Last month, ITV called on pay TV platforms like Sky and Virgin Media to start paying fees to the UK’s Public Service Broadcasters (PSBs) for the right to carry their main channels. 

At the moment, we don’t pay a fee for ITV’s main channel or the other PSBs. This is because we’re required by law to make it available in a prominent position on our Electronic Programme Guide (EPG) and we don’t charge customers for access to the channel, which they can continue to watch through their Sky box even if they cancel their subscription. ITV is supposed to be available free to everyone as part of its status as a public service channel, which brings valuable benefits as well as some obligations.

In support of its argument, ITV published a report by NERA Economic Consulting (commissioned by ITV) which highlighted the impact of the Retransmission Consent Compensation regime in the US, under which the main free-to-air broadcasters receive fees from cable and satellite operators. 

We have long argued that there are fundamental differences between the US and the UK markets.  The US broadcasters, in our view, are not comparable to the likes of ITV because they are fully commercial businesses and there is no PSB system with the privileges this brings.

So it is interesting to see that a new report from Enders Analysis, the independent research firm, also takes issue with the comparison with the US.

“In our view, the application of the US experience to the UK is most problematic,” says the author, Toby Syfret, adding that our market is “far more highly regulated in the interests of public service broadcasting”.

The report goes on to say:

“After the BBC come the commercial PSBs, where the concept of a universal public service to which all UK households have access also applies and is enshrined in regulations that protect the BBC and the three commercial PSBs.  They most notably include:

• Must carry obligations on all distribution platforms

• EPG prominence for all the BBC channels and the main commercial PSB channels, ITV, Channel 4 and Channel 5

• Special concessions with DTT muxes that give the main PSBs and most of their family channels 99% coverage of UK TV households, compared with 92% as the maximum for any of the non-PSB channels.”

And here is another key quote:

“It is easy to see why the ITV chose the US in looking for another national market that might bolster its case. However, as we have emphasised throughout, the US is a totally different market with a different history and different legislative mechanisms from those we are used to in the UK.”

The report also picks up on remarks by the Secretary of State, Sajid Javid, at this year’s RTS conference, where he said that any review of fees was “linked with other rules” such as EPG prominence. Here is what Enders has to say:

“…we think a full review would also need to take into account other PSB privileges in addition to those that affect them on the pay-TV platforms. This, we believe, is not a pathway the commercial PSBs would really like the DCMS to go down. Although the suggestion has been made that they could earn up to £200 million in extra revenues, this has to be set against the effect of any changes to their PSB privileges, where it is by no means certain that the net benefits will be positive over time.”

And this is the way the report sums it all up:

“In conclusion, we think the case for retransmission fees in the UK is weak.”