It is commercial television that is really in peril

Spectator, The, Aug 2, 2008 by Midgley, Neil

Carol Vorderman has, apparently, become too expensive for Channel 4's game show Countdown. Gone are the carefree days when Channel 4 could afford to poach Paul O'Grady from ITV to chase teatime ratings. Now, says C4 chief executive Andy Duncan, it can only fulfil its public service remit if someone -- most likely Gordon Brown -- gives it a new £150 million a year subsidy. Similar bleatings come from senior BBC executives whenever the future of the licence fee is discussed (despite the fact that the BBC can evidently afford £6 million a year for Jonathan Ross).

Yet the BBC and Channel 4 -- both publicly owned -- rake in £4 billion a year between them, and the licence fee is guaranteed until 2013. It is ludicrous for their millionaire bosses to claim that public service broadcasting is in any danger in the UK. What is in mortal peril, as eyeballs and advertising revenue both migrate to the internet, is the future of mass-market commercial television. For, say, ITV, even a mathematician like Vorderman will soon find it hard to make the numbers add up.

Traditional British television faces an uncertain future. As digital switchover approaches and people spend more time online, more TV channels are competing for fewer viewers. In this rapidly changing business, only one thing is for sure: public service broadcasting (PSB) is in no imminent danger of extinction. The BBC has a guaranteed income of well over £3 billion a year until at least 2013 and Channel 4 has an annual programme budget of over £600 million. Yet the Culture Secretary Andy Burnham and Ofcom chief executive Ed Richards worry vocally that the digital world will see a loss of 'plurality' in PSB. What Mr Burnham and Mr Richards are wilfully ignoring is a much more important -- and more pressing -- possibility. If they don't stop focusing all their energies on PSB, this country could be left with no commercial television of any scale or ambition at all.

The arithmetic is simple. Only three broadcasters commission a large volume of original television in the UK: the BBC, Channel 4 and ITV. Public ownership of the BBC and Channel 4 means that Britain can hope -- at best -- for only one commercial TV company of any size, in the shape of ITV. To imagine that lots of decent British programmes will ever materialise from any other commercial broadcaster is fanciful.

It's a strong ITV, or it is nothing. And the cultural and economic benefits of a strong ITV are huge.

Proper competition for ratings, motivated on at least one channel by profit, ensures high-quality programmes all round. (Look at the Saturday night fights between Strictly Come Dancing and The X Factor. ) The search for profitable shows boosts the UK's creative economy, and ensures that we have slick TV to export to commercial broadcasters in other countries. (Look at American Idol. ) And the preferences of government ministers -- recently voiced all too loudly by Mr Burnham as he championed 'standards' and regional news -- must at least jostle with the preferences of the people they represent. (Look, if you can bear to, at Channel 4's ever more dull and hectoring schedule as it begs for government cash. ) Despite knowing all this, Mr Burnham and Mr Richards currently insist -- through a unique and outmoded regulatory structure -- that ITV becomes weaker by the month.

The benefit to ITV of its position as the analogue third channel has always come with attendant PSB obligations (regional news, regional production quota and the rest).

But analogue television is losing value so quickly that by the end of 2008 the costs may well outweigh the benefits. To make matters worse, ITV1 is also subject to uniquely tight restrictions on the number of ads it can sell and the amount it can charge for them.

Mr Burnham and Mr Richards pay lip service to the difficulties faced by ITV.

'They're feeling this debate in a very real and a very present way, ' said Mr Burnham in June. Mr Richards is currently midway through a statutorily mandated review of PSB and, when he published his interim report in April, three out of his four proposed future models imagined ITV with no specific PSB obligations at all. But these words have not yet been backed up by any action. Ofcom's PSB Review and another review, of ITV's advertising restrictions, are proceeding at a New Labour -- rather than a new media -- pace.

If only ITV's online competitors were so gentlemanly. In 2002, ITV's revenue was nearly 20 times what Google managed in the UK. Next year, Google may well overtake it. There is a real prospect that, hobbled by its current level of regulation, ITV will soon simply not have enough money to spend on a full schedule of original programmes. At that point, Mr Burnham's strongly expressed 'disappointment' that ITV failed last year to meet its regional production quota would suddenly sound relevant. The government and Ofcom must urgently deregulate ITV, both its advertising and its programmes, before it is too late.

Of course, not all of ITV's woes are of the government's making. Many of its programmes are derivative tripe, and successive changes of management have failed so far to do much to address that basic problem.