Conclusions and recommendations
1. The
purposes and characteristics approach put forward by Ofcom, though
hard to measure and assess, is a useful starting point for examining
public service content. We agree that a huge amount of currently
available content meets these purposes and characteristics, and
that this content is available from the designated public service
broadcasters and from other providers including commercial broadcasters
who are not bound by public service obligations. Given this, we
believe that the fact that content exhibits public service purposes
and characteristics as defined by Ofcom is not, in itself, a sufficient
condition for the Government to considering intervening to provide
this content. (Paragraph 23)
2. There is currently
an abundant supply of content that exhibits public service purposes
and characteristics as defined by Ofcom. There are more providers
and hours of this type of content available to consumers than
ever before, including a substantial provision from the radio
and digital multi-channel sectors. We note, however, the criticism
that the digital multichannel sector is not sufficiently
investing in UKproduced content. We welcome the declared
intention of these broadcasters to increase their investment in
this area and believe that Ofcom should conduct and publish a
detailed analysis of the multichannel sector's level of
investment in UKproduced content. (Paragraph 38)
3. Plurality in the
provision of content is important, as it brings the benefits of
competition, different services and a diversity of viewpoints
to consumers. We consider that there is currently a plurality
among providers, commissioners and producers of public service
content and we note and welcome the Government's commitment to
plurality. Despite this commitment, it is the case that a large
proportion of the Government's support for public service content
has been concentrated on one provider, the BBC. We believe that
the Government and Ofcom should set out what they consider to
be a sufficient level of plurality, and the investment necessary
to achieve that, in order to assess whether this is likely to
be threatened in future. (Paragraph 42)
4. We believe that
the primary and most important factor for policymakers and
regulators to assess when looking at the provision of public service
content is the amount of content exhibiting public service purposes
and characteristics, as defined by Ofcom, available to consumers.
However, we recognise that an assessment of the number of public
service content providers and their levels of public subsidy can
be a useful, but firmly secondary, way of looking at the issue.
(Paragraph 47)
5. We recognise that
the value of the indirect subsidy of analogue spectrum for ITV,
Channel 4 and Five, which granted exclusive access to mass audiences,
will diminish as the UK approaches digital switchover and we note
the concerns that ITV,
Channel 4 and Five might therefore reduce their current provision
of public service content. On the other hand, we note that there
will still be an (albeit smaller) subsidy for the commercial public
service broadcasters after digital switchover and we believe that
this, and broadcasters' commercial interests, will sustain public
service content. We do, however, believe that it will be increasingly
difficult to continue to impose public service obligations on
commercial broadcasters beyond the value of this ongoing subsidy.
The question, increasingly, will be what level of obligation is
sustainable. (Paragraph 53)
6. The BBC currently
provides a wide range of public service content across many genres
and plays an important role in setting quality standards for the
rest of the broadcasting market. We expect the BBC to continue
to provide quality programming and to set standards for other
broadcasters in future given its guaranteed income of over £3.2 billion
per annum. (Paragraph 57)
7. We note that some
argue that the BBC should provide more commerciallyorientated
programming in order to reach a wide range of audiences. However,
we do not share this view and instead believe that the BBC should
place a high priority on areas that other broadcasters will not
provide, while continuing to offer high quality programming which
attracts diverse audiences. Given the substantial provision of
public service content by other broadcasters, we believe that
the BBC could deliver its public service remit without providing
all of its current range of services and we note and welcome the
BBC's commitment to become smaller in terms of its scale as an
organisation and in its operations. We do not believe, however,
it is in the public interest for the BBC to be allowed to wither,
as some would like, for example, to become akin to the Public
Broadcasting Service (PBS) in the US. (Paragraph 63)
8. While we recognise
the concerns that the BBC received a lower licence fee settlement
than desired, we believe that the BBC can continue its role in
providing high quality programming within the resources available
to it and we welcome the BBC's plans to become a smaller but more
distinctive organisation. However, the increase in market provision
of public service content suggests to us that further analysis
needs to be undertaken to assess the level of public funding that
needs to be made available for public service content. On current
trends, we would expect that the case for current levels of public
funding will diminish. The BBC has rightly reacted to the arrival
of new channels by drawing back from programming that can be broadcast
by others. We welcome the BBC's approach, and encourage the BBC
Trust to limit the BBC's activities in areas where there is already
alternative provision. The BBC Trust should not treat licence
fee income as a sum that must necessarily be spent in its entirety,
irrespective of others' provision of public service content, and
we encourage it to bear in mind its option of not drawing down
the full amount of the licence fee in future. (Paragraph 68)
9. We are encouraged
by S4C's optimism about its ability to provide public service
content in the future. S4C demonstrates that a broadcaster with
direct public funding and a tightly defined remit can deliver
public service content without having its editorial independence
compromised. (Paragraph 72)
10. The provision
of public service content by the digital multichannel sector
has increased plurality in UK broadcasting. The sector provides
a range and diversity of content that exhibits public service
purposes and characteristics as defined by Ofcom and this provision
may very well increase after digital switchover as its channels
gain access to larger audiences and revenues. (Paragraph 75)
11. 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.
(Paragraph 76)
12. 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.
