Joint Committee on The Draft Communications Bill Appendices to the Minutes of Evidence


Memorandum submitted by Carole Tongue


Regulation in support of the public interest

An Investment in our Industry and Imagination

    —  I am submitting evidence based on work completed for the Social Market Foundation (June 2002) "A Comparative Study of public service broadcasting regulation in eight OECD Countries".[102]

    —  I am submitting conclusions and recommendations based on this work but in a personal capacity on: public service obligations; regulatory structures and ownership.


  All the countries surveyed want to enhance cultural and linguistic diversity and plurality in audio-visual production, independent production and broadcast output, as well as strengthening their indigenous audio-visual industry.

  In Canada, the legislation is clear in that each element of the broadcasting system is asked to contribute to the creation and presentation of Canadian programming. Australian legislation is clear about what it expects from one of the standards it sets "is to promote the role of commercial television in developing and reflecting a sense of Australian identity, character and cultural diversity by supporting the community's continued access to a television programme produced under Australian creative control"[103].

  British law does not spell this out in the same unequivocal way. Linguistic diversity has been seen to have been dealt with by the creation of S4C. Investment in creation and broadcasting of local programming tends to be looked at channel by channel as opposed to the Canadian, French and Australian holistic approach. British television ecology does however produce high levels of investment in fiction programmes second only to Germany in the European Union. This is particularly attributable to Germany and UK levying two of the highest licence fees in the world. For example, BBC investment in original programming is greater than the total investment in the EU film industry. British commercial free-to-air channels account for virtually all other investment in original production.


  EU governments all believe that broadcast quotas of national European audio-visual and cinematographic production are both practical and necessary for cultural and economic reasons. This is borne out by their application of the TVWF directive. Canada and Australia also stipulate precise broadcast requirements for audio-visual and cinematographic production from their own country.

  All EU countries surveyed include broadcast obligations as laid down in the TVWF directive, that 50 per cent or more of transmission time must be filled by European audio-visual works, principally drama, documentary and television or feature film (excluding news, sport, current affairs in studio, talk shows, game shows, advertising and teletext).

  However since the late 80s we have seen the number of cable and satellite channels explode in the EU. Many rely almost wholly on imported material and, as recorded in national reports to the EU Commission, have difficulty in achieving more than 50 per cent of broadcast time for national/European audio-visual works. The result of this trend is well illustrated in the UK which has seen its £151 million surplus in television programmes with the USA in 1985 become a £403 million deficit by 1999.[104] Alarmingly "the deficit between the value of British television exports and imports leapt by more than 60 per cent from £248 million in 1998 to £403 million in 1999".[105] Furthermore Arthur Andersen has documented that competition for the acquisition of sports rights and US film has increased their purchase price, resulting in cable and satellite pay television channels investing less and less in national/European programming as defined in the TVWF directive[106]. In addition, the European Audio-visual Observatory has documented a decline in recent years in the amount invested in television fiction. Production in the five main European TV markets diminished in 2000: "Ever-rising production costs and the trend towards entertainment programmes, in particular reality and game shows, show their impact on the production of TV fiction in the year 2000. For the first time since 1996 all three main Eurofiction indicators (hourly volume, number of titles, number of episodes) for the level of television fiction programmes produced are in decline. In the five main European markets, Germany, the UK, France, Italy and Spain, the hourly volume produced in the year dropped by 3.9 per cent, from 5,786 hours in 1999 to 5,564 in 2000. The number of new episodes produced dropped by 4.7 per cent and the level of new titles produced—the only indicator already negative in 1999—diminished by 5.3 per cent. These figures seem to indicate that the status of fiction is tending to become somewhat blurred and marginalised compared to the position occupied throughout the 90's."[107] Also documented in the report is that Southern Europe is catching up in terms of its investment in fiction. The comedy genre is in decline. There are more series and less TV movies. National differences are eroding.

  In the face of these trends, EU and most individual member state broadcasting legislation has therefore sought to maintain a majority broadcasting space for national/European audio-visual works and in particular sustained high levels of investment in drama, documentary and film. This has been achieved through the imposition of broadcast and investment obligations on all channels in law. There is however a significant disparity among those countries studied as to whether an investment obligation is enshrined in all and applicable proportionately according to the nature and longevity of the channel in question.


  France, Spain, Italy and Canada have developed their broadcasting legislation to ensure that every channel makes a contribution to the national/European audio-visual industry by demanding an investment commitment into national/European drama, film and documentary production as a proportion of annual advertising revenue or turnover. Importantly this is applied to all channels. It is argued that it is practicable, fair and ensures a steadily increasing investment in original local production and particularly the film industry.

  In Germany, UK and Sweden there is no provision in law for investment quotas in particular programme genres. In Germany, Sweden and Spain investment agreements are signed between broadcasters and the national or regional Film Institutes or Boards to ensure regular sums are invested in local film production or co-production.

