister told us, in contrast to the UK public service broadcasters' ongoing commitment to children's programming, that the level of children's programming originated in Canada had fallen from 817 hours eight years ago to 708 hours today.[160]

78. The provision of specialist children's channels by satellite and cable broadcasters and ITV's focus on providing children's programming on a dedicated digital channel, rather than on ITV1, perhaps reflects children's changing consumption habits. Ofcom said that "children have overwhelmingly left what we call mixed genre channels—ITV1, BBC One, Channel 4, BBC Two"—and that they now watch "dedicated children's channels […] or they go online".[161] Research by Ofcom into children's viewing supported this view: in 2006, 82% of children's viewing was on dedicated children's channels, compared to 56% in 2002.[162]

79. The then Minister for Creative Industries and Tourism recognised this change in children's viewing patterns, stating that children are watching many more programmes ondemand and that their needs are being met by the Internet and by children's computer games. He added that children have a wide range of material to consume and that arguments about the level of UKoriginated programming should not forget about the demands of the consumer.[163] In this context we note with interest the announcement by Save Kids' TV that it is investigating the potential for a new media service for children.[164]

80. Despite the increase in the number of channels and the quantity of programming available, some stakeholders believed that this was not good for UK children. Save Kids' TV argued that the diversity in choice of channels had led to fragmentation in funding which in turn had led to less diversity in programming.[165] There were also concerns that the new digital channels mainly show imported programming and repeats rather than original, UKproduced content. The Voice of the Listener and Viewer noted that imported programming provided entertainment that many children enjoy but argued that imports did not reflect the UK's "rich cultural heritage of language, literature, values and environment".[166] On the other hand, Ofcom research into parents' views on the importance of children's programming showed that the educational content of children's programmes was the most important consideration for parents, with 85% of parents rating this as important while "having enough programmes made in the UK" was rated as important by 65% of parents.[167]

81. The Committee heard that children's programming is often a difficult proposition if left purely to market forces as it is relatively more expensive to produce and generates less revenue than other programming.[168] Pact argued that the UK is "facing a crisis in children's production".[169] Ragdoll Productions Limited, an independent children's production company, stated that "our industry is threatened with extinction."[170] In response to the then Minister's evidence on the amount of children's programming currently available in the UK, Pact argued that the increased provision from the BBC did not mean that there is a greater range of UK programming on offer to children.[171] Ofcom research found that, between 1998 and 2006, spending on original programmes had fallen by 14% in real terms but that the volume of firstrun original programming had remained relatively stable.[172] Five said that while it "has a strong commitment to children's programmes" it believed that "there are serious concerns about the longterm financial viability of UKproduced children's programming on advertiser funded channels".[173]

82. The Committee heard a lot of evidence in relation to ITV's commitment to UKproduced children's programming. ITV reduced its children's output on ITV1 from 10 hours to eight hours per week in 2005 and plans to reduce this to around five hours per week in 2007.[174] Ofcom told the Committee that it had advised ITV it "should remain a significant player in children's provision" and that this meant presence across the week, presence in a range of genres and presence as a significant commissioning force.[175] Despite this, Michael Grade indicated to us that he did not foresee children's programming featuring in ITV1's schedule in the long term.[176] Some witnesses pointed to ITV's recent moves as evidence that broadcasters driven by commercial incentives will withdraw from children's programming: Pact, for example, forecast that ITV would not be producing or commissioning children's content in five years.[177] Despite the planned reduction in broadcast hours on ITV1, ITV told us that it remains committed to children's programming; and that it will "broadcast more children's hours than BBC One and
BBC Two". ITV added that there will be a "meaningful amount" of children's programming on ITV1 and "50% of that will be originated programming".[178]

83. British children in multichannel homes have access to more children's television than ever before. This content is provided by a range of broadcasters, from the designated public service broadcasters to the digital multichannels. Children are increasingly consuming content on platforms other than traditional mixed genre television channels. We are therefore not unduly concerned if public service broadcasters shift their children's programming focus away from their main terrestrial channels, instead providing content on dedicated children's channels. We do, however, believe that before the completion of digital switchover, it will still be important for the public service broadcasters to provide some UKproduced children's programming on their main terrestrial channels, and after the completion of digital switchover, for the public service broadcasters to provide UKproduced children's programming freetoair.

