Options for the future of commercial TV public service broadcasting licences

BroadcastingOfcom has today published advice on future options for the public service broadcasting TV licences held by ITV, STV, UTV and Channel 5.

The current Channel 3 (ITV, STV and UTV) and Channel 5 licences, which contribute towards public service broadcasting in the UK, expire at the end of 2014. In preparation for the next licensing period, Ofcom has a duty to provide the Secretary of State with a report on the licences by June 2012.

Ofcom’s report considers whether the existing licence holders will be able to contribute, at a commercially sustainable cost, to public service broadcasting in the 10 years from 2015.

Delivering benefits to viewers

The licensees provide public service programming, such as news and current affairs, which is valued by viewers. In return, they receive benefits, such as the right to appropriate prominence on TV listing guides and access to spectrum to broadcast on digital-terrestrial television (Freeview).

In the report to the Secretary of State, Ofcom has outlined three credible options for the licences and considers that each could deliver benefits for TV viewers. These are:

1. Renew existing licences

The licensees have told Ofcom that, in broad terms, their existing public service obligations could be sustainable in the next licence period*. Ofcom’s analysis shows the Channel 3 and 5 licensees could continue to make a sufficient contribution to public service broadcasting beyond 2015.

This includes the possibility of establishing a separate, stand-alone licence for Channel 3 in Wales. We also suggest that changes to the Channel 3 service received by viewers in the south of Scotland may be appropriate to ensure the provision of Scottish news in that area.

2. Auction new licences

Re-auctioning would open up licensing to a competitive process. It may also test whether potential bidders – including the current licensees – could consider fresh approaches to public service broadcasting.

3. Extend the current licences

Extending the current licences for a shorter period could allow for a full review of public service broadcasting as part of a future Communications Bill. It could also give Parliament a chance to consider how public service content could be delivered in a world changed by the growth of digital media.

Ofcom believes that the three options are credible. The decision now rests with the Secretary of State.

The report can be found here.

References

1.    *The licensees’ proposals are set out in broad terms in Section 4 of the report. Licensees provided views on their ability to fulfil public service requirements in responding to Ofcom’s open letter in September 2011, which invited views from licensees and other interested parties.

2.    Under section 229 of the Communications Act (2003), Ofcom is required to prepare a report for the Secretary of State on the effect of licence conditions and other arrangements on the capacity of the existing Channel 3 and Channel 5 licence holders to “contribute, in the next licensing period, to the fulfilment of the purposes of public service television broadcasting in the United Kingdom at a cost to the licence holders that is commercially sustainable”.