Deregulation Bill

Debate between Lord Gordon of Strathblane and Lord Storey

Thursday 5th February 2015 Lords Chamber

[Lord Gordon of Strathblane (Lab)]

My Lords, I, too, support the amendment. I echo the comments of the noble Baroness, Lady Howe, that platform owners and content providers actually depend on each other. The content provider needs the platform owner to disseminate the product. Equally, the platform owner needs content to make his platform in any way relevant. It is worth recalling that many years ago the old British Broadcasting Company, as it was first known, was formed by radio manufacturers who realised that nobody was ever going to use this new device called a radio unless there was some content to listen to. So they set up the British Broadcasting Company, which Lord Reith transformed into the BBC as we know it today. There is a mutual dependency.

I suppose the object of any legislation on this subject will be to try to mimic as far as possible what a free market would deliver. If I am the content provider and the noble Lord, Lord Clement-Jones, is the platform owner, clearly I need to pay him something for carrying my product; equally, he needs to pay me something for having that product, and we will strike a deal. That deal is going to be modified. First of all, the role of Parliament here is to set the rules by which both sides are going to operate. If we say, for example, that I as a content provider must offer it to him, it weakens my bargaining position. Equally, if we say to him that he must carry it, it weakens his bargaining position.

The public service broadcasters may have to face up to the fact that the price they will get for the product will be somewhat lower than what a free market might deliver simply because the platform owner will be obliged to take it—unless, of course, the Government are contemplating making it no longer obligatory for platform owners to carry public service content. If that rule were taken away, public service content would stand or fall on its own merits and attract a much higher price—or no price at all if somebody decided to run a channel without the BBC, which I think would be rather risky if we look at the viewing figures.

We have a role first of all in deciding what the overall environment is going to be. There is going to be a degree of regulation because even the most free market-orientated of us recognise that there is a public interest here in making sure that public service content is universally available, which in some areas will mean using platforms that otherwise are of very little relevance. Equally, if the platform owner is going to be required to take that content, it will reduce the price it pays for it but there still will be a price. At the moment the transfer of resources from public service broadcasting to platform owners is wholly inappropriate and I hope the Government will address it urgently.

[Lord Storey (LD)]

My Lords, I, too, support the amendment. With the UK now the second largest exporter of television programmes, the commercial PSBs’ investment in content is part of the engine of the UK TV content market, driving the independent production sector and playing a critical role in supporting the rich talent pool, both on- and off-screen, across the UK, including the north-west, where I live.

UK programmes are not only hugely popular with UK viewers but have global appeal. These programmes demonstrate that the commercial PSBs are not only producing high-quality entertainment for viewers in the UK, free at the point of use, but producing a highly valued product that can be exported around the world and contribute to the growth of the creative industries, including in the regions, such as mine of the north-west. To be able to continue making these programmes, the commercial PSBs need to make a return on successful content investment, which my noble friends have clearly demonstrated that Section 73 is undermining.

Many noble Lords have referenced the Ofcom figures that show that between 2004 and 2012 there was a significant real-terms decline in PSB investment in original new programmes of around £800 million, and that between 2007 and 2012 there was a 29% real-terms decline in PSB spend on original new drama programmes. We should be very concerned about these numbers. The drama figure in particular links directly to the impact of personal video recorders and ad-skipping.

As has been pointed out, the UK broadcast market is evolving very rapidly as technology changes and convergence continues, altering the economics of the industry fundamentally. Therefore, retaining legislation such as Section 73, which was designed for the challenges of an analogue era, makes little sense in today’s highly competitive global media market.

Section 73 does not support the growth of the UK’s international television sector. It is putting our commercial PSBs’ ability to compete in a global market at risk. Contrast this with the UK’s main competitor internationally, the USA, which has a system that provides a “retransmission consent scheme”, which means that free-to-air broadcasters in North America are paid for delivering content to competing platforms. These payments, which amounted to $3.3 billion in 2013—nearly 15% of total broadcast television revenue—have been crucial to the continued viability of television broadcasters, contributing significantly to the new “golden age of television” in the US. They also accounted for less than 3% of cable operators’ revenues and have had little or no impact on pay-TV prices.

These fees have helped to sustain programmes that could not otherwise be made, such as regional news. They have also helped free-to-air broadcasters secure rights to sporting events that would otherwise be shown on pay-TV channels and have helped, or are helping, with technological changes such as the move to HD television.

No two television markets are exactly the same, but it is instructive that our key rival in international TV markets is taking such a different approach to maximising investment in original TV content. It cannot be right that we hold on to a system that increasingly does the opposite, particularly given that it has long since achieved its policy objective.

Like many of my noble friends, I have been waiting to see what the Government propose to examine with their intended consultation and, like them, I have been waiting some time to see when the proposed review will be published. I am also eager to know whether the recommendations that result from this consultation have any chance of being implemented. How will the Government ensure that this does not become just another issue kicked into the long grass as part of a consultation doomed never to see the light of day again, with commercial PSBs’ investment being put at risk all the while?

Section 73 has been discussed in detail as the Bill has progressed through Parliament, and I welcome this sensible amendment that would ensure that the Secretary of State has the power to repeal the whole of Section 73 without primary legislation. It seems a sensible solution that would not pre-empt the findings of the review yet would still mean that action could be taken at the earliest possible opportunity.