Advanced Television

Report: PSB licence gives ITV ‘significant’ net benefit

December 15, 2014

By Colin Mann

The commercial benefits of ITV’s Public Service Broadcasting (PSB) licence significantly outweigh the costs, providing ITV with a net benefit of between £87 million (€110m) and £221 million per year, according to an independent report commissioned by the Commercial Broadcasters Association (COBA) – the trade body for digital, cable and satellite services in the UK’s commercial television and on-demand sector – from media analysts Communications Chambers.

The report – The Costs and Benefits of the C3 Licences – comes on the eve of media regulator Ofcom launching a major review of Public Service Broadcasting, and analyses the various public service duties and commercial advantages that come with ITV’s PSB licence, which include its position at slot three on the Electronic Programme Guide (EPG), privileged access to spectrum, and requirements to provide national and regional news.

The report finds that the value to ITV of the PSB licence is at least £161 million a year, compared with costs of £74 million from fulfilling its PSB duties, resulting in a net benefit of at least £87 million per year. However, this is after factoring in potential steps that ITV might take to mitigate the loss of its PSB licence, such as buying a position on the second page of the EPG from another broadcaster rather than falling to very bottom of the relevant section. Without such steps, the benefits to ITV from its PSB licence are worth potentially £295 million a year, compared to costs of £74 million from public service duties, for a net benefit of at least £221m a year.

The report concludes that the biggest impact of losing the PSB licence would be that ITV would no longer be gifted one of the best positions on the Electronic Programme Guide (EPG) by cable, satellite and DTT platforms, which is key to securing audiences and therefore advertising revenues. Without a PSB licence, the report concludes that it would be highly unlikely that ITV would be able to secure a position on the first page of the EPG guides on cable and satellite platforms, resulting in a significant loss of viewing and therefore commercial revenues.

The report also finds that some of ITV’s obligations under its licence fail to ‘bite’ – i.e., ITV would be likely to do them anyway. This includes commissioning popular entertainment shows that are counted towards its PSB ‘quota’ to provide UK programmes.

Adam Minns, Executive Director at COBA, said the report highlighted how ITV gets a good deal from its PSB licence. “We ask policymakers to bear this in mind as we enter a review of PSB regulations where ITV is calling for additional concessions that risk harming the rest of the market. The UK benefits from a thriving mixed ecology of PSB broadcasters and non-PSB broadcasters that has made us the biggest TV sector in Europe, and we caution against intervention that favours one side at the expense of another,” he advised.

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