84. We note that decisions by the Government and Ofcom have further damaged the ability of commercial broadcasters to provide children's programming. At the behest of the Government, Ofcom has imposed restrictions on television advertising of food and drink products high in fat, salt and sugar in or around programmes made for children (including preschool children) or that are likely to be of particular appeal to children aged four to nine. In 2008, Ofcom will extend this restriction to cover children aged four to 15.[179] We note that Ofcom forecast that its restrictions will cause an initial loss of around £20 million per year in advertising revenue.[180] While we agree with the policy objective of reducing childhood obesity, it is the case that restrictions on the advertising of food and drink products high in fat, salt and sugar have increased the financial pressure on broadcasters of children's programming and that they will have an adverse effect on the provision of original, UKproduced children's content.

85. The then Minister for the Creative Industries and Tourism, told us that he did not believe that the BBC is going to be the only provider of original, UKproduced children's content in future. He considered that original content is going to be generated by a number of organisations in broadcasting and on other platforms.[181] He concluded that "there is not a crisis in children's programming in this country, it is the reverse".[182] Ofcom's recent discussion paper on the future of children's programming found that preschool children (two to fiveyearolds) and younger children (six to eightyearolds) are well served by current programming, but that "there are significant reasons for concern about provision of a wide range of high quality and original programming for older children" (nine to 12-year-olds.[183]

86. We believe that a mix of imported and UKproduced content is beneficial for UK children as both types of programming can help children learn and develop, and we believe that UKproduced content plays an important role in maintaining children's cultural identity. We note the commitment to children's programming of the BBC, ITV, Five and some digital multichannels and we encourage these broadcasters to continue to contribute to the production of UKoriginated output. Despite these commitments, we believe that the financial pressure likely to face the main current commercial commissioners of children's content, in part due to the Government and Ofcom's interventions which will restrict advertising revenue for children's programming, creates uncertainty about the level of UKproduced children's content that will be attained in future. We believe that it is important that there remains a significant amount of UK-produced children's programming on commercial channels as well as the BBC, and we would be very disappointed if ITV further reduced or withdrew from commissioning UK children's content in the future. We therefore recommend that the Government and Ofcom should identify how much UK children's production they consider is necessary and come to a view on whether they believe there will be a shortfall. We welcome Ofcom's recent discussion paper on the future of children's programming as a good first step in this process. If a shortfall is envisaged, we believe that children's programming should be eligible for assistance as we set out later.

National news and current affairs programming

87. In the evidence that we received, news and current affairs programming was widely seen as a particularly important element of broadcasters' offerings. The National Union of Journalists described news and current affairs as "an integral part of the system of public service broadcasting throughout the UK" setting "the benchmark across all sectors of the media in informing and educating the public".[184] ITN argued that highquality, independent news from different sources for different audiences is "essential to an informed democracy and is the stimulus for political and cultural debate".[185] Tim Gardam, previously Director of Television and Director of Programmes at Channel 4, said that "one of the most important aspects of public service content is the provision of reliable information to an informed democracy in the digital age".[186]

88. Consumers in the UK have access to news programming from a range of sources. Of the designated public service broadcasters, the BBC provides news on radio, the Internet, and television—including a 24hour news channel, News24. Although ITV has dropped its 24hour news channel, it broadcasts network news and regional news, with ITN as its major provider. ITN also makes Channel 4's news programming, while Five broadcasts news programming made by Sky News.[187]

89. Many other operators also provide news content even though they are under no obligation to do so. For example, BSkyB broadcasts its own 24hour news channel, Sky News. Five said that Sky News is an "established and respected" news service outside the public service broadcasting system.[188] Ed Richards, Chief Executive of Ofcom, accepted that "Sky News is in many ways meeting many of the purposes and characteristics that we would associate with public service broadcasting".[189] The RadioCentre told us that commercial radio stations have a growing commitment to news, having increased the provision of news, travel and weather information by around 85% between 2000 and 2004, from around 9,300 hours to 17,300 hours.[190]

90. There is also a substantial news presence on new media. Lord Burns, former adviser on BBC Charter review to the Secretary of State for Culture, Media and Sport, argued that there are thousands of news sources on the Internet and noted that there is a huge "supply of news content on a worldwide basis".[191] Mark Wood, Chief Executive of ITN, noted that news is being delivered in different ways, including on mobile platforms and on broadband. He added that Channel 4 News has a very strong broadband and ondemand presence and that ITV News plans to undertake a project called "Uploaded" using usergenerated content.[192] The BBC also has a substantial online presence, which Ed Richards, Chief Executive of Ofcom, described as "one of the best things the BBC has done of recent years".[193]

