Tv

The Communications Market 2006

4 Television

Published : 10 August 2006

181

Contents
4.1 Key themes - Television

184

4.1.1 Strong performance by mainstream networks’ spin-off channels

184

4.1.2 Competition for audiences intensifies on Freeview

184

4.1.3 Operators bring content on demand and on the move to market

185

4.1.4 Roadmap for digital switchover takes shape

185

4.2 The year in TV

186

4.2.1 The five mainstream channels spin offs gain share

186

4.2.2 Multichannel TV gains in popularity on Freeview

187

4.2.3 The five main channels diversify revenue sources

188

4.2.4 On-demand content shifts up a gear

189

4.2.5 The industry embraces content on the move

191

4.2.6 Emerging policy framework defines future shape of TV market

192

4.2.7 Another year of record TV licence awards

193

4.2.8 High definition television comes to market for the World Cup

194

4.2.9 Digital television - the roadmap to switchover is revealed

196

4.2.10 Platform operators launch service enhancements

199

4.2.11 Channel operators launch new channels

201

4.3

The television industry

204

4.3.1 TV revenue exceeded £10.5bn in 2005

204

4.3.2 The multichannels continue to build advertising share

205

4.3.3 Industry flow of funds– subscription revenue shows significant growth

207

4.3.4 Total industry output stood at 1.4 million hours in 2005

208

4.3.5 Originated hours fall due to ITV1’s reduced regional output

209

4.3.6

211

Factual has been the growth peak-time PSB genre for seven years

4.3.7 ITV, BBC and Five increase the proportion of peak time General

213

Factual in 2005
4.3.8 Entertainment and Children’s were the largest multichannel genres

216

4.3.9 Compliance with regulatory obligations

219

4.3.10 Original productions

220

4.3.11 Regional productions

220

4.3.12 Independent productions

222

4.3.13 News and current affairs

224

182

4.3.14 Programmes made for a regional audience

225

4.3.15 Repeats

227

4.3.16 European programming

228

4.3.17 Operators’ market shares

232

4.3.18 The five main channels retained more share in peak than in other

233

slots
4.3.19 Share loss from the five mainstream networks offset by spin-off

234

channels
4.3.20 Competition for Freeview audiences intensified in 2005

235

4.3.21 Five mainstream networks’ portfolio share holds up in multichannel

236

homes
4.3.22 The production sector

4.4

The television viewer

241

247

4.4.1 Multichannel broadcast platforms available to consumers

247

4.4.2 Freeview drove the growth of multichannel homes in 2005

250

4.4.3 Future growth in multichannel homes looks set to continue

252

4.4.4 Freeview attracts an older, more affluent demographic

254

4.4.5 Consumption of television services

255

4.4.6 TV reach amongst younger people is falling

256

4.4.7 The picture of channel share since 1955 – multichannels making

258

inroads into the share of the five mainstream networks
4.4.8 Total share of Entertainment channels grows, driven by Freeview

260

4.4.9 The five main networks’ spin-off channels gained share in 2005

264

4.4.10 Multichannel operators cater for most audience demographics

266

4.4.11 Violence, swearing and intrusion remain key concerns for the public

267

4.4.12 Television remains the public’s primary source for news

269

4.4.13 TV news viewing is declining

271

4.4.14 Regulating television for the protection of children and youth

273

4.4.15 Public attitudes toward advertising

277

183

4.1 Key themes - Television
4.1.1 Strong performance by mainstream networks’ spin-off channels
The five main channels (BBC One, BBC Two, ITV1, Channel 4 and Five) have
launched a range of spin-offs over the last eight years, starting with BBC News24 in
1997. In 2005 the commercial mainstream channels were especially active - ITV
launched ITV4, CITV and ITVPlay; Channel 4 took E4 and Film Four free-to-air on
Freeview and launched More4 and Quiz Call; Five announced the 2006 launches of
Five Life and Five US.
These new channels have come to air with a number of advantages over their
competitors:
•
•
•

established brand identities;
promotional airtime on channels with a wide reach; and
access to rich programme archives and well-known programme brands.

An analysis of the channels available only in multichannel homes that gained the
most share in 2005 shows that mainstream spin-offs featured prominently in the top
twenty strongest performers. The strong performance of these channels is reflected
in the portfolio shares of the five mainstream channels and their spin offs – in each
case, share lost from the main network has been to some extent offset by share
gains on these spin-off channels.
4.1.2 Competition for audiences intensifies on Freeview
By the end of March 2006, Freeview had been installed in 7.1m homes, having
gained 2 million homes in 12 months. The growing reach of Freeview increased the
attractiveness of the platform to commercial broadcasters in 2005 and, amid reports
of escalating prices for spare Freeview slots, the five main channels and digital-only
channel operators4 brought higher value free-to-air content onto the platform. That
included the channel launches outlined above and BSkyB swapping Sky Travel for
Sky Three.
In a sign that competition on Freeview is intensifying, the digital-only channels
collective audience share across the whole of 2005 exceeded that of any one of the
five main networks for the first time. The platform still provides some protection to the
five main channels from the steep falls in audience share typically associated with
analogue terrestrial homes moving to satellite or cable, but the level of protection is
diminishing. The intensification of competition for audiences looks set to continue
with the launch of Five’s two new channels scheduled for later in 2006.
4.1.3 Operators bring content on demand and on the move to market
Alongside the strengthening of the Freeview proposition other platforms launched
value-added services in 2005/06.
•

4

High definition television (HDTV). Both BSkyB and Telewest brought their
HDTV services to market. Telewest’s service arrived first, offering access to a

‘Digital only channels’ are taken to mean those channels that are only available on the
Freeview, Top Up Tv, FreeSat, Sky and ntl:Telewest platforms. The term includes the
channels that are available in analogue cable homes.

184

range of on-demand content in high definition alongside BBC and ITV highdefinition broadcasts. BSkyB is now offering an HDTV channel bundle that
includes Sky Sports, Sky Movies, Sky One, ArtsWorld, National Geographic,
Discovery and the BBC’s HD channel on top of Sky Box Office.
•

On-demand content. Telewest began offering full video on demand in 2005
through its pay-per-view Teleport service. BSkyB acquired broadband access
provider EasyNet and launched its Sky by Broadband service offering access
to a selection of films and sports news clips.

•

TV over broadband. Channels and content providers began to exploit the
high take-up of broadband in the home, with the launch of paid-for content
available via the internet from Channel 4 alongside free access to music
video and entertainment clips from MTV. Meanwhile, the BBC trialled its
integrated media player (iMP, later renamed BBC iPlayer) in late 2005. AOL
(in a deal with Warner Studios) also came into play with a film download
service. Channel 4 began to simulcast its main channel over the internet and
the BBC and ITV are piloting a simulcast service for all of their channels.

•

TV over mobile. A number of broadcasters and channel operators joined
forces with mobile operators, telecommunications operators and transmission
infrastructure providers to test the public’s appetite for mobile television. Trials
using DAB spectrum in London and utilising the DVB-H standard in Oxford
suggested that consumers were willing to pay for mobile TV – and that
content was often consumed at ‘dead’ times such as when commuting into
work.

4.1.4 Roadmap for digital switchover takes shape
In September 2005 the Secretary of State for Culture, Media and Sport, Tessa
Jowell, announced the date when analogue television transmissions will cease.
Between 2008 and 2012 the switchover process will progressively free up spectrum
currently used to support analogue television broadcasts.
With the roadmap for the transition now in place, Digital UK, the organisation
responsible for overseeing the UK’s transition to DTV, kicked off a seven year
national advertising campaign.
Joint research commissioned by Ofcom and Digital UK has revealed that a majority
of the population had heard of digital switchover and that about 30% have already
converted all their television sets to digital. But with many homes having two or more
television sets, there is still a large number of analogue televisions needing
conversion.

185

4.2 The year in TV
4.2.1 The five mainstream channels spin offs gain share
The five mainstream channels (BBC One, BBC Two, ITV1, Channel 4 and Five)
began a programme of multichannel launches beginning with the launch of BBC
News24 in 1997. Since then, these channels have together launched 17 additional
channels (Figure 4.1), three of which have either closed (ITV News) or been replaced
with new services (BBC Choice and BBC Knowledge).
The three main commercial channels were particularly active at launching channels
during 2005. ITV brought ITV4, CITV and ITVPlay to air, while Channel 4 launched
More4 and Quiz Call (through its subsidiary Ostrich Media). Five also announced the
launch of two new free-to-air channels, Five Life and Five US, which are due to
launch later in 2006.
Figure 4.1: The mainstream channels’ spin-off channel launches
Operator

Channel

Launch

BBC

BBC News 24
BBC Parliament
BBC Choice
BBC Knowledge
CBBC
CBeebies
BBC Four
BBC Three

November 1997
September 1998
September 1998
June 1999
February 2002
February 2002
March 2002
February 2003

ITV

ITV News
ITV2
ITV3
ITV4
CITV
ITV Play

August 2000
December 2002
November 2004
November 2005
March 2006
March 2006

Channel 4

Film Four*
E4*
Quiz Call
More4

Closed/replaced

November 1998
January 2001
August 2005
October 2005

February 2003
March 2002

December 2005

*Originally subscription-only services

Many of the recent spin-off channel launches feature in the list of channels that have
gained the greatest percentage point share in 2005 (Figure 4.2).

186

Figure 4.2: The 20 channels that gained most percentage point share in 2005
Percentage point gain in share in 2005
ITV3

0.97%

Channel 4
E4
ITV2
Five
True Movies
BBC3
ABC1
More4
Living TV 2
UKTV Drama
UKTV Style Gardens
UKTV People
BBC2
Sky Sports 3
Men+Motors
Sky Three
ITV4
Sky Travel
CBBC

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

0.6%

Source: BARB

The strong performance of the spin-off channels, which has helped to offset some of
the share loss incurred by the five mainstream networks, may be explained by the
fact that these channels benefit from established brand identities, are promoted on
channels with a wide reach and have access to rich programme archives and wellknown programme brands.
4.2.2 Multichannel TV gains in popularity on Freeview
Digital television penetration broke through the 70% barrier in early 2006 (Figure
4.3). Continuing a trend from 2004, Freeview conversions were the main driver
behind the growth of digital television take-up in 2005, gaining 2.0 million homes in
the 12 months to March 2006 and taking the total number of Freeview homes to 7.1
million. For the first time, main sets in the home with Freeview exceeded the number
of analogue main sets (though satellite is still the most popular method for receiving
television on the main set in the home), but when all sets are taken into account the
majority (60%) are still analogue-enabled.

