The Broadcasting Act finally comes into effect next month. Claire Beale
assesses its impact on the TV, radio and publishing sectors and reports
on the media players that are already geared up for the new world of
digital TV and cross-media sales
What is the Broadcasting Act?
The Broadcasting Act 1996 is a 194-page document that sets out a new
framework for the media industry to take it into the next millennium.
Who created it?
The act has been drawn up by the Department of National Heritage, and
has been shaped by extensive industry consultation and a lengthy passage
Why did they bother?
According to the National Heritage Secretary, Virginia Bottomley, the
act is designed to give media organisations the chance to expand,
develop new services and exploit new opportunities, transforming the
broadcasting and communications landscape.
‘We must now move forward to a dynamic, deregulated, flexible and
innovative media industry,’ declares Bottomley, and the act ‘will allow
us to be a major player in the emerging world market.’
When does it come into effect?
The act received Royal Assent at the end of July. Most of the digital
broadcasting provisions come into effect on 1 October and the media
ownership provisions come into force on 1 November.
Why should I care?
The act could potentially have enormous implications for the entire
structure of the media industry.
So what are the main points?
There are two main planks to the act - new rules on cross-media
ownership and legislation governing the introduction of digital
What is cross-media ownership?
In the past companies have been prevented from having too much power in
the media industry by being restricted on the share of a particular
medium they can control and the influence they can have in other media.
The new cross-media ownership rules allow greater concentration of
ownership in individual media and enable companies to expand into other
What will be the effects of the new cross-media rules?
Brace yourselves for fevered takeover and merger activity among
television, press and radio companies. Many players - big and small -
will be swallowed up in the race for synergies across different media,
concentrating power and investment into the hands of fewer, larger
So it’s all about media concentration, then?
Not exactly. The digital broadcasting provisions will herald an
expansion of media opportunities - a host of new channels catering to
niche and not-so-niche audiences.
What does the act say about ITV licences?
TV companies used to be restricted to owning two ITV licences. The act
will allow a single company to own any number of ITV stations up to a
limit of 15 per cent of the total television audience.
What will this mean for ITV’s structure?
This is the green light that the big players have been waiting for -
they can capitalise on their original ITV investment by taking a greater
share of the network through snapping up smaller companies.
Who are the major ITV players at the moment?
ITV is already roughly carved up among three big operators - United News
and Media, Carlton Communications and Granada Group, and these three are
expected to consolidate their interests through the acquisition of
smaller ITV stations.
What are they likely to buy?
Michael Green’s Carlton Communications controls Carlton and Central
Television and has been eyeing up HTV and Westcountry Television.
Gerry Robinson’s Granada - owner of Granada Television and LWT - has a
19.99 per cent stake in Yorkshire Tyne Tees and a further 3.8 per cent
in a deadlocked company, and could attempt a full takeover.
Lord Hollick’s United already owns Meridian and Anglia Television but
could take on YTT, HTV or STV without breaking the 15 per cent ceiling.
What are the opportunities for national newspapers and TV companies to
National newspapers with less than 20 per cent of national circulation
will be able to own any ITV or other broadcast licence up to 15 per cent
of the total TV audience, and a TV company can control up to 20 per cent
of the newspaper market. Newspapers with more than 20 per cent will be
able to own broadcasting licences outside of ITV, Channel 5 or analogue
radio as long as they do not exceed the 15 per cent market limit.
Wasn’t there a tussle over the provisions for newspapers?
One of the most contentious provisions of the act is the rule preventing
national newspaper groups with over 20 per cent of national circulation
from owning more than a 20 per cent stake in a Channel 3 (ITV), Channel
5 licence or radio licence.
The Labour Party argued throughout the preparation of the act that the
20 per cent limit should be abolished and has now indicated that it will
revisit the issue should it come to power at the next general election.
Crucially, this provision means that neither News International nor
Mirror Group will be able to expand into ITV territory.
Which press/TV alliances are likely?
Lord Hollick has already taken advantage of this provision by merging
his MAI television interests (Meridian and Anglia) with United
Newspapers (publisher of the Daily Express, Sunday Express and the Daily
Star) to create United News and Media.
What are the prospects for local newspaper groups?
A similar rule applies. A local newspaper with more than 20 per cent of
newspaper circulation in its area will be able to control a national
broadcast licence but not a regional Channel 3 licence in the same area.
Local newspapers with less than 50 per cent of local circulation will
also be allowed to control one AM and one FM radio licence in their
Local newspapers with more than 50 per cent of their market will be
allowed to control one local radio licence provided there is at least
one other commercial local radio licence serving the same area.
What about radio companies?
Like television, the numerical limits on local radio licences controlled
by a single company have been abolished and replaced by a ceiling of 15
per cent of the total radio market.
