Problem under consideration The problems are two-fold: the first is that existing legislation currently caps the ownership stake an independent production company may have in a broadcaster to no more than 25% (otherwise it is no longer an independent producer). This cap applies to all broadcasters regardless of whether those services are national or local in nature. The second is the 10% content quota that applies to national broadcasters. The quota will apply to the new generation of local TV services because the UK has not dis-applied the quota to local TV services as explicitly permitted by the AVMS Directive.
The Government’s current preference is to deregulate in both areas as they apply to local TV. However, there are alternative scenarios where just one of the deregulatory measures is implemented or the Government chooses to do neither.
There is logic in dealing with the two issues together (around independent producer ceiling and the independent production quota). The current independent production quota system functions by defining the concept of an independent producer by reference to (among other considerations) the size of the stake it can hold in any broadcaster. If this quota obligation is dis-applied in relation to local TV broadcasters, then there is an argument to also remove the ownership ceiling which prevents independent producers from owning a local TV service without losing their independent status. It seems right that there should be a balance between, on the one hand, saying that independent producers in the UK will not be able to take advantage of the potential revenues which a quota on local TV broadcasters would provide and, on the other, saying that independent producers may have a larger – or indeed, a total – share in a local television broadcaster without losing their independent status. It would be disproportionate to dis-apply the quota yet continue to maintain a barrier preventing independent producers from holding a local TV broadcast service licence.