Submission to DMOL s Consultation on proposals for the reorganisation of the DTT LCN listing and on changes to DMOL s LCN policy
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1 Submission to DMOL s Consultation on proposals for the reorganisation of the DTT LCN listing and on changes to DMOL s LCN policy From the Commercial Broadcasters Association May 2012
2 Executive Summary 1. COBA supports the principle of an evidence-based approach to policy, and the use of audience research as a starting point for consulting on LCN changes. In that respect, we welcome DMOL s proposals not to create a separate shopping genre or reorganise General Entertainment based on channel families. As we detail, Kantar Media s research for DMOL in the consultation clearly indicates that there is no desire amongst audiences for such changes. Kantar s research unequivocally concludes: There is no overwhelming consumer demand for a change to the channel numbering on Freeview viewers typically accept the current situation and pay it little attention or actively question it We are concerned, however, that DMOL suggests that it intends to revisit some of these proposals in the future, despite the lack of viewer interest in the Kantar research. At one point, for example, the consultation notes that changes are likely to be made in the future despite industry or audience concerns, stating: There is likely to come a point where the strategic benefits of making greater changes to the listing policy outweigh potential resistance from channel providers and indifference or a lack of saliency to consumers We believe this is the wrong way around, and that DMOL s approach to LCNs should be audience led, with any changes based on a clear indication that this is what viewers actively want. 4. More broadly, we also believe the fundamentally anomalous nature of DMOL s statutory regulation remains an issue. While DMOL states in this consultation that its LCN listings and policy conform to Ofcom s EPG Code, they are not directly subject to it in the same way as other EPG providers as DMOL does not qualify as an EPG provider under the Communications Act (and, in the interests of transparency, this should be made clear). 1 DTT Channel Numbering an audience perspective, Kantar Media for DMOL, January 2012, page 89 2 Consultation on proposals for the reorganising of the DTT LCN listing and on changes to DMOL s LCN policy, DMOL, March 2012, page 65 2
3 5. In this consultation, DMOL acknowledges that having an indirect relationship with channel providers via the multiplex operator has led to a less than optimal LCN allocation process. DMOL states that the allocation process could be improved and simplified 3 by enabling the channel operator to submit an application directly to DMOL rather than through the multiplex operator. We welcome DMOL attempting to address this as part of this consultation by introducing a more direct relationship with channels. 6. We believe that the same principles apply to DMOL s relationship to Ofcom s EPG Code. Being licensed through the multiplex operators, rather than by Ofcom directly, creates an unnecessarily complex regulatory framework. In addition to this lack of simplicity, we believe this situation means it is more difficult for DMOL to demonstrate transparency and fairness, leaving it open to accusations of bias against channels that are not owned by DMOL owners. 7. We therefore believe it is in DMOL s interests that it is brought into line with other EPG providers and directly regulated by the EPG Code. This will help DMOL demonstrate that it operates fairly and transparently, as well as provide a greater level of confidence for industry in how it is being regulated. We would therefore welcome DMOL considering how this might be achieved. 3 Consultation on proposals for the reorganising of the DTT LCN listing and on changes to DMOL s LCN policy, DMOL, March 2012, page 91 3
4 8. Introduction 1. COBA (the Commercial Broadcasters Association) is the industry body for multichannel sector broadcasters in the UK. Its members are Discovery Networks, BSkyB, Chinese Channel, Fox International Channels, Viacom International Media Networks, NBCUniversal, QVC, SBS Broadcasting Network, Sony Pictures Television, Turner Broadcasting System, UKTV and the Walt Disney Company. COBA was formerly known as the Satellite and Cable Broadcasters Group (SCBG). 2. COBA members are significant investors in the UK: they operate nearly 300 UKregulated television channels and invested 432 million in UK original content in 2009, an increase of 7.5% from 402 million in This means that COBA members are important investors in the UK production sector. Commissioning spending on UK independent producers has almost tripled since 2004, and the sector spends a relatively higher amount on smaller independent producers than PSB broadcasters, helping promote start-ups and SMEs Furthermore, as COBA members include many of the leading global media companies, they represent an important source of inward investment, bringing finance from international markets into the UK and the UK production sector and creating skilled jobs. They are therefore crucial to the UK s status as global hub for the creative industries. 5. For further information please contact Adam Minns, COBA s Executive Director, at adam@coba.org.uk or The Commercial Broadcasters Association s content investment, Deloitte for COBA, 17 March Independent Production Sector Financial Census and Survey 2011, Oliver & Ohlbaum Associates for Pact 4