91. Many stakeholders were optimistic about the future of news programming. For example, Ofcom argued that the provision of public service television news is assured in the period up to digital switchover[194] and suggested that it was likely that the "main channels will want to continue UK national and international news after digital switchover, with or without regulatory obligation."[195] ITN agreed that "high quality, impartial broadcast news is not yet under threat", and noted that it remains a "must have" in the schedules of broadcasters with big brands.[196] Looking further ahead, Five said that there "will always be a demand for news, and popular mass market channels like Five will want to continue providing a news service for as long as is feasible".[197] In relation to radio, GCap Media told the Committee that news provision, especially local news, is a "key audience attractant" for GCap Media stations.[198]

92. Greg Dyke, former BBC DirectorGeneral, stated that he "would be very surprised if [ITV] did not see that both news and regional news is valuable to them".[199] ITV agreed that "network news represents a core part of the ITV brand"[200] and will "remain an indispensable part of the schedule of any successful television network".[201] ITV told us that "experience from the US and elsewhere demonstrates successful commercial channels need to provide an authoritative and impartial news service to differentiate themselves from the long tail of minor digital channels".[202] Since then, ITV has demonstrated its commitment by announcing plans to restore News at Ten.

93. Some witnesses doubted the future financial viability of news programming in general. Five argued that news was expensive and represents a "major commitment that cannot be varied easily in the light of changing commercial fortunes".[203] Channel 4 said that while "Channel 4 News is a flagship public service broadcasting programme for the channel, it is not a commercially successful programme" and that sustaining the level and quality of news on Channel 4 would require further subsidy.[204]

94. On the basis of the evidence, it is our judgement that there is no near or midterm crisis in the provision of network television news. In the longer term, while we note the arguments that highquality news is relatively expensive to make, we believe that, on balance, the commercial public service broadcasters are likely to provide national news in the future as it is regarded as essential for their brands, but the importance of maintaining plurality in high quality news provision is such that we should remain vigilant in case this does not occur.

95. Despite the current provision of news programming and the general optimism that this provision will continue, there is a parallel concern that news provision in the future will be of lower quality than that currently provided by the designated public service broadcasters. ITN told us that while there is a plethora of news providers in the commercial marketplace, there are no guarantees that public service broadcasting values—such as independence, impartiality[205] and high quality—will survive the changing regulatory and market conditions of digital switchover.[206] ITN, however, noted that competition in news had helped create high quality standards in news broadcasting and that these standards had been maintained by newer market entrants such as Sky News.[207] Though most of the evidence focused on news, we note the continuing arguments about the failure of broadcasters, including the BBC, to commission high profile current affairs and investigative programmes and to schedule them prominently. This concern is demonstrated at the continued lament, for instance, at the demise of World in Action and Weekend World. In the digital age, we believe policy-makers should keep a watching brief on the provision of current affairs and investigative programming and if there is a shortfall, this genre might also be eligible for assistance as set out later.

96. Some witnesses emphasised the importance of independence and impartiality in news provision. For example, Mark Wood, Chief Executive of ITN, said that regulation of quality is important.[208] The Voice of the Listener and Viewer considered that it was important for the news agenda to be set by "independent newscasters, not by politicians or other powerful groups".[209] BECTU, a broadcasting trade union, expressed concerns about news provision from commercial sources, stating that the Government and Ofcom would be "failing in their duties" if they were to "stand back and allow an arm of News Corporation to become the overwhelmingly dominant commercial source of television news in the UK" as this "would present an unwelcome development with consequences not just for our broadcasting sector but for our democracy".[210] In relation to new media, ITN told us that there has been a proliferation of new media news content, but that not all of it is in compliance with the "public service broadcasting values" of independence and impartiality.[211]

97. Other stakeholders were less concerned about impartiality, and questioned whether this quality was present even in news coverage currently provided by the designated public service broadcasters. Anthony Lilley, Chief Executive of Magic Lantern Productions, argued that it is a "comforting, mass-media myth that there was ever balance and that there was ever impartiality" in news.[212] Irwin Stelzer, Director of Economic Policy Studies at the Hudson Institute, told us that we should "abandon this crazy idea that there are some wonderful people sitting out there completely impartial, reporting on social events and politics"[213] and Stephan Shakespeare, Director of Doughty Media Limited, added that "the idea that the BBC is untainted by bias is obviously ludicrous".[214]

