Deregulation Bill

Lord Macdonald of Tradeston Excerpts

Monday 7th July 2014 Lords Chamber

[Lord Macdonald of Tradeston (Lab)]

My Lords, I hope to persuade the Government to consider an amendment to the Deregulation Bill. I declare an interest having formerly worked in independent television for 30 years. Like my noble friend Lord Dubs and the noble Lord, Lord Grade, who spoke earlier, my concern is that the content of our public service broadcasters—BBC, ITV, Channel 4 and Channel Five—is increasingly being retransmitted without payment by cable and online streaming companies. These companies package public service broadcasting content on their platforms and can then place their own unregulated adverts around it. With personal video recorders now encouraging the time-shifting of programmes, and capable of storing hundreds of hours of high-quality drama, popular entertainment and, of course, sporting events, these personal video recorders are major revenue drivers for pay-TV platforms.

The issue of retransmission is rising up the policy agenda worldwide. In the United States, the steady decline of television advertising revenue is being offset by the income that broadcasters get from retransmission revenue: $2.36 billion in 2012. That may explain why US TV is increasingly producing so many successful drama series, while our advertising-funded PSB channels struggle to maintain their output of quality popular programming, with their share of advertising revenue in decline.

We can debate whether we still have the best TV in the world, but what is indisputable is that sales of programmes and formats provide very valuable income for the UK’s creative sector. ITV’s “Downton Abbey”, for instance, sells in 250 territories with an estimated 100 million viewers in China alone. Reformatted, “Strictly Come Dancing” can be seen in 50 countries, and “Who Wants to Be a Millionaire?” in more than 100. However, in these times of disruptive technologies and increasing commercial competition across the media, our public service broadcasters should not be subsidising international media conglomerates such as Liberty Global, which now owns Virgin Media.

Our PSBs do not get paid by those who retransmit their output because of the now redundant Section 73 of the Copyright, Designs and Patents Act 1988. As the noble Lord, Lord Grade, said, this legislation was originally intended to encourage the rollout of cable in the United Kingdom—but the world has moved on in the past 26 years. We now have a highly competitive pay-TV market in satellite, cable and, increasingly, online. Section 73, designed to boost cable coverage by allowing retransmission of UK public service channels at no cost, has now become the unintended loophole for commercial online platforms to stream PSB programming without permission or payment. These companies do not reinvest their online profits in the UK creative content that makes their services so attractive. Indeed, they divert money from the UK production sector because of Section 73, which could be repealed by an amendment to this Bill.

The personal video recorders—the so-called PVRs—used by customers on cable or online platforms can store, as I said, hundreds of hours of PSB-produced drama or entertainment. For instance, ITV’s “Downton Abbey” is time-shifted by almost half of cabled homes, using their TiVo PVRs, but most viewers then fast forward through the recorded advertising breaks, which means that ITV gets paid less by its advertisers. Given the importance the Government attach to our creative industries, they should surely be more purposive towards the timely removal of Section 73 in this fast-changing digital world.

They may be inhibited by ongoing litigation between PSBs and one of the many online streaming services, which has been going on for some four years already, as my noble friend Lord Dubs said, but that kind of litigation need not be an excuse for inaction. My advice is that the Interpretation Act 1978 speaks to this very issue. It provides that where an Act repeals an enactment, the repeal does not affect any investigation, legal proceedings or remedy. The irony is that the copyright Act of 1988, which includes Section 73, itself came into force despite related ongoing legislation at that time.

The Government promised, more than a year ago, that they would consult on Section 73 in the current review of the Communications Act. That has not happened. However, do they not agree that the Communications Act 2003 superseded Section 73 by making a “must offer” provision that ensured PSBs must offer their content to platforms,

“subject to the agreement of terms”?

That is the crucial difference, since it means that PSBs can enter into commercial negotiations with each platform, as they do with BSkyB; in contrast, Section 73 prevents this from happening by allowing the retransmission of PSB content without any payment in recognition of the value that it represents.

The Bill is designed to remove burdensome regulation. Section 73 clearly meets that criterion. Supporting its removal by subsequent amendment to the Bill will help to ensure that our public service broadcasters can continue to produce and commission quality programming made here in the UK.