DMB0043

Written evidence submitted by Paramount

Pre-Legislative Scrutiny of the Draft Media Bill

Paramount is a leading investor in the UK’s creative economy. We are incredibly proud of Paramount’s stewardship of public service broadcaster (PSB) Channel 5 which has undergone a creative transformation since our acquisition in 2014 and has successfully grown its audience share over the last four years. Channel 5 spends around £210m a year on content across news, kids, drama, and documentaries, including £125m with more than 100 independent UK producers.

The UK is a home for Paramount Pictures’ international productions, most recently Mission: Impossible Day of Reckoning parts 1 and 2, and this year we are filming the Bob Marley biopic Marley and the third installment of the A Quiet Place film series in the UK. Last summer we launched our new streaming platform Paramount+; we are investing in exciting new UK originated content for the service including A Gentleman in Moscow starring Ewan McGregor.

For three decades Paramount has also been the most successful international supplier of pay-TV channels to the UK market, in particular MTV, Nickelodeon, Comedy Central, BET, and the Paramount Network. The UK is also a key international market for the Pluto TV service which offers over 100 curated FAST (free ad-funded streaming television) channels that combines traditional linear entertainment with internet video that viewers love.

Due to Paramount’s investment across the creative sector, we are uniquely positioned to understand the vital link between a strong PSB sector and the UK’s position as a thriving global creative superpower. One cannot exist without the other.

Inward investment from around the world will only occur where there is an attractive, renewable base of creativity, skills, innovation, talent, and infrastructure. PSBs play a pivotal role in ensuring this, so it is of the utmost importance that the Media Bill is brought forward at the beginning of the next parliamentary session to ensure the strength of the sector.

Please see further detail below on our thoughts on how Government can strengthen the PSB agenda via the Media Bill.

PUBLIC SERVICE BROADCASTING

Prominence

Public Service Broadcasters are the cornerstone of a vibrant broadcast sector for UK producers and viewers, evident by the c. £2.5bn Channel 5 and our PSB colleagues (BBC, ITV, Channel 4) invest in first run UK originations. It is vital that viewers are able to find and access these services, which rely on easy access for audiences. The existing prominence rules were put in place over 15 years ago to support this objective. Unfortunately, the current regime has not kept pace with market change, with rules only applying to linear electronic programme guides (EPGs) but not catch-up or on-demand content, search or recommendation features. Other TV apps can therefore purchase prominence over PSB content, for example the Netflix button on TV remotes, or through prominent placing of their apps on smart TVs.

Consequently, Paramount broadly welcomes the prominence provisions set out in the Media Bill. A must-offer / must-carry regime which leaves PSBs and platforms free to deliver prominence based on commercial terms within ‘guard-rails’ set by Ofcom guidance is a positive development. An inability to reach terms would then be settled by an Ofcom managed arbitration process. We believe that the approach the Bill is taking is correct.

We do not believe the Bill should explicitly set out what prominence looks like on each individual platform. A definition that is too restrictive may struggle to be applied to future changes in technology and create challenges for Ofcom when it is seeking to draft its guidance post legislation. However, both comment from Government and the text of the legislation must give a clear indication of desired policy outcomes to help Ofcom shape its guidance.

Internet Programme Services

The approach taken within the Bill to designate PSB linked internet programme services in their entirety for prominence is to be welcomed. A concept of PSB that tries to define specific pieces of content as being ‘public service,’ and therefore worthy of specific prominence would misunderstand PSB as a concept. PSB content and quotas for specific genres exist within a wider range of programming delivered by commercial PSBs to satisfy the interests of as many different audiences as practicable. Consequently, we support the approach taken in the Bill to create the concept of Designated Internet Programme services.

Risk of a purely cost-based framework

Correct framing of the clauses that cover the ‘Agreement Objectives’ between the PSB Internet Programme Service and the Regulated Television Selection Services are crucial to ensuring appropriate agreements between the two and defining the basis on which Ofcom will settle disputes where agreement is not possible. Presently, we do have some concerns that the Bill’s focus on PSB ‘cost’ as a key factor to determine terms between PSB Internet Programme Service and the Regulated Television Selection Service may both misdirect and inhibit a free negotiation reflecting a fair value exchange rather than encouraging it.

Too much focus on simply covering PSB costs to deliver the remit may fail to acknowledge the commercial value that a PSB player will bring to a Regulated Television Selection Service. The value added by a PSB is not limited to improving the desirability of a platform for UK audiences; the platform will also be able collect data and insights that it will then commercialise for its own benefit. An approach that focuses solely on PSB cost risks these wider benefits falling outside of scope of any commercial agreement – meaning the Regulated Television Selection Service might seek to simply enforce standardised terms on these points to the disadvantage of PSB. There must be a level of flexibility afforded to Ofcom so that it can consider all elements of a commercial negotiation between the parties.