98. Some witnesses told us we should be more concerned about whether there was a range of voices and opinions, rather than whether individual news providers were impartial. The Satellite and Cable Broadcasters' Group said that all news services should be entitled to have opinions as long as general regulations requiring accuracy are well enforced.[215] Stephan Shakespeare considered that consumers would get a good picture of current events as long as there is a variety of voices. He argued that balance in a single body can never be achieved, but that a balance of voices was possible.[216] Irwin Stelzer agreed, arguing that everything is biased and that it was important to have conflicting biases on television.[217]

99. The Committee heard evidence on the potential impact on news plurality of BSkyB's purchase of a 17.9% stake in ITV. David Elstein, Chairman of the Broadcasting Policy Group, told us that the ITV/BSkyB deal could raise issues around news provision; specifically whether or not Sky News and ITN would cease to compete with each other in light of BSkyB's shareholding.[218] However, Michael Grade, Executive Chairman of ITV, told us that that he did not believe ITN should have any concerns in terms of its news provision.[219] Mark Wood, Chief Executive of ITN, told us that he had a "frisson of concern" when BSkyB bought the stake but "since then none at all" and that "there has been no indication at all of any influence by BSkyB" on ITN's process for negotiating its contract with ITV.[220] BSkyB said that its "intention is simply to be a supportive shareholder, but in a passive way".[221] Although we saw little evidence to raise concern about the effect of BSkyB's stake in ITV on plurality of news provision, the importance of this issue is such that the Secretary of State's decision, on the advice of the Office of Fair Trading, to refer it to the Competition Commission for examination is appropriate. We note the Competition Commission's provisional finding that the acquisition restricts competition and therefore operates against the public interest. In relation to the media public interest consideration, we note that the Competition Commission provisionally concluded that the acquisition will have no adverse effect on the sufficiency of plurality.[222]

100. It is, of course, possible for a range of news providers to coexist, some with particular viewpoints and others attempting to be impartial. Mark Wood, Chief Executive of ITN, argued that it would be acceptable to have public service broadcastinglabelled news which is guaranteed to be independent, reliable and balanced alongside "an explosion of Fox-type services". He argued that UK consumers were sufficiently sophisticated to judge what they see, but noted that they will want to know that anything which is labelled "public service news" is balanced.[223] Stephan Shakespeare agreed that it was important to maintain traditional news values, but added that we should also look for quality in new providers such as Internet news provision.[224] Ofcom said that while there is no reason for impartiality rules to be relaxed for public service broadcasters, it is timely to consider whether a relaxation in universal application or impartiality rules for television might encourage more diverse views. It also noted that impartiality requirements for all licensed television services may become less practical in a digital environment where regulated and unregulated services exists side by side on the same platform.[225]

101. An increasing amount of news content is provided by commercial broadcasters and other providers, and we note the concerns that this content may be of lower quality and may be less independent and impartial than content provided by the designated public service broadcasters. We are not unduly concerned, however, if news coverage from nonpublic service broadcasters is presented from a particular viewpoint, as long as this is made clear to the viewer: we believe that it is more important for there to be a balanced range of views and opinions from news providers across the media spectrum. News provision from other organisations, especially on new media, has an important role in maintaining the plurality and diversity of news output in the UK. We recognise in the age of broadcast by broadband that it is neither possible, nor necessarily desirable, to subject every such operator to impartiality rules. We do believe, however, that the impartiality requirements currently applied to public service broadcasters have served the UK well and policy-makers again need to keep a watching brief as the industry develops in the digital age.

Regional and local content

102. In seeking to ensure the provision of television content that caters to the needs of audiences in different geographical areas, the UK has traditionally taken a regional approach. The original ITV regional map in the 1950s created broad regional areas for licensees facilitating the provision of content—such as news and weather—specific to each region. Regional television services in the UK are currently available on ITV1, BBC One and BBC Two. Welsh programming is provided by S4C and a range of radio stations and print media also provide content specific to the regions.

