MEDIA FORUM: Should the ITC stick to issues of programming? The Independent Television Commission has come under fire again. Last week, in the High Court, Flextech won the right to challenge its pronouncements on ’unbundling’. Is the ITC r

If the commercial TV sector doesn’t squeal from time to time, then the Independent Television Commission isn’t doing its job properly. That, at least, is the view of many within the ITC. They’re not there to be popular. Their role is to keep a bunch of pretty rowdy customers in line.

If the commercial TV sector doesn’t squeal from time to time, then

the Independent Television Commission isn’t doing its job properly.

That, at least, is the view of many within the ITC. They’re not there to

be popular. Their role is to keep a bunch of pretty rowdy customers in

line.



By this reasoning, the ITC got a result last week. Flextech’s decision

to challenge the ITC in the High Court counts as a pretty loud

squeal.



Flextech is fighting new rules covering the packaging of cable and

satellite channels introduced by the ITC in June. The new rules will

outlaw the practice of bundling, where customers are forced to subscribe

to tiers of channels devised to suit broadcasters rather than

viewers.



The ITC’s new rules, to take effect next year, will encourage the

emergence of an a la carte system, with subscribers deciding what they

want to pay for. Cable network operators argue it will lead to a greater

take-up of multichannel TV - so everyone should be happy, shouldn’t

they?



Not Flextech, obviously. Adam Singer, the company’s chairman, comments:

’We have spent a great deal of time analysing the ITC’s ruling in the

light of existing and future carriage agreements for our channels. The

direction (the ITC’s original statement of intent on this issue,

delivered in June) does not provide the clarity and guidance needed for

us to ensure our contracts are acceptable under the new regulation and,

despite several attempts, we have been unable to obtain clarification

from the ITC. We have no option but to seek judicial review in order to

challenge the ruling, which we believe to be outside of the ITC’s legal

authority.’



Last Thursday it was granted the right to judicial review. Don’t hold

your breath, though. This will take three months - a lot of lawyers will

need to take their cut before this one ever sees the light of day

again.



And Flextech is seeking more than clarity; it doesn’t care for the

concept of unbundling at all. It obviously believes multichannel TV is

not yet in a strong enough state to brave the rigours of a totally free

and transparent market. The view has widespread support on the

media-owner side.



Is it time to reassess that argument? And is it also worth turning our

attentions once more to the role of the ITC? Singer’s comments were

echoed by many last week and there was widespread disappointment that

the Government’s recent Green Paper failed to address the issue.



Flextech could be about to prove to us all just how inadequate the ITC

really is. Should it stick to programming issues and leave economic and

infrastructural issues to others? Is this a timely reminder that we

really need one single Ofcom authority, perhaps as a result of merging

the ITC with the Oftel telecoms watchdog?



Jim Marshall, the chief executive of MediaVest, has mixed feelings on

this one but, on balance, he doesn’t think the ITC has handled it too

badly. ’My understanding is that anything currently bundled will remain

bundled for the next few years and that it recommends moving away from

the current situation in a gradual way - certainly in enough time to

keep testing new channels. This is all about the relationship between

programme providers and cable owners. Commercially, both sides have good

points,’ he says.



Marshall points out that the single biggest barrier to the growth in

viewership of new channels is an inertia in people’s viewing habits. He

points, for instance, to the struggles that Channel 4 or breakfast

television faced in their early days. He adds: ’Lots of people sample

Discovery - which is one of the stronger channels on satellite and cable

- from time to time, but would you actually go out and buy it? There’s a

limited type and number of channels that you can sell. So I can

absolutely understand the commercial reasoning behind Flextech’s

actions.’



Many observers believe the established players deserve the right to milk

multichannel TV in the short to medium term. After all, they were the

pioneers, the risk takers who created a sector where previously there

was none. Now they should have every opportunity to make some serious

money before the market becomes generic, commoditised and a free-for-all

crumbfight instead of a cake.



Bob Wootton, the director of media and advertising affairs at the

Incorporated Society of British Advertisers, isn’t convinced by that

argument. He states: ’This is not a subject ISBA has very strong views

about. But anything that can influence the growth in penetration of

multichannel television has to be a good thing and the argument that

cable increases penetration seems pretty convincing. So ISBA would have

a moderate enthusiasm for unbundling.’



Cable, he argues, is also a pioneering business, albeit a less glamorous

one. It has spent years digging up roads and now it needs to recoup that

investment. ’From a purely personal point of view as a consumer,

bundling is a pain. Sport and movies, for instance, are of no use to me

but I might want a cocktail of channels from the other stuff,’ he

comments.



Wootton hopes the ITC is competent to regulate this area. ’It would be a

great worry if it were not,’ he ventures. Others are less

optimistic.



David Cuff, the broadcast director of Initiative Media, states: ’I

wonder whether this sort of issue wouldn’t be handled better by the

Office of Fair Trading. It is about the way TV channels are sold to the

consumer.



The irony is that the ITC is seeking to extend consumer choice but the

result could be that choice is diminished.



’Where channel choice and access are concerned, unbundling may help move

the UK towards a more European TV environment but it won’t change the

overall shape of the broadcast landscape. It will continue to be about a

few big channels and lots of little channels that aren’t watched

much.



Some of the latter might believe they have a better chance of surviving

following unbundling. In the US, people have an average of around 45

channels but, on average, they only view ten each month. Unbundling

won’t make any real difference to the emergence of a similar sort of

pattern over here.’



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