The Broadcasting Act 1990 and re-regulation of British broadcasting broadcasting

The White Paper on Broadcasting in the 90s: Competition, Choice and Quality, the government’s response to the Peacock report, was published in November 1988. It retained essential aspects of the traditional BBC-ITV duopoly, and in this sense, halted the move towards a fully-fledged market system, envisaged by Peacock (Deakin and Pratten 1999: 338). The White Paper made four main proposals, of which the two latter were adopted directly from the Peacock report, and all of which would be core elements of the Broadcasting Act 1990: 1.) it proposed a fifth free-to-air commercial terrestrial television channel; 2.) the IBA was to be replaced with a new, lighter touch regulator, the Independent Television Commission (ITC); 3.) licences for ITV companies were to be allocated (subject to qualifications) to the highest bidder in an ‘auction’, rather than though an administrative procedure; and 4.) Channel 4 was to gain organisational independence and was to be allowed to sell its own advertising (Home Office 1988; Goodwin 1998: 93). The White Paper maintained that the new framework it proposed would promote more open and competitive broadcasting market without affecting programme standards and quality, but was rather ambiguous in specifying how the changes would be carried out to maintain quality and plurality.

Outside observers were more sceptical, as each of the proposals had the potential to transform the core nature of the UK public service broadcasting system, with both programme standards and quality at risk (Goodwin 1998: 93).

The proposal for a radical regulatory reform within the commercial broadcasting sector was without doubt the most ambitious and controversial element of the White Paper. The new regulatory body for commercial terrestrial, satellite and cable broadcasting, the ITC, would assume the powers of the IBA and the CA. However, its primary role was to award broadcasting licences and oversee programming in a retro- rather than proactive manner. Thus, the ITC’s regulatory approach reflected the institutional legacy of the CA, rather than that of the IBA. The ITC was no longer to be the legal publisher for ITV: it was stripped from the right to preview programmes or organise ITV schedules to the extent the IBA did. Its duty was to enforce the

‘”consumer protection” requirements’ on all commercial services: to monitor the

impartiality of news, political and religious programmes, and to consider the violations against ‘taste’, ‘decency’ and ‘public feeling’ (Home Office 1988: para 6.10).

Additionally the White Paper proposed that the ITV companies would be given detailed programme requirements, such as requirements to broadcast regional programmes, ‘high quality news and current affairs’ and to ‘provide a diverse programme service calculated to appeal to a variety of tastes and interests’ (Home Office 1988: para 6.11). The ownership and operation of the transmitters was also to be transferred to an external company.

The organisational reform of Channel 4 also laid within the government’s proposals for a more competitive independent television sector. Channel 4 was still a subsidiary of the IBA, with its advertising sold by the ITV companies. The government wanted to transform Channel 4 to an independent, commercial broadcaster and a competitor to ITV, with its ownership under a public trust. Simultaneously, it maintained that this would not affect Channel 4’s public service remit, which aimed to serve underrepresented minorities in particular. The White Paper did acknowledge the concern that a fully commercial Channel 4 would be anxious to maximise profits at the expense of the public service remit. Apart from outlining three possible options for Channel 4 organisational structure (a private company, a non-profit-making-body or a joint operation between Channels 4 and 5) it was uncertain about the new Channel 4 structure and its effects on the channel’s special remit (Goodwin 1998: 98-9).

O’Malley (1994: 134) argues that the Act ‘created a relatively deregulated commercial TV, satellite, cable and radio sector’ and ‘left the BBC and Channel 4 as the only mainstream broadcasters with the sort of public service broadcasting obligations which had been embodied in the Broadcasting Act 1981 and which previously had been imposed on all TV and radio organisations’. However, it did not go as far in institutional privatisation and deregulation of the television system as some neo-liberal politicians, businessmen and think-tanks wanted, mainly because of vocal criticism against the market elements of the Act from politicians and industry professionals (Bonner and Aston 1998: 381-419). Deakin and Pratten (1999: 325) maintain that the institutional changes produced by the Act modified, but did not

abandon, the ideal of PSB. Changes to the ITV network were minute,²¹ the organisational structure of the BBC was left untouched, and Channel 4’s public service role remained – theoretically at least – unchanged. Moreover, the process of allocating ITV licences was not based solely on financial considerations (i.e. the size of the bid). The ITC’s invitation to apply for Channel 3 (ITV) licences in the 1993 franchise auction contained minute details about the public service programming strands (such as news, education, religion and children’s programmes) that applicants were expected to include in their schedules, and quotas for these strands were included in the broadcasting licences of the successful applicants.

Nevertheless, Goodwin (1998: 166) contends that the introduction of the ‘light-touch’

regulatory regime of the ITC has undoubtedly been a factor in replacing public service by marketisation on commercial channels. The ITC’s regulatory powers to enforce the quality requirements proved to be insufficient once the competition for audience share intensified, since, unlike the IBA, it only monitored and commented on programmes retrospectively, imposing financial penalties in respect of breaches of its code of conduct. It was not able to withstand changes in the spirit or even the letter of public service obligations, such as changes in scheduling (Leys 2001: 146). Born (2005: 52) argues that throughout its existence the ITC was reluctant to exercise its controls and sanctions to the full because it ‘grew intimate with the industry it was supposed to police’. The result of the regulatory reform, Born maintains, has been an increasingly populist programming policies of the commercial broadcasters, to which the BBC had been impelled to respond. Johnson and Turnock (2005: 28) and Harrison (2005: 130) argue that the populism in ITV’s programming policies caused the network to move a number of its mandated public service programmes (such as news and religious

21 Only four franchisees out of the 16 lost their licences: Thames Television’s previous licence was awarded to Carlton Television, Television South’s to Meridian, Television South West’s to Westcountry Television and TV-am’s breakfast TV franchise was awarded to GMTV. Only GMTV’s licence was awarded purely on grounds of highest bidder – the others were outbid in the auction, but licences were awarded to them on quality grounds. Thus, the process did largely preserve the IBA “beauty contest”

administrative choice (Prosser 1993; Goodwin 1998).

programmes) from peak hours to the fringe. When Channel 5²² was launched in 1997, it too was given rather modest public service obligations, which were eventually either reduced by the regulator, or broken at the margin with ‘relative impunity’ (Leys 2001:

145), owing to the aforementioned inherent impotence of the ITC.

