Costs and benefits of each option (including administrative burden)
Option 1: Do nothing The ‘Do nothing’ option is presented as a counter-factual option. In this case, there would be no change to the existing regime as set out in the statute.
Costs In the current status quo, independent producers would not be able to fully partake in the local TV market. They would not be able to both bid in their own right and retain their independent status. This would mean that they would not be able to participate fully in the opportunities offered by local TV compared to other industry players (e.g. broadcasters with their own in-house production capabilities).
Local TV providers would be required to fulfil their obligation to procure at least 10% of their content from independent production companies. This could represent a potential financial and/or administrative burden on new local TV services in their start-up phase. It is possible that a local broadcaster may be able to produce content in-house more cheaply than an independent producer could. Local TV operators would need to put in place mechanisms for taking into account operation of the quota and ensuring compliance with it.
Under this option, there is a risk that there might be fewer bidders for local TV with less diversity in the range of applicants and so some genuinely innovative approaches might not come forward.
It is possible that local TV services might find it difficult to attract sufficient interest from independent producers in commissions (due to small budgets); this could result in local broadcasters failing to fulfil their quota obligations or distorting their programming strategy in order to comply with the quota.
Benefits The independent sector would still benefit from the range of new local TV service providers who would be obliged to commission at least 10% of their output from independent producers; this would represent “new” money coming into the sector, although the value of this revenue stream remains unclear. Independent producers would also still be able to have part-ownership of a local TV broadcaster, as long as their ownership stake did not exceed 25%.
Option 2: Remove the ownership ceiling which currently prohibits independent producers from owning more than a 25% share in a local TV licensee without losing their independent status; and dis-apply the 10% independent production content quota for local TV
Costs Removal of the 25% ownership ceiling for independent producers may lead to a small number of powerful producers becoming proprietors of local TV licences, although broadcasting local television could not become their main activity if they wished to retain their independent producer status. This may reduce the variety of voices and content that is made available. If a particular producer gains control of many local licences this result might take on more than local significance.
The independent sector would not gain from a guaranteed revenue stream from local TV services. However, this would not prevent independent producers from securing local TV commissions; it would simply remove the certainty that 10% of commissions would be ring-fenced for these producers.
Benefits Removing the ownership ceiling would allow independent producers to bid for local TV licences without losing their ‘independent’ status. This could increase competition at the bidding stage, i.e. potentially lead to an increase in the number and range of bidders for local TV licences. There is thus the potential for a greater diversity of services and approaches in the provision of local TV services, which could in turn benefit consumers.
Exempting local digital television programme services from the 10% independent production content quota would mean that local TV operators are not obliged to source at least 10% of their content from independent producers. However, it is assumed that in many instances, local TV would choose to source content from independent producers. This option simply removes the obligation from local TV that forces them to source such content, thus reducing the regulatory burden upon these services.
Implementing this option could increase the degree of competition among content providers in that ‘non-qualifying’ producers (i.e. non-independents) would be able to compete for an additional 10% of commissions that they would otherwise have been prevented from bidding for if the quota were in place, but it is expected that this would only represent a small change.
Overall, option 2 is intended to be de-regulatory. The Government will welcome views on the assertions made in this impact assessment through its consultation. In particular, market players and interested parties are encouraged to share data and information on the potential costs, benefits and consequences of making these changes to help inform the analysis presented here.