  This is expressed differently in the UK. The UK regulatory body, the ITC, has set a quota of at least 65 per cent original productions or commission on all ITV licences. This has resulted in ITV investing £244 million in original drama in 2001 and £29 million on documentaries out of annual advertising revenue of £1,703 million. BBC invests £268 million on drama and £308 million on factual and learning out of a licence fee revenue of £2,371 million. Its total original programming investment per annum is over £1 billion. Of Ch4 total programme budget for 2001 of £423 million, £71.7 million was committed to drama, £35.2 million to news and current affairs and £22.1 million to documentaries. In addition both the BBC and Channel 4 have dedicated film departments which co-produce British feature films. This is without any particular stipulation in legislation unlike in France, Spain and Italy where legislation spells out what percentage of turnover, revenue or advertising revenue should be spent on cinematographic works by all channels.

  It is clearly necessary to balance public interest objectives with wider concerns of economic viability. In this sense, it would appear from the majority of countries studied that if cultural and economic public interest objectives are to be met fairly and consistently, then proportionate investment obligations on cable and satellite channels should be considered.


    —  Broadcasting legislation should clearly state that our system is designed to reflect British creativity and talent, our multicultural diversity and social values. Furthermore that national drama, documentary, feature and tele-film play an important role in developing and reflecting a sense of local, regional and national identity, character and cultural diversity as well as ensuring a strong audiovisual industry that is competitive nationally and internationally.

    —  A similar kind of statement should reflect the aims of telecoms regulation along the lines of: "The main objective of the Communications Bill in the field of telecommunications is to ensure that the British people have access to reliable telephone and other telecommunications services at affordable prices."

    —  Licence conditions asking for investment in the above-mentioned categories of programme will promote the development of national audiovisual production industry, providing jobs and new national audiovisual programmes for export.

    —  In any new legislation we should reinforce broadcaster's investment obligations towards children's programming proportionate to type, size and revenue of the channel.

    —  Legislation should require all TV channels to contribute proportionately to the broadcasting and production of national programming for the cultural benefit of national audiences. These decisions should not be left to OFCOM alone.

    —  Given the distinctiveness of pay TV channels there should be a separate regime to govern their contribution to the broadcast and production of national audiovisual programmes.

    —  All countries, drawing on the experience of those who already do so, should levy investment obligations on all cable and satellite channels according to their longevity, nature and turnover, thus balancing the public interest objectives of television with the wider concerns of economic viability.

    —  Prior to this countries like the UK which have not hitherto levied investment obligations on cable and satellite channels should conduct an investigation, along the lines of the Australian model, into the modalities of doing so.

    —  "There should be clear and accountable structures, to demonstrate to the public their contribution to the television sector through the information collected, produced and distributed by these broadcasters.[108]

    —  One broadcasting authority in each country should be responsible for the monitoring and compliance of broadcast, independent production and investment quotas to ensure transparency, accountability and consistency.

    —  A high stable licence fee should continue (Germany, UK) with regulatory oversight as the best guarantor of consistent high levels of spending on drama, documentary and film.


  The report highlights the importance of a continued commitment of the EU governments in maintaining the standards and the philosophy of public service broadcasting in the present media environment. It is as crucial today as it has ever been to steer the broadcasting market in order to derive the maximum benefits, to as many viewers as possible. It is therefore necessary to have the right regulatory structures in place to enable public service broadcasters, as well as the commercial sector to take advantage of the new opportunities that multichannel television offers. In the UK an extremely healthy market is emerging in multichannel television, which includes a central position for the BBC. However, the position of the BBC clearly needs to be underpinned by legal statute, though this process must go hand in hand with making it more accountable and acceptable to the public, which it was established to serve.

  In regulatory terms the British, German and the Swedish method of regulatory separation between the main public service broadcaster and commercial channels has been successful in allowing for the development of the new opportunities that new media offer. Though some services are yet to take off, the public broadcasters have a clear set of purposes and strategies, which extend public service provision into a multichannel television environment.

  Where convergence of regulatory practice has recently taken place ie Italy, there appears to be little obvious benefits in real terms. Though both systems come under one umbrella organisation, content issues remain separate concerns. Therefore the case for an OFCOM[109] style super regulator may have very little real benefits. Indeed, in attempting to establish a working relationship between the different institutions, it may leave a decision making vacuum at the regulatory level, at this vital time in broadcasting development. The European Commission clearly recognises this problem and distinguishes between carriage and content and the need to regulate the two sectors separately with a policy of co-operation.

  This study therefore concludes that the present system of dual regulation in the UK, which importantly distinguishes between the commercial and the public sector, should be maintained, due to the increasingly different sets of needs and expectations for the two sets of broadcasters. This study illustrates there is widespread support for the continued existence of a self-regulatory body to act as public guardian of the BBC. Though there is wide endorsement for self-regulatory practices at the BBC, there is a strong case for reform of the nature and constituency of the current board of governors. Suggestions for reform are wide and varied from election procedures to creating a greater distance between the board and the executive at the BBC. There is a broad consensus that the unrepresentative nature of the board of governors is an anomaly in a system of public service and it is crucial to modernise the present arrangements. That is a concern for a future debate.


