Request by Digital 3 and 4 Ltd (“D3&4”) and Channel Five Broadcasting Limited (“Five”) for a determination by Ofcom of the price payable by Five for the use of reserved capacity on Multiplex 2

28 July 2010

Case opened: 02 December 2009
Case closed: 27 July 2010
Relevant Instruments: Condition 7 of the Licence granted to D3&4 under the 1996 Broadcasting Act (as amended), and the general powers conferred on Ofcom under Section 1 of the Communications Act 2003.

Update note: 28 July 2010

On 27 July 2010, Ofcom issued its determination resolving this matter. The determination is confidential between the parties. However, it may be of interest to third parties to know the broad methodology that Ofcom has applied in this determination. A non-confidential summary of the determination has therefore been prepared (please see related item).

End of update note

Issue

Condition 7 of the Licence granted to D3&4 provides that in consideration of payments made by the holder of the Channel 5 licence as are from time to time agreed between the holder of the Channel 5 licence and the Licensee or (in default of agreement) determined by Ofcom, the Licensee shall ensure that Channel 5 is broadcast throughout the United Kingdom.

This licence condition was included in D3&4's licence as a consequence of the Television Multiplex Services (Reservation of Digital Capacity) Order 2008 (the "Order"), which provided for the re-organisation of the services broadcast on DTT. Amongst others, the Order provided for the reservation of digital capacity for the broadcasting of Channel 5 on Multiplex 2, which is licensed to and operated by D3&4. Carriage of the Five service on Multiplex 2 commenced on 30th September 2009.

The parties have agreed a contract on all terms except for the charges that Five should pay to D3&4 for carriage on the Multiplex. In default of an agreement, both parties have requested that Ofcom should now determine the charges that are payable by Five.

Scope:

Ofcom have determined:

(a) The price payable by Five to D3&4 for the supply by D3&4 to Five of the D3&4 Services, such price to consist of:

a. The price for the period of 12 months commencing on 30 September 2009 (the "Base Price"); and

b. The appropriate mechanism which should be used to adjust the Base Price in each successive 12 month period commencing on 30 September 2010 for the duration of the Term;

and;

(b) The price payable by Five to D3&4 for the transmission of the Five Service on a regional (as opposed to national) basis.

Case leader: Jonathan Porter, Principal Economic Adviser (email: jonathan.porter@ofcom.org.uk)