Support for the creative economy

Written Evidence submitted by the Voice of the Listener and Viewer [SCE 020]

Voice of the Listener & Viewer (VLV) is an independent, non-profit-making association, free from political, commercial and sectarian affiliations, working for quality and diversity in British broadcasting. VLV represents the interests of listeners and viewers as citizens and consumers across the full range of broadcasting issues. VLV is concerned with the structures, regulation, funding and institutions that underpin the British broadcasting system.

VLV welcomes the Committee’s inquiry into support for the creative economy and the opportunity to submit written evidence.

Summary

This submission is made on behalf of The Voice of the Listener and Viewer (VLV).

· VLV welcomes this inquiry because it is VLV’s view that the broadcasting, television and radio production sectors need support to ensure the production of high quality public service content where there is market failure. We view market failure as a situation in which there is a lack of supply of a genre or type of programming or there is a lack of plurality of supply of a genre on free to air platforms. This most often occurs when the BBC is the only provider of a certain genre or type of programming.

· VLV is keen to stress that the value of the broadcasting and production sectors lies not just in the economic contribution they make to the UK but also in in the contribution they make to British life, education, society and culture through public service broadcasting.

· Television viewing is increasing and is one of the UK’s most popular leisure past-times. There is an opportunity for television to continue to provide informative, entertaining and educative content but without policy which supports high quality public service broadcasting, it is likely that quality, diversity and range of content will diminish and certain genres of programming will disappear from our screens because they are considered less commercially viable.

· VLV believes that the upcoming Communications Act is an opportunity for the Government to ensure support for UK originated public service content rather than simply UK-originated content which appears to be the focus of this inquiry and the Government’s Communications Review. If content supported by policy is public service content this change will bring a greater benefit to the public. It will be a missed opportunity if the government legislates for this to be simply UK-originated content rather than UK-originated public service content.

· There has been a drop of 20% in investment of UK originated public service programming on the BBC, ITV, Channel 4 and Channel 5 in the past 5 years. VLV believes the Government should implement policy which incentivises investment in such public service content on the mainstream channels.

· There are other income sources which the Government should consider including levies, the abolition of retransmission fees and further tax breaks. This funding could be put into programme making and help the broadcast industries flourish.

Evidence

1. Success of the Broadcasting sector: Despite the fact that the UK broadcasting and production sectors generate billions every year and employ thousands of people, VLV is concerned to stress that the success of Britain’s cultural sector cannot be judged simply in economic terms.

2. Social and Cultural Benefits of Broadcasting: A diverse and thriving UK content production industry is profoundly important because it makes a contribution to Britain’s sense of identity, to British citizens’ knowledge and information about the world around them, and to the richness of British cultural life. It is VLV’s view that the social, cultural and educational benefits of UK-produced public service content (PSC) need to be considered equally as important as the economic benefits of such content when the Government is considering regulation and legislation.

3. Investment in PSC: Investment in UK-originated public service content has declined by 20% in the past five years and VLV believes that the Government needs to incentivise investment in public service content across all platforms especially in genres in which there is market failure. We have made suggestions of how to source funding for public service content and incentivise production later in this document.

4. UK produced content is essential for the UK as an informed, democratic society because it is produced from a UK perspective, reflecting the world we live in from a British point of view. We welcome the Government’s ambition to encourage growth in this market by developing legislation which removes barriers to growth, but VLV believes that there should not be de-regulation at the expense of public service broadcasting content. There still needs to be legislation to ensure the future provision of high quality public service content on television and radio which might otherwise not be provided.

5. Genres of programming which are specialist, such as children’s programming, current affairs or international content need support because the market for them is limited and they are ofte   n less commercially viable internationally because they may be produced from a specifically UK perspective. These programmes are essential because they inform us from a uniquely UK perspective what is going on around us in the world. This means that such programming is specifically relevant to us and therefore it may sell less well internationally.