  This study supports a clear separation of content and carriage issues and public and private sectors within OFCOM. It therefore recommends a full commitment to the maintenance of the formal distinctions made between the sectors, which are characteristic of the current regulatory environment. However, although this study supports the sector specific approach to communications regulation, it recognises the need for increased co-operation between the regulatory agencies within the future OFCOM, as a degree of overlap is inevitable.

  The continued role of the ITC staff and structures within a future OFCOM is essential for the content regulation of this sector, regardless of delivery platform. There will be an increased workload for the content regulation part of OFCOM. The content regulation in OFCOM must have increased resources to monitor and regulate the commercial sector of television including all cable and satellite channels.

    —  The Chair and Board of OFCOM should be appointed by an independent panel of experts.

    —  The Content Board must represent expertise from all relevant public interest organisations, academia, business and civil society.

    —  The Content Board as the effective defender of public service values in the commercial sector should have its decisions accepted and implemented unless the Main Board can offer exceptional reasons for overriding them.

    —  There should be a separation of the regulation of content and carriage within OFCOM with appropriate co-operation between the two when required.

    —  The monitoring role should be restricted to the commercial sector, including all subscription, cable and satellite channels and including oversight of the EU Television Without Frontiers Directive.

    —  The responsibilities of the Content Board and the Consumer Panel should be separate and different. The Consumer Panel should discuss service delivery issues such as pricing, access and fair competition. They should not have an advisory role on content issues. Content regulation requires an expertise and perspective beyond the natural scope and expertise of consumer protection organisations.


  The proposal to open up commercial broadcasting to takeovers by foreign companies beyond the EU, takes the UK out of step with its European neighbours and presents significant risks for the future of the British broadcasting ecology, our audiovisual industry and culture which is revered across the world. The following issues must be considered:

    —  Given the enormity of the potential consequences, was an impact study carried out into the economic and cultural effects of non-EU ownership of ITV?

    —  No reciprocity on media ownership is being sought from the USA or others and unobtainable even within GATS framework. The EU has not and will not put audiovisual matters on the GATS table given the cultural and economic specificities of the sector.

    —  Furthermore the USA shows no inclination to remove ownership restrictions which they justify for national security reasons and anyway only apply to the networks. Questions of national security fall outside of the GATS framework. Any demand for reciprocity would invite the question "If you want us to open up the whole of our market why don't you open up the whole of yours, including the BBC and Channel 4?"

    —  It is unclear what kind of investment is desired from outside ie programming is very different from infrastructure. Why would a non-EU company be interested in investing in our culture and audiovisual industry?

    —  With no stipulations in the Bill on obligatory investment and broadcast of British and European drama, documentary and film there is a risk of increasing imported programmes which reflect the cultural imperatives of other countries and not our own.

    —  It is unclear what effect there will on Channel 4 and BBC in respect of advertising on the one hand and the effects of competition with programme and resource rich multinational companies on the other.

    —  What economic benefit will there be when there is likely to be repatriation of profits to the home country?

    —  Given huge programme libraries of audiovisual multinationals from North America in particular, what would be the likely effect on our trade balance with US now standing at £403 million deficit in audiovisual programmes and films?

  Furthermore I strongly endorse the evidence on Ownership submitted to the Committee from Professor Stephen Barnett and Professor Jean Seaton.


  Legitimacy with the public would be helped by having consistency and proportionality in our regulation as well as precise methodological framework for assessing the performance of broadcasters that makes clear their content and investment obligations in the primary legislation itself and how and whether these are being met. Once government and Parliament have adopted legislation, its oversight should be left to the appropriate regulatory bodies mandated in law. There is novelty and innovation in other national systems which we might incorporate into our system be it German civil society involvement in public service regulatory oversight or their independent KEF which watches over ZDF and ARD. France, Canada, Australia and belatedly Italy and Spain ensure that all channels make a fair and proportionate broadcast and investment contribution to the culture and industry of their respective countries. Britain should be inspired by these examples and not imagine we have a monopoly on broadcasting wisdom.

  One of the enduring values we share in Europe is the protection and nurturing of a public space in broadcasting given its importance for democracy, citizenship and cultural diversity. That must continue to guide us as we seek to regulate anew.

June 2002

102   "Culture or Anarchy?" The Future of Public Service Broadcasting. Social Market Foundation. June 2002. Back

103   Australian Broadcasting Authority Content Standard, Back

104   DCMS Creative Industries Mapping document 2001. Back

105   Broadcast magazine. 16 March 2001. Page 2. Back

106   Arthur Andersen Report for the EBU (1998) The Impact of Digital Television on the Supply of Programmes. Arthur Anderson Consultants. Back

107   9.10.2001. The European Audiovisual Observatory "EUROFICTION, Television Fiction in Europe". Back

108   "A Comparative Analysis of Television Programming Regulation in Seven European Countries: A Benchmark Study commissioned by the NOS from the European Institute for the Media. Authors: Emmanuelle Machet; Eleftheria Pertzinidou; David Ward, 28 February 2002. Back

109   House of Commons (1998) "The Multi Media Revolution". Select Committee for Culture, Media and Sport. Back

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