187

Figure 4.3: Multichannel penetration in the UK
Homes (m)

20
Analogue cable

15

Digital cable
Digital terrestrial (DTT)

10

Free-to-view digital satellite

5

Analogue satellite
Pay digital satellite

0
1999

2000

2001

2002

2003

2004

2005

2006

Source: Operator figures, sales data and Ofcom estimates

The growing popularity and reach of Freeview came alongside both a broadening of
the range of channels available on the platform and an increase in the levels of
investment made by operators in channel content meant that multichannel share on
Freeview exceeded that of any one of the five main networks for the first time (Figure
4.4).
Figure 4.4: Channel shares on Freeview
Audience share

30%
BBC One
BBC Two

20%

ITV1
Channel 4
Five

10%

Other
0%
2001

2004

2005

2006

Source: BARB

4.2.3 The five main channels diversify revenue sources
In 2005 the five main channels took steps to counter increasing competition for their
established base of advertising revenue. A number of new approaches emerged
during the year:
1. Continuing expansion into the multichannel market
The networks have developed targeted services designed to capture share, enhance
appeal to advertisers and thereby maintain (or ideally build) portfolio share. For
example, capitalising on the growth in popularity of its two existing multichannel
services, ITV launched ITV4 at the end of the 2005 and CITV in early 2006. ITV4 is
targeted at a younger, male audience and is designed to complement established
audiences for ITV’s other channels. CITV allowed ITV to capitalise on its established
presence in children’s output and its extensive programme catalogue. Channel 4

188

followed suit with the launch of More4 which has attracted an older, ABC1-skewed
audience.
2. Taking subscription channels free-to-air
With the DTT platform attracting an increasing number of viewers, two channels
found it economically viable in 2005/06 to discard the subscription model and rely
instead on advertising revenue. Channel 4 toook the plunge with E4, which went
free-to-air on Freeview ahead of Big Brother 6; it followed with FilmFour in July 2006.
3. Reduced dependency on advertising revenue
By building direct transactional relationships with audiences, channels can lessen
their dependence on advertising revenue. Channel 4 launched Quiz Call in August
2005 and ITVPlay went to air in March 2006. Offering cash prizes, these gaming
channels raise revenue through a premium rate telephone number that quiz
participants call. ITV announced that ITVPlay had generated £2m of profit in January
2006 during a pilot phase.
4. Diversification into new media
ITV acquired Friends Reunited in 2005, bringing in a range of new revenue streams
from services including dating and genealogy into ITV’s top line. It also launched a
local service for Brighton and Hastings over broadband which has the potential to
deliver new revenue streams in the future.
4.2.4 On-demand content shifts up a gear
The market for on-demand content evolved in 2005 as a range of platform operators,
content providers and businesses outside the media sector sought to capitalise on
the public’s appetite for programmes delivered at their convenience.
Two delivery models are now established.
The first, the personal video recorder (PVR) uses mass storage in the home
pioneered first by TiVo in the year 2000 and then by BSkyB with Sky+ (Figure 4.5).
This service had attracted 1.4 million subscribers by the end of the first quarter of
2006, representing a 46% increase in 12 months.
Figure 4.5: Sky+ subscribers
Homes (m)

1.5

1.0
1.3

0.5
0.4

0.5

0.6

0.8

0.9

1.4

1.0

0.0
Q2 2004 Q3 2004

Q42004

Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006

Source: BSkyB

189

A number of comparable devices and services were either launched or announced in
2005, as outlined in Figure 4.6 (note that Sky+ is included for completeness).
Figure 4.6: Local storage options available or planned
Cost
Operator

Service or
device

Description
Up-front (£)

Monthly (£)

BSkyB

Sky+

£299

£0 – £10 A PVR capable of storing 80 hours of content. HDTV
compatible.

Telewest

TV Drive

None

£0 – £10 A PVR capable of storing 80 hours of content. HDTV
compatible.

Various

Freeview PVR

£130
minimum

None PVRs typically offering 80 hours of storage, some with 7 day
EPGs and dual tuners. Freeview consortium plan to promote
them using the Freeview Playback label later in 2006.

Various

Plug-in device
for PCs or Mac

£29
minimum

None USB devices that enable a PC or Apple Mac to decode the
Freeview signal and to record content onto the hard drives

Forthcoming
Top Up TV

Anytime

tbc

tbc Set top box offering PVR functionality.

BT

Vision

tbc

tbc Integrated Freeview tuner and PVR. Access to pay per view
content.

The revenue models underpinning these services vary from one-off device fees
(Freeview PVRs) to monthly subscriptions for device rental (Telewest’s TV Drive) to
service-based subscriptions (Sky+).
The second on-demand delivery model to emerge in 2005 exploits the increasing
penetration of broadband connections to the home. The growth in popularity of legal
audio downloads has shown that consumers have an appetite for digital downloads
and, given the chance, many are willing to pay for them. This demand has translated
into the audio-visual space with peer-to-peer services such as BitTorrent becoming
increasingly popular. Responding to the technological and consumer demand
opportunity, platform operators, content producers and rights owners have developed
a series of on-demand services to offer the customer legal video download services
(Figure 4.7).
Figure 4.7: On-demand internet-based content services available or planned
Operator

Cost

Description

BBC

Free

Time-limited access clips and shows from BBC Two and BBC Three including
The Culture Show and Anthea’s Tips.

MTV

Free

Access to music videos and entertainment-based content. Offers consumers
the chance to purchase CDs.

BSkyB

Free for premium
subs

Access to sports news clips and a selection of films.

Channel 4

99p per show

Paid-for episodes of Lost and Desperate Housewives, accessible for 24 hours.

Five

£1.50 per show

Downloadable episodes of Fifth Gear.

BT

tbc

Pay-per-view access to a range of films and archive programming and near-live
premier league matches

Flextech

tbc

Online rentals of US shows e.g. Gray’s Anatomy and Alias and chance to buy
own shows e.g. Most Haunted.

Forthcoming:

190

The BBC, meanwhile, began to explore the possibilities of on-demand over
broadband on two other fronts:
•

The integrated media player (iMP) pilot explored customers’ appetites for
broadcast quality downloadable content. Running through the third and fourth
quarters of 2005, the pilot made use of peer-to-peer filesharing to minimise
the download burden on the BBC’s infrastructure; and

•

Mirroring ITV’s local broadband service for Hastings and Brighton which
launched in October 2005, the BBC followed in December with a broadband
and interactive satellite pilot of ‘ultra-local’ television, offering targeted news
services to a number of local territories within the West Midlands region.

4.2.5 The industry embraces content on the move
Delivering content not just when consumers want it but where they want it was also
an emerging theme in 2005, with operators piloting or launching services over both
mobile networks and the internet.
The delivery of audio-visual content to mobiles enables broadcasters to raise
additional revenue off the back of existing and reversioned content. It also enables
customers to make use of traditionally ‘dead’ time such as the commute to work, and
offers broadcasters the opportunity to forge a relationship with an audience
demographic whose relationship with traditional television is weakening.
Several broadcasters struck deals with 3G mobile network operators to deliver audiovisual content to mobile handsets. Sky by Mobile was launched with Vodafone in
October 2005 with a total of 19 channels bundled into two packages – one Factual,
the other Entertainment-based. Paying £5 per month for either package (on top of the
usual network subscription), subscribers get access to content from channels such
as Discovery and Sky News. ITV came to an agreement with the 3 network in
November to give its subscribers access to live television coupled with programme
clips and highlights.
Meanwhile, two services offering TV content to mobile handsets were piloted in 2005.
The first trial, in June 2005, involved Virgin Mobile/BT and DAB broadcast capacity to
deliver content to mobile handsets. This service generated average viewing levels of
one hour per week, and the subsequent evaluation revealed that 66% of users would
be willing to pay up to £8 per month the service. BT has subsequently confirmed that
it will be launching a commercial version of this service, Movio, towards the end of
2006.
The second trial, in September, involved Arquiva, O2 and Nokia. It used the DVB-H
mobile television standard, offering access to 16 live television channels including
Discovery, MTV, Cartoon Network and the five main networks. Interim results
suggested that there was an appetite for the delivery of content on the move, with
viewing averaging three hours per week.
A summary of these mobile content pilots and fully-fledged services is illustrated in
Figure 4.8.

