From Ofcom's updates: Today, Stewart Purvis, Partner, Content and Standards, gave a speech http://www.ofcom.org.uk/media/speeches/2008/09/rts_wales_psb at a joint Ofcom and Royal Television Society seminar in Cardiff on Ofcom's Public Service Broadcasting (PSB) Review. The seminar considers what the PSB Review will mean for Wales and the rest of the UK. -------------------------------------------------------------------------------------- 12|09|08 RTS Wales PSB Event Speech given by Stewart Purvis, Partner, Content and Standards, Ofcom University of Glamorgan , Cardiff 12 September 2008 INTRODUCTION Those of us in or around broadcasting love anniversaries. They are the chance for a celebration of some kind: a lunch, a dinner, a reception, a party. I remember attending a lunch at one of London ’s most fashionable restaurants to mark the 18 th birthday of Channel Four on the basis that it had now ‘come of age’. This year is the fiftieth anniversary of the first transmission by an ITV or Channel Three company in Wales and there have been occasions to mark that. But few, if any I suspect, to mark the anniversary of the start of what was meant to be a golden period in Welsh television. On 20 th May 1968 Harlech Television went on the air as the licensee - or franchise holder as they were known then - for Wales and the West of England. Earlier that year the regulator the ITA had taken away the licence from TWW and given it to a company which was chaired by Lord Harlech and included a galaxy of Welsh talent on its board including Richard Burton and Stanley Baker. Among the programme promises was that Burton and his then wife Elizabeth Taylor would make films in Wales with their own production company. On the much-hyped opening night there were a number of technical mishaps: a section of pre-recorded material went missing in a journey across the Severn Bridge and one part of the launch programme was somehow transmitted twice within a few minutes. Burton and Taylor didn’t appear at all and were rarely sighted again on Harlech. In one minor and slightly bizarre development a 20 year old from West London who appeared briefly at the start of a series about students at local universities - well it was 1968 - was chosen to present the rest of the series and then to present a new arts magazine series. The student shared presenting shifts with the famous Welsh actor Kenneth Griffith. An unusual double act. Nothing much more was heard of the student, Stewart Purvis, as a presenter. When the series finished he went back to university to do his finals but he turned up later as a regulator. If that’s what happened to me, what became of Harlech Television? Well Harlech Television with all its promise begat HTV, which begat part of United News and Media, which begat part of Granada but then the Wales service became part of Carlton which begat part of the merged Granada and Carlton entity now known as ITV plc. No wonder that Elis Owen, Managing Director and Controller of Programmes for ITV Wales says that his staff are becoming experts at take-overs. Of course in the past forty years there have been some wonderful moments on screen on Channel 3 in Wales despite the constant changing of the guard backstage. Documentaries from John Morgan and Colin Thomas, drama from Alun Owen and Ewart Alexander. And in the 80s following the arrival of S4C, both BBC Wales and HTV Wales responded creatively and there began a mini-boom of independent production companies, raising Wales ’s profile internationally. Most recently the cornerstone of PSB in this nation, BBC Wales under Menna Richards, has witnessed an extraordinary renaissance in programming with a truly world-wide reach. And always there, day after day, a solid service of news about Wales from the newsrooms of the BBC and the Channel 3 licencee. So if the structure that we call public service broadcasting has a proud if somewhat complicated history in Wales , what of its future? And what of the future of PSB in Scotland and Northern Ireland too. And if more money is needed to ensure the future of PSB in the nations, where is the money to come from? THE PSB REVIEW PROCESS I’ve now been with Ofcom for ten months and I’ve spent some of that time focusing on the future of television in the nations and regions of the UK as part of what is Ofcom’s second review of public service television. In April we published The Digital Opportunity, the first phase of the review. During the summer we held numerous events in Wales conjunction with the Institute of Welsh affairs, the IWA. We conducted a round-table discussion with key industry stakeholders and a series of public consultation meetings in Llandudno, Aberystwyth and Cardiff. The consultation document was also debated extensively by the National Assembly’s Broadcasting Committee, which was established in March, and Ofcom gave evidence at the beginning and the end of the committee’s scheduled hearings. There have been similar processes in Scotland and Northern Ireland , and as part of those I’ve appeared with colleagues before the relevant committees of the Scottish Parliament and the Northern Ireland Assembly. We have spoken to stakeholders throughout the nations and more importantly we have listened. By the time the consultation closed in June we had received over two hundred and seventy formal submissions from stakeholders across the UK. However, given the high profile of public debate in Wales , the volume of responses specifically from the television industry here was perhaps disappointing although it was good to hear from organisations as diverse as the National Eisteddfod, the Welsh Rugby Union and the Wales TUC. In the second phase of our Review, which we are due to publish later this month, we will seek to move the debate on in several key areas and we will set out new research and analysis that we have carried out, partly in response to some of the issues and arguments raised by stakeholders. There are issues for the short term: Ofcom has to decide on a number of significant matters affecting the commercial PSB channels in order to ensure that their delivery of public service broadcasting continues to be sustainable. And there are issues for the longer term: Ofcom will have to report to Government and Parliament next year on the options which exist for maintaining and strengthening PSB after digital switch-over. THE ISSUES ACROSS THE NATIONS Turning first to the short term issues across the nations of the UK , it’s no secret that ITV plc wishes to