Ofcom launches debate on the future of public service broadcasting and content

10 April 2008

10 April 2008

Video briefing

Ed Richards, Ofcom Chief Executive, introduces Ofcom's Second Public Service Broadcasting Review

Ofcom today launched the first phase of its review of public service broadcasting (PSB). The review sets out alternative ways that PSB can be funded in the future to meet the demands of audiences, including content which is widely available, free at the point of use and which serves all communities within the UK.

The review covers all public service broadcasters, both publicly-owned (the BBC, Channel 4 and S4C), and commercial (ITV1, five and Teletext).

The main highlights of the consultation are:

  • Public service broadcasting is at a crossroads.
  • Audiences value competition for the BBC, but the underlying economics of commercial public service broadcasting are increasingly difficult.
  • Audiences place a high value on UK-made public service programming from a mix of providers, but there is risk that this will not be provided to the same degree in the future.
  • Audiences are increasingly taking advantage of new digital media to access public service content.
  • A new sustainable model for public service broadcasting is needed, with a range of options for funding and provision considered.

Audience demands

Extensive new research by Ofcom shows that audiences want content that reflects life in the UK. They want programming which reflects our cultural identity, increases our understanding of the world, stimulates our knowledge and interests and which makes us aware of different cultures and viewpoints.

Audiences also want competition to the BBC in public service broadcasting (often called plurality) to continue. They value the range of voices and the higher standards that competition brings.

Cover: Ofcom's Second Public Service Broadcasting Review

Cover: Ofcom's Second Public Service Broadcasting Review

However, the review highlights that the costs to commercially-funded public service broadcasters of making programmes that meet these aims is going up, while their main financial benefit - privileged access to terrestrial broadcasting radio spectrum to transmit programmes - is going down.

As a result, before 2012, the costs of holding ITV1 licences may well exceed the benefits and Channel 4's financial future will look uncertain. Programming for older children and for the nations and regions of the UK are already commercially unattractive.

Ofcom's consultation starts a debate about four different long-term models for public service broadcasting, some of which would involve new forms of public support for commercially-funded channels.

Changes since the last PSB Review

Since Ofcom was created in 2003 the way that audiences watch and access television programmes has changed dramatically.

In 2003 digital television was in a minority of homes and broadband was rare. Now, almost 90 per cent of homes have digital television and the majority have broadband. Ofcom's research shows that use of the internet to access public service content has grown dramatically since 2003, especially for younger people. Amongst 16-24s with broadband, the internet is now their preferred source for discovering new things and pursuing personal interests.

Despite the expansion of choice, public service broadcasters represent over 90 per cent of total investment in UK television content (excluding sport and film) and account for two-thirds of television viewing. But their audiences are declining as digital viewing and time spent online continues to increase. There has been a 17 per cent decline in the public service channels' share of viewing between 2003 and 2007, rising to 22 per cent amongst the generation of 16-24 year olds who have grown up with multichannel television and the internet.

The future challenges - beyond traditional television

Ofcom's review considers how public service broadcasting could thrive in the future; it also addresses the implications of this for the whole of the UK - locally, regionally and for each of the UK's nations.

The review highlights the impact of declining audiences on the current funding model for public service broadcasting by the commercial free-to-air broadcasters. They have already reduced their investment in unprofitable services for the nations and regions and children's television.

These changes will continue and the costs of commercial PSB obligations could soon exceed the benefits, the largest of which is privileged access to radio spectrum. Ofcom identifies three main risks to the future delivery of public service broadcasting:

  1. falling investment by ITV1, Channel 4 and five in UK content;
  2. a loss of choice in many types of public service content; and
  3. a declining ability to reach a large audience with programmes shown on the main public service channels.

As a result, Ofcom forecasts that some types of UK-made content which audiences want may in future only be available from the BBC. Ofcom believes a new PSB model will need to be in place by 2011.

A vision for PSB

Ofcom believes that a new public service broadcasting system should achieve five main goals:

  1. delivering high levels of content made in the UK;
  2. meeting the changing needs of UK audiences;
  3. reaching a broad audience with content that is free at the point of use;
  4. providing diverse content serving all the communities within the UK; and
  5. being sufficiently flexible to respond to future audience and market changes.

Ways to fund PSB in the future

Ofcom highlights four potential models for the future of public service broadcasting and content:

  1. Evolution: the BBC, ITV1, Channel 4 and five continue to provide public service programming as they do now, though with either extra public funding or fewer obligations for the commercial channels.
  2. BBC only: ITV1, Channel 4 and five become purely commercial and the market provides competition to the BBC.
  3. BBC/Channel 4 plus limited competitive funding: the BBC and Channel 4 are the main UK-wide public service broadcasters with other providers bidding for limited long-term funding to provide additional competition to the BBC.
  4. Broad competitive funding: A wide range of providers - not just ITV1, Channel 4 and five - bid for long-term funding to provide public service competition to the BBC.

Options outlined in the review for funding these models include:

  • Government funding, from a variety of possible sources.
  • The licence fee, either funding currently going to BBC services or the excess licence fee which contributes to the costs of switchover until 2012.
  • Continued access to broadcasting spectrum and other regulatory benefits.
  • Industry levies, like those recently proposed in France.

Any decisions for substantial change in the way PSB is provided or funded will be for Government and Parliament.

Ofcom Chief Executive Ed Richards said: "Public service broadcasting is at a crossroads. Viewers still want a mix of high quality UK-made content, but the traditional television model is not enough to meet all their needs. Today's proposals outline options for a securely-funded PSB future. Now is the time for a wide-ranging debate looking carefully and dispassionately at all the options."

Next steps

As part of its review, Ofcom will consult a wide range of stakeholders, from television viewers, politicians, broadcasters and content providers, and others in the industry. Ofcom's consultation closes on 19 June. Following this, a second consultation in the autumn will examine the possible long term models and funding options in more detail and set out specific options on the shorter term issues including nations and regions programming, Channel 4, and children's programming.

The full consultation can be found at: http://www.ofcom.org.uk/consult/condocs/psb2_1/.

In addition to the formal consultation, Ofcom has today launched An online blog for people to debate the issues in the review.

The blog site can be found at: http://ofcompsbreview.typepad.com

Note for Editors

1. Ofcom is obliged under the Communications Act 2003 to undertake reviews of public service broadcasting at least every five years.