191

Figure 4.8: On-demand mobile content services available or planned
Service

Partners

Delivery model Status

Services

BT Movio

BT
DAB
Virgin Mobile

Technology

Broadcast

Pilot in London

Sky News, Cartoon Network, ITV2, E4, Channel 4

02 Trial

O2
Arqiva

DVB-H

Broadcast

Pilot in Oxford

Cartoon Network, CNN, Discovery Channel, Sky Sports News,
Sky Travel, Chart Show TV, Sky News, Sky Travel

Orange TV

3G

One to one

Available to Orange
subscribers for £10 per
month

Bloomberg, Bravo, Cartoon Network, CNN, Kerrang!, Kiss,
Smash Hits, FHM TV, Living TV, Channel 4

Vodafone

3G

One to one

Available to Vodafone
subscribers for £3 £10 per month

Sky News, Sports and Factual pack: Sky News, Sky Sports
News, Discovery, CNN, Bloomberg, The History Channel,
National Geographic Channel
Sky Music & Entertainment pack: Sky One, MTV, Cartoon
Network, Bravo, LivingTV, Nickelodeon, Discovery Lifestyle,
Paramount Comedy
Variety pack: Fashion TV, Eurosport, Channel 4, HBO content

Widening the availability of broadcast channels using the Internet was another trend
amongst broadcasters in 2006. Channel 4 launched a simulcast service of its main
channel over the internet. ITV and BBC also began piloting a similar service for all of
their channels (though this is only available through broadband service providers who
support multicasting, which ensures that the burden on the broadcaster’s distribution
infrastructure is minimised).
4.2.6 Emerging policy framework defines future shape of TV market
Three broadcasting policy areas took significant steps forward in 2005/06, which
together will provide a roadmap for the future development of the BBC and may also
come to define the shape of the industry as a whole. The first, digital switchover, is
considered in section 4.
The second development came in June 2005 with an announcement by Ofcom of the
review of the Channel 3 and Channel 5 licence payments. Reflecting the declining
value of ITV’s access to analogue spectrum, the licensing terms were revised in a
way that was forecast by ITV to reduce its licence payments by £132m to £75m in
2005. ITV anticipates that on completion of digital switchover in 2012, the payments
made for its analogue licences will total £4m per annum.
The third development in March 2006 saw the publication of the DCMS White Paper
on the government’s policy towards the BBC in the next charter period (2007 to
2016).
The DCMS definition of the BBC’s public purposes
•
•
•
•
•
•

192

Sustaining citizenship and a civil society;
Promoting education and learning;
Stimulating creativity and cultural excellence;
Reflecting the UK’s nations, regions and communities;
Bringing the world to the UK; and
Building digital Britain.

The White Paper emphasised the characteristics that should distinguish BBC content
– high quality, challenging, original, innovative and engaging. The responsibilities of
the new governance body, the BBC Trust, were defined with an emphasis on clarity
of purpose and clear separation from the executive body.
The publication of the White Paper was preceded by a BBC bid for licence funding
running at 2.3 percentage points above inflation for seven years to help deliver the
BBC’s blueprint for the next Charter, Building Public Value. The White Paper was
followed by the BBC’s Director General announcing the ‘Creative Future’ strategy in
April 2006, setting out the editorial strategy the Corporation plans to adopt to
underpin the delivery of the blueprint. The BBC has since announced a
reorganisation of its business to support the delivery of Create Future.
4.2.7 Another year of record TV licence awards
Ofcom once again awarded more television broadcast licences in 2005 than ever
before. Note that a licence issued does not equate to a service launched on any DTV
platform; there can be a significant lag between getting a licence and launching a
service. In some cases, issued licences never result in a service launch.
The number of licences issued in 2005 rose to 168, up from the 156 that were issued
in 2004. Of that total, Ofcom estimates that 85% were for UK channels (Figure 4.9).
Figure 4.9: Licences issued by Ofcom and the previous regulator (ITC)
Number of licences issued

180
160
140
120
100
80
60
40
20
0

25
36
12

Overseas
licences
UK
licences

134
109
29

33

43

50

126
93

114

120

143

50

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Note: For years with purple bars, no distinction is made between UK licences and overseas licences.
Source: Ofcom

Entertainment and Shopping continue to be the most popular genres for which
licences were issued in 2005, as Figure 4.10 illustrates. They also included licences
issued for the HDTV services on BSkyB and Telewest, and for ITVPlay and Channel
4’s Quiz Call service.

193

Figure 4.10: Television licences awarded in 2005
Breakdown of licences

Other
15%
Sport
4%
Movies
4%
HD channels
4%
Gaming
4%
Music
6%
Factual
7%

Entertainment
35%

Ethnic
8%

Shopping
13%

Source: Ofcom

4.2.8 High definition television comes to market for the World Cup
High Definition Television (HDTV) was launched in the UK in December 2005 when
Telewest began a four-month roll out of its high-definition service. BSkyB followed in
May 2006 with the launch of Sky HD ahead of the World Cup.
Telewest’s service offers access to a range of films on demand (through its Teleport
product) and to the BBC’s and ITV’s high definition services. Sky, meanwhile, has put
together a channel bundle that includes its sports and film services alongside factual
output from Discovery and Artsworld, although output on those channels is not
always broadcast in a high-definition format. (Figure 4.11).
Figure 4.11: Comparison of the two high-definition services
Telewest HD
Cost

Sky HD

• £10 - £15 per month (depending on

• £299 for a set top box
• £10 per month

subscription tier)
Services

• TV Drive (80 hour PVR)
• HD content from ITV and BBC
• Pay-per-view films

• Eight channels: Sky Sports, Sky Movies, Sky
One, ArtsWorld, Discovery, National
Geographic, BBC HD
• Pay-per-view films from Sky Box Office
• Sky+ (80 hour PVR) available for £0 - £10
(depending on subscription tier)

Sky estimates that sales of HD-ready television sets would reach 1.4 million in 2006,
taking the total number of set sales to 2.1 million by the end of 2006.
On top of these commercial service launches, a consortium of broadcasters launched
a six month pilot of HDTV on the DTT platform in June 2006 in the London area. Five
hundred homes have been equipped with set-top boxes capable of decoding the HD
signal, giving access to content including Lost, Space 1999, event programming from
the BBC (Wimbledon and the World Cup) and a number of BBC co-productions such
as Bleak House and Planet Earth. Meanwhile, the BBC trialled downloadable HD
content via its integrated media player pilot (BBC iPlayer).

194

Looking ahead, the availability of HD-capable equipment and content is set to widen
with the launch of two competing high-definition DVD formats (Blu-Ray and HD
DVD). The take-up of these formats (and ultimately whether or not one emerges as
the dominant format) may be determined by the relative popularity of the next
generation of games consoles. A Blu-Ray DVD player will be integrated into the PS3
while an HD DVD player will be marketed as an add-on to the Xbox 360.
High-definition TV explained
High-definition TV (HDTV) is the generic term that is used to describe any
television signal that has a higher resolution than the standard TV signal that has
been broadcast for nearly forty years. The term HDTV actually covers a range of
different standards.
A standard UK television signal comprises 625 lines of information from the top of
the screen to the bottom (just 576 of these lines can be seen by the viewer), and
768 lines from left to right. This means that fine details – especially on newer
large-screen TVs – tend to become blurred. HDTV increases the number of lines
of information, either to 720x1280 or to 1080x1920. This means that finer details
can be represented within the picture.
HDTV can also differ from a standard television broadcast by the way in which the
lines of information are refreshed (updated) on the screen. In standard TV, and in
the current 1080x1920 format, the horizontal lines of the picture are renewed
alternately – i.e. lines 1,3,5,7…etc. are refreshed to the bottom of the screen, then
lines 2,4,6,8…etc. are refreshed. Since UK TV pictures are broadcast at 50Hz,
this means that every line of the picture actually only changes at half that rate –
25 times per second. This system is known as interlacing, and is usually depicted
by the suffix ‘i’.
The alternative system is called progressive scanning, and entails updating each
line of the picture in sequence. This means that the whole picture refreshes 50
times per second – double the rate of interlacing. Progressive scanning can give
the viewer the perception of higher vertical resolution than an interlaced picture.
Progressive scan formats have the suffix ‘p’.
Currently, Sky’s HD broadcasts use the 720x1280 progressive scan system
(known as 720p), whereas the BBC’s HD output is at 1080x1920 interlaced (or
1080i).
An important factor for HD viewers is that most ‘HD-ready’ TVs can only support
720-line signals (most LCD and plasma TVs currently have 768 lines top-tobottom and 1024 lines left-to-right). Indeed, the ‘HD-ready’ logo can be applied to
any TV that has a minimum of 720 horizontal lines. The small number of plasma
TVs that support 1080x1920 are currently priced at the high end of the market,
although prices may fall as production increases. Viewers with 768x1024 TVs can
still view 1080i HD pictures, but some of the lines of information need to be
combined in order to display the picture

195

4.2.9 Digital television - the roadmap to switchover is revealed
The Secretary of State for Culture, Media and Sport confirmed in September 2005
that digital switchover will be completed by 2012. Tessa Jowell explained that the
switchover programme would begin in 2008 with the Border region, and roll out
across other ITV regions over the following four years (Figure 4.12).
Figure 4.12: The timetable for digital switchover

Source: Digital UK

196

Digital UK, the organisation responsible for managing the transition to digital
television, launched its programme of communications and assistance in May 2006,
in what will be a seven year, £200m campaign to inform and support the public
through switchover.
With 72.5% of UK homes receiving multichannel television on their main set, there
are still 7 million homes which have no access to digital television. Ofcom’s Media
Literacy research uncovered a variety of reasons for not switching to multichannel
television, as highlighted in Figure 4.13. Two barriers to adoption included
contentment with the five main channels and concerns over cost.
Figure 4.13: Reasons for not switching to digital television
Proportion of respondents not intending to get digital TV in the next 12 months

Happy with current channels/not interested
Expensive
Concerns over frequency of viewing
Lack of understanding
Quality of content
No coverage
Don't watch much TV
Hard to use
Other

68%
27%
11%
5%
4%
4%
3%
3%
5%

0

10

20

30

40

50

60

70

Source: Media Literacy Audit June – August 2005. Multiple responses permitted

These barriers may subside as the Freeview channel proposition continues to
strengthen and as Freeview set top box costs fall further.
Even with a large proportion of homes having already converted their main sets to
multichannel television, the fact that many have two or more sets means that there
are still a substantial number of homes needing conversion (Figure 4.14).
Figure 4.14: Number of sets per home
Proportion of homes

30%
25%
20%
15%

30%

34%
21%

10%

11%

5%

3%

0%
1

2

3

4

5 or more

Source: Ofcom

197

80

Research jointly commissioned by Ofcom and Digital UK revealed that a significant
proportion (60%) of people had heard of digital switchover, but many of those people
did not realise that every set in the home would need converting to digital (Figure
4.15).
Figure 4.15: Awareness of ‘digital switchover’ and awareness of the need to
switch all sets
Proportion of respondents (percent)

