Home > Consultations > Consultation Documents > PSB > Ofcom review of PSB > Executive summary

Executive summary

Consultation published: 21|04|2004
Consultation closes: 15|06|2004

Introduction

Parliament has required Ofcom, the communications regulator, to review the effectiveness of public service television broadcasting and to report on how it can be maintained and strengthened. This is the first phase of our review. It sets out our initial conclusions about the effectiveness of broadcasting on the main terrestrial TV channels, and our initial views on how to maintain and strengthen the quality of public service broadcasting in a changing market, as we move into a fully digital world.

A matter of terminology

The term 'public service broadcasting' is frequently used and often abused. It has at least four different meanings: good television, worthy television, television that would not exist without public intervention, and the institutions that broadcast this type of television.

To avoid confusion, we will use the following convention throughout:

When assessing the current effectiveness of the broadcasters, defined in the Communications Act 2003 as 'public service broadcasters', we will call them the 'main terrestrial TV channels'. They are all the BBC's licence fee funded channels, ITV1, Channel 4, S4C and Five ^(-1-).
When we offer our emerging ideas on how to maintain and strengthen 'public service broadcasting' in the future, we will first define what we mean by the term. Thereafter, we will use public service broadcasting (or PSB) to refer to the purposes that PSB should achieve in society and the necessary characteristics of PSB programmes.

The current effectiveness of broadcasting

The Communications Act requires the main terrestrial TV channels - BBC One, BBC Two, ITV1, Channel 4, S4C and Five - to deliver programmes and services which cover a wide range of subject matters and which meet the needs and interests of many different audiences. Among other aims, they are expected to meet high standards, to educate, to inform, to entertain, and to reflect and support cultural activity in the UK. They should reflect the lives and concerns of different communities in the UK, and include an appropriate proportion of content made outside the M25 area.

We have examined the effectiveness of the main terrestrial TV channels from three broad perspectives:

Output: have the main elements of programming, as set out in the Act, been provided by the relevant broadcasters
Impact: have they reached their target audiences?
Value: are they appreciated by their target audience, and do they deliver benefits to society as a whole?

Our initial finding is that broadcasting on the main terrestrial TV channels has partially, but not completely, fulfilled the requirements of the Communications Act. There are some significant achievements, but also important shortcomings in effectiveness, partly due to the actions of broadcasters, and partly because viewers have drifted away from the more challenging types of programming, traditionally thought to be at the heart of UK television.

Output

The main terrestrial TV channels receive 57% of total UK television revenue and continue to provide a wide range of high quality output. Competitive pressures are mounting, and while this has welcome aspects it has also had an impact on the balance of peak-time schedules (6pm to 10.30pm). We found that:

Between 1998 and 2002, expenditure on programming by the main terrestrial TV channels rose by 19% in real terms. But excluding sports and movie rights, where inflation has been high, expenditure growth on programming was only 8% in real terms.

The volume of UK-made programmes across their schedules increased slightly with the largest increase recorded by drama.
A wide range of subject matters was covered; the range of broadly defined genres (or programme types) shown in peak-time in 2002 is little changed from 1998. All channels continue to mix entertainment with news, information and other factual material.
High quality, accurate and impartial news and information services were provided. Spending on news resources also rose.
Drama was a strong feature in peak viewing hours. Both the number of hours transmitted and the total expenditure increased.
Innovative approaches to programme formats were developed, which defied traditional categorisation, such as 'factual', 'entertainment' or 'drama'.
But in important areas, the number of new titles launched each year fell and the range of subjects covered narrowed.
Specialist programming on topics such as arts, current affairs and religion was increasingly pushed out of peak viewing hours.
Expenditure on certain elements of programming also suffered: total expenditure on arts, children's, religion and education programming fell.
Within programme types, there was a reliance on those with more obvious popular appeal, for example soaps within drama, and factual entertainment within factual, as all the main terrestrial TV channels pursued a more ratings-led agenda.
Overall, the hours of regional programming broadcast and expenditure on regional programmes rose over the period. But the UK nations fared better than the English regions, and the total number of hours of regional programming on ITV1 fell.