reduce many of its PSB obligations immediately. Our analysis, set out in Phase One, shows that well before digital switchover is complete, the cost for ITV of meeting its PSB obligations will exceed the value of any benefits. Let me explain what we mean by that. We are not saying that ITV plc which holds all the licences in England and Wales will go into deficit. We are comparing the costs and benefits of being a PSB broadcaster with those of not being one and instead being a fully commercial broadcaster with no PSB obligations, such as Sky One and Virgin One. Programming for the nations and regions is one of the things that makes Channel 3 so different from those fully commercial channels but it is also one of the biggest PSB costs. Now undoubtedly with these licences and these costs come many benefits such as gifted spectrum. The short-term issue is whether a fair balance between these benefits and the regulatory costs can be found for the remainder of these licences which run until 2014. The long-term issue is whether another model is needed after that. In Phase One we recognised that the costs of holding a PSB licence in relation to the ITV Wales service would theoretically exceed the benefits by next year. However, the true costs of the ITV Wales service are contained within those of ITV Plc as a whole, where we estimated that the tipping point would be around 2011. But the situation is more acute in Scotland where the Channel 3 licences are held by a separate company ‘stv Group’ and where the licences are likely to be in deficit somewhere between next year and 2010. In Northern Ireland , UTV is likely to continue to receive benefits from its PSB status a little longer. What all the licensees in the nations have in common is that they are seeking reductions in what is called ‘non-news programming’ to try to bring the costs and benefits of PSB status more closely into line. THE NEW DEVELOPMENTS While the process of considering these proposals has been underway this summer a new and very relevant issue has arisen. ITV plc announced that it was considering the option of handing back its Channel 3 licences, including the licence currently held by ITV Wales, thus releasing itself from all obligations other than the minimum standards which all broadcasters have to accept. It would mean giving up the access to both the analogue and digital transmission spectrum which it receives by right as a Channel 3 licence-holder and rely instead on alternative distribution. One of those alternatives is a company born in this city, SDN, originally S4C Digital Networks, which ITV now owns. We should all be in no doubt that licence handback could be a realistic alternative option for ITV plc but with that strategy would come enormous risk and uncertainty, possibly unquantifiable risk and uncertainty for ITV plc and specifically for the Wales (and west of England) licence which they currently hold. But if it happened it would also create risk and uncertainty for the other Channel 3 licensees stv, UTV and Channel TV. There is nothing to stop a wholly commercial ITV channel containing all of the familiar ITV1 content such as Coronation Street and Britain’s Got Talent being broadcast on a fully UK wide basis, but there would be no obligations at all on that UK wide channel to carry any content specifically for Wales, Scotland and Northern Ireland or the English regions. When ITV first publicly announced the handback option Michael Grade said on the Today programme; “The real problem of us handing back the licence …is that it would be disastrous in Scotland and disastrous in Wales ”. At the same time ITV plc made another public announcement which shows the stressful times inside the Channel Three system. It claimed that it effectively subsidises stv, UTV and Channel TV to a total of £25 million pounds a year. Those companies counter-attacked in public claiming that in fact value was moving the other way. Now is not the time or place to explore this debate which goes to the heart of the viability of the licences in Scotland , Northern Ireland and the Channel Islands. But it explains why the question of the future services to viewers in the nations is one of most complex issues we face short-term and long-term in this Review. The issues are imminent and sometimes acute. THE ISSUES IN WALES In Wales there are specific further issues to be considered. Our Communications Market Reports for Wales show a heavy reliance by the public on television, and to a lesser extent radio, in order to receive news and information about Wales. As Alun Davies, Chairman of the Assembly’s Broadcasting Committee put it in the introduction to their report: “The place of the Welsh language and the role of the broadcast media in fostering and defining a sense of national identity in a country that lacks a national press and whose geography mitigates against easy communications leads to a political salience that is wholly different from any other part of the United kingdom ”. In Wales there is currently vigorous competition between ITV Wales and BBC Wales in the provision of English language news and current affairs. In our research ninety one per cent of respondents thought it was important for ITV Wales, as well as BBC Wales, to provide nations programming. In the Welsh language, although the BBC provides the news service for S4C, there is plurality in the supply of current affairs programming which is sourced from ITV Wales as well as BBC Wales. In the short-term, we firmly believe that it is strongly in the interests of viewers in Wales to retain public service delivery from ITV plc at a realistic level rather than risk losing such delivery altogether. THE PRIORITIES We believe that providing competition to the BBC in prime time news and current affairs is the priority in the nations. This is not the personal view of an old ITN newsman who spent 31 years competing with BBC News in television, radio and online. It is based on the research which Ofcom has done. LONG TERM SOLUTIONS With all the uncertainties about Channel Three we have had to consider other long-term solutions in order to provide plurality in Wales and the other nations. It is important to emphasise that any solutions may well have to be different in each nation to meet effectively different national circumstances. In terms of media distribution, Wales ’ geography provides unique and difficult broadcasting challenges. Currently, digital terrestrial television services reach only fifty seven percent of households