As part of an ongoing strategic review of the UK public service broadcasting system, the UK government will review the ownership model and remit of Channel 4 and consider tightening regulation of SVoD services such as Netflix, Disney+ and Amazon Prime Video.
The Department for Digital, Culture, Media & Sport (DCMS) says that with a fast-evolving media landscape, increasing competition and changing audience habits posing imminent challenges, moving Channel 4 into private ownership and changing its remit could help secure its future as a successful and sustainable public service broadcaster.
The government will also consult on whether the regulation of video-on-demand services such as Netflix and Amazon Prime need strengthening so they are subject to similar rules as traditional linear broadcasters such as the BBC, ITV and Sky.
It will consider whether new rules are needed to protect viewers of video-on-demand services – such as changes to age ratings and addressing impartiality and accuracy rules for documentaries and news content – alongside measures to level the playing field so public service broadcasters can compete with international rivals. It suggests this will help ensure the country has a diverse, free and pluralistic broadcasting landscape with high standards.
The reviews will come ahead of a broadcasting White Paper scheduled for the autumn of 2021. The White Paper would consider the future of the country’s broadcasting landscape with the ultimate aim of making sure it serves listeners and viewers on all platforms and across the UK.
“Technology has transformed broadcasting, but the rules protecting viewers and helping our traditional channels compete are from an analogue age,” states Digital Secretary Oliver Dowden. “The time has come to look at how we can unleash the potential of our public service broadcasters while also making sure viewers and listeners consuming content on new formats are served by a fair and well-functioning system. So we’ll now be looking at how we can help make sure Channel 4 keeps its place at the heart of British broadcasting and level the playing field between broadcasters and video-on-demand services,” he adds.
At present, Channel 4 is entirely commercially funded, but it has been publicly-owned since it began broadcasting in 1982. According to the DCMS, it has delivered its original aims, including supporting the independent production sector in the UK and creating diverse, varied and risk-taking programming. But four decades later the broadcasting landscape is unrecognisable. Online streaming and digital terrestrial TV have flooded the market with new and varied content while at the same time intensifying the competition for advertising and being able to raise huge sums for subscriptions.
More than 90 per cent of Channel 4’s revenue comes from advertising – which is traditionally cyclical in nature – and from events-driven sponsorship activities. This makes it particularly vulnerable to market fluctuations and the decline in linear TV advertising spend.
Moving Channel 4 into private ownership could allow it to access new capital, create strategic partnerships, and reach international markets only available through the private sector. Changes to the model may also allow Channel 4 to diversify its income streams, enable it to invest in new technology and produce new content and programming, says the DCMS.
This would better allow Channel 4 to compete and strengthen its role as a public service broadcaster and secure the long-term benefits it can bring to the creative industries and to audiences.
Video-on-demand services available in the UK are not regulated to the same level as linear television channels and some services such as Netflix and Apple TV+ are not regulated in the UK at all.
Only content on the BBC iPlayer is subject to Ofcom’s Broadcasting Code, which includes enhanced protections to audiences from harmful or offensive material and rules on accuracy and impartiality.
Existing audience protections on UK-regulated video-on-demand services are primarily focused on children and rules preventing content which incites hatred. Some services have introduced their own voluntary procedures – such as Netflix’s voluntary age ratings partnership with the British Board of Film Classification (BBFC).
The current landscape makes for an inconsistent, ad hoc and potentially harmful gap in regulation between video-on-demand services alongside a potential competitive disadvantage between UK broadcasters and their internationally-funded online counterparts.
It is also almost twenty years since the UK broadcast sector’s regulatory framework was introduced in the Communications Act 2003, which was designed before the arrival of online companies such as Apple+, Amazon Prime and Netflix in their current form.
The government will also take forward existing commitments to legislate to strengthen public service broadcasters’ ‘prominence’ online so that their video-on-demand content can easily be found and accessed on smart TVs and other platforms and devices.
Ofcom published its review on prominence in July 2019 which made a number of recommendations, including the need for new legislation to keep PSB content prominent online. Ofcom’s PSB Review builds on this, and Ofcom’s recent consultation on the future of public service media (closed 16 March 2021) has specifically sought views on the requirements around the availability of public service on-demand content.
The White Paper will also be influenced by Ofcom’s ongoing PSB review, the government’s own strategic PSB review as well as the recommendations of the Digital Radio And Audio Review which will report this summer.
Responding to the announcement, John McVay, CEO of trade body Pact, which represents the UK’s independent TV production companies,commented: “Channel 4 plays a critical role in the UK’s broadcasting ecology as a publisher/broadcaster which has invested in hundreds of independent production companies over the nearly 40 years of its existence, enabling and improving access, skills, international activity and diversity.
“The channel is a thriving dynamic and successful public service broadcaster and a catalyst for generations of entrepreneurs. The Government’s plans to sell off Channel 4 will damage small businesses across the UK at a time when they are recovering from the pandemic and rebuilding their businesses. The current Government’s thesis that bigger is always better is an archaic concept from an analogue past.”
“Pact is very concerned about the Government’s proposal for the future of Channel 4, as their profits are reinvested in hundreds of British companies who not only make high quality, diverse programmes for the British public, but exploit their IP around the globe taking those programmes to international audiences and bringing money back to the UK economy.”
“This proposal will damage British SMEs at a time when we should be focussing on building back better after the pandemic.”
“Independent analysis suggests that Channel 4 is in strong financial health having come through the uncertainty of the pandemic with a financial surplus – demonstrating the resilience and flexibility of the current model. We have no reason to believe that the current ownership model and structure will not be sustainable in the future.”
“Pact will be responding to all the reviews published by Government over the summer and is ready to fully support Channel 4’s efforts in maintaining its current model as a publisher broadcaster,” he confirmed.
Pact’s Policy Team will be working closely with McVay and Pact Council on Pact’s responses to the VoD and prominence issues for the future of the sector and will keep Members updated as things progress.