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Written evidence submitted by ViacomCBS and Channel 5 DCMS Select Committee Inquiry into the Future of PSB 19 June 2020 ViacomCBS welcomes the opportunity to submit evidence to the Select Committee’s inquiry into the future of Public Service Broadcasting (PSB). For three decades ViacomCBS has been the most successful international supplier of pay TV channels to the UK market, in particular MTV, Nickelodeon, Comedy Central, BET and the Paramount Network. The purchase of Channel 5 in 2014 not only extended the ViacomCBS footprint into free-to-air, public service commercial television, it represented a step-change in our ambitions for our UK business: to invest in more local original programming, to create synergies between our pay and free channels, and to export more programmes and formats globally. Since 2014 Channel 5 has undergone a radical transformation. It has recently won the prestigious Channel of the Year accolade at the 2019 Royal Television Society Awards, Channel of the Year 2019 at the Broadcast Television awards, and a 2018 Channel of the Year win at the Edinburgh TV Awards. EXECUTIVE SUMMARY . PSBs remain the enduring cornerstones of the UK broadcasting ecology and critical investors in the creative economy. They are striving to meet UK audiences’ changing tastes and expectations through technological innovation and investment in original UK content that reflects British culture and society. PSBs offer a rich diet of UK programming across a multiplicity of genres universally and free to everyone. They are distinct from, and serve a different purpose to, other commercial UK channels and content services. Under ViacomCBS stewardship since 2014 Channel 5 has become an award-winning home for innovative and high-quality UK programming, matching both other PSBs’ public value contributions, and those of commercial rivals, with far fewer employees and a much smaller budget. It is a highly cost-effective and distinct contributor to the PSB ecology and wider TV sector, investing throughout the UK in diverse talent, children’s, factual, drama, news and current affairs programming. ViacomCBS is concerned that in the medium to longer term the UK advertising market alone is an inadequate means of delivering high quality commercial PSB through Channel 5. Increased competition for advertising revenues, coupled with economic uncertainty such as that created by Covid-19 and Brexit, will inhibit its ability to invest in UK original content and meet its PSB obligations. If the UK government supports the aim of a healthy and pluralistic UK PSB system, it needs to act decisively to strengthen its funding models. Extended prominence rules for digital platforms, as proposed by Ofcom, are vital to maintaining viewing and therefore income, and should be established without delay. The government should allocate new funding for UK original content on commercial PSB from revenues generated by the Digital Services Tax on less regulated digital platforms. Further, a new contestable fund for innovative UK content such as that for Children’s TV managed by the BFI should be established for other genres. THE CONTINUED IMPORTANCE OF PSB The media sector has undergone a period of radical change over the past decade. Online content delivery of both curated and user-generated content has altered viewing habits as more than half of UK households have their TV connected to the internet and around half subscribe to a subscription video on demand (SVOD) service1. There is a view among some commentators that in the context of these significant changes there ‘must’ be a need for a radical reform of the structure and functioning of the PSB system: moving the BBC to a part or wholly commercial model and reforming the current commercial PSB licensing system under Ofcom to a more market-driven delivery of PSB type content. The argument goes that PSB outcomes can be delivered not just by a group of designated broadcasters, but across other broadcasters in the market that make UK originated content, including those behind a paywall or with subscription models. While such an approach would indeed still provide some types of PSB content to viewers, it is hard to see how the Sky, Netflix or Virgin Media commercial platforms could, without the established PSB channels and players, replicate the huge range and reach of programmes offered by commercial PSBs to reflect the UK’s culture, diversity and values; or create a trusted, easily identifiable and accessible place where viewers know they can find drama and children’s programmes, accurate and impartial news, current affairs and documentaries. PSBs, as their name suggests, are an important and enduring part of British cultural life that cannot be replicated with the same public value by the commercial marketplace. This is not to diminish spend by the commercial TV sector on first-run UK originated content, to which ViacomCBS is also a contributor through its pay channels. We recognize that some channels - such as Sky News, Discovery, History Channel, or Nickelodeon – may contribute to public purpose, but these channels do not have the reach and impact, and in many cases are not free to air or universally available. Nor are they subject to the rigorous application and scrutiny of programme quotas, terms of trade, and other licence obligations placed on PSB services. Instead of seeking radical reform that trusts the market to deliver desired outcomes, we urge the Committee to consider how policy interventions can strengthen and maintain PSB 1 Ofcom, 2019, ‘Media Nations 2019’, August 2019 broadcasters going forward. Whilst there has been some decline in viewing to linear TV, particularly among younger audiences, PSB channels and their associated on-demand services remain valued by consumers and account for the majority of viewing2. PSB is the centre of gravity for creative innovation and economic growth within the TV industry and a home for viewers seeking content that reflects their own culture and values. The PSBs make the largest and most significant investment in UK production right across the UK. Despite challenging market conditions PSBs (BBC, ITV, Channel 4, Channel 5) invest £2.5Billion each year on first run UK originations3. This compares to £1Billion spent by the entirety of the commercial broadcasting industry4 of which 90% is news and sports programming5. Further, hours of first-run original UK content on the five PSB channels and the BBC’s other public service channels6 combined has remained stable since 2014, despite market challenges, at approximately 32,000 hours per year. This compares to 210 hours of UK-produced content available on Netflix & Amazon Prime7.The success of the UK production sector is rooted in investment by PSBs that have supported small, regional and independent producers that have gone on to work with commercial broadcasters and the global SVOD players. The response to Covid-19 The Covid-19 pandemic has underlined the importance of PSB for UK audiences as they seek information and guidance on their response to the virus, as well as entertainment for themselves and their families at home. Without the established PSB eco-system it would have been far more challenging to sustain a collective sense of responsibility and mutual support through the crisis. Channel 5’s 6.30pm news bulletin returned on 10th June having been off-air for two months due to operational pressures caused by the pandemic, but its flagship news bulletin at 5pm has been maintained and Channel 5 continues to broadcast brief news updates throughout the day at 12:10, 19:55 and 20:58. Despite the restrictions on movement Jeremy Vine, Channel 5’s daily two-hour current affairs programme, has been maintained. It has proved an incredibly important vehicle to distribute information about Covid-19 to the general public and give them an opportunity to put their questions to expert medical professionals. To entertain children and support their parents at this time, Channel 5’s preschool Milkshake! block is releasing a brand-new episode everyday between March and August, and 250 additional episodes have been uploaded onto Channel 5’s VOD service My5, to sit alongside the 500 episodes already on the platform. In addition, on social platforms brand 2 Ibid. 3 Ibid. 4 COBA 2019 Content Report, Oliver & Ohlbaum Associates for COBA 5 Ofcom 2020, PSB Review, Ofcom, 27 February 2020 6 The BBC’s other public service channels are BBC Three, BBC Four, CBBC, CBeebies, BBC News and BBC Parliament. BBC Three ceased broadcasting as a television service on 31 March 2016. 7 Ofcom, February 2020, ‘Small Screen: Big Debate – a five-year review of Public Service Broadcasting (2014-18)’ new content will include Milkshake! Activities and Milkshake! Move & Shake shorts led by Milkshake! presenters, as well as new fact and mindfulness posts. The content will supplement the 22 hours of shorts and posts already made available on Milkshake!’s social platforms, covering birthdays, craft, dance, music, story time, keeping fit, food, celebrations and learning about new things. CHANNEL 5’s ROLE WITHIN THE PSB ECOLOGY As one of the UK’s two commercial public service broadcasters, Channel 5 has a substantial set of programming quotas which it is required to deliver as part of its licence agreement. These cover news and current affairs, UK first-run original, independent and regional productions, and access services (See Annex). It is also subject to Terms of Trade rules in its dealings with independent producers, regulated by Ofcom. Since 2014 increased spend on original UK content has funded the creative reinvention of Channel 5 under its Director of Programming Ben Frow, allowing it to display greater range and ambition in its commissioning. No other UK broadcaster has undergone such a transformation over the same period. Channel 5 is the smallest of the UK’s PSBs with a programme budget of just £240M and a team of only nine Commissioners, yet it punches well above its weight on public value delivery.