100%
80%

37%

40%

No
60%
40%
Yes

60%

62%

Heard of digital switchover

Aware of need to convert every set

20%
0%

Source: Ofcom/Digital UK

That same research suggests that nearly two-thirds of the UK population have
already converted, or plan to convert, all of their television sets to digital when
required. A further 25% may not convert all sets, but plan to convert some (Figure
4.16).
Figure 4.16: Plans to convert television sets
Proportion of respondents (percent)

40
30
20
10

35
26

25
11
3

0
All sets already
converted
Source: Ofcom/Digital UK

198

All sets will be
converted

Some sets will
be converted

No sets will be
converted

Don't know

4.2.10 Platform operators launch service enhancements
BSkyB
In the year to the 31st March 2006, BSkyB revenues were estimated to be £4,314m,
up 14%. Subscription revenue increased by 10% to £3,149m while advertising
revenue rose to £344m, a 4% increase. In that same period, BSkyB gained an
additional 400,000 homes taking the platform operator’s total UK subscriber base by
the end of the quarter to 7.7 million.
Sky+ subscribers exceeded one million for the first time in 2005 and had reached
1,430,000 by the end of the first quarter of 2006. Multi-room subscribers (which
allows different Sky channels to be viewed in different rooms in the home) stood at
990,000 at the end of the same period.
In September 2005 BSkyB restructured its channel packages to widen choice and
simplify pricing to support the drive towards a 10 million homes subscriber target for
2010. At the time of the restructuring the cost of the top tier package was increased
by £1.50 to £42.50 per month. In October, BSkyB took a controlling interest in
broadband service provider Easynet and also launched Sky by Broadband, offering
existing subscribers access to downloadable films and sports news clips over a
broadband connection. The company has since launched a free broadband access
service that is available to all of its subscribers.
Ntl/Telewest
NTL and Telewest completed their merger in 2005, giving the UK a near single cable
operator (Wight Cable remains independently owned and operated). The merged
business had 3.32 million subscribers by the end of Q1 2006 (including analogue and
digital subscribers), up 43,000 in 12 months.
NTL:Telewest became the first ‘quad-play’ operator in the second quarter of 2006
with its acquisition of Virgin Mobile. The acquisition concluded talks that began in late
2005. The company explained that the acquisition would provide opportunities for
cross-selling of products between respective customer bases and that it hoped that
new customers would be drawn to the business through the offer of innovative new
product bundles.
Separately, Telewest embarked on a programme of service enhancements in 2005.
These included the launch of an on-demand service, Teleport, and their PVR service,
TV Drive. Telewest also made further forays into channel investment with the
acquisition of SitUp TV, which operates a range of retail, auction services and film
channels. Including the Flextech and UKTV channels, Telewest now controls 11
digital-only channels and partly controls a further ten.
Freeview
Freeview gained 2 million homes in the year ending of March 2006, taking the total
number of homes with a Freeview box attached to the main set to 7.1 million.
Freeview maintained its position as the second most popular choice for the reception
of multichannel television on the main set after Sky.
The growing popularity of the Freeview platform has driven up the price of spare
capacity for new channels. In its recent annual report, ITV estimated that the cost of

199

a slot had risen more than eleven-fold in the three and a half years since Freeview’s
launch (Figure 4.17).
Figure 4.17: ITV’s estimated cost for a channel slot on Freeview
Cost of capacity for a single channel on Freeview (£m)

12

8
11.5

4
5.0
1.0

0

Q42002

2004

Q1 2006

Source: ITV results, 2005

The typical cost of a Freeview box at the time of writing (based on a survey of
electrical retailers) stood at around £50 (the cheapest box available at the time of
writing was on offer for £19.99) with PVR-capable devices typically costing between
£100 and £200. The Freeview consortium has announced the launch of a Freeview
Playback campaign to raise awareness and understanding of Freeview PVR devices.
Several new channels were introduced onto the Freeview platform in 2005/2006:
•
•
•
•
•

ITV4 launched towards the end of the year, replacing ITV News;
Sky Three replaced Sky Travel;
E4 and Film Four went free-to-air;
More4 was launched as a free-to-air channel; and
ITV launched its first dedicated children’s channel, CITV.

With Freeview slot costs escalating and advertising revenue coming under pressure,
operators have begun to fill some of Freeview’s available slots with services that rely
on new revenue models – two examples were the quiz-based channels Quiz Call in
October 2005 and ITVPlay in March 2006.
Top Up TV
In November 2005, Top Up TV announced that Five had taken a strategic investment
in the company. This was followed in 2006 with Five announcing that its ability to
launch two new channels on Freeview was linked to the strategic investment that it
had taken in Top Up TV. Around the time of Five’s announcement, Top Up
announced an Autumn launch of a PVR-based service, Top Up TV Anytime.

200

4.2.11 Channel operators launch new channels
The BBC
Licence fee revenue broke through the £3bn barrier for the first time in the year
2005/06. It rose by 5.4% to £3,125m while expenditure increased 4.2% to £3,237m in
the same period. The BBC’s commercial businesses contributed a further £95m, with
BBC Worldwide generating profits before interest and tax of £89m (up 62%) and BBC
Resources contributing a further £6m (down 14%).
The BBC’s eight UK-based television channels recorded a fifteen minute weekly
reach of 85.3%, down by 1.3 percentage points on 12 month’s earlier. The 11
national radio stations along with nations/local radio delivered reach of 66.5%, while
bbc.co.uk monthly reach increased by 3.1 million to 13.7 million unique users.
Reflecting the BBC’s ongoing desire to harness digital technologies to widen the
distribution of existing content and develop/deliver new content to licence payers, the
BBC iPlayer pilot offered time-limited access to content downloaded to a user’s PC.
Meanwhile, the BBC’s high-definition channel launched on Sky and Telewest ahead
of the 2006 World Cup
Following-on from the publication of Building Public Value in 2004 (the BBC’s
contribution to the DCMS consultation on Charter review) the Director General
outlined in April 2006 his editorial blueprint for translating the BBC’s public purposes
(as laid out in the DCMS White Paper on the future of the BBC) into a delivery plan.
The Creative Future includes commitments to:
•
•
•

relaunch bbc.co.uk with more personalisation and richer audio-visual content
develop a new teen brand delivered over existing digital platforms
build broadband portals around content areas such as Music and Sport

The DCMS took the decision to replace the BBC’s Board of Governors with a BBC
Trust. With greater distance between the Trust and the BBC’s executive body, it will
be responsible for issuing service licences that will define the remit and budget of
each of the BBC’s services alongside commissioning a Public Value Test whenever
the executive proposes a significant change to existing services or the introduction of
a new one.
Finally, BBC announced the decommissioning of two long-running television series.
Top of the Pops and Grandstand. While Top of the Pops once generated audiences
of around 15 million, audiences in its final Sunday evening slot were closer to 1
million.

201

ITV
ITV’s total revenue in 2005 reached £2,177m, up 6% on the year. Net advertising
revenue (NAR) comprised 75% of that total and stood at £1,631m - a rise of 3% on a
year earlier. ITV1’s NAR fell by 3% (£45m) to £1,462m but this was offset by strong
NAR growth from ITV’s remaining channels, where revenue rose 91% on the year to
£111m.
ITV4 went to air in the third quarter of 2005 as the company’s fourth digital-only
channel. In the same quarter, ITV announced the closure of its news channel, freeing
up capacity on the platform in advance of the launch of ITV’s children’s channel,
CITV. Tapping in to a new, consumer generated, revenue stream ITVPlay came to
air in March, following a three-month pilot. The company has also confirmed that a
timeshifted version of ITV2 will launch at the end of 2006. These launches were
accompanied by a comprehensive rebranding of the company’s channel portfolio at
the beginning of 2006.
ITV1’s network commissions rose by £24m to £591m, while acquisition costs were up
by a further £47m. The company also increased investment in its digital-only
channels by 97%, taking total spend to £61m. These increases were offset by a
reduction in sports costs which fell by 32% to £96m, while regional commissioning
spend fell by 12% to £125m. At the same time, ITV launched a regional broadband
pilot for Brighton and Hastings, offering access to local news and other content and
via a broadband portal.
Channel 4
Channel 4 revenue rose by 6.3% in 2005 to £894m. The contribution made by the
corporation’s main channel stood at £725m or 82% of the total; the digital channels
delivered a further £88m, up 14% on 2004.
Channel 4 took a 20% share in the Freeview consortium that now comprises ITV,
Channel 4, National Grid Wireless, BSkyB and the BBC. The channel also
announced an intention to bid for the second DAB national commercial radio
multiplex, and has since launched a radio brand on its website, offering podcasts
connected to a range of Channel 4 shows such as Big Brother and The Richard and
Judy Show. The company also launched paid-for broadband downloads of its hit
shows Lost and Desperate Housewives, alongside the launch of its FourDocs site, a
portal where the public can upload short factual videos.
E4 went free-to-air on Freeview in mid-2005 and audience share has risen
significantly as a consequence. FilmFour went free-to-air on Freeview in July 2006
while More4 was launched in late 2005.
Five
Five’s parent company RTL reported the broadcaster’s revenue for the year to
December 2005 as £324m, up 12% on 2004. At the same time, it increased its
programme spend by 9.8% to £190m. It has since announced that content spend in
2006 will increase again by 6.3% to £202m. In a move to fund more prime-time
drama and scripted comedy, Five decommissioned its long running soap, Family
Affairs, which broadcast its final episode at the end of 2005.
In July 2005, RTL took full control of Five, acquiring 35.4% of the business from
United Business Media for £248m. This was followed in November by an
announcement that Five had made a strategic investment in Top Up TV. That deal