Impact

The main terrestrial TV channels accounted for the majority of viewing, even in multichannel (cable, satellite and DTT ^(-2-)) homes. But their effectiveness as a means of reaching large audiences with a wide range of programming diminished

Their audiences decreased: in 2003, the five main terrestrial TV channels captured around 76% of total viewing, compared with 87% in 1998.
In multichannel homes, their audience share started lower and declined from 63% to 57% over the same period. DTT households were a clear exception to this trend: the main five channels' share remained in the region of 85%.
They began to lose touch with some audience groups: their share among 16-34 year olds declined from 84% to 69% during this period, and in 2003, their share among non-white audiences was around 56%. Younger audiences and ethnic groups rarely watched mainstream news output.
Their audience reach fell: in 2003, BBC One reached 80% of audiences in cable and satellite homes for 15 minutes or more each week, compared with 84% in 1998; the same channel reached only 75% of 16-34 year olds in 2003.
Some of the more serious and challenging programme types were most affected by multichannel competition. Horizon, Newsnight and The South Bank Show all had a viewing share more than 50% lower in multichannel homes compared with homes with only the main terrestrial TV channels.

For all the decline in audiences, terrestrial channels still broadcast important events, such as the Rugby World Cup, which brought the nation together. They also offered initiatives such as The Big Read or Restoration, which had an impact beyond viewing figures.

Value

Our attitude survey showed that the public appreciated and valued television, but there were differing views about the existing output:

The provision of entertaining programmes was seen as television's primary function, but beyond that there was substantial public agreement with the notion that the main terrestrial channels should support wider social purposes.
The highest levels of support were recorded for news and information and for the provision of a wide variety of programmes across the schedules. Programmes targeted at a broad audience received strong backing.
Programmes made in the UK and innovative, original output were seen to be important components of good television.
There was less support for the provision on the main terrestrial channels of the more specific elements of the Act's public service requirements and those which attract lower audiences:
Specialist arts programming, programmes dealing with religion and other beliefs, and some types of regional programming were much less widely valued than news, drama and factual programming.
Regional programming received mixed reviews: many people felt it was important, but there was evidence that audiences did not engage with much regional programming other than regional news.
Programmes dealing specifically with minority interests were not widely valued by the rest of the population. There was more support for the representation of minority groups and interests within mainstream programming.

We also asked people how well they thought the main terrestrial TV channels were providing different types of programming:

The provision of news and other programmes that keep the population well-informed is thought to be done very well.
Viewers thought that television lacked innovation and original ideas, relied too much on copycat and celebrity programming, and on occasion talked down to its viewers.
There was a strong feeling that television was failing to provide an environment that could protect children from unsuitable content in the pre-watershed (9pm) schedules.

In-depth discussions with the public and with broadcasting professionals revealed widespread support for competition between the main terrestrial channels to provide the sorts of programming specified in the Communications Act. But different broadcasters were also expected to achieve different goals:

The BBC was assumed by the public to have the most programming obligations, Five the least. Audiences gave ITV1 some leave to pursue mass audiences with popular drama and entertainment.
Channel 4's loyal viewers were clearer about its role to experiment and innovate than were viewers in general.
Beyond terrestrial, only a small proportion of respondents saw a need to oblige cable or satellite channels to provide programming with a wider social purpose, although many were appreciative of the availability of such programming on these channels.
Many viewers felt that there was not enough co-operation between the main terrestrial channels to avoid direct schedule clashes, and they resented some of the effects of competition - derivative formats and aggressive scheduling.
Broadcasting professionals felt that the BBC had taken a more aggressive approach to winning audiences in recent years and was less different from other channels than it should be.

