A FUTURE FOR PUBLIC SERVICE TELEVISION CONTENT AND PLATFORMS IN A DIGITAL WORLD

CONTENT AND PLATFORMS IN A DIGITAL WORLD
channels, developing new kinds of advertising
revenues such as sponsorship, and selling
advertising on its on-demand service, the
ITV Hub. It has also reduced its reliance
on advertising, by building its production
capacity, developing a distribution business,
and even venturing into pay TV with the
Sky-only channel ITV Encore. Revenues
from sources other than net advertising – i.e.
traditional spot advertising – accounted for
49% of total revenue last year, up from 40% in
2009. 226
In its efforts to become a more efficient
organisation, it has also reduced costs,
shifting its spending away from comedy and
drama, despite high-profile recent successes
such as Downton Abbey, towards the cheaper
genre of factual. It reduced its hours of
drama output by 65% between 2008 and
2014. 227 It has effectively abandoned arts
programming – The South Bank Show being
a notable casualty – and heavily reduced its
commitment to children’s television following
the ban on junk food advertising. ITV’s ability
to make these choices has been facilitated by
legislation and regulation.
The decline of ITV as a public
service broadcaster
Until relatively recently, ITV’s great asset was
its access to the scarce analogue spectrum
on which the third channel was broadcast.
In return, the ITV franchise holders were
required to make payments to the Treasury
– first through levies on their profits, and
then, from 1993, through licence fees – and to
shoulder the cost of providing public service
television. Not so long ago, these licence fees
were substantial: in 2004, ITV was still paying
the Treasury £215 million for its licences.
Ofcom changed the formula for calculating
these fees in 2005, leading to a substantial
reduction to less than £80 million that year,
and altered it again in 2010 to reflect the
declining value of analogue spectrum during
the switchover process. 228 Following a final
adjustment in time for the new 2015 licence,
ITV now pays just £140,000 in licence fees –
a nominal £10,000 for each of its licences. 229
Ofcom determined that no hypothetical rival
would be prepared to pay for ITV’s licences
and take on the cost of its remaining public
service obligations in return for the remaining
benefits associated with the licences. 230
Over the same period, the amount of
specifically mandated public service
television content required of ITV has
declined significantly. The 1990 Broadcasting
Act retained a genre-based system of
regulation, with detailed quotas for the ITV
franchise holders to fulfil. In the licences
that took effect in 1993, the then regulator,
the Independent Television Commission,
stipulated weekly averages covering nine
specified genres in both national (‘nonregional’)
and regional programming:
drama, entertainment, sport, news, factual,
education, religion, arts, and children’s. The
exact figures varied considerably between
226
Ibid., p. 33.
227
Ofcom, Public Service Broadcasting in the Internet Age: Ofcom’s Third Review of Public Service Broadcasting, 2015, p. 12.
228
The figures of £215m and £80m are reported in Stephen Brook, ‘Ofcom slashes ITV licence fee’, the Guardian, June 29, 2005.
For full details of the pre-2005, 2005-09 and 2010-14 terms, see the Ofcom document Determination of financial terms for the Channel 3 and
Channel 5 licences, February 11, 2014, Table 2. The fees were made up of a fixed cash sum plus a set proportion of ‘qualifying revenues’ for
each licence. The qualifying revenues applied only to advertising and sponsorship revenues attributable to analogue households, the number
of which decreased to zero by 2012.
229
Determination of financial terms for the Channel 3 and Channel 5 licences, Ofcom, February 11, 2014, Table 3.
230
Ibid., under the sub-heading ‘Determination of financial terms for the renewed licence period’.
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