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Explainer: The latest issues facing ITV and other PSBs… and how regulation changes could help

Posted on: July 15, 2020 by Mariella Brown

Through the blizzard of inquiries that are taking place in the media sector, the SoE has broken down the latest findings of the ongoing Digital, Culture, Media and Sport select committee inquiry into The Future of Public Service Broadcasting.

The latest session took place on Tuesday (July 14) and called upon ITV to give evidence to committee chair Julian Knight MP.

The session unpacked the effect of Covid-19 on Public Service Broadcasters (PSBs) and addressed how regulation could ease the challenges that PSBs face against the global TV streaming market.

From the very start, CEO of ITV Dame Carolyn McCall (pictured above), made it clear that Covid had come on top of a lot of seismic shifts for the industry. Speaking broadly about the impact of the crisis, Dame Carolyn said ITV’s two major streams of income had been affected where “advertising halved overnight and all our production worldwide stopped”.

The latest on news: programming, metrics and audience

Despite the challenges facing production, ITV said it had continued to provide ten hours a day of news, regional news and daytime programming from the first day of lockdown.

The broadcaster says it spends £120m on news each year and employs 500 trained journalists. Its written evidence published on Tuesday to support the oral questions stated that ITV reaches over 19m people each week through news bulletins in normal times.

However, in the weeks since lockdown ITV says its news has reached 22.8m viewers each week – amounting to 38 per cent of the UK’s TV population.

The inquiry also revealed new evidence that young people were coming to ITV for trusted news during the Covid crisis, after the broadcaster upped spending to target that age group in 2019.

The broadcaster reported that ITV News has reached 2.8m people aged 16-34 a week, a 20 per cent increase on the first 11 weeks.

Magnus Brooke, ITV’s Director of Policy and Regulatory Affairs, told the DCMS committee that ITV’s Rundown news service for 12-17-year olds which runs on social media platforms such as Instagram, Facebook and Snap garnered 17m views in April alone.

Cuts to ITV budgets and consequences for staff pay

The inquiry also provided clarification on how long the measures taken to preserve cash flow such as pay cuts and furloughing would be in place for.

Senior management have been placed on a salary reduction at least until October when it will be reviewed and bonuses have been suspended for all staff for the remainder of the year, Dame Carolyn told the committee.

She added that ITV currently have 1,000 staff and 500 freelancers on furlough, but that number has been “reducing all the time” as staff come off furlough to work on restarting productions.

Where the BBC has announced the need to make £125m worth of savings due to the Covid-19 crisis, ITV told the committee they have cut their programming budget by £100m. However, Dame Carolyn added that money has been saved through programmes such as the Euros 2020 where the full payments have been deferred as the matches will not be aired.

Calls for legislative changes

Following this month’s report by the Competition and Markets Authority which called for new powers over digital giants to regulate the digital advertising market, the committee looked at how further legislative changes for broadcasters could be introduced.

In their submissions to the DCMS committee, both ITV and Channel 4 have stressed that the 2003 Communications Act needs to be reformed to guarantee prominence for PSBs when competing against global TV streaming services such as Netflix and Amazon Prime.

ITV’s written evidence called for legislation to ensure that PSBs receive fair value from TV platforms for their investment in content.

It added that improved prominence and inclusion – for instance, ensuring viewers can find ITV content easily on their TV and guides – must be accompanied by a level regulatory playing field between online platforms and broadcasters. Tax and online advertising regulation were cited as key areas that could be levelled out.

ITV’s submission stated: “There is also no point in a new prominence and inclusion regime if platforms can then use their global muscle to squeeze much of the value out of public service broadcasters’ content in return for merely allowing it to appear on their platforms.”

Dame Carolyn reinforced this issue was urgent and added that “time is running out” to change the regulation.

She said: “We want to be on every platform but we want to do it in a framework of regulation where there are the same rules that apply and prominence is guaranteed; inclusion is guaranteed.”

The CEO of ITV pressed the DCMS committee to consider that any measures “need legislation – an updated broadcasting act” in order to have a desirable outcome adding “otherwise I don’t think anything will change”.

The implications for funding news services if competition regulation is not addressed

ITV’s report sought to show how leaving PSBs at a competitive disadvantage will have grave consequences for the unique national and local news services that PSBs provide.

ITV’s written submission added that global TV services “do not invest in news” or offer local or national news, warning of the danger that that PSB content including news “will disappear from view on user interfaces.”

The committee heard that broadcasters are often left out when global TV services pay for prominent inclusion on TV interfaces such as buttons on TV remotes. 

Global content is increasingly prioritised over national services: “The economics of free to view national content vs global pay-tv content is asymmetric in a world which will be increasingly dominated by global distributors,” warned ITV’s report.

Without significant reform, ITV’s submission argued that the quality of free content will diminish, and the investment in “mass reach accurate news” will lessen.

Diversity

The committee pressed ITV representatives for having what it said was the lowest BAME representation out of PSBs. Addressing the statistics, ITV said that 12.5 per cent of staff are of a BAME background and had 22 per cent representation on screen.

Dame Carolyn said ITV has announced a diversity acceleration plan to double the number of apprenticeships and has created a group diversity director to sit on the management board to address the issue of representation within the broadcast company.

Addressing regional diversity, ITV’s written evidence added that while Netflix and Amazon are investing in production sites based in London and the Home Counties, half of ITV’s employees are based outside of London.

To catch up on the inquiry and hear ITV’s evidence in full, visit the Parliament TV website here.