DMB0053

Written evidence submitted by Sky

Sky’s response to the Culture, Media and Sport Committee’s call for evidence into the Draft Media Bill

Overview

Sky welcomes the opportunity to respond to the Culture, Media and Sport Committee’s call for evidence into the Draft Media Bill. As a major broadcaster and platform operator, Sky is an integral part of the UK content sector and as such has a significant stake in policy discussions around its future.

Sky’s investment in UK content is significant and growing. We’re producing an increasing amount of our original British content across the nations and regions of the UK and will open Sky Studios Elstree this year, leading to the creation of 2,000 jobs and £3 billion of production investment over the next five years. Much of our content bears the key characteristics of public service content. The free-to-air, multi-award-winning and editorially independent Sky News reaches 25m people across the UK and adds to its media diversity and Sky Arts went free to-air in 2020 to further boost the UK cultural economy. Meanwhile this year Sky Kids launched its ad free, 24 hour linear channel, showcasing our growing investment in Sky Originals for children.

Sky also has longstanding, highly effective partnerships with the PSBs that play a vital role in enabling and supporting their public service delivery. We appreciate the role that the PSBs play in supplying high quality British content and enriching the creative industries - just as the PSBs understand the importance of Sky’s platform in reaching their audiences in new and innovative ways. As a result of this we have a unique and well-informed perspective on potential changes to the UK’s media landscape.

We recognise the ambition of the Media Bill to ensure the UK creative economy remains a global success story. We believe the changes in the Bill will support industry as it evolves, but policymakers should ensure that the legislation remains futureproof and fit for purpose by i) ensuring that the must offer/must carry obligations for on-demand prominence strike the right balance for both parties, with regulatory involvement only in the most egregious of circumstances; ii) providing clarification on the criteria for tier one Video on Demand (VoD) providers; and iii) reflecting on the risk to audiences if digital rights are brought under the listed events regime. Appropriate consideration should be made to amend the Bill in these areas before it begins its introduction and legislative process.

Prominence

As one of the UK’s leading platform operators and aggregators, we are a critical partner to the PSBs and play a direct role in connecting consumers to much loved PSB content. Platform providers like Sky have a commercial incentive to both carry and give prominence to PSB content as we know our audiences want to watch and easily find this content. We have a long history of successfully negotiating mutually beneficial deals with PSBs, to the extent that our recent deals with them for carriage of their online services on Sky Glass have been highlighted by Ofcom as examples of an “ambitious and open approach to genuine, strategic partnerships”[1].

The prominence requirements in the Bill should not undermine the current positive commercial outcomes that exist. We therefore welcome the intent of the current approach taken in the draft Bill to provide a high-level framework, with the flexibility for Ofcom to then develop guidance and adjudicate on how the regime will work in practice. As DCMS refines the Bill between now and its full introduction later in the year, it should take care to ensure that the prominence clauses do not lead to unintended adverse consequences for the UK media ecosystem and undermine the existing PSB compact. Particular care should be taken in respect of the agreement objectives included in the Bill in respect of the must offer/must carry obligations[2]. Language here needs to strike a careful balance – protecting the PSBs from unreasonable demands from platforms and giving their content appropriate prominence, whilst ensuring that content that is freely available elsewhere is made available without charge, and that platforms remain free to innovate. Prescriptive rules that significantly disadvantage non-PSB services that make a substantial contribution to the UK content ecosystem should be avoided.

Government could also provide some much needed clarity in regard to legacy equipment. Sky operates a number of services that are no longer actively sold or supported and designation of these would cause significant practical issues. We imagine the same is true of other platform providers. We would suggest that Government looks either to narrow the scope through clarifying language to only those platforms that are still ‘active’ (e.g. by referring to ongoing technical support or similar) or else sets a date from which platforms will be captured. The latter approach would mirror provisions in the existing EPG code on accessibility, which state that certain new accessibility provisions only apply to EPGs "accessed on new models of TV receivers beginning development after 27 July 2018 and any subsequent models".

Finally, while we welcome the need for Ofcom to provide a Code of Practice to both platforms and PSBs on how the regime will work in practice, the draft Bill risks being too prescriptive in requiring Ofcom to set out specific ‘steps’ that platforms can take to ensure they are complying with its prominence requirements. This creates a risk that Ofcom’s guidance will restrain platforms from designing consumer-facing features (such as User Interfaces) that work best for their customers for fear of falling foul of the prominence requirements in the Bill. To align this Code of Practice with the principle-based framework for prominence in the Bill, we recommend this requirement on Ofcom should be reworded to be more high level, which would allow Ofcom to set out the principles of how platforms can be compliant with the on-demand prominence regime without setting out specific actions to take.

Other duties on Regulated Television Selection Services

Separate to prominence requirements, the draft Bill contains a number of other duties for Regulated Television Selection Services (RTSS). We understand the need for these but have a particular concern about the current wording of the accessibility obligations for people with disabilities, which is written in a way that would make it difficult for an RTSS to fully comply with these. For example, while the draft Bill does provide an obligation for Ofcom to issue a Code of Practice to help providers understand how to achieve compliance on accessibility issues, it does not currently allow for an exemption where the third-party equipment does not have the functionality to allow for these features to operate properly. The approach is more flexible for linear EPGs, which allows Ofcom to take these technical practicalities into consideration when considering how EPG providers meet accessibility obligations. We recommend that the Draft Bill is amended to mirror this approach and provide the necessary flexibility to RTSS to practically be able to comply.

