BRO0030

 

Supplementary written evidence submitted by Ofcom

 

Thank you for your letter of 26 June referencing claims from witnesses at your Committee’s Broadcasting in Wales inquiry that some production companies are temporarily establishing a presence in Wales in order for their programmes to be counted towards Regional Production quotas. I have set out some background on Ofcom’s Regional Production Regime and the Made Outside London (MOL) Register as well as responses to the specific questions laid out in your letter.

The Regional Production and Programming quota obligations are a key part of our substantial programme of work to support the entirety of the UK production sector. Since publishing our recommendations to Government on the future of Public Service Media in 2021, we have maintained our focus on this vital part of our broadcasting ecology.

We have commissioned research to better understand the dynamics at play throughout the whole of the UK production sector, and our ongoing year-round engagement with a wide range of stakeholders across the nations and regions also continues to provide us with valuable insights. The challenges that production companies, studios and freelancers face are clear; from commissioning budget reductions, and the growth of more in-house production, to cost inflation and skill shortages. This underlines the critical role that industrial policy interventions - such as the regional production quotas – play, in helping the sector to thrive and we take their implementation very seriously.

In 2019 we concluded a sizable review of the Regional Production Regime, which included both a Call for Evidence and a Consultation on our Guidance for Broadcasters. As a result we strengthened the Guidance criteria that define a Regional Production, including the substantive base criterion. We also added detailed information about the aims of each of the 4 criteria and how they should be applied, to better reflect the intention behind them and to aid stakeholders’ interpretation and application of the criteria. Additionally, we increased reporting requirements (detailed below) and added an easy-to-use process for reporting concerns about a production’s regional status. The updated Guidance has applied since 2021.

“Brass plating” is a concern that we continue to take seriously. We know that many stakeholders are very conscious of the importance of meeting the criteria in an appropriate manner and work hard to do so. However, we are also aware that some worries persist about the presence of brass plating within the sector and this type of activity would clearly be counter to the objective of the regional production regime. When we explored this issue as part of the 2019 review, concerns about this practice were common, but the evidence was anecdotal and limited. The data below also suggests that the opportunities to “game” the system are often more limited than may first appear.

It is important to acknowledge that “brass-plating” is also sometimes conflated with practices that some stakeholders would prefer to be prohibited, but which are within the rules. For instance, it may be the case that a substantial number of productions allocated to Wales in the MOL Register have their headquarters located outside Wales. However, we have made clear that this does not, and should not, preclude such a production company from making a qualifying production, or from making a substantial contribution to the Welsh economy or broadcasting ecology.

Fundamentally, we believe that London plays a key role in nations and regions’ production. It is crucial that production centres in the nations and regions can draw upon London-based resources where necessary. However, we also acknowledge the desire for production centres in the nations and regions to be able to stand alone and work independently of London where possible. The current regime is designed to allow for both approaches, with the aim of providing production companies outside London with enough flexibility to successfully win, and deliver, the widest range of commissions possible.

To turn to the detail of each of your specific questions:

1. What assessment has Ofcom made of the frequency of “brass-plating” or “pop-ups” in Wales?

To help guard against any potential gaming of the substantive base criterion, we introduced the changes to the Guidance to broadcasters outlined above.

We currently receive very few reports of brass plating, so we also have a number of checks in place to identify possible abuse of the regional production criteria.

Firstly we undertake an annual assessment of the Made Outside London Titles Register data, conducting quality assurance and spot-checks (where required) on the information supplied to us by the PSBs in their annual regional production returns. Analysis of the 2021 MOL Register looking at how the substantive base criteria was used to qualify as a MOL production, shows that 58 of the 72 (81%) titles allocated to 4 Wales in 2021 met all three of the MOL criteria (and so would qualify as Welsh productions even if the substantive base criterion was discounted), 9 (13%) qualified on spend and talent alone, with 5 (7%) titles reliant upon the substantive base criteria in combination with either talent or spend to qualify as a regional production, and thus be in a position to potentially “game” the criterion.

• Secondly, we assess any reports or complaints we receive. This work is carried out once the broadcaster has returned the title in question as a regional production. This is because Ofcom is a post-broadcast regulator and the regional production status of a programme can be fluid over its lifecycle. A show, originally commissioned as a “MOL” production, may end up being submitted as a non-regional original production, due to changes such as talent availability or shooting location. In some instances, the status of a show cannot be confirmed until the last details of the final accounts are submitted some months after the production is completed or broadcast.

• Thirdly we continue to gather information from our wide network of stakeholders in the nations and regions on the composition and activities of the production sector outside of London.

2. How does Ofcom check the location of production companies?

Since 2018, we have asked the broadcasters to provide additional detail of where each criterion was met, in addition to the postcodes of the substantive bases reported. As part of our quality assurance process, we look at the postcodes and check they correspond with the allocations claimed for each title qualifying for the register. Any discrepancy would be queried with the broadcaster.

In addition to the quality assurance process, we may conduct spot-checks on entries in the Register. These may be intelligence led or random checks. In these instances, we will initially investigate whether a base appears to be substantive by drawing on desk research and by requesting additional information from the broadcaster about particular productions to ascertain their regional production credentials.

3. Are there any reforms needed to the existing rules to prevent this activity?

Our current view is that further reforms are not necessary at this time, for the reasons outlined above. However, we will continue to monitor this issue as the sector evolves and responds to market conditions. For instance, changes wrought by the Covid-19 pandemic, have, at least temporarily, resulted in more home working. This has the potential to impact on where regional production talent (criterion 3) is “based” and what might constitute a substantive base (criterion 1) should this change prove permanent. We will continue to closely observe such developments, listen to stakeholders, and act where necessary.

4. How do you ensure the published register is as up to date as possible?

The Made Outside London Titles Register comprises all qualifying first-run UK-originated titles broadcast over the full previous calendar year. For example, the register published in August 2022 covers programmes broadcast throughout 2021. 4 As with all PSB quotas, the Regional Production (MOL) obligations are annual quotas. Broadcasters have until the end of March in the following calendar year to compile and submit compliance data to Ofcom for all required PSB quotas. The annual returns submission process relies on individual broadcasters’ interpretation of our regional production guidance.

Ofcom then undertakes a quality assurance process to review the accuracy of the data, which in the case of broadcasters’ MOL submissions includes cross-referencing the relevant datasets to ensure no repeats or programmes transmitted in earlier years are wrongly included in the data.

The annual quality assurance process also involves engagement with the broadcasters. Once our checks are complete, we send any questions about that may arise to broadcasters, which can generate a series of back-and-forth communications and sometimes result in adjustments or resubmission of data by the broadcasters. This process is time consuming, but the timelines involved generally enable us to confirm with broadcasters which of the titles from the March MOL submissions should be confirmed or excluded from the quota data ahead of the publication of the MOL Register in August, alongside all other PSB annual quota data. The spot-checks outlined above also add an additional layer of quality assurance to the MOL Register after publication. I hope this information answers your questions in full.

 

12 July 2023