Ofcom: U.K. Public Broadcasters’ Program Spend, Viewing Drops

LONDON: Ofcom has published its third review of the U.K.'s public service broadcasting (PSB), reporting that the PSB sector is performing well despite falls in both program spend and viewing.

Audiences told Ofcom that PSB is meeting their needs, with 77 percent of viewers satisfied with the PSB channels, up from 69 percent in 2008. Viewers value the PSB purposes highly and are increasingly taking advantage of HD and on-demand programs and watching TV across a range of devices.

Viewing to the main PSB channels accounted for more than half (51.1 percent) of all TV viewing in the U.K. in 2013, down from 60.8 percent in 2008. If the PSB's +1 channels are taken into account, the combined viewing share of the PSBs was 58.7 percent in 2013.

Overall investment in original, first-run programs from the PSB channels fell by 17.3 percent between 2008 and 2013, to £2.41 billion ($3.8 billion). However, the impact on range and quality of programs is unclear, as overall audience satisfaction remains high and the volume of new shows during peak time viewing increased by 1.1 percent over the five years. There has been increased program spend from providers other than the PSB channels between 2008 and 2013, including both the PSB's commercial portfolio channels and multichannel broadcasters. Spend on original, non-sport programs from non-PSB channels has increased by 43 percent to £345 million ($540 million) in 2013 and now accounts for 15 percent of investment in original, non-sport programs.

Ofcom outlines a number of changes in the U.K. media sector that could present both opportunities and challenges for PSB. This includes a faster shift from live TV to on-demand viewing that on the one hand could reduce the reach of the PSBs, but could also help them better meet audience needs by providing greater convenience and access to archive programs. The increased competition from the proliferation of OTT platforms and other new entrants to the marketplace could reduce audience share and revenue for the PSBs, but it could also stimulate greater innovation and better quality. The demographic changes in the U.K. are potentially challenging for the PSBs, says Ofcom. Other potential challenges cited are if there's a significant reduction in either the BBC license fee or TV advertising, or a significant increase in TV production costs.

The U.K. watchdog has outlined four key areas for further consideration should challenges to the PSB system emerge. Firstly, if Parliament wants to ensure that PSB content has universal reach, current regulation around channel prominence and carriage may need to be reformed. Also, the PSBs may need greater flexibility in choosing how they deliver public service content, including online, on-demand and mobile offerings. Ofcom also suggests that after the significant consolidation in the production sector, the current regulations regarding relations between broadcasters and the indie producers may need to be reevaluated. Additionally, it questions whether changes to regulatory or other arrangements could be made to help maintain and strengthen public service broadcasting. These could include, for example, retransmission fees, relaxing TV advertising rules or considering new tax breaks to encourage investment.

Ed Richards, Ofcom's chief executive, said: "How people watch TV is changing but it is clear that viewers value programs from the public service broadcasters.

"The entire TV industry must meet new challenges from an evolving media landscape, which brings risks and uncertainties. But our view is that the public service broadcasters are in a strong position to continue contributing to a successful and innovative sector."