103. The provision of regional content on television is sustained by regulatory obligations on the BBC, ITV and S4C. ITV is subject to regional programming quotas: ITV1 is currently required to provide seven hours of regional programming per week, of which at least 5.5 hours must be news and 1.5 hours must be other regional programmes. Higher quotas apply in the nations to reflect their additional responsibilities while somewhat lower quotas apply in the smaller regions.[226] ITV has said that it currently spends around £120 million a year on regional services, the vast majority on regional news, providing 17 different news services across 10 licence regions, four more than the BBC.[227] However, the regional map is historically determined and bears little relation to population size.

104. When the first UK region achieves digital switchover, Ofcom intends to reduce the nonnews programming quota in the English regions to 0.5 hours per week.[228] The BBC is also subject to regional programming quotas: it is required to provide 6,580 hours of regional programming per year across BBC One and BBC Two. The Voice of the Listener and Viewer told us that the nations and regions of the UK currently "enjoy distinctive highquality services which meet their particular needs and interests".[229]

105. There are concerns, however, that regional programming—news in particular—may come under threat in future. ITV told us that its regional news service involves greater costs that other genres and that regional news programmes "do not punch their weight in commercial terms".[230] ITV argued that while network public service broadcasting should continue to be sustainable, there is potential for a "funding gap" with respect to ITV's regional services.[231] Scottish Screen said that current developments in Scotland raise concerns about the future of programming that preserves and promotes Scotland's distinctive national identity.[232] Bobby Hain, Managing Director of STV, noted that he understood the business rationale behind trying to reduce regional commitments on ITV, but added that SMG needs a regulatory framework within the ITV network that allows it to adequately provide Scottish content.[233]

106. ITV did see some future in regional programming, however, stating that "regional news services are highly valued by viewers up and down the country".[234] Michael Grade, Executive Chairman of ITV, said that regional programming was a "huge part of the brand value of ITV" and that a "regional connection in the postanalogue world is one of the great unique selling propositions of ITV".[235] Michael Grade recognised that costs were attached to the provision of regional services[236] but added that he believes that ITV will maintain regional news programming at its present level for as long as it can[237] as regional news is the "core" of ITV.[238] Since then, ITV has announced its intention to reduce the number of individual news services from 17 to nine while continuing subregional provision for a period in some areas.[239] This is now subject to discussion with Ofcom as part of its public service television broadcasting review and ITV has also argued that there should be a debate about the appropriate regional requirements on ITV in the digital age and possible means of addressing any resulting "funding gap".[240] Ofcom noted that economic circumstances make it "much less likely that commercial broadcasters would choose to carry news for the UK nations and regions" in the absence of effective regulatory intervention.[241]

107. We note the concerns about the future viability of regional programming and we recognise that regional programming is relatively costly to produce as it cannot generate the mass audiences and revenues of national programming. While we note that it is in the interests of broadcasters to provide regional content, as this type of content is attractive to viewers, we believe that content specific to the nations and regions, especially news programming, may come under pressure in future. We also recognise the concern in some distinct areas such as the South West and the Border region about the impact that ITV's proposals will have on relevant local news provision. We therefore believe that the Government and Ofcom should identify how much regional material they believe should be provided, and come to a view on whether they believe there will be a shortfall in future. If a shortfall is envisaged we believe that regional programming should be eligible for assistance as we set out later. In the interests of plurality it would be regrettable if regional news in any area were to become solely the preserve of the BBC.

108. Turning from regional content to more local content, the Committee received a range of submissions in support of local television. The general theme of these submissions was that the Committee should recognise local television as a form of public service broadcasting, and that smaller organisations should be granted free spectrum to provide it.

109. We heard a range of arguments in support of local television. Dave Rushton, Director of the Institute of Local Television,[242] argued that local content enhances a sense of community and gives people the opportunity to see faces like their own, hear voices like their own and be encouraged to participate in broadcasting and the delivery of news, information and cultural activity.[243] We were told that "local television is a strength of local democracy" and that the provision of local television could "revive democracy in this country".[244] Ofcom identified local television as a potentially important element of the future public service broadcasting mix, serving audience needs that were not fully met by national and regional broadcasting. However, Ofcom recognised that the economic viability of local services was not established, and that audience demand for them had not been adequately assessed.[245]

