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Summary

The requirements upon Ofcom

1.1 The ITV Networking Arrangements (the ‘NWA’) are a set of arrangements between ITV Network Ltd (‘ITV Network’) and the 15 regional Channel 3 licensees. These 15 licensees are currently under the control of ITV plc, SMG plc, Ulster Television plc (‘UTV’) and Channel Television Ltd (‘Channel’).

1.2 The NWA, which currently comprise five main documents, are intended to apply to all holders of regional Channel 3 licences and provide for programmes made, commissioned or acquired by or on behalf of any such licensee to be available for broadcasting in all regional Channel 3 services.

1.3 Their purpose is to coordinate the provision of a national television service that is capable of competing effectively with other television programme services in the UK .

1.4 Under section 293 of the Communications Act 2003 (the ‘Act’), we have a statutory duty to carry out from time to time, reviews of the NWA, in particular, to consider:

• Whether the NWA enable regional Channel 3 services to be a nationwide system that can compete effectively with other UK television programme services; and
• The impact of the NWA on competition – in particular whether they prevent, restrict or distort competition in the UK.

1.5 In addition, we are also required to consider the effect of the arrangements on the ability of the regional Channel 3 licensees to maintain the quality and range of regional programmes and other programmes contributing to the regional character of the services.

1.6 We are required to conduct such a review no more than a year after the previous review and having done so, consider whether any modifications to the arrangements are required.. We published our final recommendations on the 2006 NWA review in February 2007.

Developments in 2007

1.7 The 2006 Review recognised that there would be a need to update the Network Centre Code of Practice to take into account changes to Ofcom’s Guidance to broadcasters for drawing up Codes of Practice relating to the commissioning of independent producers. However, because we were in the process of consulting on that new Guidance, we did not make specific recommendations as to how the Network Centre Code of Practice needed to change at that stage: we simply stated that it would need to be amended in the light of that revised Guidance and the new agreements on new media rights. Similarly, the Network Programme Licence (‘NPL’) and Tri-partite Agreement (‘TA’) would also need to be amended in the light of the changes made to the ITV Network Centre Code of Practice.

1.8 The 2006 Review also indicated that we intended to look to streamline the process of future NWA reviews using a more informal consultation process where the proposed changes were not material. This was intended to comply with the legal requirement for frequent reviews of the NWA whilst minimising the burden on stakeholders.

1.9 We also indicated that we anticipated that it might be possible to streamline the documentation that comprises the NWA by removing at least the NPL and TA once the changes indicated above had been made.

1.10 Since the 2006 Review, we have completed our consultation on Guidance to broadcasters and published revised Guidance in June 2007[^(-1-)]. We are now waiting for ITV Network to submit its revised Code of Practice for us to approve and similarly for the appropriate changes to the NPL and the TA to be made.

1.11 We have also adopted a more streamlined process for this, the 2007, Review. We wrote to ITV plc, Channel, SMG and UTV to invite them to comment on the scope of the 2007 Review. We also asked them to provide an update on the position in respect of the implementation of the recommendations of both the 2005 and 2006 Reviews.

1.12 A new (and ongoing) development in the course of 2007 has been issues around “Participation TV”. This led to us c ommissioning an inquiry following significant compliance failures by broadcasters. The inquiry, led by Richard Ayre (a member of the Ofcom Content Board), was charged with making recommendations on actions needed to restore confidence and trust in the use of Premium Rate Telephony Services (“ PRS ”) by television broadcasters[^(-2-)]. The Ayre Report published its findings in July 2007.

1.13 Following a period of consultation on implementing the recommendations of the Ayre Report, in February 2008 we made a number of changes to broadcasting licences. Those changes not only provide that when licensees invite audiences to participate in programmes, responsibility for handling all communications rests with the licensee but also that there should be i ndependent third-party verification of all systems used in PRS voting and competitions. These changes could have an impact on ITV1’s compliance arrangements and in particular the role of ITV Network.

1.14 There are also a number of on-going investigations into the use of PRS by broadcasters and some of those investigations involve ITV1.

1.15 Also in 2007 we began[^(-3-)] our Second Review of Public Service Broadcasting, having brought the timing forward in light of changes to the broadcasting environment. This review is considering the period through digital switchover and afterwards to 2016 and will focus on traditional public service television services provided by the BBC , ITV, Channel 4 and Five, S4C and Teletext. It will also consider non-traditional audio-visual services offered by the existing public service broadcasters on other platforms. The review also considers public service broadcasting in the Nations and English regions where ITV’s regional licences are key to the provision of plurality with the BBC . The licensees’ ability to deliver regional and national obligations is underpinned by the NWA. The PSB review could therefore raise issues which have an impact on the scope and operation of the ITV NWA.

Conclusions of 2007 Review

1.16 In broadcasters’ responses on the scope of the current Review and the implementation of the 2005 and 2006 recommendations, they indicated that although progress has been made with the process of implementation of the recommendations of the 2005 Review, sign-off on final legal drafting has still not been achieved. We remain very concerned by the fact that the regional C3 licensees have still not been able to come forward with the revised documentation which would complete the process of implementing the recommendations of the 2005 Review. In addition, in terms of implementing the recommendations of the 2006 Review, there is an outstanding obligation on ITV Network to submit a revised Code of Practice for Ofcom to approve.

1.17 Given the outstanding issues in implementing the recommendations of the 2005 and 2006 Review, we have not been in a position to evaluate how those changes have bedded down as we would have hoped. It is important therefore that these actions are completed without further delay to avoid the need for us to consider what further action may have to be taken.

1.18 Having considered the current position and assessed the responses received from the regional C3 licensees, whilst we do not consider it necessary to require any additional modifications to the NWA at this point in time, we do consider there are a number of areas which could warrant a more detailed review going forward e.g. the need to consider how intra-licensee arrangements and communications might need to develop in a multi-platform world.

1.19 Moreover, as noted above, the issue of participation TV and compliance arrangements has been an important topic in the course of 2007. The process by which programmes for ITV Network are complied is an issue that is addressed in the ITV Network Code of Practice. Given that there was a consultation on licence changes to implement the recommendations of the Ayre Report and there are specific cases currently under investigation, it would have been premature for us to undertake a review of ITV Network compliance arrangements as part of the 2007 Review. However, we would expect to look in more detail at the impact of the new licence conditions e.g. on ITV Network’s role in putting in place arrangements for third-party verification, as well as the issue of compliance for ITV1, more generally as part of the 2008 Review.

1.20 Ofcom’s Second Review of Public Service Broadcasting also raises issues about the scope and operation of the ITV NWA. However, it would have been premature to consider these issues as part of the 2007 Review. It would be more appropriate in the course of the 2008 Review to consider how the emerging thinking from the Second PSB Review could impact on the ITV NWA and whether any specific changes to the NWA would be needed.

1.21 As a result of all these considerations, we have confined the scope of the 2007 review to being a general assessment of the overall operation of the NWA. However, we anticipate that the 2008 Review will need to be a more extensive review of all these aspects of the NWA. We will of course continue to conduct formal consultations where we consider it appropriate to do so and, in particular, where modifications are proposed to the NWA which are considered material.

Footnotes:

1.-Guidance for Public Service Broadcasters in drawing up Codes of Practice for commissioning from Independent Producers (Ofcom: June 2007).

2.-The published version of the Inquiry’s report is available on the Ofcom website at: http://www.ofcom.org.uk/tv/ifi/prsinquiry/ayrereport

3.-See press release for publication of terms of reference at http://www.ofcom.org.uk/media/news/2007/09/nr_20070911

The full document is available below

• Review of ITV Networking Arrangements 2007 [pdf]
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