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Ofcom seeking views on proposed changes to BBC’s Operating Licence requirements

Published: 14 December 2022
Last updated: 16 March 2023

The BBC’s Operating Licence sets regulatory conditions designed to ensure that the BBC fulfils its Mission and Public Purposes; that audiences across the UK are well served by the BBC; and that it provides distinctive output and services.

The BBC is facing a challenging market and economic climate – including intense competition from well-funded global players, pressures on its licence fee-funding, and rapid changes in audience behaviour. We therefore recognise the need for the BBC to transform and that this requires it to make some difficult decisions and trade-offs.

But we have also been clear with the BBC that, as it shifts greater focus to online provision under its “digital first” strategy, it must continue to provide for all audiences. That includes continuing to offer a broad range of important content, including high-quality local programming.

We also want the BBC to do a better job of explaining planned changes to its services to viewers, listeners and other broadcasters – in a consistent and open manner.

Ofcom’s proposed response

The BBC has requested revisions to its Operating Licence to enable it to implement certain changes to its programming on BBC Radio 5 Live, BBC Radio 2 and on its national and regional variations of BBC One and BBC Two, known as “opt-out” services.

After careful consideration, we propose, in summary, to:

  • accept the request to reduce the quota for news and current affairs on Radio 5 Live from 75% to 70%. This would allow the BBC to broadcast some additional sports content. Evidence suggests this would help extend its reach among younger people and those from lower socio-economic groups.
  • reject the request to remove the quota for live music on BBC Radio 2. Live music is a key element of the distinctiveness of BBC Radio 2, which is important to safeguard with quotas. We propose instead to amend the quota to exclude repeats and apply only to genuinely live or new specially recorded music.
  • accept the request to reduce certain quotas for news and non-news programming on the “opt-out” services. These proposed changes would, among other things, enable the BBC to increase its investment in online news, reflecting where audiences are increasingly turning to for news content, as well as in high-quality, high-impact, local content to be shown on the network channels.

Our proposals are set out, in full, in our consultation document. We are now inviting interested parties to give their views on these proposals, which must be submitted by 18 January 2023.  We will take all responses into account before reaching our final decision.

Review of BBC’s materiality assessment relating to is local online news proposals

Under its Digital First strategy, the BBC is aiming to modernise its delivery of news and current affairs. It plans to make savings in broadcast news so that additional money and resources can be invested in its video and online news provision. As part of this approach, the BBC intends to expand its local online news offering in England.

When the BBC wants to make changes to its services funded by the licence fee, Ofcom’s role is to assess the extent to which its plans may harm other competing services – in this case local commercial news websites.

We have carefully scrutinised the BBC’s “materiality assessment” alongside other available evidence – including information provided by the News Media Association and the published financial statements of local news publishers.

Our assessment

In summary, our assessment is that the impact on the total revenues of online local news providers is likely to be less than 1%. We also consider that, while the proposals will mean that the volume of BBC online local news content may grow and attract more audience, it will not necessarily replace the interest in and consumption of commercial online local news content that already exists.

This leads us to conclude that the change is not one that may have a significant adverse impact on fair and effective competition – and so we do not, therefore, consider the change to be “material”.

We recognise, however, the importance of protecting competition in the provision of local news and will closely monitor the progress of the BBC’s proposals. This will involve gathering detailed information from the BBC and commercial news publishers to assess the actual impact of the BBC’s proposals on audiences, to be shared in our next BBC Annual Report.

If evidence emerges of harm to competition from the BBC’s ongoing activities in this area, we will not hesitate to step in using our BBC competition powers.

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