ITV calls for fair deal on retrans fees
September 8, 2014
UK commercial Public Service Broadcaster ITV has called for major pay-TV platforms to pay UK Public Service Broadcasters (PSBs) fairly for the transmission of their channels, ending what is effectively a multi-million pound subsidy to Sky and Virgin.
The demand for action follows 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”.
In 2013, US free-to-air broadcasters received around $3.3 billion in retransmission payments. The report reveals that these fees account for less than 3 per cent of cable operators’ revenues, and have little or no impact on pay-TV prices.
ITV says that UK PSBs invest around £3 billion on programming – and that it alone spends almost £1 billion a year – the vast majority of which is invested in original UK content. In the case of the commercial PSBs, this is not only a driver for UK economic growth, the content is provided free to viewers throughout the UK at no direct cost to the taxpayer. Under the current regime, no payment is made by the Pay-TV platforms to PSBs who fund this programming.
Adam Crozier, Chief Executive at ITV, said that introducing retransmission fees would have clear benefits to the UK creative industries and the wider economy – as well as to viewers right across the UK – by enabling PSBs to continue to invest in the original programming people love to watch.
“The majority of viewing on these pay-TV platforms is PSB programming yet ITV, whether as producer or broadcaster investing in creating that content, doesn’t receive any payment – despite the fact that pay-TV platforms pay commercial terms for other channels. The impact of this wholly outdated regime is that UK Public Service Broadcasters are forced to subsidise major pay-TV platforms. In today’s highly competitive media marketplace that is simply wrong – and to the detriment not just of the PSBs, but the consumer and the wider UK creative economy,” he added.
“It is in the interests of all broadcasters that we encourage the regulator and government to look again at this issue for the benefit of the industry and viewers,” he concluded.
Other key findings from the report – Delivering for Television Viewers: Retransmission Consent and the US Market for Video Content – commissioned by ITV in partnership with Germany’s VPRT and Free TV Australia, include:
- In 2013, US free-to-air broadcasters received approximately $3.3 billion in retransmission payments accounting for nearly 15 per cent of total broadcast television revenue in 2013. This is projected to rise to 25 per cent by 2019.
- Retransmission payments account for more than one-third of all spending on broadcast television programming, providing US broadcasters with the financial capability to invest in original content and innovation whilst helping to fund the airing of major sports events on free-to-air television, HD content and new multi-cast television services.
- The US television market has outperformed the rest of the world – much of which does not have retransmission consent – and the consistent investment in quality content suggests the regime has served the public interest and benefits consumers creating a more efficient and robust market for digital content of all types.
- The combination of minimal impact on pay-TV prices together with the consistent delivery of high levels of investment in quality US TV content suggests the retransmission regime serves the public interest.