Joint Committee on The Draft Communications Bill Minutes of Evidence


Further memorandum submitted by BSkyB


  The Television without Frontiers ("TWF") Directive[29] requires Member States to ensure "where practicable" that broadcasters reserve for European works "a majority proportion of their transmission time, excluding the time appointed to news, sports events, games, advertising, teletext services and teleshopping" to be achieved progressively. Statistical reports must be supplied to the European Commission by Member States every two years on the proportions achieved and reasons for any failure to reach the majority quotas.

  The ITC acts as the collection agency for this information for UK licensed cable and satellite channels and passes the details to the Department for Culture, Media and Sport, which is responsible for implementing the policy. The figures for the most recent year reported by DCMS to the European Commission[30] for Sky channels are attached.

  The great majority of Europe's public service broadcasters and mainstream commercial channels that enjoy scarce, universally available frequencies provide a majority of EU content. [31]National governments make it a condition of receiving those funds and frequencies that high domestic content levels are maintained. It would be odd if BBC, ITV, Channel 4 and Channel 5 did not provide this given the direct and indirect subsidies and other privileges they have been granted in return for specific content requirements.

  In contrast, entirely private sector commercial channels—including the vast majority of services on the digital satellite and cable platforms in the UK—enjoy no special privileges. They receive no guaranteed licence fee income, subsidy or special protection, or automatic access to homes, and exist purely on the basis of consumer demand. Their choice of programme content is based on many factors including overall programming budgets, audience size, potential revenue streams (from advertising, sponsorship, subscription and carriage fees etc), availability and cost of talent, availability and cost of acquired programming, competitive conditions, and the nature of each service.

  Over the years, Sky has invested hundreds of millions of pounds in creating thousands of hours of original UK content. However, most of this has not counted as "European" content under the TWF Directive, given the exclusion of news and sports events from the definition of EU content. So a low-budget soap counts towards EU quotas—but coverage of the Kosovan crisis (for which Sky won the RTS News Channel of the Year award), or an EU summit, does not. Similarly, a cheap chat show counts as European content under TWF—but Sky Sports' commitments not just to high profile sporting events, but to coverage of grass roots events and minority sports as well, do not.

  Sky One's commitments to original content have grown significantly over the years. In the most recent year reported by DCMS to the European Commission, [32]34 per cent of Sky One's content comprised European works. This is a positive achievement given the channel's audience share of less than 2 per cent of UK television viewing (around one-fifth of Channel 4's and one-fifteenth of ITV's audience share in the year).

  As a proportion of Sky One's programming budget, the cost of commissioned first run programming is even higher than the EC quota figure. In 2000-01 approximately 50 per cent of the channel's budget was spent on first run original UK commissioned programming. The vast majority of the spend on commissioned first run programming is also with EC producers independent of Sky (eg the multi-award winning Dream Team, commissioned from Hewland International).

  Sky One's initiatives underscore the fact that new, private sector channels have added significantly to the overall levels of investment in, and volume of, EU content available to viewers in recent years.

  With respect to Sky's film channels, pay TV movie channels are principally an additional exhibition window rather than a source of original production. As long as theatrical exhibition largely features non-European product, a thematic film channel is likely to reflect that in order to appeal to its viewers and to gain a sufficient supply of films. However, Sky has invested in movies directly[33] and indirectly, eg through output deals with distributors. Sky's massive investments in digital satellite have also made it easier for new services to launch: witness Channel Four's launch of its own pay TV film channel, Film Four, on the platform, as an additional outlet for European and non-European films.


  Clauses 181 and 182 of the draft Communications Bill describe general requirements for public service broadcasting (PSB) in the UK and remits for the licensed public service channels.

  Before the public service requirements are translated into obligations for each licensed public service broadcaster, OFCOM should consult not just with the relevant broadcaster but more broadly about its proposals. Other broadcasters and consumer groups should be included in this consultation process. The obligations of the public service broadcasters should be balanced with the privileges they receive (eg free or discounted spectrum).

  The Bill also gives the Secretary of State power to amend public service remits (clause 188) on the recommendation of OFCOM. Before OFCOM makes such a recommendation and before the Secretary of State makes an order, each should consult the public service broadcasters affected. These consultations also should not be confined to the public service broadcasters but should take into account the views of the public and of other commercial broadcasters.

  In respect of the BBC, OFCOM should be given responsibility for the approval of any proposed new BBC services and for the ongoing scrutiny of the new BBC channels that have already been approved. The BBC is a large player in the communications sector whose unique privileges make it a strong and effective competitor to commercial companies. Approvals and reviews should be considered with a specific obligation to ensure that such services do not duplicate or foreclose entry by similar commercial services.

  In the interests of transparency and accountability, the BBC should also be subject to audit by the National Audit Office and scrutiny by the Public Accounts Committee.

July 2002

European Quota Figures for Sky channels—2000[34]
ChannelEuropean Content
TV(analogue) [35] 91
TV (digital)91
Sky One34
Sky Sports 191
Sky Sports 290
Sky Sports Extra95
Sky Premier  9
Movie Max  4
Sky Cinema17
Sky News91
Sky Travel43

29   Directive 89/552/EEC adopted on 3 October 1989 by the Council and amended on 30 June 1997 by the European Parliament and the Council Directive 97/36/EC. Back

30   For the year ended 31 December 2000. Back

31   These channels also account for the majority of television viewing. As Mrs Viviane Reding, European Commissioner for Education and Culture noted in her speech to the European Voice Conference on TWF (21 March 2002): "When 'Television without frontiers' was first adopted in 1989, there were a mere 47 TV channels in Europe. There are now more than 1,500. Yet three-quarters of the audience remains dominated by about just 50 broadcasters." Back

32   Year ending 31 December 2000. Back

33   At Sky's oral evidence session, Tony Ball noted an agreement with Pathe to finance up to four films each year. Back

34   Most recent annual figure reported by DCMS to the European Commission. Back

35   TV subsequently ceased transmission (analogue and digital) in September 2001. Back

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