The future of public service broadcasting Contents

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1Introduction

Public service broadcasting in the UK

1.The public service broadcasting ecology in the UK is made up of a number of constituent parts. First, the main UK-wide public service broadcasters (PSBs): the publicly funded BBC, the publicly-owned but commercially-funded Channel 4, and the wholly commercial Channel 5. Secondly are the fully commercial Channel 3 licence holders: ITV in England and Wales, STV in Scotland and UTV in Northern Ireland. Finally, S4C (the independent Welsh language service) is part publicly- and part commercially-funded. The public service remit of the BBC is set out in its Charter, and Section 265 of the Communications Act 2003 outlines the remit for Channel 3 licence-holders, Channel 4 and Channel 5.1 The Office of Communications, more commonly known as Ofcom, has a statutory requirement to oversee the compliance of PSBs with their duties and to carry out a review of public service broadcasting, as a whole, every five years.2

2.The BBC, which describes itself as the “world’s leading public service broadcaster”, is the UK’s largest PSB. Established in 1922 by a Royal Charter, it is principally funded through the TV licence fee. The BBC’s Charter sets out its five public purposes:

• To provide impartial news and information to help people understand and engage with the world around them.
• To support learning for people of all ages.
• To show the most creative, highest quality and distinctive output and services.
• To reflect, represent and serve the diverse communities of all the United Kingdom’s nations and regions and, in doing so, support the creative economy across the United Kingdom.
• To reflect the United Kingdom, its culture and values to the world.

The PSB remit covers all of the BBC’s output, with the exception of its commercial operations (BBC Studios, BBC Global News and BBC Studioworks) which supplement its income.3 The BBC has a portfolio of television services, ten UK-wide radio networks, two national radio services in each of the Nations (Scotland, Wales and Northern Ireland) and 39 local radio stations across England. The BBC also operates the BBC World Service in more than 40 languages.4 In addition to its linear output, BBC content is available through its on-demand player, iPlayer. The BBC also jointly owns BBC Alba, the Scottish Gaelic-language channel, with Meadhanan Gàidhlig Alba (Gaelic Media Scotland).

3.ITV, as the largest Channel 3 licence holder, describes itself as an integrated producer broadcaster which “creates, owns and distributes high-quality content on multiple platforms” and operates the “largest family tree of free-to-air commercial channels in the UK”.5 ITV’s content is also hosted on its on-demand player, ITV Hub.

4.Channel 4 is a publicly owned, non-profit organisation which invests its available income back into commissioning content. It is entirely commercially funded, and the vast majority of its income comes from TV and online advertising.6 Channel 4 is a publisher/broadcaster which means it commissions content from external production companies rather than producing its own programmes.7 Channel 4’s operation is governed by a specific remit, outlined in the Communications 2003 Act, which requires its programming to be “innovative, creative and distinctive, for it to take account of cultural diversity and to make a significant contribution to meeting the need for licensed public service channels to include educational programmes”.8 Its content is available online through its on-demand player, All 4.

5.Channel 5, which launched in 1997, is the newest PSB and was the first new terrestrial channel to be launched in the UK in 15 years. The channel was purchased in 2014 by American media company ViacomCBS. Since the takeover, Channel 5 has made a marked move away from US acquisitions and set-piece reality shows, upon which is had become heavily reliant. Today, approximately 80% of Channel 5’s output is original, and its content is also available online through on its on-demand player, My5. Channel 5 is the smallest of the PSBs with nation-wide coverage: it has a budget of £240m a year and just nine Commissioners.9

6.The final PSB, S4C, is the independent Welsh language provider. Like other PSBs, its content can be accessed on linear TV and on its service-specific on-demand player, but its content is also hosted on the BBC iPlayer. S4C’s current funding model has 8% of its £84m budget coming from the UK Government, 90% from the TV licence fee and 2% from its own commercial income. However, from 2022 it will no longer receive UK Government funding and will only receive public money via the licence fee.10

7.All free-to-air BBC services are bound by PSB obligations, including iPlayer, while the obligations only extend to the main linear Channel 3, Channel 4 and Channel 5 services; ITV Hub, All 4 and My5 are not covered by the PSB remit.