compared to 73 per cent in the rest of the UK. Broadband penetration in Wales is currently only forty five per cent and there are access and speed issues, particularly in rural areas. Consequently, in the short to medium term, television will still be the main way public service content is delivered to mass audiences in Wales. We cannot rely on an online only solution. THE FOUR MODELS The four possible long-term models for the future we set out in our first document were:– Model 1: Evolution of the status quo (the only one in which Channel Three is still a PSB). This got the most support in Wales but its deficiencies were also recognised by some. Model 2: we called the BBC only option and there was no support for this in Wales. Model 3: where the BBC would compete with Channel 4 with some additional competitive funding. A measure of support for this, slightly less for Model 4: where all publicly funded PSB outside the BBC would be provided through broad competitive funding. For clarity I should immediately explain that in Wales we envisaged that in all these models S4C’s services would continue. In fact we are interested to see if S4C can play a greater role in providing quality UK television for older children in English. But the IWA and Ofcom’s Advisory Committee for Wales thought S4C was not a substitute for the need for plurality in the English language in other programming. Over the summer we have examined some options within models including the idea of a Channel Three affiliate system suggested by the IWA, and that of a separate licence for Wales , remembering that the present licence includes the West of England. We have also looked at hybrids of the four models and we will report on those at the end of the month. Today let me summarise what the long-term choices appear to be from the perspective of the nations: One is to stop regulating for content in the nations and leave the decisions to what the Channel 3 licensees like to call ‘their own commercial risk”. The issue which then arises is why these licensees should be given the public subsidy of gifted spectrum if they are not required to commit to specific public purposes. The second is to provide new funding to sustain the Channel 3 licensees in providing programming for the nations. ITV plc has rejected the concept of direct public funding but has left the door open for indirect funding via some independent intermediary. And the third is to introduce systems of competitive funding where interested bodies other than Channel 3 could bid. This option could possibly accommodate, for instance, the idea from the Ofcom Advisory Committee for Wales of a funding agency specifically for Wales to fund non-BBC PSB content on television, radio and on-line. Similarly the Assembly Broadcasting Committee’s recommendation that some of what we at Ofcom call the BBC’s switchover surplus could be used to fund what it called ‘a mainstream service in Wales ’. In all the competitive tender options the process of specifying the content which would be required and the method by which it should be delivered might not be quite as complicated and bureaucratic as some people fear. Just across the Irish Sea , the Republic of Ireland operates such a system with relatively little fuss. And programming for the nations is at least relatively easily described for the purposes of a tender, unlike some other public service content. The award of a competitive tender to deliver content for Wales might not just mean the award of money, but also perhaps the award of high coverage DTT capacity on which to deliver the service and a suitably prominent position on the EPG in Wales so that viewers can find it. In the nations of the UK the bidders for competitive funding might range from producers to channels, from websites to institutions. The framework put in place by Ofcom for future access to spectrum, and the potential for broadband delivery where appropriate, offer greater prospects for local content providers than ever before so new local TV services and community media organisations may also wish to join the bidding. The Welsh Assembly Government and others believe that peak time slots on ITV1 remain the best way to provide reach and impact for Welsh news and non-news programmes. However the Broadcasting Commission set up by the Scottish Government has this week recommended establishing a new channel for Scotland , preferring this over a solution based around Channel Three. The SBC report describes ITV licence hand-back as “every likelihood…in the next few years” and says that it would “not be sensible to rely on the ITV system to deliver Scottish public service content in future”. FUNDING OPTIONS So whether the funding for quality content in the nations is to go to sustaining the old or creating the new, where is it to come from? In Phase One we identified four sources of additional funding: * regulatory assets; * support from the BBC licence fee; * industry levies; and * direct government funding. In our next consultation document we will set out our thoughts on these in more detail. In advance it is worth highlighting the debate around direct government funding especially because the Scottish Broadcasting Commission looks to the UK Government to fund its suggested channel which it estimates will cost between 50 and 75 million pounds a year. It may well be that the SBC was influenced by events here in Wales where there is already have a successful example of direct funding of public service content, in the shape of S4C’s funding from the DCMS, where arms’ length oversight has ensured that independence has been retained. And it is to the UK Parliament and Government that we will look for final decisions on all this. Ofcom is of course only able to regulate within the existing legislation. This also applies to some of the more wide reaching constitutional questions regarding accountability and regulatory structure raised by both the Assembly Broadcasting Committee and the SBC. But for now, we welcome a continuation of the vigorous, well informed and lively debate about these issues that we have already seen here in Wales during Phase One. Thank you for input so far and we look forward to receiving your further views during the Phase Two consultation that begins at the end of this month. ------------------------------------------------- MeCCSA Policy mailing list W: http://www.jiscmail.ac.uk/lists/meccsa-policy.html Please visit this page to browse list's archives, or to join or leave the list.