The Public Service Broadcasting review so far
Ofcom is required by Parliament to review public service broadcasting at least once every five years, and to make recommendations about how its quality can be maintained and strengthened. In doing so, our focus is on audiences’ needs: both understanding them, and ensuring they continue to be met as sweeping changes take place in the media landscape.
While the BBC is highly valued, stakeholders and audiences want alternatives to it, and do not agree on how to achieve this
The importance to viewers of public service broadcasting and UK originated content was widely accepted by respondents to our consultation. Audiences value the BBC very highly, but virtually nobody favoured it becoming the only provider of public service content.
Commercial public service broadcasting under the current system will not survive the transition to an all-digital world
Our analysis of the funding available to the commercial PSBs for public service content, reviewed for this phase, shows they will continue to deliver much UK public service content, often for commercial reasons. The regulatory assets identified in phase 1 used to fund provision of this content, such as access to reserved spectrum, will retain some value beyond the completion of digital switchover in 2012.
The market will make a growing contribution, but is unlikely to meet all needs
Viewers have access to a wider range of content than ever before, on digital TV and online. Multichannel broadcasters now make a significant contribution to public service content, particularly in sport, entertainment, archive and acquired programming, and in one case, news. But they provide very little original programming in the genres under most pressure on commercial public service channels – current affairs, nations and regions programming, challenging UK drama, UK scripted comedy, and UK drama and factual programming for children. This is unlikely to change as provision on the commercial PSBs declines, because most multichannels do not reach the audiences required to justify large and risky investments in these areas and will themselves face increasing economic pressure.
Existing institutions retain important roles, while competition for funding could create greater flexibility during an era of great change
The model for provision of public service content beyond the BBC now faces its greatest challenge – how to harness the opportunities opened up by digital media while responding to growing pressures on funding, and reconciling the divergent needs of different audiences.
Three models for the post-switchover world
The evolution model was favoured by those who believed Channel 3 licensees retained an important role, especially in the devolved nations. The BBC/Channel 4 model was supported by many respondents and viewers, who welcomed Channel 4’s ambition to play an enhanced role. Audiences and stakeholders valued the flexibility of the competitive funding model, but expressed concern about possible bureaucracy.
Three models for the post-switchover world
Driven by this assessment, this document sets out three refined models for further consideration. All of these models would require significant change to the existing legislative framework. Given that the current model will become unsustainable before 2012, we continue to believe that there is a pressing need for action with a clear direction established by government no later than 2010.
An enhanced Evolution model
If audiences’ needs change relatively little over the next few years, and the existing broadcasters remain best placed to meet those needs, an enhanced Evolution model has advantages.
A refined BBC/Channel 4 model
If ITV1’s and Five’s incentives are no longer credibly aligned with public service purposes, and not for profit institutions are chosen as the primary way of securing those purposes, a BBC/Channel 4 model offers benefits.
A refined competitive funding model
If audiences turn rapidly to new platforms and forms of content, and competition for funding is deemed the best way to ensure the accountable and efficient use of public resources, a competitive funding model offers advantages.
Provision of news and information for the devolved nations is an essential requirement for any future model, and is likely to need replacement funding
Because the costs of provision for some Channel 3 licensees will soon outweigh the benefits of PSB status, it is likely that replacement funding will be needed for nations and regions services, particularly news. The options as we see them are:
Do nothing, and allow provision to decline over time, against clear audience preferences;
Provide new public funding for Channel 3 licensees in the nations and regions;
Introduce competitive funding for services in the nations and regions to enable other providers to bid, potentially enabling the creation of cross-media services in Scotland, Wales and Northern Ireland; or
Fund the creation of dedicated channels for the devolved nations, such as that proposed by the Scottish Broadcasting Commission.
Replacement direct or indirect funding of £145-235 million is likely to be necessary by 2012
If audiences continue to want to enjoy the same mix of public and private content they have today, we estimate that public funding of between £330-420 million is likely to be required by 2012 in addition to the core licence fee. Towards that total, we estimate existing regulatory assets will contribute around £185 million, leaving a likely gap of £145-235 million. After 2012, it is increasingly difficult to be precise about funding requirements given uncertainty about the wider media environment.
Channel 4 needs clarity about its future role and model by 2010
Channel 4 has an important ongoing role to play in public service content, but is experiencing increasing financial pressure. It has already cut its programme budget for 2008 and 2009 in order to break even. Its reserves could be used to sustain its public service investment to around 2010, but certainty about its long term role and funding is now a pressing priority.
Our proposals for the commercial PSBs’ obligations from 2009 are designed to ensure audiences’ priorities are secured
Ofcom is required to decide what obligations the commercially funded public service broadcasters should have. They retain important roles over the next few years, especially in providing high levels of original UK content, national and international news, and nations and regions news.