A changing landscape

8.Public service broadcasting means different things to different people. To some it’s their main source of current affairs and news, to others, it’s sitting down together to watch Strictly Come Dancing on a Saturday night. Regardless, there is no question that the way in which we access and consume TV, including that provided by PSBs, has changed dramatically in recent decades. Since 2010, the average daily viewing of linear broadcast TV has declined by almost an hour, and the decline is even more prominent in the younger age groups.11

9.Whilst PSBs continue to maintain a “strong position” in terms of share of broadcast viewing, the growing popularity of subscription video on demand (SVoD) services and other online services has resulted in a dramatic fragmentation of viewer behaviour.12 Audiences have more choice than ever before, and the methods by which they consume content has expanded: rather than all viewing taking place via the conventional TV set receiving a digital or, previously, an analogue signal, audiences now watch content on their mobile phones and tablets, or via internet-enabled devices such as smart TVs, games consoles or streaming sticks. It is now possible to consume content on the go and before the Covid-19 pandemic, the amount of solo viewing undertaken was on the rise.13 It is also now estimated that approximately 60% of the households in the UK subscribe to at least one SVoD service14 and that on average, adults in the UK watch around 30 minutes of YouTube content every day.15 The most popular streaming services and platforms are owned by US corporations so rather than being the big players in a national market, PSBs are now the small national players in a global market.

10.The Covid-19 pandemic had a huge impact on viewing behaviour. With the whole country in lockdown in the first half of 2020, the amount of time people spent consuming audio-visual content skyrocketed: in April 2020, the average person watched 6 hours 25 minutes per day, an hour and a half more than the average figure for 2019.16 As lockdown eased, broadcast TV viewing fell but at the end of June 2020, it still stood at around 11% higher than the same week in 2019.17 However, streaming services maintained much more of their “lockdown uplift” and at the end of June 2020, viewing for SVoDs was up by 71% year on year.18 The difference in viewer retention at that point of 2020 is stark and highlights the way in which the Covid-19 pandemic has accelerated the already fast-paced growth in online viewing.

Principles of public service broadcasting

11.Within public service broadcasting, there are three core principles that have come to be expected of the system, some of which are outlined in the Communications Act 2003 and some which have come to be generally accepted. First, universality of access is widely considered to be an integral part of public service broadcasting. It is expected that public service content is made widely available to all citizens of the UK, free at the point at which they consume it. There is also an expectation that this universally available content represents the diversity of the UK, and spans a wide range of genres to reflect that diversity.19 Secondly, it is expected that the news and current affairs content produced by PSBs be accurate, reliable and impartial.20 In short: consumers expect PSBs to be a trusted source of information. Finally, it is expected that PSBs should be able to function free from Government interference or political pressure. This includes, but is not limited to, transparency in funding structures.

12.There are some key questions facing PSBs, and the broadcasting industry as a whole. In 2021, for example, how should public service broadcasting be funded? What should be included in the remit of a PSB? How should public service broadcasting be delivered, and what should it aim to achieve? For public service broadcasting to prosper in the future the Government will need to act—changes that require ministerial authority are needed in order to ensure that the public service broadcasting system remains sustainable in the context of today’s greatly expanded and increasingly global media market.

Our inquiry

13.Throughout our work on this inquiry, we have received almost 100 pieces of written evidence and taken oral evidence from more than 20 witnesses including PSBs, academics, Ofcom, streaming services and other broadcasters. We would like to thank Professor Catherine Johnson and Joey Jones, Specialist Advisers to the Committee, for their work on this inquiry. Their much valued expertise allowed the Committee to explore areas which might otherwise not have been possible, and we are grateful for their input on this Report as well as their extensive research and work on the annex on public service broadcasting funding models.