U.K. Regulator: Retrans Fees Would Require "Complicated and Lengthy" Intervention
But Ofcom says such fees, which have boosted the revenue of broadcasters in the U.S., "could bring additional funding" for British public service broadcasters and will continue to explore their introduction that ITV has supported.
U.K. media regulator Ofcom on Thursday published its latest review of public service broadcasting in Britain, which included comments on a possible introduction of retransmission consent fees like in the U.S.
"Some public service broadcasters (PSBs) want subscription TV services to pay to carry their channels - so-called 'retransmission fees'," Ofcom said. "These fees could bring additional funding for PSBs, but resolving any possible disagreements would probably require complicated and lengthy regulatory intervention. There is currently no guarantee that all fees would be spent on public service programs."
It added: "The government has consulted on the question of retransmission fees." It said a decision would come at a later time.
U.K. TV giant ITV has pushed for retrans fees, but pay TV powerhouse Sky and others have raised concerns, saying public service broadcasters already have special status in Britain.
The comments in its report "may be taken as saying Ofcom is against retransmission, but, having spoken to them, that is not the case and more a case of presenting the issues," Liberum Capital analyst Ian Whittaker said. " it is worth noting that the government will take the final decision and there are suggestions it may be moving towards allowing such fees for the five main channels."
Ofcom's Thursday report also discussed the challenges for PSBs in the digital age. "Public service broadcasting continues to deliver TV that is enjoyed and valued by millions of viewers across the U.K.," said Ofcom CEO Sharon White. "More people are watching online or on demand, and this presents challenges as well as opportunities for public service broadcasters. They must continue to find new ways of connecting with audiences, and the PSB system needs to evolve to ensure it remains effective in the digital age."
Watching online, on-demand and across various devices are increasingly important to U.K. viewers, especially to younger people, the Ofcom report highlighted. "Among 16-24 year olds, only 50 percent of viewing is through live TV as new online services, such as Netflix, Amazon Instant Video, BBC iPlayer and All4 give people greater choice of what, and when, to watch," it said.
"Public service broadcasters are well placed to take advantage of increased connectivity to engage with audiences in innovative ways," the report added. "But challenges are emerging, and PSB needs to respond to changes in technology and viewer behavior. Since 2008, investment in new U.K. content, including sports content, from the PSBs has fallen by around £440 million ($685 million) in real terms, a decline of 15 percent between 2008 and 2014."
Ofcom concluded: "Broadcasters have met this challenge through a mixture of savings and changes to the types of programs they make. As a result, the volume of new content remains high...Audience satisfaction has increased since 2008, up from 69 percent to 79 percent in 2014. But Ofcom believes that broadcasters need to adapt their models to maximize commercial revenues and efficiencies, and the PSB system needs to evolve as the trend towards online viewing grows. Otherwise, PSBs are likely to face difficult choices about which content and services they are able to fund."