Lon­don Busi­ness School: David Cur­rie, out­go­ing Ofcom (UK broadcast/digital reg­u­lator) chairman.

Ofcom pub­lish­ing 20 page sum­mary of con­tri­bu­tions on phase 1 review of PSB. Wide range of mutu­ally exclus­ive positions.

Wide recog­ni­tion of role mar­ket now plays. Impor­ted digital con­tent too. Pub­lic pur­pose can be met by imports in his­tory, sci­ence, drama etc. UK ori­gin­a­tion not an end in itself, but a means to an end — deliv­ery of pub­lic purposes.

Mar­ket pro­vi­sion may be such that mar­ket fail­ure argu­ments have been super­seded by ‘cit­izen­ship’ arguments.

1) In con­tent pro­vi­sion evid­ence is that mar­ket has reached a plat­eau. Not because of crowding out by PSBs. Chan­nel and audi­ence frag­ment­a­tion mil­it­ates against the mar­ket provision.

2) Role of a strong BBC is corner­stone of PSB. Uni­ver­sal agree­ment. You don’t strengthen PSB by weak­en­ing BBC. PVT suc­cess­ful and mar­ket impact suc­cess­ful. But use of BBC assets would not fill gap for com­mer­cial PSBs.

3) More con­tent reaches PSB stand­ards — issue is dis­cov­er­ab­il­ity. Idea of BBC and C4N as part­ners for other pro­viders of PSB con­tent is an inter­est­ing suggestion.

a) Plur­al­ity. To con­fuse diversity and plur­al­ity is like con­fus­ing share and reach. Plur­al­ity is valu­able in itself. Ques­tion is how far the mar­ket can deliver PSB plur­al­ity without inter­ven­tion. Audi­ences less con­cerned about reli­gious TV plur­al­ity. C4 has been more suc­cess­ful than BBC in reach­ing eth­nic groups and young.

Pub­lic inter­ven­tion prob­lem­atic, use exist­ing pub­lic pro­viders e.g. BBC. Few takers for BBC only PSB model. Evol­u­tion can be extinc­tion without sustainability.

Clear-sighted debate about where plur­al­ity neces­sary and how best it can be delivered.

Uni­ver­sal­ity. Sky argu­ments have a point under old mar­ket fail­ure jus­ti­fic­a­tion. Not under new cit­izen­ship argu­ments. Secur­ing reach and impact import­ant for future PSB delivery.

Innov­at­ive one-off dra­mas have become increas­ingly rare. Michael Grade says lift all reg­u­la­tion so we can give the pub­lic good pro­grammes. Value of PSB drops rap­idly, for ITV will drop well before 2014. ITV rela­tion­ship with nations will change. Polit­ical wish­ful think­ing won’t change this.

People say we are let­ting ITV off. Cur­rent down­turn only accen­tu­at­ing pressures.

C4 can do more thru self-help but likely to run into trouble soon. C4 shouldn’t settle for man­aged decline in its pub­lic pur­poses. BBC do have a point that insti­tu­tional model can deliver bet­ter than com­mer­cial model.

We may need mixed approach — long term approach may be too inflexible.

One fund­ing option is digital switchover sur­plus. £800m not within BBC baseline. Govt and Par­lia­ment can reduce 2013 switchover cash and:

• give it back (e.g. lower licence fee)
• give it to BBC
• give it to other PSB content.

Using switchover sur­plus for any­thing other than BBC is based on thin sur­vey evid­ence. Not every­one under­stands what the BBC licence fee actu­ally funds.

Ofcom wants wider debate than this.

Con­clude: revolu­tion in AV con­tent deliv­ery. Broad­band, Mobile etc.

Paddy Bar­wise:

Title: Brit­ish Broad­cast­ing: What Will Our Chil­dren Inherit?

Ofcom report ter­rific. Argu­ably noth­ing that Bri­tain did bet­ter in 20C than broad­cast­ing. If we get this wrong, we won’t be able to recon­struct it. (me: Eng­lish Her­it­age approach to media.)

PSB sys­tem needs adapt­a­tion, as TV advert­ising is mature mar­ket, primar­ily push/brand-building advert­ising but it is not fall­ing off a cliff (print clas­si­fied “pull” advert­ising is fall­ing off a cliff, hit­ting local news­pa­pers). Pretty close to sat­ur­a­tion on multi-channel, so decline of main chan­nels prob­ably slowing.

Agree with Sky that much multi-channel meets PSB, but little is UK produced.

Ofcom mod­els:

1) Evol­u­tion (BBC/C4 plus some ITV/Five PSB)
2) BBC/C4 plus lim­ited com­pet­it­ive fund­ing
3) Broad com­pet­it­ive funding

If you don’t believe in insti­tu­tions (eco­nom­ists think they mat­ter more, e.g. col­lapse of Soviet Union) and beleive in digital future you will favour 3 — Bar­wise favours 1. Tel­cos favour 3, con­sumer beha­viour types more evol­u­tion oriented.

Don’t give up on PSBs.

Evol­u­tion­ary solution:

1) Strong, well-funded BBC.
2) Enough fund­ing for C4 to com­pete against BBC (indir­ect not “top-slicing”)
3) Do a deal with ITV and Five to con­tinue UK PSB pro­duc­tion
4) Sup­ple­ment with com­pet­it­ive fund­ing (not thru Arts Coun­cil approach — cre­at­ive con­tent hard to manage)

How to fund it?

