Enders questions case for UK retransmission fees
Joseph O'Halloran
| 19 October 2014
While not anywhere near as controversial nor indeed as financially significant as the case in the US, the subject of retransmission fees is being discussed in the UK but their case is weak a leading and respected analyst has said.

Recently the CEO of ITV Adam Crozier called for the replication of the US retransmission model in its home market, urging regulators to compel major pay-TV platforms to pay UK public service broadcasters fairly for the transmission of their channels. Crozier argued that introducing retransmission fees would have clear benefits to the UK creative industries and the wider economy - as well as to viewers right across the UK - by enabling PSBs to continue to invest in the original programming people love to watch. "The majority of viewing on these pay-TV platforms is PSB programming yet ITV, whether as producer or broadcaster investing in creating that content, doesn't receive any payment – despite the fact that pay-TV platforms pay commercial terms for other channels," he said early in October 2014.

Yet according to a note written by Toby Syfret of Enders Analysis, it is unlikely that the next UK government—due to be elected in May 2015— will intervene to impose a charge on TV platforms for PSB content. He said that a deregulatory route would be unattractive to the commercial PSBs as that process would also need to consider other privileges gifted to PSBs, such as EPG prominence.

"We nonetheless think the next government most unlikely to consider the regulation pathway because the imposition of a fee indirectly amounts to an extra tax, as the platform operators, Sky and Virgin Media, pass on the fees to the consumer," Syfret said. "At the same time, it does nothing to address the levelness of the playing field, this time with respect to the non-PSB multichannel sector, where many of the channels receive very modest, or do not actually receive, carriage fee payments."

Instead, Syfret believed that the next UK government, whichever party was elected, was likely to consider the deregulation pathway, as suggested by current UK Sajid Javid in a recent speech to the Royal Television Society where he spoke of the need to consider the retransmission question in conjunction with the EPG prominence of PSBs, although we think a full review would also need to take into account other PSB privileges in addition to those that affect them on the pay-TV platforms.

"This, we believe, is not a pathway the commercial PSBs would really like the DCMS to go down," the analyst added. "Although the suggestion has been made that they could earn up to £200 million in extra revenues, this has to be set against the effect of any changes to their PSB privileges, where it is by no means certain that the net benefits will be positive over time.

In conclusion, we think the case for retransmission fees in the UK is weak. It is not to say that ITV, and perhaps especially Channel 4 on account of its focus on younger adult audiences, are not facing challenges in the connected TV landscape that need to be looked at carefully by the regulator. However, adapting to the challenges felt by all channels by introducing retransmission fees does not come across as a fair solution that is in the interests of a level playing field where the free-to-air PSBs already enjoy significant privileges."