Memorandum submitted by Carole Tongue
Regulation in support of the public interest
An Investment in our Industry and Imagination
I am submitting evidence based on
work completed for the Social Market Foundation (June 2002) "A
Comparative Study of public service broadcasting regulation in
eight OECD Countries".
I am submitting conclusions and recommendations
based on this work but in a personal capacity on: public service
obligations; regulatory structures and ownership.
All the countries surveyed want to enhance cultural
and linguistic diversity and plurality in audio-visual production,
independent production and broadcast output, as well as strengthening
their indigenous audio-visual industry.
In Canada, the legislation is clear in that
each element of the broadcasting system is asked to contribute
to the creation and presentation of Canadian programming. Australian
legislation is clear about what it expects from one of the standards
it sets "is to promote the role of commercial television
in developing and reflecting a sense of Australian identity, character
and cultural diversity by supporting the community's continued
access to a television programme produced under Australian creative
British law does not spell this out in the same
unequivocal way. Linguistic diversity has been seen to have been
dealt with by the creation of S4C. Investment in creation and
broadcasting of local programming tends to be looked at channel
by channel as opposed to the Canadian, French and Australian holistic
approach. British television ecology does however produce high
levels of investment in fiction programmes second only to Germany
in the European Union. This is particularly attributable to Germany
and UK levying two of the highest licence fees in the world. For
example, BBC investment in original programming is greater than
the total investment in the EU film industry. British commercial
free-to-air channels account for virtually all other investment
in original production.
EU governments all believe that broadcast quotas
of national European audio-visual and cinematographic production
are both practical and necessary for cultural and economic reasons.
This is borne out by their application of the TVWF directive.
Canada and Australia also stipulate precise broadcast requirements
for audio-visual and cinematographic production from their own
All EU countries surveyed include broadcast
obligations as laid down in the TVWF directive, that 50 per cent
or more of transmission time must be filled by European audio-visual
works, principally drama, documentary and television or feature
film (excluding news, sport, current affairs in studio, talk shows,
game shows, advertising and teletext).
However since the late 80s we have seen the
number of cable and satellite channels explode in the EU. Many
rely almost wholly on imported material and, as recorded in national
reports to the EU Commission, have difficulty in achieving more
than 50 per cent of broadcast time for national/European audio-visual
works. The result of this trend is well illustrated in the UK
which has seen its £151 million surplus in television programmes
with the USA in 1985 become a £403 million deficit by 1999.
Alarmingly "the deficit between the value of British television
exports and imports leapt by more than 60 per cent from £248
million in 1998 to £403 million in 1999".
Furthermore Arthur Andersen has documented that competition for
the acquisition of sports rights and US film has increased their
purchase price, resulting in cable and satellite pay television
channels investing less and less in national/European programming
as defined in the TVWF directive.
In addition, the European Audio-visual Observatory has documented
a decline in recent years in the amount invested in television
fiction. Production in the five main European TV markets diminished
in 2000: "Ever-rising production costs and the trend towards
entertainment programmes, in particular reality and game shows,
show their impact on the production of TV fiction in the year
2000. For the first time since 1996 all three main Eurofiction
indicators (hourly volume, number of titles, number of episodes)
for the level of television fiction programmes produced are in
decline. In the five main European markets, Germany, the UK, France,
Italy and Spain, the hourly volume produced in the year dropped
by 3.9 per cent, from 5,786 hours in 1999 to 5,564 in 2000. The
number of new episodes produced dropped by 4.7 per cent and the
level of new titles producedthe only indicator already
negative in 1999diminished by 5.3 per cent. These figures
seem to indicate that the status of fiction is tending to become
somewhat blurred and marginalised compared to the position occupied
throughout the 90's."
Also documented in the report is that Southern Europe is catching
up in terms of its investment in fiction. The comedy genre is
in decline. There are more series and less TV movies. National
differences are eroding.
In the face of these trends, EU and most individual
member state broadcasting legislation has therefore sought to
maintain a majority broadcasting space for national/European audio-visual
works and in particular sustained high levels of investment in
drama, documentary and film. This has been achieved through the
imposition of broadcast and investment obligations on all channels
in law. There is however a significant disparity among those countries
studied as to whether an investment obligation is enshrined in
all and applicable proportionately according to the nature and
longevity of the channel in question.
France, Spain, Italy and Canada have developed
their broadcasting legislation to ensure that every channel makes
a contribution to the national/European audio-visual industry
by demanding an investment commitment into national/European drama,
film and documentary production as a proportion of annual advertising
revenue or turnover. Importantly this is applied to all channels.
It is argued that it is practicable, fair and ensures a steadily
increasing investment in original local production and particularly
the film industry.
