Media Forum: What will Ofcom's vision mean for PSB?

Will reduced public service broadcasting requirements offset a potential second licence fee? Jeremy Lee investigates. In 2012, when everyone will probably be forced to watch television via a digital platform, the value of the terrestrial broadcasters' analogue licences will be virtually nil. This will raise serious issues regarding the provision of public service broadcasting, particularly for the commercial TV channels.

Last week, Ofcom unveiled its vision, or at least a few proposals, to ensure that PSB will remain available to viewers.

As well as the BBC, each of the commercial channels has a varying degree of PSB burden as part of their licence settlements, with ITV currently having the largest.

In the crucial second phase of its review (the first was a survey of what PSB meant and the final stage is the presentation of its findings), Ofcom announced some pretty radical suggestions, each of which will affect viewers, broadcasters and advertisers.

Stephen Carter, the Ofcom chief executive, says: "A new PSB model needs to be developed before the erosion of the analogue model means that PSB is no longer worth keeping." In order to stop this happening, he proposed seven steps to rebalance PSB in the digital world.

In summary, the BBC remains the main conduit of PSB and will continue to be licence fee-funded. However, a new publicly funded non-profit PSB broadcaster, which Carter calls a public service publisher, with an annual budget of £300 million a year, should be created to counter the BBC's virtual monopoly on PSB.

Channel 4 will not be privatised but will be free to form alliances with other broadcasters (such as a takeover of BBC Worldwide), while five, which has a small PSB requirement, will continue its obligation to make some UK-originated programming.

The big question is what it means for ITV, currently the biggest supplier of PSB after the BBC. Carter says: "ITV1 should remain universally available and free to air. It should have a phased withdrawal of non-news regional programming between now and the switchover."

Ofcom proposes ITV be allowed to reduce its commitment to regional non-news programming - a strand not highly demanded by advertisers - by one-and-a-half hours per week. Surely good news for ITV and for advertisers?

Mick Desmond, the chief executive of ITV Broadcasting, thinks so: "Obviously, this is the start of the process. We've reiterated to Ofcom and in public that our PSB should focus on news and regional news and (programme) origination from the regions and we've lobbied for a cut in our PSB hours."

In terms of programming, he says ITV will now be able to concentrate on providing a schedule advertisers, rather than regulators, demand. "This gives us flexibility to review our schedule and we'll try to make the hours that come out more commercially focused. We look forward to the debate on the future funding of PSB," he says.

While ITV might have scored an initial victory, Bob Wootton, the director of media and advertising affairs at ISBA, thinks Ofcom's proposals do not go far enough. In particular, he is concerned that the BBC is still given free rein at the expense of its commercial rivals. "What metrics are there to measure the BBC's PSB output, to stop it spreading into general entertainment?" he asks.

Wootton is also concerned that the public service publisher solution could potentially distort the market, perhaps taking audience share away from the commercial channels: "The most interesting thing is the proposal for a public service publisher. Is it going to be a broadcaster? If it is, then it affects the commercial ones. The real sting is the funding - everyone agrees Gordon Brown will not be willing to give up Treasury money for it and I don't think it can be funded by other broadcasters."

Another funding proposal from Ofcom is that viewers could be asked to cough up an extra licence fee to pay for it, on top of the fee they already give to the BBC.

Tom George, the Mediaedge:cia managing director and a member of the IPA's media futures group with responsibility for TV trading, is broadly supportive of the majority of Ofcom's other proposals but thinks that this could be too much to stomach. He says: "(Ofcom's proposals) are good for commercial TV, as it was becoming increasingly difficult for the PSB obligation to be justified - it's a different TV environment from 15 years ago. The PSB requirements jarred most with ITV, especially after Contract Rights Renewal, which links its financial performance to the size of its audience.

However, on a wider political and cultural level, there's a question over whether it's right for there to be another licence fee levy."

- "The historical compact between the broadcaster, the audience, the Government and the regulator will not survive the move to digital. Our proposals aim to keep the strongest of the traditional while adding the spur of the new." - Stephen Carter chief executive, Ofcom

- "We are pleased with the announcement from Ofcom. We want to play our role as a public service broadcaster, but we want to do it in the areas where we are strongest and where it makes commercial sense for us to do so." - Mick Desmond chief executive, ITV Broadcasting

- "ITV can be more competitive but, in the scope of the overall schedule, the recommendations are small potatoes. Let's let ITV be what it should be in a modern multichannel world: a truly commercial broadcaster." - Bob Wootton director of media and advertising affairs, ISBA

- "Purely from an advertising point of view, it looks to be a good thing if the absolute size of audiences is maintained. The challenge is to ensure that the amount of television is increased but not at the expense of the quality." - Tom George managing director, Mediaedge:cia.

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