Maintaining and strengthening public service broadcasting

A changing environment

A fully digital world will fundamentally alter the shape of the market, and the role of the main terrestrial TV channels in it:

As multichannel competition has increased, the terrestrial channels' share of the funding flowing into television has already declined from 65% in 1998 to 57% in 2002.
In future, increased competition for audiences and revenues will continue to place pressure on the profitability of the commercial terrestrial broadcasters: ITV1, Channel 4 and Five. This will affect their ability to meet their regulatory obligations in the future.
The TV licence fee is already questioned by viewers whose use of the BBC's services is declining. Dissatisfaction with the BBC's method of funding may increase and there is an additional question about whether the BBC's income will keep pace with rising viewer expectations for high quality content.
Our research suggests that audiences, while supporting the obligations on the main terrestrial broadcasters in the Communications Act, prefer to watch a more entertainment-oriented mix of programming when they have the choice. They move around channels with much greater frequency, making it harder for the main terrestrial broadcasters to retain audiences for more traditional, serious or challenging programming.
New technology, in the form of broadband and Personal Video Recorders (PVRs) is likely to cause further disruption, as viewers begin to create their own schedules and to avoid advertising.

These changes have profound implications. First, increasing competition for revenues is likely to reduce the funds available to broadcasters to meet their current programming obligations. Second, the fragmentation of the audience may weaken the justification for a large amount of direct or indirect public funding for broadcasting.

Over time, questions are bound to arise about continued public support for and investment in the provision of programming that fewer people watch, and that fails to reach large groups of the viewing public.

The definition and purpose of public service broadcasting

TV broadcasting and its regulation evolved over decades without always having a clear rationale.

But we believe there are two simple aims behind the historic regulation of terrestrial broadcasters:

Helping the broadcasting market work more effectively to deliver what consumers want to watch or want to have an option to watch.

Providing the programming that as citizens we want to be widely available for as many people as possible to watch. Such programming secures the wider social objectives of UK citizens by making available TV which has broad support across the UK, but which would be underprovided or not provided at all by
an unregulated market.

Consumer rationale

Most markets routinely provide the products consumers value and want to purchase. But in a world with only a limited number of free-to-view TV channels, an unregulated market is unlikely to provide such an outcome. Regulation was designed to ensure that a sufficient range and balance of programmes was provided on each terrestrial TV channel, alongside programmes that catered for minority as well as for mass audiences.

As digital take-up progresses, with multichannel provision, encryption systems and a wide variety of different models of consumption, the market failures associated with consumers not being able to watch the programmes they would willingly buy are diminishing fast. We believe that in the future, public service broadcasting will no longer be needed to ensure consumers can buy and watch their own choice of programming.

There may remain concerns about the market power of some broadcasters, but in our view these are better dealt with by the application of competition law than through a large public intervention.

Citizen rationale

Even if the TV market provided all the programming that consumers desired and were willing to buy, it would probably not offer sufficient programmes that are valued by society as a whole.

Addressing under-provision by an unregulated market may become more important as the world becomes more complex, and social cohesion, cultural identity and aspects of the democratic process are under pressure.

We believe the purposes of programming in this category are:

to inform ourselves and others and to increase our understanding of the world through news, information and analysis of current events and ideas;
to reflect and strengthen our cultural identity through high quality UK, national, and regional programming;
to stimulate our interest in and knowledge of arts, science, history and other topics through content that is accessible, encourages personal development and promotes participation in society; and
to support a tolerant and inclusive society through the availability of programmes which reflect the lives of different people and communities within the UK, encourage a better understanding of different cultures and perspectives and, on occasion, bring the nation together for shared experiences.

Bridging the shortfall between what a well-functioning broadcasting market would provide and the wider ambitions of UK citizens is our definition of the enduring purposes of public service broadcasting. It constitutes a continuing rationale for PSB, one which, for the time being, retains widespread public support.

