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ITV urges UK to implement US-style retransmission scheme

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ITV urges UK to implement US-style retransmission scheme

Michelle Clancy
In the US, pay-TV companies are required to compensate free-to-air broadcasters to carry their content, in the form of retransmission fees. It’s an important revenue source for the likes of NBC, CBS and FOX in the US, and contributes to their budget for content carriage.


In the UK, ITV is now calling for a replication of the model in its home market, urging regulators to compel major pay-TV platforms to pay UK public service broadcasters fairly for the transmission of their channels.

Research carried out by NERA Economic Consulting concludes that introducing payments to broadcasters for retransmitting their content would end what is effectively a “multi-million pound subsidy to Sky and Virgin".“

In 2013, US free-to-air broadcasters received around $3.3 billion in retransmission payments, NERA noted, also claiming that the fees account for less than 3% of cable operators’ revenues, and “have little or no impact on pay-TV prices".

SNL Kagan meanwhile has found that retransmission consent fees add up to the equivalent of 8.9% of total fees distributors pay for basic-cable and regional-sports networks – and that percentage is expected to rise to just under 13% by 2017.   

The research house also noted that rising retrans fees are a factor in escalating programming costs – others were the additional expense of TV everywhere and digital rights agreements, increasing costs for sports rights and cable network programming, and additional channel launches.   

NERA said that UK public service broadcasters invest around $4.89 billion on programming – with ITV alone spending almost $1.63 billion a year – the vast majority of which is invested in original UK content, it argued.

“Introducing retransmission fees would have clear benefits to the UK creative industries and the wider economy - as well as to viewers right across the UK - by enabling PSBs to continue to invest in the original programming people love to watch,” said Adam Crozier, CEO at ITV.

“The majority of viewing on these pay-TV platforms is PSB programming yet ITV, whether as producer or broadcaster investing in creating that content, doesn’t receive any payment – despite the fact that pay-TV platforms pay commercial terms for other channels.”
 
Crozier added: “The impact of this wholly outdated regime is that UK public service broadcasters are forced to subsidise major pay-TV platforms. In today’s highly competitive media marketplace, that is simply wrong – and to the detriment not just of the PSBs, but the consumer and the wider UK creative economy.”
 
Retransmission payments account for more than one-third of all spending on broadcast television programming, which ITV contended provides US broadcasters with the financial capability to invest in original content and innovation “whilst helping to fund the airing of major sports events on free-to-air television, HD content and new multi-cast television services.”

Crozier concluded, “It is in the interests of all broadcasters that we encourage the regulator and government to look again at this issue for the benefit of the industry and viewers.”