Video on demand

Sky recognises the value that On Demand Programme Services (ODPS) provide UK audiences and the contribution they make to the UK’s cultural economy. We therefore welcome the introduction of a new VoD Code, bringing tier 1 ODPS in line with the Broadcasting Code, further protecting UK audiences from harmful material and providing accurate and impartial news[3]. As a broadcaster we understand the importance of protecting audiences from potentially harmful information, and for the vast majority of our content we apply linear standards of compliance, even where it is only available on demand. The new framework outlined in the draft Bill is therefore unlikely to result in any practical changes for Sky.

Nevertheless, Government should look to provide further clarity on how tier 1 services will be defined in order to give industry direction, ahead of the Bill’s introduction into Parliament[4]. Given that the public policy intention is to capture the services that have the largest audience impact, we would assume that tier 1 criteria will be outcomes/usage focused rather than (say) based on ownership of ODPSs or related revenue.

Sky also recognises the need for the introduction of VoD accessibility regulations. We believe that all audiences with varying needs should be supported when viewing content in the UK and trust that the new powers provided to Ofcom will ensure that these audiences are catered for. However, policymakers should be aware of and carefully consider the interplay between platforms and service providers. As a platform operator, Sky has no editorial control over the services available on our platforms and the programming they wish to show. By extension we cannot be responsible for service providers’ fulfilment of these regulations via subtitles and/or audio description, beyond making relevant technical facilities available to our partners. The legal responsibility for compliance should clearly fall upon the service provider rather than the platforms, and we would welcome clarification of this in the Bill and form part of the VoD Code.

Listed events

The listed events regime was originally conceived as a method of ensuring that certain sporting events remained widely available on a free-to-air basis. It is unclear why in the draft Bill Government has moved away from this objective, and towards one where the listed events regime exists primarily to drive competitive advantage towards the PSBs, as a distinct regulatory benefit[5]. It is not the case that the PSBs are somehow uniquely positioned to showcase moments of national unity. Sky’s own experience – most notably in 2020 when we broadcast the crucial Scotland vs Serbia men’s national football game on Pick TV, one of our free to air channels, and drove a 63% share of viewing in Scotland – shows that audiences are happy to turn to alternative broadcasters in order to view crucial sporting moments. As a greater number of services become ever more widely available, the risk is that restricting ‘qualifying channels’ to only those services operated by the PSBs could mean lower audiences overall.

This risk may be magnified in relation to digital rights for listed events, which DCMS is still considering. Sky believes that it may be reasonable and in keeping with DCMS’s objectives for the scope of the listed events regime to be extended beyond its current broadcast definition to cover all rights on a live or full run delayed basis in the case of category A events. However, we believe that there is no obvious justification for shorter form coverage of category A listed event such as clips and highlights to be brought into the regime, provided that broadcasters are able to buy rights to all live and delayed coverage of events.

At present, PSBs maintain strong positions in linear broadcasting, but this is not the case in regard to their digital presence, particularly in the case of the commercial PSBs. If policymakers were to extend the scope of the listed events regime to shorter coverage of category A listed services, this could act to restrict the viewership size of the audiences in the UK and across the world.

Cumulatively, Sky Sports’ various YouTube channels have more than 7m subscribers[6], which is more than 10 times the number of subscribers to the BBC Sport’s YouTube channel with 649k subscribers[7] and 30 times more than ITV Sport’s YouTube channel with 231k subscribers[8]. Furthermore, younger audiences are less likely than older generations to engage with linear and traditional PSB content, rather they seek to consume shorter clips via platforms online such as YouTube, with less than half (47%) of 16-24-year-olds watching at least 15 consecutive minutes of the PSB channels in an average week[9]. Overall, YouTube remains the most popular social video platform in Britain for watching videos of less than ten minutes, used by 70% of internet users aged 15+ for this purpose [10]. In Ofcom’s Media Nations Report (2022), 16-34s watch almost as much SVOD as they do broadcast TV content; in 2021, 16-34 year olds watched 1 hour and 24 mins minutes a day of broadcast TV content vs. 1 hour and 19 mins a day of SVOD content[11]. There is clearly the potential for an increase in importance in digital rights for younger audiences. If digital rights to listed events are restricted to PSBs only, this will perversely act to lessen their potential impact with audiences, acting directly against what is presumably one of DCMS’s policy objectives.

We are still waiting for DCMS to publish its formal policy statement on how digital rights will be governed as part of the Listed Events Regime. However, we believe that policymakers should utilise the opportunity presented by the upcoming publication of the Media Bill to clarify that shorter form coverage of category A listed events will not fall under such constraints.

Conclusion

We believe the suggested changes that we have made within this submission are proportionate and effective and will help achieve the Government’s ambitions for the Media Bill as well as strengthening and assuring the UK content industry going forward. We hope that the Committee agrees with our assessment and looks to recommend these changes to Government in its report as it looks to finalise the draft Media Bill ahead of its formal introduction.