But if it is worth doing, it must be capable of reaching audiences and being appreciated by them:

it must be high quality, original, innovative, challenging and widely available. These are what we refer to as the characteristics of PSB;
it must be delivered on channels that have a high reach among and impact on their target audiences; and
if it is to be publicly funded, it must be clear that the market would not deliver similar output, of the same quality, on the same scale.

We set out below a series of initial propositions from our Phase 1 research in three sections: a new framework for PSB; the immediate consequences of our Phase 1 research; and propositions for the transition to a fully digital world. These propositions are intended to stimulate debate and provoke responses. Our own programme of work will be designed to examine them over the coming weeks and months.

A new framework for public service broadcasting

1. PSB should in future be defined in terms of its purposes and its characteristics rather than by specific genres (programme types). Many of the most successful examples of broadcasting over the past five years have defied traditional categorisation. Audiences are, for instance, drifting away from specialist arts, religious and current affairs programming.
2. The purposes of PSB lie in underpinning an informed society, reflecting and strengthening our cultural identity, stimulating our appetite for knowledge, and in building a tolerant, inclusive society.
3. The characteristics of PSB must underpin its distinctive contribution. It implies programmes of quality, innovation, originality, challenge and wide availability. These are sometimes hard to measure, but vital to secure in all aspects of PSB.
4. Producing PSB with appropriate purposes and characteristics is not enough. TV currently plays a unique role in reaching millions of people. It must continue to do so if it is to justify significant public expenditure. This suggests that PSB is likely to have to deploy a creative approach which blends public purposes and popularity, that is serious in intent but accessible in style, and that finds new ways of leading audiences to interesting and challenging material.

The immediate consequences

1. PSB must achieve reach and impact to be effective. It must be free to respond to the challenge of providing accessible and popular programming. This suggests that regulation should break away from narrow obligations specifying hours of certain types of programming across the schedule. Implementing this new approach to PSB will require a new framework of remits, accountability, measurement and qualitative judgement to ensure that programmes and television channels meet the purposes and characteristics of PSB. Ofcom will work with the commercial broadcasters to develop and introduce this new framework.
2. A high priority should be placed on achieving digital switchover, to bring increased choice and competition and to enable the market to work more effectively on behalf of consumers. The case is set out in Ofcom's report on digital switchover (available on the Ofcom website: www.ofcom.org.uk). Achieving switchover should be given preference over some of the more marginal obligations currently placed on commercial terrestrial broadcasters.
3. There remains an important role for all the main terrestrial TV channels to play in delivering PSB prior to switchover. But regulation of commercial broadcasters will need to be made clearer and easier to enforce. The central components of
PSB delivery on ITV1 and Five should be news, regional news (for ITV1) and original UK production; the aspects that have high audiences, that are valued highly by the public, and that can be effectively mandated.
4. Channel 4 will have a critical part to play, especially given the public desire for originality and innovation. Ofcom will pursue a close dialogue with Channel 4 to ensure the channel remains well-placed to deliver PSB purposes
and characteristics effectively in the future.
5. In parallel, the BBC needs to reaffirm its position as the standard setter for delivering the highest quality PSB. The BBC Governors should take
the lead in ensuring the BBC addresses concerns about derivative formats, aggressive scheduling, competition for acquired programming and a balanced schedule in peak viewing hours.
6. Our research identified a strong desire for a safe environment for younger viewers, especially on the main terrestrial channels. But audiences also told us that some early-evening programmes, including soaps, have an important social role
to play in airing complex and controversial issues. We will undertake a thorough exercise to consider different approaches to regulation in this area.
7. Viewers and broadcasters appear to be uncertain about the role of programmes for the English regions, other than in news. We will also begin
an investigation of the importance of national and regional programming, including consideration of how it is delivered.
8. We are in a period of transition from analogue TV to digital TV. All of the main terrestrial broadcasters still have substantial scope for the effective delivery of our definition of PSB. But during the next five years a new model of PSB regulation will need to emerge. If new institutions are to be created, or older ones reformed to play an effective role in the digital world, development should begin now rather than at the point of digital switchover.