202

was followed in June 2006 by an announcement that Five planned to launch two new
free to view services Five US and Five Life (a channel offering women’s
programming and content based around its children’s morning Milkshake brand).
Also in 2005, Five joined forces with UK subscription channels to acquire first-run
free-to-view rights on shows from the US. These deals included the rights to Prison
Break (with UKTV) and to Grey’s Anatomy (with LivingTV).
BSkyB
In the calendar year 2005, BSkyB earned £222m in wholesale channel revenue from
the cable companies (up 0.5% on the year) and £341m in advertising revenue (up
5.2%). Amid growing audiences to Freeview channels, Sky Three replaced Sky
Travel in October 2005, premiering the first episode of the fourth season of 24. In
mid-2006, BSkyB also bid successfully for four of the six packages of Premier
League football rights (Setanta won the remaining two packages). BSkyB paid
£1,314m for 92 games per season. The company also won the near-live rights to
Premier League football in a joint bid with BT. These deals start in 2007/08 and will
last for three years.
Flextech
The Flextech family of channels include a portfolio of entertainment channels Bravo,
Trouble, LivingTV and a 50% stake in UKTV. In total, reported revenue for these
channels stood at £132m in 2005. UKTV Style Gardens launched as a spin-off from
the established leisure-based UKTV Style, and the channel has already built market
share. Telewest’s acquisition of SitUp Ltd in 2005 for £194m added auction channels
bid tv and price-drop tv and retail service Screenshop to the Flextech’s channel
portfolio. In the 12 months to 31st March 2006, SitUp Ltd reported revenues of
£218m.
Setanta Sports
Setanta spent 2005 and early 2006 strengthening its content proposition with a series
of acquisitions and successful bids for sports rights. In mid-2005, the company took a
controlling stake in the North American Sports Network (NASN, offering coverage of
North American sports in several European territories). Setanta began 2006 by
announcing the roll-out of pay-per-view Scottish Premier League matches across the
UK via DTT, following a successful trial in the Grampian region. The company went
on to win two of the six packages of matches advertised by the FA Premier League in
May 2006 and at the time of writing had just secured the exclusive rights to cover the
US PGA tour in the UK.

203

4.3 The television industry
4.3.1 TV revenue exceeded £10.5bn in 2005
TV industry revenue rose by £490m (4.8%) in 2005 to reach £10,622m.
Subscriptions totalled £3,891; net advertising revenue £3,548m; public funding
through the licence fee contributed £2,433m, while other sources of revenue totalled
£749m. The growth in total revenue was driven largely by an increase in
subscriptions earned by BSkyB and NTL/Telewest, which rose by 8.5% in 2005. The
close of 2005 marked a five year period of sustained growth in subscription revenue
averaging 14.5% p.a. over the period. Having first overtaken net advertising revenue
in 2004, subscriptions now exceed it by a 10% margin.
Net advertising revenue grew by £67m in nominal terms (1.9%) in 2005 to £3,548m,
marking the end of a three year period where advertising revenues grew at an
average of 4% per annum.
Public funding continued to play an important role in the UK’s broadcasting ecology.
In 2005, Ofcom estimates that the funding allocated by the BBC to television was
£2,433m, up 5% on 2004. On top of that figure, S4C received funding from the
DCMS totalling £88.8m (included in the ‘Other’ category in the figure below).
As the Communications Market Report highlighted in 2004, non-broadcast revenue
from pay-per-view, retail and interactive services is emerging as an important
component of total industry revenue. In 2005 this revenue source held steady at
£749m (Figure 4.18).
Figure 4.18: Total TV industry revenue by source
£m
3,891

4,000
3,471

3585

3,385
3,147

Subscriptions

3252
3,481

3,000

3,548

3,242
2476

2883

2049

2,000

2,216
1,820

2,433

Licence fee
allocated to TV
650

534

2002

2003

397

0
2000

2,319

1,934
781

1,000

2,302

2001

Net advertising
revenue

746

749

2004

2005

Other

Source: Operator returns and Ofcom estimates

Segmenting revenue by industry operator, Figure 4.19 reveals that the revenue
raised by the commercial analogue broadcasters increased by approximately 2% in
2005, with total revenue rising by £63m to £2,907m. This followed a 6% growth in the
previous year.

204

Advertising revenue earned by commercial multichannels grew by 1% to £1,295m.
As in 2004, the figures for commercial multichannels includes revenue from channels
owned by channel retailers and platform operators (e.g. BSkyB and NTL:Telewest).
Figure 4.19: Total TV industry revenue by sector
£m
12,000
10,000
3,585

8,000
2,476

2,883

795

1,397

1,005

2,981

2,675

2,716

1,911

2,028

2000

2001

Platform operators

3,252

987

3,891

2,049

6,000
4,000

1,287

1,295

2,677

2,844

2,907

2,309

2,396

2,414

2,528

2002

2003

2004

Commercial
multichannels

2005

2,000

Commercial
analogue channels
Publicly-funded
channels

0

Source: Operator returns and Ofcom analysis

4.3.2 The multichannels continue to build advertising share
The distribution of advertising revenue between commercial analogue channels and
those only available in multichannel homes shows the analogue operators continuing
to take a large percentage of the total in 2005. That said, multichannel share of Net
Advertising Revenue (NAR) increased by 8.6% over the year, thanks to the
increasing share of commercial impacts taken by those channels (Figure 4.20).
Figure 4.20: Net advertising revenue by sector
£m

4,000
3,500
3,000

590
826

534

676

794

863

2,500
Commercial
multichannels

2,000
1,500

2,881

2,559

2,612

2,566

2,686

2,685

2001

2002

2003

2004

2005

1,000
500

Commercial
analogue
channels

0
2000


205

Much of the gain in advertising revenue accruing to the multichannels came from
ITV1’s expense (Figure 4.21), with Channel 4 increasing its total share of advertising
revenue by 0.6 percentage points and Five putting on 0.7 percentage points.
Figure 4.21: TV advertising market share - 2005
Total NAR = £3,548m
(2004 figures in brackets)

Other
24.3%
(23.0%)
ITV1
47.2%
(49.7%)

Five
8.5%
(7.8%)

Channel 4
20.0%
(19.4%)


New and alternative streams of revenue remain important to the industry, although
they grew by only 0.5% over the year. Over the same period, sponsorship revenue
rose by 5% to £120m, public funding increased by 2.9% to £89m, and programme
sales rose to £69m (Figure 4.22). Shopping and interactive revenue both fell in the
year, but the comparability of these figures from one year to the next may be
impaired by changes in conventions for the accounting of interactive revenue; they
may also be affected by the fact that Ofcom had not received revenue returns from
all multichannel licensees at the time of writing.
Figure 4.22: Breakdown of non-broadcast revenue
Total non-broadcast revenue = £750m (2004 = £746m)
Other revenue
£85m
Programme sales
£69m

Other public funding
(S4C) £89m

Sponsorship
£120m


206

TV shopping
£154m

Interactive services
£104m

Pay-per-view
£129m

4.3.3 Industry flow of funds– subscription revenue shows significant growth
Figure 4.23 provides a simplified flow of funds for the television industry in 2004 and
2005.
The most significant changes in 2005 included:
a substantial increase in the flow of subscription revenue into the industry;
and
a modest rebalancing of expenditure between in-house and external
commissions from channels. The latter benefited from a £70m boost, while
the spend on the former fell by £54m.
Figure 4.23: Simplified flow of funds in the TV industry, 2005 (2004 in italics)
£m

Subscribers

£3,548m

£1,606m

£443

£2,819m

Pay TV
operators
£457
£457

Viewers

£3,891m

£1,536m

External producers
and rights holders2

£2,795m

Channels

£4,450m
£4,583m

Advertisers & £3,668m
sponsors
£3,594m

£1,536m
£1,590m

Government

In-house
producers

£89m
£86m

Source: Operator returns, operator results and Ofcom analysis
1 The bold figures represent 2005, the italicised figures 2004
2 Excludes flows to channels owned by vertically integrated broadcasters (BSkyB and Telewest)
3 Includes both UK and non-UK content and rights providers
4 Includes commissions to producers owned by broadcasters (e.g. Granada and SMG) from third-party
channels

Note that this picture represents a simplified analysis in several respects:
•

it does not cover playout and transmission costs;

•

it provides no breakdown of revenue in the content provision sector between
producers and rights owners, nor between UK and overseas providers, due to
a lack of sufficiently detailed data;

•

it includes limited information regarding the vertically integrated broadcasters,
to whom the concept of flows from platform operations to channel businesses
does not apply. The pay-tv operator to channel flows only represent transfers
earned by channels that are not wholly owned by platform operators, and
therefore exclude any flows to BSkyB and Flextech channels; and

•

The figures that have been used to update this flow of funds analysis are
derived from multichannel and PSB data submissions. All the major channels
had made their submissions at the time of writing; however, it is possible that
some variation in the figures between 2004 and 2005 is attributable to a
slightly different mix of data submissions supplied by small and medium-sized
broadcasters.
207

4.3.4 Total industry output stood at 1.4 million hours in 2005
2005 saw 1.4 million hours of output broadcast by all UK television channels. The
Films, Shopping, Music and Gaming genres (offering little in the way of traditional
programming) accounted for just under 700,000 of those hours.
Of the remaining 713,227 hours of output (Figure 4.24), the digital-only channels
were responsible for 87%, a 13% increase on 2004. The five main channels
accounted for a further 6% (or 42,555 hours); the BBC’s digital services made up
another 5% (or 32,839 hours) while nations and regions output took up the remaining
3% (or 11,212 hours).
Original production (‘originations’ or ‘originated output’) includes all output excluding
repeats and programmes acquired from other broadcasters. In 2005, 131,066 hours
were originated, with the multichannels accounting for 65% of the total (85,796
hours). The five main channels continued to play a role as the ‘engine’ of
originations, making a substantial 16% contribution (20,752 hours) in contrast to their
broadcasting just 6% of total hours. A further 11% came from the BBC’s digital
channels, who together commissioned 14,013 hours in 2005. Nations and regions
made up the remaining 8% or 10,505 hours.
Figure 4.24: Total and originated hours of output
Proportion of hours by operator (percent)

100%
Other digital
channels

80%
85,796

60%

619,790

Programmes for
Nations & Regions
BBC digital channels

40%
10,505
14,013

20%
32,839
42,555

0%

11,212

Total hours of output

20,752

Main five channels
(network)

Total hours of originations

Source: Operator returns

Investment in content fell by 1.3% or £62m in 2005, coming in at £4,692m. The
reduction was driven by the falling costs of Sports and Film rights and reduced spend
by BBC One (£78m or 9%), BBC Two (£13m or 3%) and ITV1 (£24m or 3%). This
was offset by increased investment by the BBC’s digital services, Channel 4, Five
and the multichannel operators. With respective increases of 1%, 11%, 3% and 24%,
these channels together increased content investment by £170m (Figure 4.25).

