Ofcom reduces licence fees for commercial broadcasters

The UK’s largest commercial television network ITV, has been gifted a saving of £135m licence fee and will pay less than £80m to the media regulator this year for its 12 ITV licences, compared with £215m in 2004.

Five has also been awarded a £4m reduction in its annual licence fee payment, which dropped from £13m last year to £9m in 2005. Scottish Media Group, which holds the licences for Scottish Television, Grampian and Ulster TV, has also been handed a rebate of between £4.5m and £5m to less than a £1.5m bill this year.

The decision from the regulator takes account of the rise of digital television, which is now in 62% of homes, and the declining value of analogue licences. It also takes into account changes in the advertising market and public service obligations.

Ofcom chief executive Stephen Carter said: “Digital Television transfers control from broadcaster to viewer. This process puts pressure on commercially funded public service broadcasting.

“We have now done all we can to give broadcasters regulatory certainty. It is now up to the broadcasters to deliver; and it is for Government to assess whether other sources and recipients of funding for public service broadcasting will be needed. We believe that they will be.”

Andrew Flanagan, chief executive of Scottish Media Group, welcomed the decision: “We’re pleased that Ofcom has recognised that in the increasingly competitive world of multi-channel television our licence fee tax costs had to come down.  This settlement, along with the outcome of the Public Service Broadcasting Review, serves to secure the future of the Scottish TV and Grampian TV franchises to 2014 - through digital switchover and beyond.  And while today’s announcement provides SMG with a firm foundation for our TV broadcasting businesses, it also presents the potential opportunity for us to maximise growth opportunities around the Group as a whole.”

ITV chief executive Charles Allen said the reductions would ensure that ITV could invest in programming and digital strategy.

“Across ITV1, ITV2, ITV3, ITV4 and the ITV News Channel, ITV will invest around £1bn in high quality programming this year,” Allen said. “It is critical that ITV has the firepower to sustain this investment and take forward its digital strategy.”

Allen added that the modernisation of ITV regulation was not yet complete and there were a number of outstanding issues, including BBC Charter renewal, Ofcom’s review of the advertising market, the review of the European Television Without Frontiers Directive, the future regulation of new media platforms and the development of a new funding model for commercial PSB.

By Mark Banham

This article was first published on Media Week