Is there much room for growth in the radio market?
Most of the big radio groups have very little room for expansion in
their own medium. Emap already has just under 15 per cent of the total
radio market, while GWR has around 12 per cent.
In any given area, a single radio company can hold up to three local
radio licences, as long as one of them is an AM licence and one an FM.
What about cross-media ownership between national TV and radio, then?
The old rules governing joint ownership of TV and radio stations remain
largely the same under the new act. The main change is the provision
allowing a regional Channel 3 licence holder to own one national radio
Can regional TV and radio get together?
Regional ITV companies will not be allowed to control radio licences in
their area, and vice versa.
What does cross-media ownership mean for media sales?
It will mean the introduction of advertising opportunities that work
from one medium to another. This will see the birth of the cross-media
Are any of the big companies preparing themselves for cross-media sales?
Express Newspapers and its sister TV sales house, TSMS, are already
looking at offering cross-media sales packages - an initiative steered
by TSMS’s chief executive, Tim Wootton.
Similarly, Channel 5’s sales director, Nick Milligan, is talking to
media buyers about advertising opportunities combining Channel 5 with
affiliated companies including the newspaper publishing division of
United News and Media and CLT, the radio company which owns Atlantic 252
and Talk Radio.
Carlton UK Sales now includes cable sales and cinema sales in addition
to its ITV sales interests.
What does cross-media ownership mean for media buying?
David Cuff, broadcast director of Initiative Media, says cross-media
ownership will result in fewer negotiations, and deals being done at a
higher level. ‘Where companies can develop sales strategies across their
media holdings they will become very powerful, and will be able to talk
to advertisers at a very senior level. They will develop more far-
reaching relationships with their advertiser clients,’ Cuff explains.
Will media companies need to adapt?
Bigger conglomerates selling across media will be even more powerful
around the negotiating table, so buying muscle will remain an important
requisite for a media company.
What does the act say about Channel 4?
Channel 4 has been battling for several years to end the formula whereby
any excess ad revenue it makes is handed over to ITV or put into
The act ends payment into the statutory reserve and will phase out the
payments to ITV from 1998. The phasing out of the funding formula should
mean more money for Channel 4 programmes, making it better able to
compete in the TV arena of the future.
What provisions are being made for the BBC’s commercial activities?
Any commercial services launched by the BBC will be licensed and
regulated by the Independent Television Commission under the provisions
set out in the act. This brings the BBC’s advertising or subscription-
funded services into line with the UK’s other commercial television
What is digital broadcasting?
Digital broadcasting is a method of compressing the TV signal to allow
more signals on to a broadcast frequency than is possible using analogue
Why is digital part of the act?
Digital broadcasting will revolutionise the media framework by
introducing a vast array of new television and radio channels to UK
consumers. These new channels will have to be allocated and policed and
the act makes provisions to ensure their smooth introduction.
Will terrestrial channels be invited to the digital party?
The terrestrial TV channels will each be allocated a digital TV licence
for broadcasting their existing channels.
How will the other digital licences be allocated?
The 12-year TV and radio licences will be awarded by the ITC and the
Radio Authority on the basis of which applicants are likely to do most
to promote the development of digital broadcasting.
Will cash bids be involved in digital allocation?
The licences will be free for the first licence period to encourage
investment in digital broadcasting. After the first licence period all
digital service providers will have to pay a percentage of their revenue
to the Exchequer.
What does digital broadcasting mean for advertisers?
Crucially, digital broadcasting will mean more outlets for advertisers
to promote their products. These outlets will, in many cases, be more
tightly targeted than terrestrial channels, which means less wastage.
The digital revolution could also result in more opportunities for
advertisers to move into programme supply as the proliferation of
channels leads to a surge in demand for editorial material.
How will digital broadcasting affect media buying?
The rapid growth of advertising outlets will require greater
understanding of a client’s target market and more research of media
consumption, often working off very low levels. Planning skills will
come to the fore more than ever before.
Who will ensure that programme and editorial standards are maintained
throughout this period of change?
As well as the Radio Authority and the ITC - which will monitor licence
holders to ensure they fulfil the terms of their contracts - the act
establishes a new body to ensure certain standards are maintained. This
new watchdog will be formed from the merger of the Broadcasting
Standards Council and the Broadcasting Complaints Commission. The merger
will create a single forum for public concerns about taste and decency
and will monitor violence and sexual content in TV and radio programmes.
What about ensuring ‘national’ events are available to everyone?
There has been much concern that the new era of media choice could lead
to a bidding war for major sporting and national events, which could
result in them moving on to subscription channels and away from general
The act guarantees the availability of live coverage of certain listed
events such as Wimbledon to free-to-air TV channels like the BBC and
This article was first published on Campaign