Propositions for the transition to a fully digital world

Proposition 1

We need to examine the prospects for PSB funding and the case for seeking alternative resources. The existing commercial funding base for PSB is being eroded. Popular support for the TV licence fee may be jeopardised by increased audience fragmentation. So, new forms of explicit or implicit funding or support for PSB need to be considered for the longer term. These should include areas such as electronic programme guide (EPG) positioning, digital multiplex access, commercial TV's payments to the Treasury and other possible incentives.

Proposition 2

Competition in the provision of PSB is at the heart of an effective system. In a digital world, a single, monopoly supplier of PSB is unlikely to be the most effective model for delivering PSB purposes or characteristics, or for securing plurality of views and perspectives. We need to examine the case for sharing existing funding streams among a greater number of broadcasters and allowing broadcasters or producers to bid for PSB funding.

Proposition 3

Where public funding is necessary to secure the purposes and characteristics of PSB, different means of distributing funding should be examined. One option is to continue with direct allocations to designated broadcasters. A second is to make allocations through a new intermediary (a 'purchaser' of PSB) with either broadcasters or producers as recipients ('providers' of PSB). Both options need
to be assessed as we consider the best model for delivering PSB in the digital future.

Proposition 4

We should continue to secure a substantial contribution to PSB by not-for-profit organisations in addition to contributions from profit-making broadcasters. This is because social purposes may be more easily achieved when the organisational aims within which commissioners and schedulers work are closely aligned with PSB purposes, rather than potentially in conflict with them.

Proposition 5

The market is likely to produce significant amounts of programming which meet both the purposes and characteristics of PSB, and which can be defined as PSB. Some programming (and channels) supplied without public intervention already contribute to PSB purposes. Prior to switchover, we should work to explore how many of the purposes and characteristics of PSB can be provided, without public intervention, by the evolving TV broadcasting market.

Proposition 6

Notwithstanding developments in the market, there is a strong case for the BBC to continue to undertake a wide range of activities to underpin the delivery of the public purposes and characteristics of PSB. But its range of activities needs to be reviewed periodically in relation to core PSB purposes.

Where a high cost of delivery is associated with low viewing figures, it will be harder to justify continued public intervention. Alternative means of funding, such as subscription, should be considered for these services.
Other activities, including secondary market distribution, studio and other production resources, and indeed production should be reviewed carefully against their distinctive contribution to PSB purposes.

Proposition 7

Every programme shown on the main commercial terrestrial channel's schedules need not always reflect PSB purposes and characteristics. In the case of the BBC, however, with its unique and privileged funding status, programmes should always strive to reflect the broad purposes and character of PSB to some degree.

Proposition 8

Channel 4 will need to overcome increasing financial pressure if its contribution to PSB is to be viable in a fully digital world. Internal efficiency and self-help must be the starting point. If necessary, a range of alternative options should also be considered, including new commercial initiatives, a share of contestable funding, a new source of direct funding, or a share of the licence fee. In considering these options, Channel 4's distinctive role and ethos should be maintained on a secure footing through its ownership status, covenants and expression of purposes.

Proposition 9

Independent producers make a major contribution to PSB purposes across most programme types. Apart from one or two specialist areas (e.g. news), our supposition is that there is more scope for independent production to enhance the delivery of PSB. Measures that need to be considered include raising the quota of programming which broadcasters must commission from independent producers.

Proposition 10

There are many significant challenges ahead. Once digital switchover has been achieved, public intervention to secure PSB may not be justified on its present scale, either because market failures are reduced considerably, or because it will prove impossible to secure the purposes and characteristics of PSB through television at a reasonable cost.

We would welcome responses to all the ideas set out in this executive summary:
our conclusions about the effectiveness of the current system of television broadcasting on the main five terrestrial channels; and the propositions in the above section on maintaining and strengthening PSB in the future.

next next