Channel 3 comprises 15 regional licensees and the national breakfast time licensee (GMTV). The Channel 3 services are broadcast both on analogue frequencies, and on the digital terrestrial multiplex awarded to Digital 3/4 Ltd (representing ITV and Channel 4) in June 1997. Current licences run for ten years, and are renewable for the same period. Although the Communications Bill is likely to change matters (see below), the present expiry date of Channel 3 licences is as follows: 1 January 2009 (Carlton, GMTV, HTV, Meridian, Tyne Tees, Ulster, Westcountry, Yorkshire), 1 April 2011 (Anglia, Border, Central, Channel, Granada, Grampian, LWT, Scottish).
The Channel 3 service is financed mainly by the sale of advertising airtime. In 2002, net advertising revenue of the regional licensees was £1,686m and £00m for the national breakfast-time service.
No individual licensee can supply all its own programmes, so the licensees are obliged to conclude networking arrangements (subject to approval and review by the ITC and the OFT) in order to broadcast a common schedule of programmes (with regional opt-outs). The networking arrangements are operated by ITV Network Centre, which commissions and schedules programmes shown across the network. The Broadcast Board of the Network Centre is a sub-committee of the ITV Council, which is the governing body of the ITV Association. The Board works with the Network Centre to agree the overall nature of the network schedule and its cost for approval by the Council. Once this has been agreed the Network Centre acts independently to commission, acquire and schedule network programmes.
Following a successful reference of the networking arrangements by OFT to the Monopolies and Mergers Commission (now the Competition Commission) in 1992, the arrangements were altered to allow independent producers to submit a programme proposal direct to ITV Network Centre and to prevent programme rights from being acquired (normally) for more than 5 years.
In scheduling programmes, licensees must comply with a number of obligations:
· all programmes must comply with programme standards in the relevant ITC codes on such matters as taste and decency, accuracy and impartiality;
· a majority of programming (excluding news, sports events, games, advertising and teletext) must of European origin;
· at least 65% of qualifying programmes must be original productions for first showing on UK television on Channel 3;
· at least 25% of qualifying programmes must be independent productions covering a range and diversity both in terms of programming strands and cost of acquisition. At least 10% of qualifying programmes, must consist of independent productions which are ‘European works’;
· assistance to the disabled. Channel 3 must subtitle at least 90% of qualifying programmes by 2010. In 2003, regional licensees must subtitle at least 79% of such programming. On its digital service, Channel 3 must provide signing and audio description for 5% and 10% respectively of its programmes by the tenth anniversary of the digital service;
· regional licensees are required to procure a high quality news service from a nominated news provider (currently ITN) and broadcast this news live and simultaneously. Licenses must provide a suitable amount of news, both at intervals throughout the day, and at peak viewing times;
· regional licensees must cover a number of programme genres in their schedules, and in some cases minimum amounts are specified. The genres are drama, entertainment, sport, news, factual programmes (including current affairs - 1 hour 30 minutes), education, religion (2 hours), arts, and children’s programmes (10 hours).
· regional programming obligations were rationalised in 2002, to facilitate better scheduling. In Northern Ireland and English regions, there are now 8 ½ hours of regional programming, including 5 ½ hours of news. Elsewhere, the amounts vary from 12 hours in Scotland, 10 hours in Wales to just under 6 hours in Borders and the Channel Isles.
Failure to comply with these and other licence or code obligations may be dealt with by a formal warning, a requirement to broadcast an apology, a ban on repeating objectionable material, financial penalties, or in extreme cases, the shortening or revocation of the licence.
Channel 3 licensees pay an annually adjusted licence fee to the ITC to cover the costs of regulation. On behalf of the government, the ITC also collects Additional Payments (more commonly known as tender payments), which take the form of a fixed sum or cash bid (adjusted annually for inflation) and a percentage of licensees' qualifying revenue (advertising, sponsorship and subscription income).
The relevant percentages for each licensee are Channel (0%), Border (2%), Ulster (5%), Grampian (6%), HTV (7%), Scottish (11%), Westcountry (13%), Granada (15%), Tyne Tees (16%), Central, LWT, Anglia (17%), Carlton (20%), Yorkshire (22%), GMTV, Meridian (23%). In 2002, tender payments collected from Channel 3 licensees amounted to £258.2m. made up of cash bids of £69.7m. and £188.5m. based on a percentage of qualifying revenue. Licensees are also required to contribute to the costs of the national television archive.
The Government has proposed changes to the regulatory regime for Channel 3 and other licensees, which are set out in the Communications Bill. If enacted, the changes would replace the current detailed programme genre requirements with a simpler public service remit, while requiring Channel 3 licensees to set out annual statements of programme policy how they would fulfil their remit and make an adequate contribution to general public service broadcasting objectives.
Current requirements as to news, assistance to the disabled, and quotas for original, independent and regional production would remain. In addition, licensees would have to accept a new digital licence running to 2014 (subject to adjustment) or have their existing licences foreshortened. Finally, the Bill would remove non-competition objections to the control of all or most Channel 3 licensees by a single owner. More information on the Bill can be found at www.communicationsbill.gov.uk.
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