Market Insight

ITV joins calls for UK transmission fee reform

September 08, 2014

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ITV, the UK’s largest commercial free-to-air broadcaster, is calling for UK regulators to introduce mandatory retransmission fees for pay TV providers carrying public service channels - BBC1, BBC2, ITV, Channel 4 and Channel 5. In a statement released today, the broadcaster issued a demand for a 'fair deal on retransmission fees', pointing to US 'retransmission consent' as a possible model. The broadcaster also stressed investment in UK programming as its reason for seeking more revenues in the reform.

ITV’s stand comes in the wake of similar statements by David Abraham, chief executive of the UK’s publicly-owned Channel Four at the Edinburgh TV Festival two weeks ago. Abraham called for a 'fair deal on platform relations'. Currently, ITV only receives payment for the HD versions of its channels ITV2, 3 and 4 - its main channels do not receive compensation from operators like Sky and Virgin.

Both announcements are timed to have maximum influence on the PSB review by regulator Ofcom, due to begin soon, with publication of its final statement in a year’s time. 

Our analysis

At the beginning of Ofcom’s Public Service Broadcasting review, ITV’s move marks the re-opening of a vexed debate. The question of payment for the carriage of free channels has been hotly debated in for many years and in multiple different territories. In Germany, where free TV channels pay cable operators for carriage, negotiations regularly lead to channel feeds being blocked by cable providers. Kabel Deutschland and the public broadcasters are in the process of multiple legal cases over the same issue.  In 2011, the UK’s BBC made a similar appeal to ITV, similarly supported by commissioned research, titled ‘The Case for Change’. In the US, carriage fee arguments have simmered over a number of years, leading to blackouts as Big Four channel feeds are dropped. The latest example is the dispute between Raycom and DirectTV.

It is notable that ITV’s newest line of attack downplays a for-more-than-profit, public interest argument for the support of PSBs, and instead advocates reform similar to the one which benefited the profit-making US broadcasters. ITV is a broadcaster with a more American model of operations, being publicly traded, for-profit, and with a small portion owned by US cable giant Liberty Global. What’s more, the broadcaster has built its sizeable Studios production arm into a major US programme supplier with the acquisition of Leftfield Entertainment.

Despite this, ITV, though its argument is forcefully made and its research jointly supported by  Australian and German free TV lobby groups, is covering old ground. Considerably more leverage will be needed to create a favourable outcome for the PSBs, and it is not yet clear from which quarter that could come.

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