Trading blows over Ofcom's plan to regulate pay-TV market prices has started. Mike Darcey, the chief operating officer at BSkyB, has accused public service broadcasters, industry regulators and politicians of breeding a “culture of dependency” that has failed to allow the UK TV industry to explore new business models.
Darcey told the Institute of Economic Affairs Sky might cut back on its investment in UK original production, including drama and arts programming, if it is forced by Ofcom into wholesale deals with other pay-TV operators for its premium sport and movie channels. He argued that the era of reliance on advertiser funding by commercial PSBs ITV, Channel 4 and Channel Five’s main source or revenue, is over in a digital world.
He claimed the reason "much of the commercial broadcasting sector has failed to move on. The reason is deeply rooted in the culture of the public service broadcasting system which binds the broadcasters together with those responsible for UK broadcasting policy.”
“In this complex system of privileges and obligations, the fortunes of the terrestrial broadcasters have been reliant on winning the support of regulators and politicians. The consequence is a culture of dependency which shapes the mindset and strategies of the licensed broadcasters.”
Darcey argued that Lord Carter’s Digital Britain report is the latest example of how, to be successful, the PSBs have to persuade policy-makers that they are vital to achieving public policy goals.”It remains the case that UK broadcasting policy is geared almost exclusively around the free model. So it is no coincidence that the attitudes of the commercial PSBs should be so closely aligned with those of the people who can make or break their businesses. The focus of policymakers on advertising as the core means of funding public service content beyond the BBC has remained unshakeable despite the evidence of the sustained challenges facing the terrestrial broadcasters.”
Darcey hit out at Ofcom’s proposal to force Sky to wholesale its premium sport and movie channels to rivals at a potential 30% discount. He said BSkyB, which has threatened to launch legal action if the proposals become reality, would have to look at cutting back programming investment across the board. “One of the many things that is remarkable about the proposals is the ease with which Ofcom feels able to undermine incentives for continued investment in high-quality content,” he added.