Pact report calls for PVR royalties for indies

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A report commissioned by Pact, the trade body representing the UK's independent production sector, has recommended that Ofcom considers forcing personal video recorder (PVR) platform owners BSkyB, ntl and Telewest to pay royalties to programme rights owners.

The report, by consultants Oliver & Ohlbaum, on policy issues facing the UK content sector in the digital era, follows Ofcom's recent order that public service broadcasters and producers must reach an agreement on how they will treat internet and mobile distribution rights by March 21, or face intervention by the media regulator.

Report author Mark Oliver, O&O chief executive and an advisor to the UK Government, said policy makers needed to encourage a broad range of buyers for rights in order to prevent vertical integration.

"In the next 10 years—despite financial pressures—the four main buyers are likely to remain the main source of new commissioning, accounting for over 85% of all such spending through their main networks and spin off channels," says the report.

"The leading networks—through their spin off channels—are also taking a growing share of the secondary linear channel audience in the UK, which is likely to both consolidate their control over the primary commissioning of new programming and leave them as the main buyers of secondary linear channel rights over the next 10 years.

"The proposed approach by the main networks—especially commercial networks—to terms of trade on emerging video on demand and mobile platform rights is designed to leave them as the dominant service providers and aggregators in these emerging markets as well.

"By proposing a greater re-use of material for video on demand and mobile exploitation within the existing primary licence and claiming the right to holdback on releasing further secondary re-use to independent third party providers, they are likely to significantly reduce the financial and economic independence of independent producers, as well as throttle competition across the UK TV market."

Oliver says if these proposals are accepted then "all rights windows in the UK are likely to end up being dominated by the main networks, increasing barriers to entry for independent channels and aggregators, and leaving independent producers with little commercial leverage and low rates of return".

The report goes on to recommend that Ofcom:

  • Should consider "applying minimum origination quotas to all leading DTT—and where possible—cable and satellite channels"
  • Allow independent producers to own small independent channels—and vice versa—"without the producer losing its independent status"
  • Should confirm that Channel 4 "remains a publisher broadcaster in all its activities so as not to increase the level of vertical integration among the main commissioning channels".

Oliver says that in order to prevent PVR functionality from depriving producers and free-to-air broadcasters from earning income "from the extensive re-use of programming on free-to-air channels, regulators should consider the introduction of a royalty scheme whereby platform owners would pay a small annual fee per PVR home to be split among rights owners in accordance with their share of new output on the main free to air commissioning channels".

He adds: "Such schemes have operated successfully for the cable retransmission of free to air channels in the Netherlands, Belgium and Canada for many years."

Lovelace Consulting  |  17.01.2006

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