In Germany, UK and Sweden there is no provision
in law for investment quotas in particular programme genres. In
Germany, Sweden and Spain investment agreements are signed between
broadcasters and the national or regional Film Institutes or Boards
to ensure regular sums are invested in local film production or
This is expressed differently in the UK. The
UK regulatory body, the ITC, has set a quota of at least 65 per
cent original productions or commission on all ITV licences. This
has resulted in ITV investing £244 million in original drama
in 2001 and £29 million on documentaries out of annual advertising
revenue of £1,703 million. BBC invests £268 million
on drama and £308 million on factual and learning out of
a licence fee revenue of £2,371 million. Its total original
programming investment per annum is over £1 billion. Of Ch4
total programme budget for 2001 of £423 million, £71.7
million was committed to drama, £35.2 million to news and
current affairs and £22.1 million to documentaries. In addition
both the BBC and Channel 4 have dedicated film departments which
co-produce British feature films. This is without any particular
stipulation in legislation unlike in France, Spain and Italy where
legislation spells out what percentage of turnover, revenue or
advertising revenue should be spent on cinematographic works by
It is clearly necessary to balance public interest
objectives with wider concerns of economic viability. In this
sense, it would appear from the majority of countries studied
that if cultural and economic public interest objectives are to
be met fairly and consistently, then proportionate investment
obligations on cable and satellite channels should be considered.
Broadcasting legislation should clearly
state that our system is designed to reflect British creativity
and talent, our multicultural diversity and social values. Furthermore
that national drama, documentary, feature and tele-film play an
important role in developing and reflecting a sense of local,
regional and national identity, character and cultural diversity
as well as ensuring a strong audiovisual industry that is competitive
nationally and internationally.
A similar kind of statement should
reflect the aims of telecoms regulation along the lines of: "The
main objective of the Communications Bill in the field of telecommunications
is to ensure that the British people have access to reliable telephone
and other telecommunications services at affordable prices."
Licence conditions asking for investment
in the above-mentioned categories of programme will promote the
development of national audiovisual production industry, providing
jobs and new national audiovisual programmes for export.
In any new legislation we should
reinforce broadcaster's investment obligations towards children's
programming proportionate to type, size and revenue of the channel.
Legislation should require all TV
channels to contribute proportionately to the broadcasting and
production of national programming for the cultural benefit of
national audiences. These decisions should not be left to OFCOM
Given the distinctiveness of pay
TV channels there should be a separate regime to govern their
contribution to the broadcast and production of national audiovisual
All countries, drawing on the experience
of those who already do so, should levy investment obligations
on all cable and satellite channels according to their longevity,
nature and turnover, thus balancing the public interest objectives
of television with the wider concerns of economic viability.
Prior to this countries like the
UK which have not hitherto levied investment obligations on cable
and satellite channels should conduct an investigation, along
the lines of the Australian model, into the modalities of doing
"There should be clear and accountable
structures, to demonstrate to the public their contribution to
the television sector through the information collected, produced
and distributed by these broadcasters.
One broadcasting authority in each
country should be responsible for the monitoring and compliance
of broadcast, independent production and investment quotas to
ensure transparency, accountability and consistency.
A high stable licence fee should
continue (Germany, UK) with regulatory oversight as the best guarantor
of consistent high levels of spending on drama, documentary and
The report highlights the importance of a continued
commitment of the EU governments in maintaining the standards
and the philosophy of public service broadcasting in the present
media environment. It is as crucial today as it has ever been
to steer the broadcasting market in order to derive the maximum
benefits, to as many viewers as possible. It is therefore necessary
to have the right regulatory structures in place to enable public
service broadcasters, as well as the commercial sector to take
advantage of the new opportunities that multichannel television
offers. In the UK an extremely healthy market is emerging in multichannel
television, which includes a central position for the BBC. However,
the position of the BBC clearly needs to be underpinned by legal
statute, though this process must go hand in hand with making
it more accountable and acceptable to the public, which it was
established to serve.
In regulatory terms the British, German and
the Swedish method of regulatory separation between the main public
service broadcaster and commercial channels has been successful
in allowing for the development of the new opportunities that
new media offer. Though some services are yet to take off, the
public broadcasters have a clear set of purposes and strategies,
which extend public service provision into a multichannel television
Where convergence of regulatory practice has
recently taken place ie Italy, there appears to be little obvious
benefits in real terms. Though both systems come under one umbrella
organisation, content issues remain separate concerns. Therefore
the case for an OFCOM
style super regulator may have very little real benefits. Indeed,
in attempting to establish a working relationship between the
different institutions, it may leave a decision making vacuum
at the regulatory level, at this vital time in broadcasting development.
The European Commission clearly recognises this problem and distinguishes
between carriage and content and the need to regulate the two
sectors separately with a policy of co-operation.