110. While there is currently some local television in the UK via channels broadcasting on restricted service licences,[246] (such as Northern Visions in Belfast)[247] or by broadband (such as Southwark.TV in London),[248] some groups stated that local television services are not sufficiently available. Milestone Group, an operator of local television channels in Oxford and Southampton, said that "local television services in the UK are underdeveloped in relation to almost the whole of the rest of the free world".[249]

111. Not all stakeholders believed that local television was necessary: Bobby Hain, Managing Director of STV, argued that it would be "slightly eccentric" to depart from the existing methods of delivering public service content specific to regional audiences and move towards a system of trying to deliver public service broadcasting and news and community information at a local level because the new method "may never happen".[250]

112. The BBC ran a local television trial between December 2005 and August 2006. This provided local content to viewers in the West Midlands via satellite and ondemand via broadband. The BBC's independent report on the trial concluded that the pilot services could be mapped onto the BBC's public purposes, but it expressed surprise that "the strong public service benefits did not achieve wider public support" among local participants.[251] Mark Thompson, DirectorGeneral of the BBC, stated that local television was a good example of a new commitment that the BBC had to "put a big question mark against" given the level of the licence fee settlement.[252]

113. Some of the submissions received in support of local television advocated terrestrial television as the most appropriate platform for local content.[253] There are, however, other technologies which may be better suited to this purpose. Michael Grade, Executive Chairman of ITV, predicted that there will be an increase in people providing services at a specific local level through broadband.[254] The BBC's independent report on its local television trial found that local content available ondemand over broadband was a better proposition than local content delivered via a linear schedule.[255]

114. On the other hand, some witnesses stated that current broadband speeds are insufficient to support local television. Dave Rushton, Director of the Institute of Local Television, stated that broadband is unsuited to local television because it is unevenly available.[256] More generally, the Institute of Local Television considered that broadband is not consumers' preferred way of receiving local television.[257] However, in the last quarter of 2006, 50% of all UK adults lived in households with a broadband internet connection, an increase from 39% in 2005 and a sevenfold increase on the 2002 level.[258]

115. Of course, media other than television—such as print and radio—provide content at a local level. The growth of digital platforms has created the opportunity for these other media providers—print in particular—to develop video content and interactive services targeted at specific geographical communities. Mark Thompson, DirectorGeneral of the BBC, said that the BBC is already present in media up and down the country with local radio stations and local websites.[259]

116. The commercial radio sector pointed out that it also provides a substantial amount of local content. While commercial radio stations are subject to regulation that requires them to provide local material, Lisa Kerr, Head of External Affairs at the RadioCentre, told the Committee that commercial radio is local because that is the only way in which it will connect with its audiences and survive commercially.[260] Kevin Stewart, Chief Executive of Tindle Radio, said that for small local stations, the fact that they provide local content is their unique selling point and connecting with the local community is the thing that drives listeners to local stations.[261]

117. We note the enthusiasm of some witnesses for the potential for local television and the view that the Government needs to take action to support the provision of local content. However, while we do see some value in local content, we are not convinced of the need to intervene to support local television, particularly by giving away spectrum for broadcasting on digital terrestrial television. If providers want to offer local television services, we believe that more targeted delivery platforms, such as broadband, are more appropriate.

New media

118. The Committee's Report on New Media and the Creative Industries found that consumers were increasingly accessing content using a range of platforms and technologies.[262] This was true not only of entertainment content, but also for content exhibiting public service characteristics as defined by Ofcom. In evidence to this inquiry, we heard that there is no shortage of public service material on new media, with the designated public service broadcasters, other public bodies and news providers all contributing public service content online. New entrants have also taken advantage of low barriers to entry in order to offer content to the market.

119. Most of the designated public service broadcasters have expanded, or plan to expand, their provision of public service material on new media. ITV, for example, told us that it expects its broadband ondemand service to include all of ITV1's public service material.[263] The BBC has also made a major investment in online services and Channel 4 said that it had launched "new media public services" such as FourDocs and Ideasfactory (4Talent).[264] In addition, many major newspapers now provide a wealth of audio visual content on their websites. ITN told the Committee that it was working with newspaper publishers to help them deliver multimedia content, and that it thought channels like "Telegraph Television, Times Television [and] Guardian Television" could all emerge in the future.[265] We were also impressed by the steps taken by the Press Association to provide video news services to newspaper publishers, Internet service providers such as AOL and Tiscali, and MSN.

