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10|01|06

Ofcom television production sector review

Ofcom today publishes its review of the UK’s television production sector and sets out proposals for consultation. The Communications Act 2003 requires Ofcom to ensure a diversity of programme supply and broad representation of the communities and cultures of the UK, as well as a wide range of television content providers and services.

The last major review of the sector was conducted in 2002. That review recommended the establishment of new Codes of Practice – the principles by which the public service broadcasters ( BBC, ITV, Channel 4, Five and S4C) commission programmes from independent producers. The Codes addressed the way in which public service broadcasters could purchase rights to programmes. The Codes were established in 2004, based on guidance issued by Ofcom in 2003.

The sector was also considered as part of Ofcom’s recent review of public service television broadcasting which recommended that the new Codes of Practice should be reviewed after 12 months in operation.

The sector

With more than 27,000 hours of programmes made by UK television producers in 2004, UK viewers enjoy one of the highest levels of domestically-originated content in the world. In 2004, UK broadcasters (public service and digital multichannel) spent £2.6bn on the commissioning of originated output (excluding news) – programmes which are created specifically for, and shown by, the broadcasters.

In September 2005 Ofcom published the results of a survey of the television production sector, carried out jointly with PACT, the independent producers’ trade association. Ofcom’s analysis shows:

• 56% (£1.5bn) of originated output was produced in-house by the broadcasters, and 44% (£1.1bn) by external producers;
• 63% (£1.6bn) of all original productions are made in London or within the M25 area and divided relatively equally between in-house and external producers at 55% and 45% of the total respectively;
• Outside London and the M25 area, 58% of production (£550m) is accounted for by in-house producers and the balance, 42% (£400m), by external producers.

Key findings and proposals

Ofcom’s review incorporates an initial assessment of the effectiveness of the new Codes of Practice. Other factors considered are the rapid technological and economic developments in the television sector – such as the growth of multichannel viewing, emerging digital platforms and other new media opportunities which are changing the ways in which television programmes are delivered and consumed.

On the basis of its analysis to date, Ofcom believes that the conditions for a withdrawal of regulation from the television production sector will not be met in the medium-term. It therefore proposes to focus on three core areas:

1. the negotiating strength of the broadcasters;
2. the commissioning of in-house production; and
3. the geographic spread of production.

Ofcom’s key proposals include:

INDEPENDENT PRODUCTION QUOTA

• The 25% independent production quota will remain an important source of certainty for the sector for the next five years at least. Ofcom therefore proposes no change to this quota.

THE BBC

• Ofcom believes that the BBC’s proposed Window of Creative Competition (WOCC) - a proportion (25%) of the BBC’s programme output over and above the independent production quota for which both external and in-house producers can compete - is critical to the future of the external production sector. However, Ofcom believes there should be more clarity on how the BBC’s commissioning structure will work to ensure in-house and external producers can compete on equal terms. Ofcom also believes it should work with the BBC Trust to review the operation of the WOCC.

OUT OF LONDON

• The quotas for production outside London should remain and additional measures may also be needed to secure out of London production for the future. Ofcom continues to hold the view that the BBC has a key role in promoting production outside London and that the BBC should aspire to a target of 50% of network production by volume and value produced outside London.

QUALIFYING DEFINITIONS

• Ofcom is willing to consider proposals for changes to the definition of a qualifying independent producer, but is currently unconvinced that there is an alternative preferable definition. Ofcom proposes no change to the definition of qualifying programmes and out of London productions.

CODES OF PRACTICE AND NEW MEDIA RIGHTS

• Concerns have been expressed by both producers and broadcasters about the flexibility of the Codes of Practice system with respect to new media rights. In order to inform debate in the industry, Ofcom has developed initial principles and options for a new approach to the definition of rights windows - the period of time during which broadcasters retain control of a programme before the rights to exploit the programme revert to the producer.
• Ofcom’s suggested new approach could involve two main rights windows: first, a primary window in which the rights acquired by a public service broadcaster apply across any distribution platform; second, a subsequent holdback period in which the broadcaster is able to apply a restriction on the exploitation of rights by the producer. Ofcom is now consulting on how these principles might work in practice.
• Ofcom is asking the industry to reach agreement by the end of this consultation period on how these issues might be resolved. In the absence of any such agreement, Ofcom will have no option but to intervene by proposing variations to Ofcom’s guidance on the Codes of Practice later this year.

The consultation closes on 21 March. It can be accessed from the Related Items at the top right of this page.

NOTE

Definitions: qualifying independent producers are producers that do not share a significant common ownership stake with any UK broadcasters; external producers are a wider group comprising not only qualifying independent producers but also broadcasters (e.g. ITV, SMG) and other companies (e.g. TalkbackThames) making programmes for other broadcasters.

Ends.

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