This study therefore concludes that the present
system of dual regulation in the UK, which importantly distinguishes
between the commercial and the public sector, should be maintained,
due to the increasingly different sets of needs and expectations
for the two sets of broadcasters. This study illustrates there
is widespread support for the continued existence of a self-regulatory
body to act as public guardian of the BBC. Though there is wide
endorsement for self-regulatory practices at the BBC, there is
a strong case for reform of the nature and constituency of the
current board of governors. Suggestions for reform are wide and
varied from election procedures to creating a greater distance
between the board and the executive at the BBC. There is a broad
consensus that the unrepresentative nature of the board of governors
is an anomaly in a system of public service and it is crucial
to modernise the present arrangements. That is a concern for a
This study supports a clear separation of content
and carriage issues and public and private sectors within OFCOM.
It therefore recommends a full commitment to the maintenance of
the formal distinctions made between the sectors, which are characteristic
of the current regulatory environment. However, although this
study supports the sector specific approach to communications
regulation, it recognises the need for increased co-operation
between the regulatory agencies within the future OFCOM, as a
degree of overlap is inevitable.
The continued role of the ITC staff and structures
within a future OFCOM is essential for the content regulation
of this sector, regardless of delivery platform. There will be
an increased workload for the content regulation part of OFCOM.
The content regulation in OFCOM must have increased resources
to monitor and regulate the commercial sector of television including
all cable and satellite channels.
The Chair and Board of OFCOM should
be appointed by an independent panel of experts.
The Content Board must represent
expertise from all relevant public interest organisations, academia,
business and civil society.
The Content Board as the effective
defender of public service values in the commercial sector should
have its decisions accepted and implemented unless the Main Board
can offer exceptional reasons for overriding them.
There should be a separation of the
regulation of content and carriage within OFCOM with appropriate
co-operation between the two when required.
The monitoring role should be restricted
to the commercial sector, including all subscription, cable and
satellite channels and including oversight of the EU Television
Without Frontiers Directive.
The responsibilities of the Content
Board and the Consumer Panel should be separate and different.
The Consumer Panel should discuss service delivery issues such
as pricing, access and fair competition. They should not have
an advisory role on content issues. Content regulation requires
an expertise and perspective beyond the natural scope and expertise
of consumer protection organisations.
The proposal to open up commercial broadcasting
to takeovers by foreign companies beyond the EU, takes the UK
out of step with its European neighbours and presents significant
risks for the future of the British broadcasting ecology, our
audiovisual industry and culture which is revered across the world.
The following issues must be considered:
Given the enormity of the potential
consequences, was an impact study carried out into the economic
and cultural effects of non-EU ownership of ITV?
No reciprocity on media ownership
is being sought from the USA or others and unobtainable even within
GATS framework. The EU has not and will not put audiovisual matters
on the GATS table given the cultural and economic specificities
of the sector.
Furthermore the USA shows no inclination
to remove ownership restrictions which they justify for national
security reasons and anyway only apply to the networks. Questions
of national security fall outside of the GATS framework. Any demand
for reciprocity would invite the question "If you want us
to open up the whole of our market why don't you open up the whole
of yours, including the BBC and Channel 4?"
It is unclear what kind of investment
is desired from outside ie programming is very different from
infrastructure. Why would a non-EU company be interested in investing
in our culture and audiovisual industry?
With no stipulations in the Bill
on obligatory investment and broadcast of British and European
drama, documentary and film there is a risk of increasing imported
programmes which reflect the cultural imperatives of other countries
and not our own.
It is unclear what effect there will
on Channel 4 and BBC in respect of advertising on the one hand
and the effects of competition with programme and resource rich
multinational companies on the other.
What economic benefit will there
be when there is likely to be repatriation of profits to the home
Given huge programme libraries of
audiovisual multinationals from North America in particular, what
would be the likely effect on our trade balance with US now standing
at £403 million deficit in audiovisual programmes and films?
Furthermore I strongly endorse the evidence
on Ownership submitted to the Committee from Professor Stephen
Barnett and Professor Jean Seaton.
Legitimacy with the public would be helped by
having consistency and proportionality in our regulation as well
as precise methodological framework for assessing the performance
of broadcasters that makes clear their content and investment
obligations in the primary legislation itself and how and whether
these are being met. Once government and Parliament have adopted
legislation, its oversight should be left to the appropriate regulatory
bodies mandated in law. There is novelty and innovation in other
national systems which we might incorporate into our system be
it German civil society involvement in public service regulatory
oversight or their independent KEF which watches over ZDF and
ARD. France, Canada, Australia and belatedly Italy and Spain ensure
that all channels make a fair and proportionate broadcast and
investment contribution to the culture and industry of their respective
countries. Britain should be inspired by these examples and not
imagine we have a monopoly on broadcasting wisdom.
One of the enduring values we share in Europe
is the protection and nurturing of a public space in broadcasting
given its importance for democracy, citizenship and cultural diversity.
That must continue to guide us as we seek to regulate anew.
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