6. Because of the economic and social benefits derived from public service broadcasting it is VLV’s view that investment in UK-originated public service content should be supported through legislation.

7. Commercial PSB’s: It is VLV’s view that it should remain a requirement of the commercial Public Service Broadcasters (ITV, Channel 4 and Channel 5) to fund guaranteed levels of original UK content in return for privileged positioning on the EPG and any other incentives the Government can devise to ensure their contribution continues. This contribution should include high quality programming and a diversity of suppliers to provide different approaches and perspectives. It is clear the public wants a plurality of suppliers of public service content. [1]

Sources of Income for PSC and Incentives for Investment

8. Retransmission Fees: VLV urges the Government to use the upcoming Communications Act as an opportunity to ensure that carriage fees for the Public Service Broadcasters on cable and satellite platforms are abolished in return for guaranteed investment in UK originated public service content (as opposed to simply UK-originated content). If the content supported is public service content, rather than simply UK-originated content, this change will bring a benefit to the public. It will be a missed opportunity if the government legislates for this to be simply UK-originated content rather than UK-originated public service content.

9. In order to ensure that such legislation results in an overall increase in investment in UK content, the amount of financial benefit to each broadcaster will need to be assessed, transparency will be required by the broadcasters and Ofcom will need to be given additional powers to ensure that this extra funding is used to produce public service content.

10. We base our argument for abolishing carriage fees for public service broadcasters on the clear evidence of the benefits to cable and satellite operators of transmitting the five PSB channels. Viewing to these channels in cab-sat homes comprises 2/3 of all viewing if you include the PSB portfolio channels and makes them more attractive to consumers.

11. Additionally, other countries have acknowledged the importance of retransmission fees as a means of returning value to those channels which have invested in original local content, and the UK should follow suit.

12. On principle, VLV opposes any funding generated by the licence fee being paid to a private company for retransmission purposes.

13. EPG Positioning: There is clear evidence that the public expects to have easy access to the five public service broadcasters and VLV strongly opposes any move which would reduce their prominence on the EPG.

14. Additionally, VLV welcomes the suggestion that EPG positioning could be used as a lever to encourage greater investment in UK-originated content but we urge that this policy should be used to encourage not just UK-originated content but UK-originated public service content otherwise there is little quantifiable benefit for the public.

15. VLV acknowledges that any legislation which implements changes to the rules for the EPG need to ensure certainty for broadcasters without which they will not be able to operate effectively.

16. Tax Breaks: VLV welcomes the proposal for tax breaks for drama and high-end TV production and animation. We believe there are other genres which the Government should consider applicable for tax breaks. These are the areas where there is market failure such as children’s and factual programming which according to Ofcom are the genres most at risk. If tax breaks were available for such programming it would provide greater incentive for investment in these areas.

17. Levies: A number of levy options have been suggested in the past, which follow the example of virtually every other European country and are based on the logical principle that those enterprises which exploit value from UK content creation should make some return to the creative pot. These include reuse fees, fees levied on ISP’s and mobile phone operators, and search engine fees.

18. The revenue thus created would help to reduce the funding deficit for public service content and could be used to provide free-to-air high quality competition to the BBC. Unlike pay-TV, this content would be free at the point of consumption, a fundamental public service principle of UK broadcasting. All new levies will have benefits and disadvantages, but none have been the subject of systematic, independent investigation. Ofcom should be asked to make such an assessment as part of the new Communications Act process.

19. Sale of Spectrum: From 2014, it is proposed that broadcasters will be charged for their use of spectrum through a new system of administered incentive pricing (AIP). This funding will go to the Treasury and will represent a further reduction in revenue available for reinvestment in original content. This funding could be diverted into public service broadcasting content and we propose that the Government should investigate this option.

November 2012


[1] 1 9 out of 10 people do not want the BBC to be the only provider of public service content in the future (Ofcom’s Second Public Service Broadcasting Review, Phase 2)

Prepared 17th November 2012