UK retrans fees to be reviewed

UK Culture Secretary Sajid Javid has revealed that the government is to review legislation that governs payment arrangements for carriage of BBC and other Public Service Broadcaster platforms.

Delivering a keynote address at the RTS London Conference 2014, Javid said the government was going to look at whether the time is right to remove Section 73 of the Copyright, Design and Patents Act, which could allow PSBs to invest more in high-quality content. “I will be taking a long, hard look at the balance of payments between broadcasters and platforms,” he declared, noting that in its Connectivity, Consumers & Content strategy paper, the government set out its ambition for ‘zero net fees’, and that lot of progress had been made towards reaching that goal.

He nevertheless still wanted to know whether the amount of regulation around these transactions was really necessary. “And of course any changes here could have implications for other parts of the industry, such as EPG prominence. But as you know we’re also going to be consulting on that issue shortly,” he told delegates.

Javid’s Department for Culture, Media and Sport intends to launch the consultation on retransmission fees by the end of the year.

Javid’s announcement followed a call by UK commercial Public Service Broadcaster ITV for major pay-TV platforms to pay UK PSBs fairly for the transmission of their channels, ending what it described as effectively a multi-million pound subsidy to Sky and Virgin Media. The demand for action followed the publication of a report that shows how retransmission payments to broadcasters in the US have contributed significantly to the new ‘golden age of television’ in North America.

In the United States the ‘retransmission consent scheme’, which was introduced in 1992, means free-to-air broadcasters are paid for delivering content to competing platforms.

The research, carried out by NERA Economic Consulting, concludes that introducing payments to broadcasters for retransmitting their content has “contributed significantly to the overall health of the US broadcasting industry”.

Jeremy Darroch, the chief executive of BSkyB, speaking on a separate panel, warned that ITV and Channel 4 should be careful of “cherry picking” parts of the US payment system that suited them, suggesting the review poses a thread to some of the benefits they enjoy.

“I’m broadly supportive of deregulation. It is encouraging the Secretary of State reconciles that this is a complex issue and is a connected issue. For deregulation to work it has to work both ways. It is untenable for the commercial PSBs to look across the pond and to cherry pick pieces from an entirely different system. All the considerable benefits, things like guaranteed access to customer bases, EPG prominence, an incredibly valuable benefit. Platform access and EPG prominence are on the table. Be careful what you wish for.”

Tom Mockridge, chief executive of Virgin Media, said that UK public service broadcasters enjoy a unique role in the broadcasting ecology. “We’re pleased Government has confirmed its review of retransmission fees will encompass other wider benefits the PSBs enjoy, such as EPG prominence. Virgin Media fully supports the ‘zero net fees’ ambition the Government reinforced today. We do not, nor have we ever, charged Public Service Broadcasters. Equally, we do not believe viewers should pay an additional tax for the privilege of viewing programming which they have already paid for. Government is right to ignore the overly simplistic calls for another tax on TV viewers and review the current system in more detail. There is a careful balance to strike,” he suggested.

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