Ofcom Presents Second Part of Public Service Review

LONDON, September
25: The U.K. media regulator Ofcom released its second public-service
broadcasting (PSB) review, which shows that British audiences place high value
on public-service content provided by broadcasters besides the BBC, even when
faced with the possibility of having to pay for it.

Phase
Two—Preparing for the Digital Future finds that in order to sustain PSB programs on channels other than
the BBC, some £145 million to £235 million in replacement funding will be
required by 2012.

According to the study, nine out of ten people
do not want the BBC to be the only provider of public service content in the
future; audiences value highly PSB alternatives to complement the BBC. Three
quarters of people are willing to pay on average up to £3.50 per month for PSB
services on ITV, Channel 4 and five; and a majority of people want ITV1 to
continue to provide regions and nations news to complement the BBC.

However, the U.K. TV landscape faces several
financial challenges. The value of ITV1 licenses will be significantly lower
than the cost of their current obligations before 2012. If ITV is to remain a
public service broadcaster at least until the end of 2014, its public service
obligations will need to be reduced.

Ofcom’s latest analysis shows that by 2012 Channel
4 will need replacement funding of around £60 million to £100 million if it is
to sustain investment in public service content. Ofcom believes it is a
priority to clarify Channel 4’s future role and economic model.

If audiences continue to want to enjoy the same
level of public-service content they have today, Ofcom’s estimates show that
total public funding of between £330 million to £420 million is likely to be
required in 2012, in addition to the core license fee. Ofcom estimates that
existing regulatory subsidies would contribute around £185 million towards that
total, leaving a likely gap of £145 million to £235 million.

Ofcom sets out three possible models for delivering
PSB in the future. The first is the Evolution model: the BBC, ITV1, Channel 4
and five continue to have PSB obligations. ITV1’s obligations would focus on
content made in the UK origination and international news. Additional funding
would be required for nations and regions news. Channel 4 would have an
extended remit to innovate and provide distinctive public service content
across platforms, with additional funding. Five’s role would focus on
broadcasting programs made in the UK, in particular children’s programming and
news.

Second is the
BBC/Channel 4 model: the BBC and Channel 4 receive public funding and
regulatory assets. Channel 3 licensees and five lose their PSB status and
benefits. Funding to provide content for the nations and regions and
potentially local news and children’s content would be open to a wide range of
potential providers.

And third is the
Competitive funding model: Funding
to provide public service content to complement the BBC would be opened up to
competition. A wide range of providers (in addition to ITV1, Channel 4 and
five) such as online providers, multichannel broadcasters, or other types
of media organizations, could all bid. Tenders might not specify particular
forms of content or methods of distribution, but would depend on a providers'
ability to deliver the purposes of public service broadcasting and deliver
reach and impact. The BBC would remain the cornerstone of PSB provision.

Ofcom believes that
ITV and five should retain important PSB roles for at least as long as the
current license terms, which continue until 2014.

But if significant
adjustments are not made now, our analysis shows it will not be possible for
ITV1 to balance the costs of holding its licenses with the benefits. Therefore
choices need to be made to create a sustainable structure for the next few
years.

According to Ofcom
ITV1 should be focused on programs made in the U.K., network news, and nations
and regions news, especially in peak time. For ITV1, Ofcom is proposing the
following:

Ofcom’s
consultation closes on December 4, 2008. Ofcom expects to publish a final
statement in early 2009. Government and Parliament will make a final decision
on the future funding of PSBs and, if appropriate, legislation by 2011.

—Anna Carugati