Matthew Horsman, Mediatique, Carriage consent in the UK

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Matthew Horsman, Mediatique: presentation on "Carriage consent in the UK" given at the TV content seminar, Driving investment and growth in the UK’s TV content industries, 16 July 2012. More information at http://dcmscommsreview.readandcomment.com/tv/

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Matthew Horsman, Mediatique, Carriage consent in the UK

  1. 1. Carriage consent in the UKPresentation to DCMS seminarJuly 2012 Mediatique
  2. 2. Key questionsThe brief: promote investment in original content alongside a deregulatory approach to public policy What is the current balance of payments between PSB channels and platforms? What are the benefits of carriage to each party? Are ‘carriage consent’ fees a basis on which to ensure equitable payments? Can carriage consent fees contribute to greater investment in original content? Mediatique
  3. 3. Some policy context... “Carriage” of PSB channels in the UK varies by platform:Platform Must offer? Must carry? Copyright? Payments?Cable Yes Back-stop No - exempt None provision only Payment flows inDTT Yes Yes Yes None favour of Sky under regulated Platform Contribution Charges (TPS)Satellite Yes No Yes Channels pay platforms: regime: £14m - Sky – TPS regime currently - Freesat – EPG charges PSB channels are alsoPSB channels effectively multiplex operators/unable to deny carriage tenants in DTT Mediatique
  4. 4. The benefits of carriage... Channel Pay-TV operator / platform  Benefit from being able to  Benefit from offering PSB reach pay TV homes (c14m) channels on an integrated Key benefit of basis, within their EPGs and carriage  ...a key element of their mass- linked to their “players” market access and unlocking advertising revenue streams  ...consumers do not have to “toggle” to get their PSB services  Viewing impairment – the  Incremental churn – those What is the benefit at risk if drop in viewing generated by subscribers that would switch channels are not those that remain on the to a rival platform as a result carried? platform after it has stopped of the channel(s)’ absence carrying the channel Mediatique
  5. 5. From benefits to payments... A “carriage consent” regime would Benefits to permit the two sides of the carriage channel bargain to withhold or deny carriage at will – at the risk of service black- outs Benefits to pay- TV operator Payments might flow in either direction, from broadcasters to pay TV operators or the other way Whichever side has higher “benefits at risk” would be willing to pay the other around... For modelling purposes, 50% of the difference between the two sets of benefit ...depending on assumptions on churn and viewing impairment – for which international and domestic data is limited Mediatique
  6. 6. From payments to content investment... What would the party receiving payments do with the incremental money? Short of imposing obligations, there is no sure way to predict how payment flows will affect content and subscribers ...but, past behaviours provide guidance... Impact of/on... Investment in original Investment in original content Subscriber prices content by PSBs by platforms/pay-TV channels Payments from PSBs    to TV platforms Payments from TV    platforms to PSBs Key factors How important is content spend to Mitigated by PSB commitments platform robustness – vs. at BBC/C4 functionality, technology etc? Competitive context is important – is there scope to raise prices? ...and commercial objectives at Will current plans be honoured, or ITV/C5 costs passed onto third-parties? Mediatique
  7. 7. Mediatique
  8. 8. Policy options...Policy options Basis of assessmenta) Status quo  Deregulatory?  Impact on contentb) Removal of all relevant payments for PSBs investment? (i.e., platform charges = 0)  Risk of black-outs?a) Negotiations – with backstop I.e., allow PSBs to withhold channels by  Impact on removing must-offer subscription prices?b) Negotiations – no backstop obligations  Legal and execution issues? Backstop of must-carry Collective or separate based on US experience (at negotiations? regular intervals – 3 years) Mediatique
  9. 9. Key issues for discussion Are international case studies relevant in light of UK platform penetration trends? Would the parties accept the risks of market negotiation? Is reform worthwhile if the expected payment flows are small and content outcomes broadly unaffected? Are the regulatory hurdles too great (EU/domestic)? Will level of TPS trend downward in any event, short of any reform? Mediatique
  10. 10. Mediatique21 Little Portland StLondon W1W 8BT United KingdomTelephone: 020 7291 6900Facsimile: 020 7291 6901www.mediatique.co.uk Mediatique

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