Summary:

The growing volume of online content can’t yet substitute falling investment in commercial broadcasters, because over a third of UK consumer…

The growing volume of online content can’t yet substitute falling investment in commercial broadcasters, because over a third of UK consumers still don’t have internet access, says Ofcom’s final public service broadcasting review – a report likely to see online innovation come from existing organisations rather than new entrants.

Despite earlier toying with creating a “public service publisher” for the internet, the regulator now makes almost no internet recommendations because, it says, older folk would be excluded by online-specific initiatives. Younger users’ only worry is replicating online the “serendipity” by which TV presents unexpected content – but then, the internet isn’t a lean-back-and-entertain me medium.

Broadband take-up has “levelled off” at 60 percent of homes, Ofcom said: “It may be that alternative distribution for local content such as broadband internet will be more effective (than TV), although this still depends on further progress towards more widespread availability and in particular take-up.” So the regulator regards online as an adjunct to its wider, key recommendations…

BBC retaining license fee: Auntie will remain the prime PSB; the fee won’t be “top-sliced” to fund other channels so that it “has the room to innovate fully and develop in a fully digital world”. Ofcom said the BBC can help to pioneer new platforms “imaginatively” as it had with iPlayer.

“Second institution” based on C4: No more public funds for C4. Instead, a “new remit” to make the broadcaster a “robust alternative” to the BBC, “preferably based on partnerships, joint ventures or mergers”. A warning: “Our objective is not on sustaining Channel 4 as an end in itself.” Ofcom encourages C4 and BBC Worldwide to explore “deeper and more integrated partnerships”, or one with Five.

ITV (LSE: ITV), Five escape public commitments: ITV is allowed to be an “essentially commercial network” with “modest” obligations on UK-produced TV, UK and international news. Coupled with last week’s announcement Ofcom may relax rules on how much ITV can charge for advertising, and ITV’s future is a bit brighter. Reduced commitment to news in the nations and regions…

“Alternative” model for news in nations and regions: After the possible eventual disappearance of regional ITV news, Ofcom wants to see the creation of “independently funded consortia to provide an alternative source of news to the BBC”. Any potential news provider, including current ITV regions, can bid for part of a total £30 million to £50 million per year, but it could mean a series of joint-venture news operations across the UK. Bulletins would be offered through ITV, C4 or some other digital platform. “In all such cases we would envisage provision being not only broadcast but across various digital media to enhance both content and distribution.” Spectrum freed up in digital dividend auctions may even play a part.

Devolved govts can fund broadcasters: S4C will continue to get DCMS funding. Recent proposals for channels in Scotland and Norther Ireland may go ahead but, if they don’t work, Ofcom is freeing the devolved governments to fund initiatives that guarantee representative national programming.

Govt should fund kids TV: “Provision beyond the BBC is already under severe pressure” despite the existence of numerous childrens channels. Funding could be bid for by a “second public institution”.

Full review | Summary statement | Statement on short-term position

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