COBA responds to final PSB review statement

COBA’s response to Ofcom’s final statement for its review of Public Service Broadcasting.

Responding to Ofcom’s final statement for its review of Public Service Broadcasting (PSB), COBA calls on policymakers to realise the full value of the PSB licence as a public asset by ensuring that it reflects emerging revenue streams in the digital era.

COBA would like to highlight Ofcom’s conclusion in today’s final statement for its review of Public Service Broadcasting (PSB) that the PSB broadcasters are performing successfully in the Video-on-Demand market and that this success is underpinned by their strength as linear broadcasters – through, for example, cross promoting popular shows. In turn, this strength in linear broadcasting is founded on their PSB licences, which give them additional audiences through prominent positions on Electronic Programme Guides and guaranteed universal availability of across digital, cable and satellite platforms.

In our view, this success supports the arguments COBA made to Ofcom as part of this review that the PSB regime already allows and indeed helps PSBs to adapt successfully to technological developments, and that PSBs do not require further statutory protection in the on-demand market. Furthermore, the PSB licences should therefore reflect the additional value to PSBs’ on-demand services from these audiences. This would enable policymakers to either set a higher price for the PSB licence on behalf of the public or, if they consider there is a shortfall in delivery of PSB content, then to increase PSB duties commensurately.

Ofcom stated in its final PSB statement that: “The strength of the brands of the PSBs, including their portfolio channels, combined with their reach and impact in linear television, means that they are well placed to take advantage of the opportunities provided by the internet.”

Revenues for free-to-air VoD services account for 51% of the total UK VoD market, having grown from £19m in 2008 to £184m in 2013. This represents a high level of growth, and we believe PSBs’ revenues from VoD services will continue to increase over the next decade, making it all the more important to realise this value on behalf of the public. Independent analysis for COBA indicates that the value of the PSB licence to ITV alone in driving online and pay revenues was £4.9m in 2013.

We would also like to welcome Ofcom’s conclusion that regulating a revised Balance of Payments regime between platforms and PSBs would require “complicated” and “lengthy” regulatory processes and that there is no guarantee that PSBs would spend any additional revenues on content, as opposed to increasing profits. In addition, we would like highlight the potential harm of such a revised regime to investment by non PSBs, for whom subscription revenues from platforms are an often vital return on investment. We note that broadly speaking Ofcom puts investment by non PSB in new UK content at 15% of the market excluding sports production, up 43% on 2008. With sports production, we estimate that non PSB investment in new UK content is around 20% of the market.

We also note Ofcom’s proposal that policymakers might consider enabling Channel 4 to deliver its PSB remit across different channels and services. We would like to stress that this could have a negative impact on the wider broadcasting market and that policymakers should closely consider this impact as part of any future consultation.