5 Submission to DMOL s Consultation on proposals for the reorganisation of the DTT LCN listing and on changes to DMOL s LCN policy Question 2 Do you agree with DMOL s proposal not to create a dedicated shopping genre, but to expand the General Entertainment genre to meet future demand and leave the shopping channels within it? Please provide evidence based reasons for your views. 1. We agree that DMOL should not create a dedicated shopping genre. Kantar Media s research for DMOL indicates that there is no appetite amongst viewers for such a move. Kantar s report states that 83% of DTT viewers believed that Concept 5, which introduces the shopping category, would not make a difference to them. 6 This was comparable to Concept 4, where 85% of viewers felt that the proposals would make little difference to them. We therefore believe that the overwhelming majority of viewers see no benefit in such a move. Question 9 Do you agree with the proposal to abolish the local genre and to classify local services within genres by their content? 2. No. DMOL s rationale for doing so, as set out in the consultation paper, is that this is an approach that is likely to appeal to viewers who our research shows are generally supportive of group channels together by content type. We do not believe that the localness of local channels in itself represents a distinct type of content We do not agree with DMOL that its audience research supports this view. According to Kantar Media s report, Concept 2, which introduces the proposal of including local PSB content within the General Entertainment section, drew a 6 DTT Channel Numbering an audience perspective, Kantar Media for DMOL, January 2012, page 52 7 Consultation on proposals for the reorganising of the DTT LCN listing and on changes to DMOL s LCN policy, DMOL, March 2012, page 72 5
6 similar response to concept 1. 8 Kantar Media goes on to state that: Overall, 88% of respondents felt that this would represent no difference to them When non PSB local channels are also added to the General Entertainment section in Concept 3, there is no significant change in audience reaction. Kantar states that: Overall, 87% felt that the implementation of concept 3 would make no difference to them Our reading of Kantar Media s report, therefore, is that there is in fact no desire on the part of audiences for the separate genre for local channels to be abolished. As we detail below in response to Question 16, nor do we believe that the Kantar research supports any more general desire on the part of audiences for changing the current LCN arrangement. 6. We also question the assumption that the localness of local channels is not a good way to define them, or that the General Entertainment section would necessarily be a suitable place for them even if they were categorised in another way. The Shott report for the Secretary of State on the viability of local television concluded that audience appetite for local television was primarily limited to news and informational content, and that their localness should be a defining characteristic. The report observed: Ofcom research has shown an appetite for local TV from audiences, mostly around local news and informational content. There is less evidence of demand for other types of programming. In order to be differentiated from current regional news offerings that carry national brands, the content that is provided should be truly localised and made specifically for the local audience Furthermore, DMOL states that at the heart of the consultation s proposals is the aim to free up space for new services and local television within the General Entertainment genre. 12 We are not convinced that the number of local channels for each area will represent a significant issue for the General Entertainment 8 DTT Channel Numbering an audience perspective, Kantar Media for DMOL, January 2012, page 34 9 Ibid 10 Ibid, page Commercially Viable Local Television in the UK, A Review by Nicholas Shott for the Secretary of State for Culture, Olympics, Media & Sport, December 2010, page 3 12 Consultation on proposals for the reorganising of the DTT LCN listing and on changes to DMOL s LCN policy, DMOL, March 2012, page 10 6
7 section. However, if DMOL s concern is correct, abolishing the local genre is particularly desultory in that it would create an unnecessary pressure on the General Entertainment section through a re-ordering that has no audience support. Question 16 Do you agree that DMOL should not propose a reorganization of the General Entertainment genre by channel families at this stage? 8. Yes. To our knowledge, no other platform has done such a thing in the past. The first-come-first-served principle of securing LCN/EPG positions is well established and, across the sector as a whole, has helped develop a competitive UK broadcasting ecology. Furthermore, Kantar s audience research for this consultation demonstrates that viewers are not in favour of change in terms of the ordering of LCNs or for services to be grouped along the lines that DMOL proposes. In response to Concept 6, in which it is proposed that general entertainment channels are re-arranged by channel family brand, Kantar Media reports that: In total 79% of DTT viewers said that concept 6 would not make a difference to them The report goes on to state that only: 16% said that the concept would be a change for the better (5% a lot better, 11% a little better). 4% stated that concept 6 will be a change for the worse (3% a little worse, 1% a lot worse) In our view these findings clearly indicate that the greater majority 79% - of DTT viewers do not have any active desire for channels to be grouped by family brand. We do not agree with DMOL that concept 6: generated a positive response from viewers. The response can only be seen as positive in the sense that it elicits marginally less viewer apathy than concept 5, where Kantar found that 83% of DTT viewers said that the proposals would not make a difference to them. 15 The incrementally positive response to concept 6 described in the consultation paper might more accurately be described as a marginally less indifferent response compared with the responses to concepts 4 and DTT Channel Numbering an audience perspective, Kantar Media for DMOL, January 2012, page Ibid 15 Ibid, page 52 7
8 Question 17 Do you agree that a reorganisation of the General Entertainment genre into channel families is an issue to which DMOL should return in a future review of LCN listings? What principles might such a reorganisation be based on? 11. No. As we have outlined in response to Question 16, we do not believe that DMOL s audience research indicates any desire for change on the part of the viewer. We therefore do not see a need to return to this issue for the foreseeable future. 8
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