An Introduc3on to PSB
survive and prosper in the medium to long term. Its recently departed Chief Executive pinned his hopes on a Government sponsored bail out – either from gaining a slice of the licence fee or merging with some of the BBC’s profitable commercial operations, but neither has yet been forthcoming, leaving its new Chairman – Lord Burns – and its new Chief Executive with the task of finding a viable alternative future. Five – the much heralded third commercial network in the UK whose launch was recommended by the Peacock Committee in 1985 but which took a further 10 years to licence and launch, has only been profitable in three of its thirteen years of trading and has been hit very hard by the recent downturn as it lacks the “must have” status of Channel 4 and ITV in advertisers’ budgets. It is generally recognised that Five’s only sustainable long term future is a merger with either Channel 4 or ITV but in the mean time it too is cutting its programming budget and its overheads and biding its time. While much of the malaise among the commercial PSB networks has been driven by changes in market structure and competition, they have not been helped by a regulatory regime which often works against them. The Competition Commission has made a series of decisions which have restricted their ability to charge more for their advertising or to co-operate in the launch of new on demand TV platforms. In addition, as discussed in more detail later in this report, UK commercial networks are not entitled to retransmission fees from cable networks or digital satellite platforms for the relay of their main channels (such arrangements do apply in the US and much of Europe). Indeed, the commercial networks actually pay the Sky platform for carriage of their main channels in the UK. The allocation of digital terrestrial frequency has also favoured the BBC. While the BBC has been gifted the capacity to transmit BBC 1 and BBC 2 in standard and high definition and its six extra digital channels in standard definition, the commercial networks have only been gifted enough capacity to retransmit their main networks in standard and high definition and 3 to 4 extra channels between them. This has left them having to bid high to keep extra digital terrestrial capacity out of the hands of their rivals. All this pressure on the main commercial PSB networks has led to a 17% reduction in their spending on originated UK programming from 2006 to 2009 (a 25% reduction in real terms). While there has been some programming investment by the new spin-off channels, it has been not sufficient to bridge this gap. In practical terms, this has meant more entertainment programming and global format reality and lifestyle programming and less originated drama, comedy and documentaries across commercial network TV. To make matters worse, while the BBC’s revenue has been increasing a smaller proportion of its income is ending up with new programming on TV and radio. Instead, the BBC has been spending more of its licence fee on new digital platforms (such as the i-Player, Project Canvas, Freesat etc), the promotion of the switch to digital and its move of several production departments to Salford. Beyond the decline in new programming investment, there is perhaps an even deeper malaise across the PSB ecology in the UK. Two notions that underpinned the UK system are now being questioned. First, whether PSB provision can be
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