Further, an approach that is focused only on ensuring PSBs “meet costs reasonably incurred fulfilling the public service remit” gives the impression that an outcome of a commercial deal is simply to ensure the platforms cover costs of specific PSB remit-meeting content and delivery. Such an approach would fail to acknowledge that content meeting PSB licence obligations does not exist in isolation but within a broad schedule of varied content that requires considerable investment - the success of which is crucial to paying for PSB obligations such as news. Commercial PSBs like Channel 5 invest significantly in a wide range of genres to attract viewers to their services; their commercial model is not built simply around creating and distributing remit-meeting content with a goal of breaking even.

We therefore recommend that Ofcom is given the discretion to review and comment on any commercial terms of a deal, using a broader set of measures than just PSB cost. This will support PSBs in negotiations and underpin their role as the lynchpin of the broadcasting ecology.

Delivering the remit through online programming as well as linear

Paramount fully accepts that regulation must keep pace as audiences migrate to viewing television through internet linked services that provide both linear simulcast viewing and on-demand viewing. We therefore welcome the forward-thinking decision by Government to acknowledge that the PSB remit can in future be delivered by PSB linked digital services alongside the main linear Ofcom licensed PSB channel.

As the Committee will be aware, all broadcasters, including PSBs, are continuing to experiment and innovate the ways in which they deliver content to viewers. Whilst the majority of TV viewing remains linear, some programming is delivered digital first and some digital only. The latter can be particularly important for content delivery to niche audiences. Broadcasting a linear programme on a week-by-week basis whilst placing a full series on the linked video-on-demand (VOD) service for those viewers that wish to ‘binge watch’ a series is now commonplace. It is positive therefore that the Media Bill will permit the regulator to consider more than the main linear licensed channel to assess remit delivery.

However, it is important to note that such a move will also have consequences for commercial PSBs like Channel 5 when it comes to calculation and delivery of quotas. There needs to be thorough consideration of how content quotas may in part be delivered through a PSB linked Internet Programme Service, compared to the current approach of assessing hours/spend on the main linear channel. For example, ‘peak time’ does not exist within the catalogue of a non-linear service.

Channel 5 has an audience that regards linear TV as their preferred way to view programming. Whilst it is important that regulation keeps pace with changing viewing habits, PSBs must continue to have the flexibility to deliver their remit and licence obligations as best works for them and their viewers.

It is also worth noting that alongside guidance on remit delivery and quotas, proposals to make regulation more ‘digital’ will also have consequences for the regulation of the independent production sector – the so-called Terms of Trade. The Media White Paper noted the need to update the regime to reflect current market structures and viewing habits. Ofcom last updated its guidance in 2007, we therefore would encourage the Government to push forward the review on the Terms of Trade at the same time as introducing the Media Bill.

Secretary of State powers

The Media Bill affords the Secretary of State powers to amend quota levels on PSBs. Paramount would welcome assurances from Government on record that if these powers were to be used, any recommendation by the Secretary of State would be preceded by an Ofcom assessment of audience needs and consultation with the affected stakeholders.

Listed Events regime

Within the next five years we would anticipate that linear viewing for listed events – national sporting occasions that bring the country together – will remain important. However, viewers increasingly expect to be able to view live sports content on a range of devices. A listed events regime based around audience reach (95% as a qualifying threshold) is therefore no longer fit for purpose as it risks some PSBs falling out of the listed events regime.

The Media Bill updates the range of services that fall within scope of the listed events regime to include both television programme services and internet programme services and amends the conditions specifying that qualifying services must be provided by a PSB. We support this step.

We also note that separate to the Media Bill the Government has its ongoing Digital Rights Review which has consulted with stakeholders on what possible future set of rights might be included within the listed events regime. We would suggest the outcomes of this review are clarified in advance of the Media Bill’s passage through Parliament so that any outcomes requiring legislation can be incorporated into the Media Bill.

VIDEO ON-DEMAND

Tier 1 services

Paramount believes that the current criteria – which states that the Tier 1 services will be PSB services used to fulfil a public service remit, other than those operated by the BBC, or any VOD service designated by legislation – is appropriate in the round. However, we would welcome greater clarity on criteria that will be used for consideration when designating a non-PSB VOD service as Tier 1. Such criteria would need to be objective and proportionate. We would therefore welcome either improved clarity in the Bill, or in its explanatory notes.

We note that the Secretary of State is set to have powers to specify which on-demand programme services fall under Tier 1 regulation. The first set of designations must be preceded by a report prepared by Ofcom that addresses ‘any matters’ requested by the Secretary of State. As it stands this could be a far-reaching power for the Secretary of State. We believe it is important that Government work extensively alongside Ofcom and industry when considering which services should be designated Tier 1. We would recommend the Bill ensures appropriate consultation with industry at some point during the classification of Tier 1 services.

