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Ofcom's Second Public Service Broadcasting Review

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Ofcom's Second Public Service Broadcasting Review Ofcom’s Second Public Service Broadcasting Review Phase One: The Digital Opportunity Consultation Publication date: 10 April 2008 Closing date for responses: 19 June 2008 PSB Review Phase 1: The Digital Opportunity Contents Section Page 0 Foreword 2 1 Executive Summary 4 2 The aim of the first phase of this review 18 3 How well are the public service broadcasters delivering public purposes? 26 4 The changing market environment 50 5 Prospects for the future delivery of public service content 61 6 Meeting audience needs in a digital age 75 7 Future models for funding and providing public service content 89 8 Options for the commercial public service broadcasters 104 9 Scenarios for the UK’s nations, regions and localities 111 10 Prospects for children’s programming 129 11 Timetable for implementing a new model 136 Annex Page 1 Responding to this consultation 139 2 Ofcom’s consultation principles 141 3 Consultation response cover sheet 143 4 Glossary 145 1 PSB Review Phase 1: The Digital Opportunity Section 0 0 Foreword At least once every five years, Ofcom has a duty, set by Parliament, to conduct a review of public service broadcasting. The first such review started at the end of 2003 and finished early in 2005, since when the pace of change in the broadcasting and wider communications sectors has increased. The result is that for the first time since their creation, some are questioning not only the scale and nature of the public service obligations carried by ITV and Five, but whether these organisations can or should play a central role in the public service framework for the future. Likewise, Channel 4’s future is in question: what should be its contribution to public service? And how should that be funded? Taken together, these developments call into question the viability of the longstanding principle of competition in the provision of public service broadcasting between the BBC and its commercially funded competitors. This argument about plurality flows through the pages which follow. The argument is particularly intense when it comes to the most highly valued aspects of commercial public service provision, such as news and current affairs and children’s programmes. Viewed from the perspective of Scotland, Wales, Northern Ireland and the English regions, these questions acquire a particularly intense focus. It is against this background that we thought it right to bring forward our second statutory review of public service broadcasting. The purpose of the current review, like its predecessor, is to make recommendations as to how public service broadcasting can, as Parliament enjoins us, best be maintained and strengthened. This is an obviously challenging mission, but there are in practice many ways in which it might be achieved. The same technological and market changes which have put established commercial public service broadcasters under such pressure have also delivered a world of digital content unprecedented in its scale, scope and promise. As funding for public service broadcasting has fallen back, new sources of funding have been found for new services, many of them on-line. So the circumstances we face in this review are full of challenges, but they are also rich in opportunity. Clearly there is a need to understand the mechanics of how public service broadcasting is delivered, the institutions and funding models and the incentives and obligations on private companies. But the purposes of public service broadcasting are rooted in the interests of the citizen not the producer. This review is being conducted through the prism of audience needs. It is only against those needs, and public service purposes that the very big questions – is further intervention needed? If so, on what scale? Why does plurality and competition really matter in public service broadcasting? – can sensibly be answered. In order to explore these audience issues in depth, we have undertaken extensive research. This work confirms that audience support for the accessible and effective delivery of the public purposes which underpin public service broadcasting remains strong. Audiences say they want plurality, even in genres, such as children’s programming, where the BBC’s provision has traditionally been extensive. When it comes to news, they are in no doubt about the virtues of competition. 2 PSB Review Phase 1: The Digital Opportunity But our analysis also reveals an increasing challenge to the reach and impact of public service programming as audiences fragment. This is creating serious pressure on the ability of commercial broadcasters do deliver certain genres and to sustain historic levels of investment in UK content. This matters, not for some industrial policy reason, but because audiences recognise that high levels of UK origination remain essential if the purposes of public service broadcasting are to be delivered. These concerns, however, have to be balanced against the fact that market provision in the digital age has substantially extended viewer choice and, in some genres, resulted in content that recognisably meets public purposes. This is welcome. But, outside film and sports coverage, the overall level of market investment in original UK content has reached a plateau; and a plateau that remains only a fraction of the levels of origination audiences have come to expect from our public service broadcasters. In linear television and radio, the evidence does not so far bear out the proposition that the market left to itself will deliver UK-originated, high quality public service programming on the scale UK audiences have come to expect. In interactive media the picture may be different. Barriers to entry are low and users are spending increasing amounts of time online. The public service broadcasters, particularly the BBC and Channel 4, are using interactive media to meet public purposes for audiences and to sustain reach and impact. Meanwhile outside broadcasting, we are experiencing an extraordinary flowering of public purpose content in digital media from a variety of sources – public sector, community and voluntary organisations, individual and commercial, with a wide range of funding sources. These developments have both validated the original insight behind the public service publisher concept for interactive media, and moved the debate on to a set of questions relevant to today and tomorrow. How best can interactive media enhance the value of existing public service output to enhance reach and impact? How can new forms of content be tapped to meet the audience’s desire for strong UK public service media in the digital age? And how do we ensure that audiences can easily access these new services? It is clear that the regulatory and funding model which supports today’s public service broadcasting framework has had its day. It is too fixed in linear media and too inflexible. As a result it is unsustainable. Ofcom’s task in the current review is to provide the analysis and the ideas which will allow government and Parliament ultimately to decide whether and how public service should be re-invented for the digital age. The specific purpose of this Phase One report is to set out the facts, to describe Ofcom’s research and to sketch out some possible options for discussion. Our analysis concludes with four possible public service models for the future. We would like to know your views on whether these models capture the range of what is potentially achievable. What do you think is the best approach? If you favour continued intervention, what is the best mechanism for funding it and how should that funding be supervised? This is a debate of great significance for the UK. We are all rightly proud of the achievements of our broadcasting sector in the last century. This review aims to help us frame our ambition for broadcasting’s second century. We want your views and look forward to receiving them. David Currie Philip Graf Ed Richards Chairman Deputy Chairman Chief Executive 3 PSB Review Phase 1: The Digital Opportunity Section 1 1 Executive Summary Access to public service content has expanded dramatically, but the public service broadcasters continue to play a dominant role 1.1 In 2003, when the Communications Act came into force and we started our first review of public service television broadcasting, the world was very different. Digital television was for a minority. Freeview was only a year old. Domestic broadband was rare. Now Freeview is the leading television platform, 87% of homes watch digital services, and the majority of homes have broadband access. 1.2 In the first PSB Review, we defined public service broadcasting by its purposes and characteristics. Our research shows that audiences across the demographic spectrum continue to believe that those purposes and characteristics are vitally important. Television – and the public service channels in particular – are seen to have an essential role to play in delivering the purposes of public service broadcasting. 1.3 As we complete the first phase of our second statutory review, consumers and citizens are also turning to interactive media to fulfil many of the needs historically served by public service television broadcasting. The internet has emerged as a significant source of information, educational content and entertainment, particularly for younger audiences. Interactive technologies are beginning to play a key role in informing us and supporting participation in democratic processes. Other television channels play a role too, with significant numbers of viewers now seeing digital-only channels as their primary source of entertainment, sports and knowledge about other topics that interest them. 1.4 The growth of digital television and the internet has broken down geographic boundaries and allowed audiences to see much more of the world’s best content. Digital channels offer acquired programming with high production values, often from the US. The internet creates a platform for new talent, and for niche providers and individual voices to reach an audience.
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