UK comms regulator Ofcom has published a consultation on its third review of public service broadcasting against a backdrop of what it suggests is reduced viewing of and investment in such services.

The latest review examines how the BBC, ITV, STV, UTV, Channel 4, Channel 5 and S4C have fulfilled the purposes of public service broadcasting (PSB) since Ofcom’s 2008 review.

Ofcom’s initial view is that public service broadcasting is performing well despite falls in both programme spend and viewing.

According to Ofcom research, audiences told the watchdog that PSB is meeting their needs with 77 per cent of viewers satisfied with the PSB channels, up from 69 per cent in 2008.

Viewers value the PSB purposes highly and are increasingly taking advantage of high definition and on-demand programmes and watching TV across a range of devices.

Viewing to the main PSB channels accounted for over half (51.1 per cent) of all TV viewing in the UK in 2013, although falling from 60.8 per cent in 2008. If the PSBs’ ‘+1’ channels are taken into account, the combined viewing share of the PSBs was 58.7 per cent in 2013.

Overall investment in original, first-run programmes from the PSB channels fell by 17.3 per cent between 2008 and 2013, to £2.41bn. However, the impact on range and quality of programmes is unclear as overall audience satisfaction remains high and the volume of new shows during peak time viewing increased by 1.1 per cent over the five years.

Possible areas of change

The UK media and communications industry has undergone significant change since 2008, driven by the completion of digital switchover, the rise in online TV viewing and the rapid take-up of connected and mobile devices.

There has been increased programme spend from providers other than the PSB channels between 2008 and 2013, including both the PSB’s commercial portfolio channels and multichannel broadcasters. Spend on original, non-sport programmes from non-PSB channels has increased by 43 per cent to £345 million in 2013 and now accounts for 15 per cent of investment in original, non-sport programmes.

If current trends continue, Ofcom’s view is that the PSBs should be able to maintain current levels of delivery and output. But on-going changes in the sector could present both opportunities and challenges for PSB:

A faster move to on-demand viewing

A faster shift from live TV to on-demand viewing could reduce the reach of the PSBs. Alternatively, it could help PSBs better meet audience needs through greater convenience and access to archive programmes.

More new entrants to the UK market

New entrants, including ‘over-the-top’ online video services such as Netflix and Amazon, compete with traditional broadcasters. Increased competition could reduce audience share and revenues for the PSBs. It could also stimulate greater innovation and better quality programmes.

Faster fragmentation of audiences

Demographic changes in the UK, particularly differences between younger and older audiences, are potentially challenging for the PSBs. While a failure to respond may result in falling viewing share, innovation and increasing use of on-demand may allow better targeting of distinct audience groups.

Key sources of funding

The BBC licence fee and TV advertising are key sources of funding for PSBs. A significant reduction in either would need to be offset by further efficiencies or by creating new sources of revenue.

Significant inflation in programme costs

A significant increase in TV production costs could lead to a reduction in the range, volume or quality of PSB programmes, if funding is not maintained.

Options for maintaining and strengthening the system

Ofcom has also considered what could be done should challenges to the PSB system emerge. The latest consultation identifies four key areas for further consideration:

• If Parliament wants to ensure PSB content has universal reach, current regulation around channel prominence and carriage may need to be reformed. Does ‘universal’ availability need to be redefined in an increasingly connected world?

• The PSBs may need greater flexibility in choosing how they deliver public service content, including online, on-demand and on mobile. Should the PSBs be regulated by organisation rather than by individual channel?

• Following significant consolidation in the production sector, is the current regulation of relations between broadcasters and the independent production sector still appropriate? Any proposed change would need to be tested against how it could help increase investment in UK content, improve the delivery of PSB content and support the UK independent production sector.

• Are there changes to regulatory or other arrangements which could help maintain and strengthen public service broadcasting? These could include retransmission fees, relaxing TV advertising rules or considering new tax breaks to encourage investment for example.

Ofcom is seeking views on its initial findings. A final statement on the PSB review will follow in summer 2015.

“How people watch TV is changing but it is clear that viewers value programmes from the public service broadcasters,” noted Ed Richards, Ofcom Chief Executive. “The entire TV industry must meet new challenges from an evolving media landscape, which brings risks and uncertainties. But our view is that the public service broadcasters are in a strong position to continue contributing to a successful and innovative sector,” he advised.

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