UK television's USP: Just how unique are we?

UK television's USP: Just how unique are we?

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Tuesday, 9th December 2014

After Channel 4 boss David Abraham lit the touch paper in his MacTaggart lecture this year, he spoke alongside Virgin Media CEO Tom Mockridge for a full and frank discussion on PSBs and retransmission fees. 

With Charter renewal around the corner, in an evening of open and vibrant discussion - that included Virgin Media's Tom Mockridge counting the platform out of a Premier League bidding war, two of the industries key players spoke frankly about the state of UK television.

The fault line that has opened up between commercial public service broadcasters and pay TV platforms over their value to each other was laid bare in a heated debate between Channel 4 Chief Executive David Abraham and Virgin Media CEO Tom Mockridge.

Building on the arguments he laid down in his MacTaggart speech in August about retransmission fees, in which he said pay TV operators should pay to transmit the five main PSB channels, Abraham said that a new study confirmed that the gap between the value of public service broadcasters to pay TV platforms was around £²00million.

During the early evening event, Abraham argued that together the commercial PSBs offer "huge value to pay platforms".

 

Abraham revealed that Channel 4 had recently invested in a study of 2,000 pay TV consumers and what they would do if they were denied access to PSBs on pay platforms such as Sky or Virgin.

From the results, he said that it is possible to work out how many consumers would seek out the PSB channels elsewhere, but added that Channel 4 does "also rely on distribution to the pay platforms for advertising revenue."

Channel 4 CEO David Abraham called for negotiations over fair value and a 'regulatory backstop' (Credit: Paul Hampartsoumian)Channel 4 CEO David Abraham called for negotiations over fair value and a 'regulatory backstop' (Credit: Paul Hampartsoumian)

Abraham added that, "what we are saying is that we should negotiate" over what is the fair exchange of value between commercial PSB's services and the distribution pay TV platforms offer, but also, "we should have a regulatory backstop."

In a frank exchange of views during which the executives spoke over each other, Mockridge said: "I dispute absolutely that the business has been built on the PSBs. The big driver for demand for Virgin Media is broadband."

Abraham countered: "The system is broken. It makes no sense whatsoever that we have got this decades old regulation. I'm just saying it is now absurd to behave as if the absence of [PSBs on paid TV] would not drive big changes in consumer behaviour."

Abraham told Mockridge that Channel 4 will provide Ofcom with its calculations based on quantitative information of commercially sensitive data. He added that "consumer behaviour change will occur between platforms. That behaviour change is very substantial to your business, it would be irresponsible to deny that."

He continued, "right now, as you know, whenever we negotiate with you guys or Sky it always goes down to the wire." Abraham believes it is "the threat of removing our services" which is the point at which the platforms work out what the value is.

Virgin Media CEO Tom Mockridge called any possible retransmission fees a tax on the viewer. (Channel 4 CEO David Abraham called for negotiations over fair value and a 'regulatory backstop' (Credit: Paul Hampartsoumian)Virgin Media CEO Tom Mockridge called any possible retransmission fees a tax on the viewer. (Credit: Paul Hampartsoumian)

Mockridge said that a regulated backstop provided by Ofcom, "in ordinary people's language, the customers that we serve, is a tax," and would have to be passed on to consumers through their bills, rather than be taken out of margins.

He said that the subsidised spectrum Channel 4 gets has huge value and that the industry should beware of changing the current broadcasting eco-system for "a reasonably modest sum of money to Channel 4.

"When you saw how quickly last week some politicians leapt on the BBC, opening up this debate at this time and running into the licence fee negotiation - you cannot see these as isolated incidents."

The Virgin Media boss added that the unravelling of an "eco-system which works", and has a long history before a BBC licence fee debate is "reckless."

Mockridge denied Abraham's accusation that the BBC was a "red herring" but the Channel 4 boss argued: "It's irrelevant to talk to us about the BBC, it's a big diversion from the central issue we are raising."

One of the biggest revelations of the evening was the Virgin Media boss stating that although his company lobbied for Ofcom to investigate the spiralling cost of Premier League broadcasting rights because of concerns about price rises for consumers, Virgin Media would not be bidding.

"No, we are not going to bid" for the rights in the next, forthcoming auction, said Mockridge, adding that he thinks the price of the rights could at least double. 

UK television's USP: Just how unique are we? was produced by David Mahoney. It took place at the Hospital Club on 9 December 2014. 

Report by Tara Conlan

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After Channel 4 boss David Abraham lit the touch paper in his MacTaggart lecture this year, he spoke alongside Virgin Media CEO Tom Mockridge for a full and frank discussion on PSBs and retransmission fees.