208

Figure 4.25: Investment in network programmes £m
£m

5,000

Movies/sport channels
1,206

653

236
177
488

3,000

1,089

526

4,000

262
190
492

Digital-only commercial channels
BBC digital channels
Five
Channel 4

2,000
862
381

368

878

1,000

838

800

ITV1 + GMTV1
BBC Two
BBC One

0
2004

2005


4.3.5 Originated hours fall due to ITV1’s reduced regional output
Across the five mainstream networks, hours of originated output fell by 3,019 hours
(9%) to 31,257 hours in 2005 (note that this figure includes 20,752 hours of network
originations and 10,505 of nations and regions originations). This downward trend
dates back to at least 2000 when total originations stood 18% higher at 36,869 hours
(Figure 4.26).
With the five main networks reprioritising investment towards peak-time output (peaktime originations rose by 119 hours (or 2%), much of the reduction in 2005 hours was
explained by a 2,547 hour (20%) decline in originated regional output; the latter was
driven by ITV1’s lower regional quota. Non-peak-time originations also fell in 2005 by
591 hours (4%).
Figure 4.26: Hours of originated output on the five main channels
Transmitted hours

40,000
35,000
30,000

15,161

14,933

14,496

13,006

Regional originations
13,052

25,000

10,505
Non-peak network
originations

20,000
15,000

16,358

16,213

15,936

16,321

15,733

15,142
Peak-time network
originations

10,000
5,000
5,350

5,615

5,712

5,695

5,491

5,610

2000

2001

2002

2003

2004

2005

0
Source: Operator

Figure 4.27 outlines the investment that funded originated hours from the five main
networks. Total investment fell by £60m or 2% to £2,622m in 2005. This followed
average reductions of 1.5% in the preceding two years.

209

Figure 4.27: Investment in originated output on the five main networks
£m

3,000
2,500

388

374

357

2,000

1,022

975

953

369

359

989

323

995

Regional
originations

950

Non-peak network
originations

1,500
1,000
1,203

1,347

1,348

1,328

2001

2002

2003

2004

Peak-time network
originations

1,349

2000

500

1,265

2005

0


With reductions in regional content spend being outstripped by the drop in regional
hours, there was a 11% increase in the cost per hour (CPH) of regional output in
2005, its highest level for at least five years (Figure 4.28).
Figure 4.28: Cost per hour for originated content on the five main networks
Cost per hour (£k)

250

241

242

237

236

225

225

200
Peak-time network
originations

150
Non-peak network
originations

100
58

50

64

60
24

25

63

61
27

28

63
28

Regional originations
31

0
2000

2001

2002

2003

2004

2005


Figure 4.29 offers a complete picture of originated output from the UK’s PSBs, by
including the BBC’s investment in its services available only in multichannel homes.
In peak time (defined by the time interval 18:00 – 22:30), total hours of originations
rose by 4% in 2005 to 179 hours per week. While this was 3% below the high point of
investment in originations, it was still 12% higher than the equivalent figure in 2001.
Turning to originated output from the five mainstream networks across the whole
schedule, hours fell modestly in 2005 to 669 hours per week - a 2.0% reduction on
2004 and 5.8% down on 2003.

210

Figure 4.29: Hours of originated output by the five mainstream networks in
peak time and all day
All day real cost/hour (£k, 2005 prices)
70.5

71.4

70.3

73.1

Peak real cost/hour (£k, 2005 prices)

73.3

160.6 157.3 156.0 165.4 155.8

200

600
231

283

286

275

269

BBC digital
channels

400

74

74

71

76

74

80

69

95

101

101

96

57

62

62

64

68

118

112

110

105

104

BBC One

65

74

17

16

23

BBC digital
channels
Five

Channel 4

66

72

16

13

14

23

25

23

21

26

26

26

25

25

ITV1+GMTV1

19

18

19

21

BBC Two

26

26

26

26

BBC One

51

100

BBC Two

69

ITV1+GMTV1
200

68

26

67

95

150

17

Five

Hours per week

Hours per week

800

50

Channel 4

0

0

2001 2002 2003 2004 2005

2001 2002 2003 2004 2005


4.3.6 Factual has been the growth peak-time PSB genre for seven years
The patterns of investment that PSBs have made in their output over the last seven
years have evolved significantly. Figure 4.30 breaks down the hours of output by
genre that the five PSBs transmitted between 1998 and 2005. In peak time, General
Factual emerges as the growth genre, making up 28% of total hours in 2005 (up from
21% in 1998). This growth has come at the expense of Light Entertainment/Modern
Music, Films and Sport, whose share of peak-time hours fell by four, two and two
percentage points over the same period.
Among the remaining smaller genres, Religion enjoyed a boost in 2005, increasing
by 40% to 73 hours or 1 hour 24 minutes per week.
Figure 4.30: PSB genre mix in peak time
Proportion of total hours
100%

500

406

380

428

530

362

401

341

1424

1472

1580

1623

1334

1330

1395

1268

1047

1038

1013

947

937

972

757

2077

2070

1863

80%

60%
1848

1748

1880

1854

688

1935

Sport
Light Entertainment &
Modern Music
Films
Drama
Education
General Factual
Religious

40%
1702

1972

1802

1824

1814

2015

2105

2253

Children's
Arts & Classical Music

20%
333

256

257

246

255

284

296

318

Current Affairs

935

917

835

785

News

2002

2003

2004

2005

790

849

867

925

1998

1999

2000

2001

0%


211

The daytime schedule shows a different genre mix. In 2005, Light Entertainment
/Modern Music, News and Films all took a larger proportion of total hours (13%, 15%
and 11% respectively) than each did in 1998 (8%, 11% and 9% respectively). These
gains came amid reductions in the hours of Sport, Education, General Factual and
Drama, each of which lost two percentage points of daytime share of hours over the
same period (Figure 4.31).
Figure 4.31: PSB genre mix in daytime
Proportion of total hours

100%
2161

1921

2193

1832

1958

1849

2038

2250

2352

2448

2665

2810

2713

1913

1957

2113

2188

1959

2069

2080

2464

2292

2236

1863

2135

2294

1331

1344

1276

1198

918

2031
694

2056
738

1797
821

3953

60%

2239

1782

80%

2099

3911

3658

3189

2833

3165

3150

3512

Sport
Modern Music
Films
Drama
Education
General Factual
Religious

40%
4403

4422

4392

4613

Children's

4856

5055

4906

4575

379

384


20%
764

671

692

756

807

830

2443

2425

2491

2678

2753

2939

3299

3191

1998

1999

2000

2001

2002

2003

2004

2005

0%

Current Affairs
News


Changes in the genre mix across the BBC’s digital services reflect the channel
launches that have occurred in the past five years. There are two distinct trends. The
first is the growth in hours of children’s programming as a result of the launch of two
children’s channels (CBeebies and CBBC); the second is the reduction in General
Factual hours in 2002 as a result of the launch of BBC Four in place of BBC
Knowledge.
Over this seven-year period, total hours of output on the BBC’s digital channels grew
at an average rate of 18% per annum, while investment in that output rose by 26%
per annum – driving cost per hour up from £5.2k to £8.0k over the period (Figure
4.32).

212

Figure 4.32: The BBC’s digital channels

100%

£53m

19,051

26,798

27,278

29,832

31,421

32,792

32,839

£81m

£84m

£99m

£195m

£228m

£236m

£262m

1747
1203
1242
1656

1751
1306
1340
1615

1738
1143
1478
2297

1690
1260
1360
2482

7990

Output (hrs) 10,165
Investment (£m)

7983

8021

8033

1117
1435
1240
140 503
495
348 906
98
2014
80%
4676
1878
964
115

568

4647

60%

5662
5916

40%

1153
1462
1589
4540

4759

5398

Other
Modern Music
General Factual

7494

Children's

8837

6871
17890

17674

Current Affairs

8125

20%

8296

8377

8500

8589

2000

2001

2002

2003

News

0%
1998

1999

2004

2005

Source: Ofcom analysis

4.3.7 ITV, BBC and Five increase the proportion of peak time General Factual in
2005
Figure 4.33 offers an analysis of the structure of peak time schedules by network. It
illustrates how the five main channels are pursuing different genre investment
strategies.
In 2005, the one genre that enjoyed growth across most of the five networks was
General Factual. Conversely, Light Entertainment/Modern Music all showed a decline
in hours showed.
On BBC One, General Factual’s share of peak time hours grew by two percentage
points in 2005, with the channel bringing to air Big Cat Week, Egypt, Life in the
Undergrowth, Seaside Rescue and Trauma. This was followed by Drama with a one
percentage point increase in output and News which increased by 0.9 percentage
points. The growth in those genres came at the expense of Sport/Light Entertainment
and Modern Music which collectively lost 4.4 percentage points.
On BBC Two General Factual and Arts/Classic Music all grew (5.4 and 3.8
percentage points respectively) while Films, Light Entertainment and Sport each fell
as a proportion of the peak time schedule (by 3.1, 5.2 and 2.0 percentage points
respectively).
ITV1 saw General Factual and Films as the growth genres in 2005 (gaining 2.4 and
1.4 percentage points each), with Ladette to Lady, The Real Good Life and Package
Holiday Undercover as just three series examples for 2005. Offsetting those genre
increases, Light Entertainment and Modern Music lost 2.9 percentage points,
followed by News which lost 1.6 percentage points.
Five decreased the proportion of News in its peak-time schedule (by 2.4%
percentage points), Films (2.2%), Education (2.0) and Light Entertainment/Modern
Music (1.0). In their place, Five brought more General Factual and drama-based
content, which increased by 4.7 and 2.3 percentage points respectively.

