‘PSBs investing less in UK content’

Ofcom chief executive Sharon White

Investment in UK-originated content has decreased in recent years, but satisfaction with public service channels in the UK has increased, according to communications regulator Ofcom’s latest PSB Review, which was published today.

The UK public service broadcasters are the license fee-funded BBC and its commercial counterparts, ITV, Channel 4 and Channel 5.

Against a backdrop of the upcoming renewal of the Charter that sets out the BBC’s mandate Ofcom noted that, while the role of the BBC was not part of its PSB review, “significant changes in the scope or nature of the output of the BBC could have a material impact on the delivery of the PSB outcomes”.

In terms of the retransmission fees debate, whereby PSBs would be compensated by pay platforms in return for carrying their channels, Ofcom said there is a risk any new regime would be complex and require more, not less, regulation.

It noted that retrans fees could bring the PSBs additional funding, but added that analysis would also be needed to ensure any retrans fees were invested in content and not returned to shareholders. This was a concern directed at publicly-listed ITV and Viacom-owned Channel 5.

Addressing the role of Channel 4, the regulator said the framework governing its operation could be updated to allow it to better meet the needs of younger viewers. “This might include allowing it to deliver some of the obligations attached to its core Channel 4 service across the range of its services, or guaranteeing that its channels and services are given appropriate prominence on the most popular user interfaces,” Ofcom said.

Turning its attention to content, Ofcom noted that PSB investment in UK programming fell by £400 million (US$623 million) between 2008 and 2014 and “difficult programming decisions” will have to be made if funding continues to be constrained.

In its third PSB Review, Ofcom identified the provision of news for young people, locally relevant drama, arts, culture and religious programming and children’s content as areas of concern.

In terms of drama, Ofcom noted: “The PSB system continues to deliver high profile, big budget drama. However, this masks substantial falls in first-run UK-originated spend by the PSBs, which has fallen by 44 per cent since 2008.”

It added that there has been minimal provision of arts, classical music, religious and education content since quotas were removed in 2003. Kids and youth programming was also highlighted as a problem area, with funding for UK-originated animation and live-action content having drastically declined among the commercial PSBs.

The regulator also examined the impact of the widespread consolidation taking place in the UK production sector, much of which has been led by US and non-UK businesses.

It said: “Overseas investors might be willing to provide greater levels of risk capital to fund commissions from public service broadcasters than they do currently. Equally, consolidation could put at risk new entrants and the small- and medium-sized enterprises that have been the strength of the UK television production sector in the past decade. It is too early to assess the full impact of market consolidation, and we will keep this area under close review.”

The wider international ownership of channels and media assets is also impacting the PSBs, according to Ofcom, although to what extent is not clear.

Ofcom said: “The UK’s creative sector, and the PSB system, are operating in an increasingly international context. The full effect of the acquisition of UK broadcasters and production companies by international companies, the increasing opportunities for the global exploitation of content and, in particular, the impact of new online players, is not at this stage clear.”

“The market is evolving quickly and will need to be monitored carefully, given the potential risks to the success of the PSB system and the UK production sector,” it concluded.