Ofcom has said it does not have the power
to stop commercial broadcasters cutting back public service
programming, such as ITV News
Ofcom has said that the best option to guarantee that
ITV and
Channel 5 continue delivering news and their other
public service broadcasting
commitments is to renew their licences. But the regulator also admitted
that it will not have the power to stop broadcasters cutting back on
PSB programming if they want to.
The admission came on Friday as Ofcom
published its government submission on options for renewing Channel 3 (ITV) and Channel 5 licences, which expire at the end of 2014.
Ofcom
said that the three options given to Jeremy Hunt, the culture
secretary, give him the "choice between stability and disruption" by
either maintaining the status quo and renewing the existing licences or
tearing them up and rethinking how, and in what form, public service TV
content might be delivered in future.
Ofcom said that the
first option, that of renewing the existing licences with the same
broadcasters for another decade, is probably the best bet if viewers
want to continue to see PSB content on TV.
"In the medium
term licence renewal is the approach most likely to ensure the
continuing delivery of the key public service objectives of supporting
investment in original programming and news provision," Ofcom said in
its 36-page submission to Hunt.
However Ofcom notes that
there is a "high degree of uncertainty" surrounding the commercial
sustainability in a volatile UK broadcasting market of a licence running
for 10 years from 2014.
Ofcom's commercial PSB licences
give holders benefits which have historically been financially very
valuable, primarily reserved access to broadcast on strictly limited
terrestrial spectrum and more recently on digital terrestrial TV, or
Freeview. Licensees are also guaranteed prominence in the digital TV
electronic programme guides.
In return broadcasters have
had to guarantee delivery of a range of PSB content, such as national
and regional news for ITV licensees, and investing in original UK
programming.
However, broadcasters such as ITV have
vigorously lobbied, and Ofcom has concurred, that the value of the PSB
licences are less than the cost of delivering PSB programming that is
often expensive to make and delivers low audiences.
The
PSBs have already moved to cut back on some of their obligations – under
former executive chairman Michael Grade ITV threatened to pull out of
regional news altogether – despite the sanctions at Ofcom's disposal to
punish licence breaches.
"It is uncertain whether the
regulatory enforcement mechanisms currently in place would be sufficient
to prevent licensees from seeking to pare back delivery of public
service content in the future in response to unfavourable market
conditions," said Ofcom.
The media regulator admitted that
"some form of agreement" would have to be reached with broadcasters to
make sure PSB content was delivered "until the mid-2020s" – meaning some
reduction in obligations agreeable by both sides.
This
option might also allow parliament to amend the structure of Ofcom
broadcast licences covering the UK to look at options such as the
creation of a separate licences for Channel 3 in Wales and Scotland,
which is covered currently by three licences (Border, owned by ITV plc,
and STV and Grampian, owned by STV).
The second option is to cancel the existing PSB licences and retender to the market for the next period from 2014.
This
would give the government a chance to rethink what obligations should
be included in the new licences and may also encourage the emergence of
new players beyond the traditional PSBs.
"A decision by the
secretary of state to block licence renewal would lead to an award
process that could lead to the development of new and innovative forms
of public service content and drive efficiency," said Ofcom.
Analysts
at Citigroup said that such a move could lead to companies including
Facebook and Google investigating the potential advantages of PSB
provision.
However, Ofcom also notes that it will be
difficult for government to change or modify the existing PSB
obligations and that it is "unclear" what new bidders would be
interested.
Nevertheless Ofcom says that the second option "remains a credible possibility".
The
third option is to extend the existing licences to allow for public
service broadcasting to be given "full consideration" in the next
communications bill, due before the next general election in 2015.
Ofcom
said this would allow parliament to assess what the PSB licences should
cover in light of the remits of both Channel 4 and the BBC, as well as
initiatives such as Hunt's plans for a new network of local TV services.
"For
instance, developments in the provision of local TV services in the
next few years may lead parliament to reassess the continuing need for
English regional programming on Channel 3," Ofcom said.
This
option would also allow the government to "clarify and tighten" the
regulation around prominence of PSB channels on the EPG "to create
additional public service value".
However, Ofcom admits
that forcing the existing PSBs to continue delivering on licence
obligations they find loss-making may lead them to "consider becoming a
fully commercial UK-wide broadcaster". The media regulator admits that
ITV for one is set to find the costs of PSB status outweighing the
benefits before 2014.
"In those circumstances, it may not
be possible to secure a replacement licensee given both the high fixed
costs of providing a fully regional service with the existing range of
obligations and the short term nature of any licence that Ofcom would be
able to offer," said the media regulator.