Audience protection standards code

There remain fundamental differences between VOD services delivered over the internet and traditional linear TV services that necessitate the ongoing separation of regulatory systems. Generally, in the traditional linear environment each piece of content (where access is not otherwise protected e.g., via a PIN) must be considered as though a viewer may stumble across it without prior information about what the content is. Expert compliance teams will make a judgment about the piece of content in the context of the channel, the proposed time of broadcast and anticipated audience, the day/week/month of broadcast, what precedes and follows in the schedule, on top of strict compliance with Ofcom’s Broadcast Code.

The huge expansion of internet connectivity over the past decade has facilitated the development of VOD services as more than catch-up viewing linked to linear services but destinations for the consumption of audiovisual content. As these platforms have grown they have built a connection with audiences predicated on viewer (as opposed to broadcaster) control of what is watched. Despite the convergence of consumer devices, this distinction in the consumer experience continues to provide the justification for differential regulatory approaches.

Within this context we broadly welcome the approach being taken within the Bill which seeks to focus on outcomes for consumers of VOD through technological measures and the imposing of standards similar to the Broadcasting Code, where relevant and appropriate, rather than prescriptive rules within legislation.

Ratings, guidance and descriptors exist, and are used by VOD services to ensure informed choices are made in the VOD environment. Helping viewers make informed choices about the content they wish to view should be the guiding principle for any oversight of audience protection measures set by Ofcom. A standards-based approach by Ofcom is particularly important for services such as My5 which have a varied content mix that includes both VOD only content and content previously broadcast on an Ofcom-licensed linear service.

One point of note is the expectation that Ofcom’s Tier 1 VOD standards code is anticipated to translate the Broadcast Code’s rules on impartiality into the on-demand environment. It will be important that such a transposition of rules is done in a way that recognises the differences between linear and on-demand viewing. This will be particularly important when considering rules around elections due to the significant archives VOD services have that may include current affairs programming of a political nature.

More generally it is worth noting that given the significant size of VOD service catalogues -  many thousands of hours - whether PSB like My5 or commercial streamers like Paramount+, the imposition of new standards will require time and resource for compliance. It will be important for Ofcom to provide industry with clear guidance on library compliance that afford the sector sufficient time to meet the new standards. 

Accessibility requirements for Video on-Demand

5 and My5 already exceed the proposed thresholds for subtitling, audio-description and signed programming set out in the Media Bill. For other services such as Paramount+ and other streaming services, the proposed standard for signed programming in particular will be a novel requirement.

Paramount contributes funds to the British Sign Language Broadcasting Trust in place of putting signing around content on its Ofcom licensed broadcast channels MTV and Comedy Central. Ofcom should engage with the BSLBT and the wider deaf community to assess whether a similar scheme for VOD would be desirable.

OTHER MATTERS BEING CONSIDERED DURING PRE-LEGISLATIVE SCRUTINY

Ofcom’s new and updated obligations

Ofcom will have a number of new responsibilities as a consequence of the changes to media regulation proposed within the Media Bill. Not least, Ofcom will be required to establish and enforce a new PSB prominence regime and new audience protection standards for VOD services. It will also be required, as consequence of the Bill, to update the listed events and Terms of Trade frameworks.

It is our view that Ofcom is best placed to carry out these duties having done much of the analysis that fed into Government consideration regarding the future of media regulation, notably its Small Screen Big Debate report in 2021 – which recommended a number of measures to secure the future of the PSB ecology. Further, Ofcom has longstanding expertise in regulating media and technology sectors. However, it will be important that, following the passage of the Bill through Parliament, Ofcom has both the appropriate power and flexibility to ensure it can keep up with a changing market, and sufficient funding to carry out its duties effectively.

Linear viewing households

Within its terms of reference the Select Committee has asked for comment on whether the draft Bill provides sufficient protection for those without internet, or who prefer to use broadcast services. We feel this an important question that will present policy challenges for Government beyond the scope of the Media Bill.

Paramount does not believe that the Media Bill will harm linear TV viewers. Importantly, from a Channel 5 perspective, the Bill proposes a degree of flexibility allowing the PSB remit to be met by both linear and on-demand distribution. We do not believe that there is any short-term risk of linear viewers missing out.

However, whilst not included in the Media Bill, there are much broader policy questions to consider regarding the longer-term trend of audiences moving away from Digital Terrestrial Television (DTT) towards an IPTV viewing environment. How the most vulnerable viewers, such as those in rural areas without internet access, or those who cannot afford to pay for internet access will be considered is an important question. We note that in 2021, Ofcom found that 1.5m homes in the UK did not have internet access.

It is also worth highlighting that this UK focused discussion is not occurring in isolation. Global discussions are ongoing and will have an impact on UK viewers, such as those at World Radio Congress on the allocation of spectrum – with pressure from some countries to allocate more spectrum for mobile broadband and military use instead of DTT.

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MITCHELL SIMMONS

Vice President

Public Policy & Government Affairs EMEA

 

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