213

Channel 4 was the one network that went against the trend toward broadcasting
more General Factual in peak time. Peak time General Factual hours fell on Channel
4 in 2005 by 4.8 percentage points. These hours were replaced most significantly by
Light Entertainment/Modern Music and General Factual (up 2.8 percentage points),
Current Affairs (0.9), Religion (0.5) and Arts/Classical Music (0.4).
Figure 4.33: The five main networks’ genre mix in peak-time
Hours of output and cost per hour (£k)
Cost per hour (£/hr)
£310k £289k £118k £122k

100%

80%

86
310

48
207
280
52

55

60%

394

174

410

329
415
35
69

£361k £362k £139k £136k
12
15
60
67
258
303
290
329
105
107
79
59
229
223

311

20%

0%

6
8
17 43 29
42
318
306

£66k
37
66

452

415

659

510

579

673

100
78

Sport
Modern Music
Films
Drama

472
723

759

340

36
83

Education

86
58
710

40%

£64k

General Factual
Religious
Children's

23 162
76

32 92
52
156

128
53
134

447
18 46 26 370
39 127
113
3
9
23
20
11
217
214
155
115 19

Current Affairs
News

2004 2005 2004 2005 2004 2005 2004 2005 2004 2005
five
ITV1
BBC Two
Channel 4
BBC One

ITV1 was the channel where a single genre dominated most noticeably. Drama
(including soaps) accounted for 49% of its peak-time schedule in 2005. For BBC Two
and Channel 4, the dominant genre was General Factual, accounting for 46% and
35% of their schedules respectively. In Five’s case, Drama was dominant with 31%
of its peak-time schedule; the same was true for BBC One, but even then it only
accounted for 26% of peak-time hours.
Genre diversity across the networks varied significantly, and this can be shown with a
genre concentration curve as illustrated in Figure 4.34. By way of illustration, two
genres made up 68% of ITV1’s peak-time schedule. In descending order, the
equivalent figures for the other networks were 66% (BBC Two), 58% (five), 54%
(Channel 4) and 49% (BBC One).

214

Figure 4.34: Genre concentration curves for the five main networks in peak
time
Proportion of hours (percent)

100%
five

80%

BBC One
Channel 4

BBC Two
ITV1

ITV1

60%

Channel 4

BBC One
BBC Two

40%

five

20%
1

2

3

4

5

6

7

8

9


Daytime patterns of investment across the five main networks differ significantly from
peak-time, with greater genre diversity. A unique audience profile (people not in fulltime employment, students, etc.) and lower audience volumes at this time of day,
may point to the networks’ willingness to experiment and to take more risks with new
shows instead of relying on a small number of tried and tested genres and/or
formats. Experimentation in non-peak has in the past occasionally led to hit shows
that have then migrated into peak time – examples of this are The Weakest Link and
Bargain Hunt. Underlying the growing commercial significance of ‘late daytime’, ITV
has identified the 16:00 – 18:00 slot as a future focus for the company.
The dominant genre on BBC One in 2005 daytime was News with 28% of total hours,
closely followed by General Factual with 24%; on BBC Two Children’s content was
the biggest single genre category with 30% of hours. General Factual was the largest
single genre category on ITV1, taking 35% of the daytime schedule; on Channel 4 it
was Light Entertainment and Modern Music (31%); Five’s Children’s output took
31% of hours, closely followed by Films with a further 28% (Figure 4.35).
Comparison of daytime output across 2004 and 2005 reveals that ITV1 significantly
reduced the proportion of daytime hours devoted to Children’s content (by 4.8
percentage points) and Education (by 3.9 percentage points), to be replaced by Light
Entertainment and Modern Music (which increased by 8 percentage points in 2005).
Channel 4 increased its General Factual output by 5.3 percentage points and
reduced its Drama output (by 2.5 percentage points) and Light Entertainment/Modern
Music (by 2.4 percentage points).
Five’s biggest genre shift in daytime was towards Film, increasing hours by 8.4
percentage points in 2005. This came at the expense of Drama (4 percentage point
drop) and Light Entertainment/Modern Music (4.8 percentage point drop).

215

Figure 4.35: The five main networks’ genre mix in daytime
Hours by genre, by channel and year
BBC TWO

BBC ONE

itv1

100%
88

111
127

578
66

627

408
450

94
189

1006

553

40%

222

115

Drama
653

655

1041

419

16

151

487

1048
438

Education

479

General Factual
105 309
37
49
43

548
13

1
30

1340

185

11

1431

1249

29

21

48
3
487

54
482 3

0%

162

1
30

1337

1375

283

551

681
1198

537

3
204 36

5
390 9
99 26

Religious
Children's

314

80

20%
1230

1449

795

735

Contemporary Music
Films

1217

849

111
198

88

71

Sport

546

152
229

533

914

17
353

563

571

294
393

584

241

608

532

60%

five
5

201

400

547

80%

Channel 4

Current Affairs

766
1
328

7

102 26

227
439

12
230

6

News

323

2004 2005 2004 2005 2004 2005 2004 2005 2004 2005

4.3.8 Entertainment and Children’s were the largest multichannel genres
The channels in the six main multichannel genres (Entertainment, Children’s,
Factual, Sport, News and Leisure) broadcast 549,559 hours of output in 2005.
Entertainment channels accounted for 37% of that output signalling the enduring
popularity and broad appeal of this type of content in multichannel homes (Figure
4.36).
Figure 4.36: Hours of output on channels available on multichannel platforms
Total broadcast hours in 2005 = 546,559
Leisure
7%
News
9%
Entertainment
37%
Sport
14%

Factual
16%

Children's
17%


Only 16% of these total hours consisted of first-run originated content – in contrast to
the PSBs for which 73% of their hours in 2005 were originated. Among the
multichannel operators, Entertainment was the single largest originated genre with
36% of total hours. That was followed in 2005 by Sport which added a further 26% or

216

22,306 hours. Despite transmitting 17% of the multichannel hours in 2005, Children’s
channels delivered 11% of the originated hours, pointing to a higher degree of
repetition and re-versioning in that genre when compared to the other five genres.
The same was true for Factual and Leisure categories which together originated
6,864 hours or 8% of the total, despite transmitting 23% of multichannel hours
(Figure 4.37).
Figure 4.37: Multichannel originations
Hours of originated content in 2005 = 85,796
Factual
5%

Leisure
3%

Children's
11%
Entertainment
36%

News
19%

Sport
26%


Digital-only channel operators invested £652m in content (excluding Films and Sport)
in 2005, up by 24% on 2004. This represented 18% of total UK spend on originations
(including PSB spend but excluding Films and Sports costs) and contrasts with the
share of hours broadcast by these channels which stood at 87% in 2005.
Entertainment was the channel genre where investment in originated output was
highest, accounting for 59% or £387m of the total. Of the remaining spend, News,
Children’s and Factual accounted for a further £175m or 27% of the total (Figure
4.38).

217

Figure 4.38: Investment in content by channels only available in multichannel
homes (source: operator returns and Ofcom analysis)
£m

£652m

700
600
500
400

34
35
62
21
53
60

Shopping
Music
News
Leisure

300

Factual
200

387

100

Entertainment

0
2005

218

Children's

4.3.9 Compliance with regulatory obligations
What are the regulatory obligations?
All television broadcasters licensed by Ofcom in the UK are subject to
European legislation requiring them to meet European independent production
targets. A total of 70 cable, satellite and public service broadcasters are also
subject to access service obligations, introduced in the Communications Act
2003, to subtitle, sign and audio describe a proportion of their programming.
Additional obligations are imposed in the Act for public service broadcasters
(PSBs): the BBC, ITV1, Channel 4, five and S4C (in Wales). Public service
channels include the BBC’s digital channels, but exclude the commerciallyfunded broadcasters’ digital-only services (for example, ITV2, ITV3, ITV4, E4
and More4).
Channels 3, 4 and 5 are subject to conditions laid down in the Communications
Act 2003, under which they must comply with a set of obligations and quotas,
designed to make sure that minimum levels of certain types of programmes are
produced and broadcast. Some of these obligations, such as the 25%
independent production quota, are statutory and apply across the board to all
public service broadcasters (including the BBC), whereas other obligations are
not specified in detail in the legislation. Ofcom sets a number of other
production quotas (eg originated material) and programme genres (eg news,
regional), in consultation with the broadcasters, and ensures that they comply
with the levels required. A degree of flexibility is possible because different
levels may be set for different broadcasters, depending on individual remits,
and quotas may be adjusted over-time.
Ofcom has a direct relationship with the commercial PSBs in terms of quota
compliance but for the BBC, its Board of Governors is responsible for regulating
and monitoring output, setting the majority of the BBC’s targets. However,
Ofcom must be consulted and must agree with the BBC on particular
commitments. Services provided by the S4C Authority in relation to
programmes broadcast by S4C in Wales are also regulated by Ofcom. Ofcom
has a duty under the Communications Act 2003 to report on the
communications market as a whole on an annual basis, so the BBC and S4C
quotas, together with the figures achieved, are included in this section where
relevant.
Fewer fixed quotas exist now than under previous regulatory regimes with a
continued movement towards greater self-regulation by broadcasters. This
process involves broadcasters’ publication of their forward plans, outlining
programme output intentions for the year ahead, coupled with reporting back on
achievements against plans for the previous year. Broadcasters must consult
Ofcom before making any significant changes in their programme policy,
particularly those involving reductions in their public service commitments. In
2005 two significant changes were agreed and implemented on ITV1. As a
result of the recommendations of Ofcom’s PSB Review, further consolidation of
ITV’s regional output took place. There was also an agreed reduction in the
amount of Children’s programmes.