120. Anthony Lilley, Chief Executive of Magic Lantern Productions, argued that it was "important to think about delivery of public service in a very wide context when you think about new media"[266] and added that there was more to public service content on new media than a simple extension of the way the designated public service broadcasters delivered their remits. For example, some public service institutions with no historic link to broadcasting have taken advantage of new media to distribute content exhibiting public service purposes and characteristics as defined by Ofcom. The Tate Gallery, for instance, now has a television and interactive media production facility and its websites generate greater traffic than the actual footfall through the doors of the Tate. Anthony Lilley also pointed out that the NHS is providing public services online via www.nhs.co.uk and that the burgeoning community, NGO and notforprofit sector is also providing public service content on new media.[267]

121. Given that so much public service content is already available online, many stakeholders questioned whether further intervention was necessary to support public service content on new media. For example, the BBC recognised that public service content is already widely available on the Internet, stating that "the lack of barriers to entry [and] relatively low costs of content production and distribution […] means that valuable content can be found from many thousands if not millions of sources".[268] ITV considered that there is no necessary "threat" to the provision of public service broadcasting genres on new media and that "more and more such content is being provided by the market".[269] Channel 4 said that "given the huge range of services available online and the low barriers to entry, it will be necessary to identify where market failures arise in the new media space, and only to intervene in those circumstances".[270]

122. A lot of public service content on new media is provided by groups outside the system of designated public service broadcasters. While recognising the contribution of the smaller, newer players to the provision of public service material on new media, some stakeholders questioned the quality of content not linked to traditional providers of public service content, such as the public service broadcasters. For example, ITV said that "if public service material is to be provided at sufficient quality and with sufficient impact via new media, it is very likely that it will need to be linked to existing public service broadcasters such as ITV1 and Channel 4".[271] Anthony Lilley also raised concerns that new entrants might be unable to provide material with sufficient impact. He suggested that smaller new media providers may struggle to achieve and maintain scale and may also experience difficulties in developing business models or demonstrating public benefit sufficient to ensure sustainability. He believed that intervention might be needed as the challenges facing participative services on new media are different from those facing traditional, mass media services.[272]

123. Other stakeholders thought that public service content on new media could be valuable regardless of its scale or whether it was linked to a traditional media provider. For example, ITN argued that while traditional providers have the leverage to crosspromote, a "very vibrant" new media market including different providers will emerge.[273] While Anthony Lilley told the Committee that smaller new media companies may struggle to find the resources to commission expensive television programmes, he also argued that this "does not necessarily mean that public service content has to come from public service broadcasters".[274]

124. A huge amount of content exhibiting public service purposes and characteristics, as defined by Ofcom, is currently available on new media and there is a plurality of providers of this content. We believe that there is clearly no threat to the production or distribution of public service content on new media platforms. While we note the efforts by the designated public service broadcasters to make their content available on new media, we believe that material provided by smaller, newer entrants can also meet public service purposes and characteristics as defined by Ofcom. We do not accept the arguments that the Government needs to assist new media startups to achieve scale and we therefore consider that there is no need for further intervention to support public service content on new media.

THE PUBLIC SERVICE PUBLISHER CONCEPT

125. With this in mind we turn to the public service publisher concept advanced by Ofcom. Ofcom originally proposed a public service publisher in 2005, as part of its first review of public service television broadcasting. Ofcom believed that, after digital switchover, there would be a shortfall in the amount of funding for public service broadcasting as the value of the indirect subsidies provided to ITV, Channel 4 and Five diminished. Ofcom suggested that one way of addressing this could be the creation of a new public service broadcasting institution—a public service publisher—with a remit to be a "freetoview premier content service providing highquality, imaginative and innovative drama, comedy and factual content, designed to take full advantage of broadband capabilities, and to provide local and communities services".[275] Ofcom believed that a budget of £300 million might be required for the public service publisher to invest in content and distribution.[276]

126. Ofcom's public service publisher concept is now somewhat different from that outlined above. Ofcom now proposes that the public service publisher would be a body that commissions and distributes public service content using new media.[277] BSkyB told the Committee that the public service publisher "has been a fairly slippery concept" evolving from a "tool to tackle market failure" to a "commissioning arm which would create public sector content on the Net, of which there is no shortage whatsoever".[278] In January 2007, Ofcom released a discussion paper on the potential role of a public service publisher and scaled back the funding requirement of its proposal to a budget of £50 to £100 million.[279] It has since said that responses to its paper expressed broad support for the principle of intervention to support public service content online and that it therefore intends to carry out further work on the current level of provision and its sustainability, both as part of and outside its public service television broadcasting review.

