Independent producers and local tv


Summary: Analysis & Evidence Policy Option 0



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Summary: Analysis & Evidence Policy Option 0


Description: Do Nothing

FULL ECONOMIC ASSESSMENT

Price Base Year     

PV Base Year     

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Net Benefit (Present Value (PV)) (£m)

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Best Estimate: n/a




COSTS (£m)

Total Transition
(Constant Price) Years





Average Annual
(excl. Transition) (Constant Price)

Total Cost
(Present Value)

Low

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High

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Best Estimate


Not quantifiable

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Description and scale of key monetised costs by ‘main affected groups’

n/a. Government is consulting on this Impact Assessment and welcomes views on quantifiable costs.

Other key non-monetised costs by ‘main affected groups’

If the current ownership ceiling is maintained, independent producers would not be able to own a stake of more than 25% in a local TV station without losing their independent status. ‘Independent’ status currently benefits independent producers by providing them with a commissioning revenue stream from broadcasters who must commission at least 10% of their content from independent producers (though we are seeking to remove this quota as far as it would apply to licensed local TV broadcasters). The prospect of losing independent status could discourage independent producers from applying to operate a local TV broadcast service in their own right, which could reduce the potential number of applicants for local licences.

Imposing an obligation on local TV to acquire a minimum content quota of 10% of programming from independent producers may distort commercial decisions that might also result in higher costs. The local service would also face an administrative burden, as it would need to monitor compliance with the quota regulation. The cost burden this would place on licensed local TV operators might reduce the overall number of viable local TV content broadcasters. A cost would also be incurred by Ofcom who would have to monitor and enforce compliance of local TV with the 10% quota.

BENEFITS (£m)

Total Transition
(Constant Price) Years





Average Annual
(excl. Transition) (Constant Price)

Total Benefit
(Present Value)

Low

Not quantifiable

   

Not quantifiable

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High

Not quantifiable

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Best Estimate


Not quantifiable

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Description and scale of key monetised benefits by ‘main affected groups’

n/a. Government is consulting on this Impact Assessment and welcomes views on quantifiable benefits.

Other key non-monetised benefits by ‘main affected groups’

Independent producers do not currently benefit from a local TV revenue stream (because the local TV framework is only now being put in place for the first time). Thus, doing nothing means independent producers could stand to benefit from at least the 10% content quota, and continue to have a guaranteed revenue stream from all national plus the new local TV services. It is unclear what the value of a local TV quota would be, but it is likely to be small, as the commercial value of programming broadcast to a relatively small local audience will be far less than content made available to a national audience.



Key assumptions/sensitivities/risks Discount rate (%)


-

Assume no other changes to the legislation to change the requirements currently around independent producers.

There is a risk that retaining the current rules may mean there could be insufficient bidders for local TV broadcast licences (as outlined above) and any successful bidder would encounter the burden of complying with the 10% content quota. This risks the future commercial success of local TV in the UK.


BUSINESS ASSESSMENT (Option 0)

Direct impact on business (Equivalent Annual) £m:

In scope of OIOO?

Measure qualifies as

Costs: n/a

Benefits: n/a

Net: n/a






Summary: Analysis & Evidence Policy Option 0


Description: Deregulate in both areas by: (a) removing a regulatory barrier to permit independent producers full ownership of local TV services; and (b) dis-apply the obligation on licensed local TV broadcast services to commission at least 10% of content from independent producers.

FULL ECONOMIC ASSESSMENT

Price Base Year     

PV Base Year     

Time Period Years     

Net Benefit (Present Value (PV)) (£m)

Low: n/a

High: n/a

Best Estimate: n/a




COSTS (£m)

Total Transition
(Constant Price) Years





Average Annual
(excl. Transition) (Constant Price)

Total Cost
(Present Value)

Low

Not quantifiable

   

Not quantifiable

Not quantifiable

High

Not quantifiable

Not quantifiable

Not quantifiable

Best Estimate


Not quantifiable

Not quantifiable

Not quantifiable

Description and scale of key monetised costs by ‘main affected groups’

n/a. Government is consulting on this Impact Assessment and welcomes views on quantifiable costs.

Other key non-monetised costs by ‘main affected groups’

There are no direct costs imposed by the removal of these burdens. However, there may be an opportunity cost for independent producers, because dis-applying the 10% content quota might mean the independent production sector does not automatically benefit from a guaranteed revenue stream from local TV services. 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 (but conversely, retaining the quota represents a burden on the local TV providers).

BENEFITS (£m)

Total Transition
(Constant Price) Years





Average Annual
(excl. Transition) (Constant Price)

Total Benefit
(Present Value)

Low

Not quantifiable

   

Not quantifiable

Not quantifiable

High

Not quantifiable

Not quantifiable

Not quantifiable

Best Estimate


Not quantifiable

Not quantifiable

Not quantifiable

Description and scale of key monetised benefits by ‘main affected groups’

n/a. Government is consulting on this Impact Assessment and welcomes views on quantifiable benefits.

Other key non-monetised benefits by ‘main affected groups’

Removal of the existing ownership ceiling would enable independent producers to bid for local TV licences in their own right. This would increase the opportunity for them to enter a new market. This may increase both the amount and quality of the competition for licences at the award stage. As experienced content producers, independent producers would bring proven TV production skills and the potential for innovative approaches.

Removal of the 10% content quota would reduce the burden of regulation on small local TV broadcasters by allowing them to source content from anywhere. This has a potential benefit for the local TV broadcasters if, for example, making content in-house is cheaper than commissioning it from an independent producer. This does not prevent local TV broadcasters from sourcing content from independent producers should they wish to. Removal of the 10% content quota would open up competition to fill the gaps in the entire schedule, which would represent an incremental increase in the extent of competition between qualifying and non-qualifying producers in the provision of content. Removal of the 10% quota also reduces the administrative burden for local TV services of complying with the quota. Removing the regulatory burden of the quota would result in lower costs of regulation for Ofcom’s monitoring and enforcement of compliance.


Key assumptions/sensitivities/risks Discount rate (%)


-

Assume that the rules at a national level in relation to independent producers will not change. The changes outlined above will be applicable only to local TV services.


BUSINESS ASSESSMENT (Option 0)

Direct impact on business (Equivalent Annual) £m:

In scope of OIOO?

Measure qualifies as

Costs: n/a

Benefits: n/a

Net: 0







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