The very process of auctioning the ITV franchises created pressure for ITV companies to review their programming. While a few uncontested licensees paid a nominal sum for their licences (such as Central Independent Television’s £2000 bid), the others ended up submitting excessive bids that, in some cases, exceeded their financial endurance.²³ This not only affected ITV companies’ ability to invest in programming, but also created pressures for revenue maximisation through populist programming (Fitzwalter 2008: 102). Faced with increased competition from cable and satellite broadcasters; and, since 1997, Channel 5, the ITV companies felt they needed to grow in order to operate more effectively and economically against competition. The large ITV companies in particular lobbied for relaxation of the ownership rules, particularly as they faced an additional risk of foreign take-over. The Broadcasting Act 1990 prevented any ITV company from owning or controlling more than two licences, but it did not prevent a media company from an EU country to take over an ITV company. In response to fears of foreign takeover of the ITV companies the government amended the anti-monopoly ownership rules at the end of 1993 to allow companies to own up to two large ITV franchises (except for both London franchises) (Johnson and Turnock 2005: 28). These rules were relaxed further in the Broadcasting Act 1996, which permitted mergers as long as they were not considered to affect the quality and range of programmes, and the regional representation of the company and its programming. It also relaxed restrictions on cross-media ownership, allowing newspaper owners to enter the terrestrial television market (Goodwin 1998:

148). The result was a set of mergers, and by 2000 11 of the 16 ITV networks were

22 Rebranded as Five in September 2002. The original name was re-adopted in February 2011.

23 For example, Yorkshire Television submitted a bid for £37.7 million per annum for a licence for a much smaller region, which meant that it needed to spend 33 per cent of its annual revenues just to cover the licence costs (Fitzwalter 2008: 102).

owned by just two companies, Granada and Carlton. Following an inquiry by the competition watchdog, they were finally allowed to merge in 2004 creating ITV plc, which reduced the number of ITV companies to just five (Johnson and Turnock 2005:

29).²⁴ This concentration of ownership in the ITV network was accompanied by centralisation of programming production and drastic cuts in regional production budgets that served to reduce internal pluralism in ITV’s programming and compromise the quality of ITV’s regional programming (Fitzwalter 2008: 161-2).

The passing of Channel 4’s control from the IBA-controlled Channel Four Television Company to the Channel Four Television Corporation, a statutory corporation that was institutionally independent from the IBA and responsible for its own advertising sales, in 1993 also had a profound influence on Channel 4’s programming policy.

Originally envisaged as mainly complementary to the ITV network, the channel’s new position as an independent competitor to ITV made it exposed to commercial pressures of the broadcasting market, and hence shifted its programming radically towards that of a mainstream commercial channel.²⁵ While the channel acted as a

‘voice of plurality’ in its early years, with its alternative and experimental agenda facilitated by subsidies from the ITV network, it began to target mainly the three audience groups that were favoured by the advertisers; teenagers and young adults, light viewers and viewers from the ABC1 socio-economic group, in order to maximise its advertising revenue (Brown 2007: 155-64). Correspondingly, its programming shifted to a more populist direction, with ratings-boosting soap operas and imported American series dominating the peak-time schedules and minority interests occupying an increasingly marginal position in the channel’s organisational priorities (Ellis 2000: 158-9; Born 2005: 46; Hobson 2008: 194). As Born (2005: 46) notes, this

24 ITV plc currently holds all but the following ITV franchises: Scottish and Grampian (owned by STV Central), Ulster (UTV Media) and Channel (Yattendon Investment Trust). It also owns 75 per cent of GMTV plc, which holds the national breakfast television franchise.

25 The link between ITV and Channel 4 was not, however, broken, but Channel 4 was guaranteed a share of ITV income should it run to financial difficulties (Brown 2007: 157).

has only served to increase the similarity between the schedules of Channel 4 and its commercial rivals, thus further intensifying competition in the broadcasting market.

Paradoxically, considering that the ideological father of the Act, the Peacock Committee, was originally set up to scrutinise the BBC’s financing and position, the Broadcasting Act left the BBC untouched (apart from imposing a 25 per cent independent production quota²⁶ and moving from the system of pegging the licence fee to the RPI to setting the fee below the RPI in April 1991 (O'Malley 1994: 134-5)).

The fact that the Home Office and the Department of Trade and Industry were negotiating with the BBC and IBA about moving BBC2 and Channel 4 to satellite to free terrestrial frequencies for new advertising-funded commercial channels only five months before the White Paper demonstrates that the government was still uncertain about the future of the PSB system prior to the Act (Goodwin 1998: 89). The White Paper, however, acknowledged that ‘the BBC will continue as the cornerstone of public service broadcasting’ (cited in Reville 1991: 4). Reville (1991: 4) suggests that this fact ‘explains, in part, the policy of the 1990 Act in imposing on all independent services, other than Channel 4, programming requirements that fall short of those found in public service broadcasting.’ In other words, the government’s intention was to shift the public service ‘burden’ from commercial channels to public channels, thus allowing greater competition between the commercial channels.

4.2.5. The rise of the New Labour and the neo-liberal consensus in the