127. Ed Richards, Chief Executive of Ofcom, told the Committee of the potential benefits of a public service publisher. He argued that "if you want to reimagine public service content for [the digital] age you should embrace the online world, the broadband world, as well as conventional broadcasting". He noted that audiences are migrating away from terrestrial television—that "viewers, listeners and surfers are going to want something different"—and argued that if the Government wanted public purposes and characteristics to be met in the digital and Internet age it should think about public provision on new media.[280] Ed Richards stated that provision of content that meets public purposes on new media is "fantastically exciting" for older children in particular.[281]

128. Other stakeholders also saw merit in the concept. For example, SMG told us that the public service publisher is a "form of Government intervention which must be forthcoming to fund digital public service broadcasting". SMG said that the benefits of the public service publisher would "lie in funding the public service broadcasting offering of the future" including "areas particularly under risk—around children's news and current affairs".[282] Some stakeholders supported the idea of a public service publisher, but with a slightly different vision to Ofcom. For example, GCap Media thought that there should be a public service publisher of radio/audio output, consisting of a channel of public service audio output, broadcast on digital radio but also available for streaming online.[283]

129. The majority of stakeholders, however, questioned whether intervention in new media in the form of a public service publisher was necessary. Geoff Metzger, Managing Director of the History Channel, perhaps summed it up best when he said that the public service publisher was a "cure with no known disease".[284] The BBC questioned whether there was in fact a lack of plurality in the provision of quality UK content of public value on new media, and whether a public service publisher acting as a commissioner was the best targeted, most effective and most cost efficient way of addressing any shortfall.[285] While not rejecting the idea for ever, the RadioCentre stated that a public service publisher would, if introduced on the terms proposed for television by Ofcom, "represent a further state intervention in an already crowded broadcasting sector".[286] BSkyB stated that the "public service publisher concept has no rationale to the extent that it is based on incremental state funding" and that it "plainly ignores what is being and what will be provided by the market and the role that the existing stateowned broadcasters are playing and could be playing in delivering public service broadcasting".[287]

130. Others feared that public intervention in the form of a public service publisher could crowd out private operators. The Satellite and Cable Broadcasters' Group said that "the very fact that Ofcom is even contemplating such a proposal will serve to disincentivise commercial companies from investing in new media ventures".[288] Ofcom recognised that the market did provide a large amount of public service content, and noted that it needed to think about the risk that intervention could inhibit innovation and new entry. However, Ed Richards said that a "mix of public provision and private provision has given us the quality of broadcasting in the country that we have" and argued that we should translate this mix to the online, broadband world.[289] Ofcom told us that the commercial new media market would not be harmed by public service provision. By way of example, Ofcom said that in television broadcasting, "despite the presence of the BBC, despite the presence of Channel 4, you will see that the [spending in this country on subscription and pay TV] is as high in this country than in any other country" and that "this does not give you evidence of any kind that there is crowding out of commercial provision". Ofcom told the Committee that this indicates that "commercial provision can prosper alongside public service provision".[290] On the other hand, Irwin Stelzer questioned the logic of this statement, and said that Ofcom could only guess at how much the private sector would provide in the absence of subsidised competition.[291]

131. The Government has expressed lukewarm interest in the public service publisher concept. In the March 2006 White Paper on the BBC Charter review it is mentioned on one occasion as a suggested response to future pressure on the public service broadcasting system.[292] In oral evidence, the then Minister for Creative Industries and Tourism expressed a slightly more positive view, stating that the concept of public service publishing is bound to be important in future but that it is less certain "what form it should take and how it should be financed".[293]

132. Given the huge amount of public service content currently available on new media, we believe that the creation of a new public service publisher, as currently envisaged by Ofcom, is unnecessary. The creation of a new public service content institution for new media would run the risk of distorting the market and impeding innovation. We also believe that an approach that attempts to impose the institutional interventions of the past in the new media world is misguided. At a time when technological change and digital uptake strengthens the case for the withdrawal of existing intervention, the introduction of new public institutions does not appear to be merited.

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159 "New Welsh language TV channel proposed", S4C press release, 14 May 2007 Back

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