(Paragraph 83)
13. 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. (Paragraph 84)
14. 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. (Paragraph 86)
15. 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. (Paragraph 94)
16. 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. (Paragraph 95)
17. 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. (Paragraph 101)
18. 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. (Paragraph 107)
19. 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. (Paragraph
117)
20. 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. (Paragraph 124)
21. 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. (Paragraph
132)
22. Competition between
providers has provided consumers with a range and diversity of
content. We believe that in future, competition—not least
with, and from, the BBC—will drive the provision of quality
content for consumers, although there are already evident areas
of concern. The most appropriate way for the Government and Ofcom
to encourage the beneficial effects of competition is not to employ
a heavyhanded approach to regulation. They should ensure
the minimum amount of public intervention that is necessary to
meet policy objectives with respect to the continuing availability
of public service content in all its forms. (Paragraph 135)
23. We believe that
the Government and Ofcom should only consider intervening in the
broadcasting market where it appears that certain types of content
would not be provided or underprovided. Given that the market
currently provides a wealth of content exhibiting public service
purposes and characteristics as defined by Ofcom and is likely
to continue this provision in the future, we believe that the
level of Government and regulatory intervention should diminish
as we enter the digital age. In order to be clear about policy
objectives, we consider that the Government and Ofcom should specify
the socially valuable programming genres or areas which they believe
should be sustained, and undertake a detailed, robust analysis
of the amount of this content that is likely to be provided after
digital switchover in order to identify where, if anywhere, there
is likely to be a shortfall. We have already suggested children's
programming and regional programming as two areas that merit examination.
If the Government and Ofcom wish to intervene in areas where the
market can provide, it is our view that they should explain why.
More broadly, the Government and Ofcom should ensure that any
decision to intervene is evidencebased, that the intended
policy outcome is clear and measurable, and that the costs of
intervention are transparent to consumers. (Paragraph 141)
24. We note that the
Government has committed itself to reviewing the case for making
available public funds, including licence fee income, beyond the
BBC and we welcome the Government's commitment to bring forward
the timing of this review. We foresee that the BBC will remain
the main provider of public service programming in the future
and will continue to receive by far the largest share of the public
funds available. However, we believe that public funding, should
be made available beyond the BBC, on a contestable basis, to sustain
plurality and to bring the benefits of competition to the provision
of public service content that the market would not provide. We
do not necessarily accept the arguments against the redistribution
of public funding: redistribution might increase accountability
and transparency and could lead to a greater provision of public
service content. However, the body allocating public funding would
need to take care not to fund programming that is already commercially
viable. (Paragraph 154)
25. We believe that
the most appropriate source of public funds for public service
content is either from the licence fee or from general taxation,
although we do not believe that the overall cost to the public
should be allowed to increase.
(Paragraph 155)
26. Channel 4 is currently
profitable and has been performing well compared to other terrestrial
broadcasters. We note, however, that Ofcom believes Channel 4
is likely to face financial difficulties in the medium term. After
digital switchover, should Channel 4's residual subsidy be
insufficient to provide public service content that the market
would otherwise not provide, we believe that Channel 4 should
be able to apply, on a contestable basis, for public funding—which
could potentially include television licence fee income—to
make specific public service programmes that meet its remit. (Paragraph
161)
27. We believe that
Channel 4's remit is inappropriate in the digital age and that
it needs to be more tightly tied to the provision of content that
the market would be unlikely to provide, such as highquality,
challenging UKproduced drama and documentaries of the kind
that used to be synonymous with the channel. A more tightly defined
remit would help the body considering applications for public
funding judge whether to allocate money to Channel 4 and
would also more clearly justify the expenditure of public money
on supporting the channel. Of course, Channel 4 would still
be able to produce commercial programming to crosssubsidise
the provision of content that the market would not provide. (Paragraph
165)
28. We welcome the
OFT's decision to hold a review of the Contract Rights Renewal
(CRR) mechanism. The advertising market has changed dramatically
since the CRR mechanism was imposed and we believe there is a
strong case for relaxing or possibly removing this remedy. We
note, however, that ITV is still likely to have a high market
share and consider that it is likely that there will still need
to be some intervention. (Paragraph 171)
29. Given the concerns
about the future provision of some genres of public service content,
we reiterate our recommendation from our Report on New Media and
Creative Industries that commercial broadcasters should be permitted
to introduce product placement within the boundaries set by the
new EU Audio Visual Media Services Directive. (Paragraph 175)
30. We recognise the
substantial provision of public service content from the radio
sector, including commercial radio. We sympathise with the concerns
of commercial radio that the BBC is overdominant with a
55% share of total listening and that the sector is too heavily
regulated relative to its size. Ofcom proposes to reform the regulation
of commercial radio and we encourage it to be as radical and as
speedy as possible in removing requirements that are unnecessary
given the impact of regulation on the commercial sector's current
and likely future provision of public service content. (Paragraph
181)
31. If the Government
decides that additional forms of support are needed for public
service content, we believe that this support should be provided
using direct, accountable subsidies. On balance, we believe that
the benefits of direct funding outweigh any risks to broadcasting
independence. In particular, we believe that the Government and
Ofcom should not interfere further with the spectrum market to
pursue broadcasting policy, for example by allocating additional
spectrum to support the provision of public service content. (Paragraph
189)
32. We support Ofcom's
decision to introduce Administered Incentive Pricing for spectrum
used for broadcasting. We note that broadcasters have benefited
from a long immunity from paying for the spectrum they use and
that the introduction of Administered Incentive Pricing will merely
bring broadcasters into line with other users of the spectrum,
such as the Ministry of Defence. (Paragraph 192)
33. We reiterate our
support for Ofcom's technologyneutral approach to auctioning
the spectrum released by digital switchover. We have continued
to listen to the arguments but we fail to see how transmission
of extra high definition digital terrestrial television channels
delivers sufficient extra public value to justify intervention.
In any case, we note that Ofcom and the public service broadcasters
have agreed in principle that it is technically possible to transmit
up to four channels in high definition within their current allocation
of spectrum. We agree that the most appropriate use of the vacated
spectrum is best determined by market mechanisms and note that
this will still allow the broadcasters the option of purchasing
additional spectrum in the marketplace. (Paragraph 197)
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