More gen­er­ous licence fee set­tle­ment needed (!)
Des­pite anti-BBC pro­pa­ganda, licence fee com­plaints are non-barking dog
Import­ance of BBC in people’s live is massive, cost is trivial
Use reg­u­lat­ory assets, includ­ing spectrum

Real prob­lem is ideological/political

1) Wide­spread mar­ket fun­da­ment­al­ism — pure mar­ket worse for con­sumers as well as cit­izens because cost per hour of BBC is so low.
2) BBC Trust PWC report says more suc­cess­ful the BBC the more com­pet­it­ors object — and suc­cess breeds com­plaints (e.g. Jonathan Ross salary).
3) Main com­pet­itor owns Sun and has access to PM.
4) Politi­cians don’t watch TV.
5) Hype and con­fu­sion about the internet.

Solu­tion?

1) Make the pure-market coun­ter­fac­tual expli­cit. What does get­ting rid of the BBC mean?
2) Pub­lic value vs. mar­ket impact.
3) Don’t get para­noid about Mur­doch.
4) Get PSB on polit­ical radar.
5) More audi­ence research.

How much inter­ven­tion is neces­sary? Coun­ter­fac­tual is US sys­tem. Only com­pet­it­ors would be bet­ter off without BBC.

Me: Where is cit­izen­ship argu­ment artic­u­lated?
DC: Doesn’t really answer question.

David Wheel­don (BSkyB): How do you quantify how much money you spend sup­port­ing ‘cit­izen­ship’ — it’s bol­locks btw!
DC: Par­lia­ment debated it in Com­mu­nic­a­tions Act…for oth­ers to quantify.
PB: This prob­lem is not unique to broad­cast­ing — pub­lic ser­vice pro­vi­sion always dif­fi­cult — defence, nurses etc. Research­able but not quantifiable.

Inst of TV, Scot­tish (sorry — missed name): State spec­trum should go back to nations and regions not com­mer­cial oper­at­ors. Missed oppor­tun­ity of PSB.
DC: Local ser­vices are cru­cial. We do con­sider them. Very dif­fer­ent ways to deliver them. Take nations very ser­i­ously, and deliv­ery of cit­izen­ship issues there.
PB: Local issue on agenda in Con­ser­vat­ive Party document.

Robin (Human Cap­ital): Re: reg­u­lat­ory assets, will you look at auc­tion­ing spec­trum?
DC: Look­ing closely at it, but won’t be suf­fi­cient. Fear that auc­tion won’t deliver enough to sus­tain regional news etc., besides rev­en­ues go dir­ect to Treas­ury.
PB: What rev­enue could you get from an auc­tion? Tel­cos would win any auc­tion.
DC: Over­sim­pli­fic­a­tion. We are put­ting spec­trum into mar­ket­place.
PB: You haven’t sold it all. Should you reserve more? Do you use some of the rev­enue to sup­port PSB?

Helen Arnot (STV): What’s your counter argu­ment to evol­u­tion lead­ing to extinc­tion?
PB: TV not going away. Diger­ati futur­ists wrong. TV still import­ant in real world. Multi-channel (90% pen­et­ra­tion) and PVR (20% pen­et­ra­tion) are only real tech­no­lo­gical changes.
DC: PB mis­un­der­stood ques­tion. STV depends on net­work arrange­ments. There is a con­cern about that net­work delivery.

Nick Toon (C4): Explain ‘bottom-slicing.‘
PB: C4 could get money towards trans­mis­sion, or a share of BBC World­wide. Lots of indir­ect meth­ods poten­tially avail­able.
BBC per­son: Money goes to sup­port content.

Ivor Gaber (VLV): What about radio? Knock-on effects of re-organizing TV?
DC: We are also doing work on future of radio and DAB plat­form. Pres­sures on com­mer­cial radio con­sid­er­able.
IG: We must con­sider radio.
DC: If money was top-sliced you could see that impact­ing on BBC Radio as well as TV.
IG: Role of radio in cit­izen­ship cru­cial.
DC: Agree.

Mat­thew Ward: State aid and EU con­straints?
DC: Not an expert, but do need to take account of them. My under­stand­ing is not a huge con­straint, e.g. Italy.

Jocelyn Hay (VLV): Rein­force import­ance of BBC Radio, pat­ron­age and quan­ti­fy­ing costs towards sup­port­ing cit­izen­ship.
PB: PWC is look­ing at that.
DC: Not easy.

Greg Childs (SaveKid­sTV): Politi­cians prob won’t engage with PSB debate. Kids sec­tor already ‘in PSB fail­ure.’ Time run­ning out.
DC: Pub­lish­ing our response in Septem­ber. May be some reg­u­lat­ory action we can take to help com­mer­cial PSBs.

Howard Lit­ton (Nick­elodeon): What invest­ment are we talk­ing about?
PB: Kids TV very cheap. Ofcom did well stand­ing up to ad ban. Make the call case by case.
DC: Altho ad restric­tions play a part, but decline longer term. Eco­nom­ics not great.

Geraint Tal­fan Dav­ies (Inst. Welsh Affairs): Pub­lic value lost from nations and regions so case for pri­or­it­ising it. Are you sug­gest­ing two-tier sys­tem? Where do regions fit in?
PB: Place high value on news. We still have Teach­ers TV, S4C, Gaelic TV, World Ser­vice. I didn’t invent hier­archy, it’s a real­ity. Very dif­fi­cult to pro­duce good TV for small bases, e.g. Aus­tria, Den­mark. So what are cit­izen­ship reas­ons.
DC: Cru­cial cit­izen­ship issues in nations, but ITV regions don’t make any sense.

Final point: Hybrid solu­tion most likely. Ofcom won’t come up with one model. Decision for govt. We need to artic­u­late pos­sib­il­it­ies for politi­cians to make well-informed decision.