219

4.3.10 Original productions
Original production quotas apply to all PSB channels, across the whole day and
separately for peak viewing hours (6pm to 10.30pm). Such quotas are necessary to
encourage a thriving UK production market and to provide viewers with a varied
choice of home-produced programmes, as opposed to bought-in material from other
sources. Originations for the purpuses of this quota are defined to be commissions
from broadcasters to their in-house production resources or independent producers.
Programmes which have been made for other countries are excluded, although some
co-productions are included (depending on the financial contribution made).
Figure 4.39 shows the quotas and the proportions achieved by the PSB channels in
2004 and 2005. With one exception all channels exceeded the required minimum.
Five achieved an all-day figure of 52% in 2005 against the quota of 53% and
explained its failure on errors in a new reporting system which had not come to light
until the end of the year. Ofcom has agreed to accept the shortfall on condition that
the quota is exceeded by an equivalent amount in 2006.
Original programmes predominate on UK public service channels, particularly in peak
time on BBC One, BBC Two, ITV1 and S4C where well over 90% of the schedule
was originally produced for a UK audience.
Figure 4.39: Broadcasters’ performance against original production quotas
Percent original programming

Quota

Achieved 2005

100%

90%
99%
42%
49%

70%
75%

85%
94%

50%
61%

70%
71%

80%
95%

90%
96%

80%
97%
53%
52%

60%
62%

20%

65%
82%

90%
95%

80%
79%

70%
84%

70%
73%

80%
81%

70%
82%

40%

70%
82%

60%

90%
99%

80%

All day

S4C

Five

ITV1
Chan
n el 4

Four

Thre
e

BBC

On e

T wo

BBC

BBC

BBC

S4C

Five

Thre
e
BBC
Four
CBB
C
Cbee
bies
BBC
Ne w
s 24
BBC
Parli
a me
nt
ITV1
Chan
n el 4

T wo

BBC

BBC

BBC

On e

0%

Peak time

* BBC Three and Four peak-time hours are 19:00 – 22:30
Note: BBC figures include programmes made or commissioned for other BBC channels

4.3.11 Regional productions
The aim of the regional production quota is to encourage the maintenance or
development of a range of production centres in the nations and regions, rather than
a concentration in the London area, and to ensure that the independent production
sector maintains its geographic diversity outside the M25 area. The quota is in two
parts: the proportion of expenditure on programmes; and the volume (hours)
broadcast. It covers own productions, made by broadcasters themselves, as well as
commissions from independent producers.

220

A new common definition is taking longer than expected to become effective across
all PSBs and an agreed transitional period is in place which allows the previous
definitions of production to apply in 2005. The new definition will come into force from
2006.
ITV1 has the highest requirement for out-of-London production, and in 2005 45% of
network productions by value were made outside the M25 in 2005 and 38% by
volume (Figure 4.40). Ofcom’s PSB review recommended an increase in ITV1’s
quotas to 50% from 2005 but these new levels have yet to be achieved. The regional
production quota applies across all the BBC’s public service channels as a whole, not
by individual channel, and in 2005 the BBC achieved 34% by value and 33% by
volume - increases for both on the previous year.
Figure 4.40: Broadcasters’ performance against regional production quotas
Percentage of network production produced outside London, by value and by volume

Quota

Achieved 2005

50%
40%
30%
45%

20%

40%
30%

38%

34%

33%

30% 31%
24%

10%

33%

25%

30%

33%

10%

30%

10%

0%
All BBC

ITV1

Channel 4

By value

Five

All BBC

ITV1

Channel 4

Five

By volume

Note: quota not applicable to S4C

Ofcom’s remit with respect to regional production also extends to assessing whether
the different production centres constitute a suitable range across the UK in terms of
geographical spread. Figure 4.41 shows the proportion of expenditure on regional
production outside the M25, broken down by macro-region, comparing 2004 and
2005. ITV1’s proportion of expenditure in London increased in 2005 and while
production continued to be concentrated in Leeds and Manchester, the proportion
made in the north fell a little – from 35.3% to 33.9%. Figure 4.41 also shows that the
nations continued to produce significantly less output than other areas, despite
Ofcom’s request that the ITV network widen its geographical spread of production
outside London, in particular to increase production in the nations.

221

Figure 4.41: Breakdown of expenditure on production, by broadcaster and
macro-region, 2004 and 2005
Percentage of production by value
100%

2.5%
6.7%

2.0%

0.8%

1.8%
4.0%

80%

Scotland

5.7%

3.2%

1.3%

6.6%

6.4%

Wales

4.5%

2.0%

3.7%

60%

16.9% 18.7%

35.3%

Northern Ireland

3.1%

33.9%

11.7%

North of England

40%
South of England

10.0% 10.1%
8.1%

20%

8.6%
5.4%

0%

7.6%

6.1%

8.6%

7.0%

1.4%

1.3%

2004 2005
2004 2005
BBC
ITV1
Note: quota not applicable to S4C

3.0%

7.1%

Mids & East
Anglia

1.1%

2004 2005
Channel 4

2004 2005
Five

4.3.12 Independent productions
The statutory requirement that broadcasters must commission a minimum of 25% of
programmes (excluding news and repeats) from independent producers applies to all
PSBs. For the BBC, it applies across all the BBC’s PSB channels taken together
(BBC One, Two, Three, Four, CBBC, CBeebies, News24, BBC Parliament) and
separately on BBC One and BBC Two. The percentage for the BBC as a whole
increased from a figure of 30% in 2004 to 31% in 2005 (Figure 4.42). BBC One and
BBC Two exceeded the quota, achieving 28% and 39% respectively. ITV1 also
exceeded the quota, achieving 33% in both years. Channel 4 and Five, which were
originally established as publisher-broadcasters and set up to commission
programmes from the independent sector, rather than produce programmes
themselves, easily exceed the quota every year and 2005 was no exception.

222

Figure 4.42: Percentage of qualifying hours commissioned from independent
producers, 2004 and 2005
Proportion of qualifying hours commissioned from independent producers, 2004 and 2005

100%

91% 88%

87%

84%

82%

80%
59%

60%
40%

2004
2005

39% 39%
33% 33%

30% 31% 27% 28%

22% 22%

20%

QUOTA= 25%

0%
All BBC

BBC
One

BBC
Two

BBC
digital

ITV1

Channel
4

Five

S4C


Figure 4.43 shows the proportion of programmes commissioned from independent
producers across a range of different types of programmes by network. The
legislation states that broadcasters must show a range and diversity of independent
commissions but this does not mean that the 25% quota has to apply rigidly to every
programme genre. Broadcasters do generally commission some independents in
each of the main genres and in many cases at least 25% of programmes within the
main genres. The figure indicates that Channel 4 and Five together commission most
or all of their output from independent producers. The BBC and ITV1 show a greater
diversity of approach by genre. It is notable that ITV1 tends to produce Sport and
Current Affairs in-house while the BBC does the same with Drama and Arts.
Figure 4.43: Percentage of qualifying hours commissioned from independent
producers, by genre, 2005
Drama

Sport

Current affairs

Factual

Arts

73%

Entertainment

57%
77%

Percentage of qualifying hour commissioned from independent producers by genre, 2004 and 2005
Education

Religion

Children's

Regional progs

100%
80%

All BBC

93%
100%
92%
100%
100%
100%
81%

95%

85%
87%
85%
95%

Channel 4

0%

4%

40%

31%

20%

26%
17%
3%
4%
42%

ITV1

0%
0%

0%

37%
17%
30%
25%
40%
18%
17%
10%
28%
32%

20%

73%

40%

97%
97%

60%

Five


223

Although there are no specific quotas, it is important that the scheduling of
independent productions across dayparts is satisfactory, particularly in peak time,
when most people are watching. Figure 4.44 shows the amount of networked
programmes by volume broadcast in peak time in 2005, compared with 2004. BBC
One increased the volume from 21% to 25%, while the levels on BBC Two fell slightly
(from 32% to 31%). ITV1 showed the lowest level of independent productions in peak
in both years, accounting for 18% of its network schedule. This is partly accounted
for by the high proportion of soaps in peak time (all of which are produced in house)
– excluding soaps brings the total up to 24%. Channel 4, Five and S4C all showed a
higher proportion of independent commissions in peak time in 2005 than in 2004.
Figure 4.44: Percentage of peak-time qualifying hours commissioned from
independent producers, excluding regional programmes, 2004
Proportion of peak-time hours

90%

81%

80%

73%

73% 74%

70%

69%
62%

60%
2004

50%

2005

40%
30%

32% 31%
21%

25%
18% 18%

20%
10%
0%
BBC One

BBC Two

ITV

Channel 4

Five

S4C


4.3.13 News and current affairs
It is a statutory requirement that all PSBs must provide high quality national and
international news and current affairs programmes, in sufficient quantity in peak
viewing hours as well as at other times. Quotas are set for all hours and for peak time
and both news and current affairs quotas apply to the commercial PSBs. For the
BBC, the news quotas apply to BBC One only and the current affairs quotas apply to
BBC One and BBC Two combined. Note that Five’s annual hourly news quota in
peak for 2005 was reduced to 100 hours. The minimum figures were exceeded by all
broadcasters (Figure 4.45 and Figure 4.46).

224

Figure 4.45: Broadcasters’ performance against news quotas, all day and peak
time, 2004 and 2005
Hours per year

Quota

Achieved 2004

Achieved 2005

1,500

1,380
1,508
1467

1,000

ITV1 Channel
4

150
171
169

BBC
One

208
213
217

S4C

100
150
119

Five

125
137
135

469
619
478

ITV1 Channel
4

275
281
293

BBC
One

200
200
230

0

208
311
319

365
385
465

500

Five

S4C


Figure 4.46: Broadcasters’ performance against current affairs quotas, all day
and peak time, 2004 and 2005
Achieved 2005

S4C

Channel
4

Five

41
45

30

ITV1

10
10
14

BBC
One &
Two

80
117
126

Five

35
44
45

ITV1

105
117
110

130
238
248

BBC
One &
Two

60
77
71

208
212
215

Channel
4

78
90
93

450
400
350
300
250
200
150
100
50
0

Achieved 2004

365
434
433

Quota

S4C


4.3.14 Programmes made for a regional audience
Regional services are available only on ITV1, BBC One and BBC Two. The quotas
applying to the BBC and the amounts achieved are shown in Figure 4.47. Individual
quotas are not set for each of the separate nations and the English regions, with the
overall requirement applying across BBC One and Two taken together and
expressed as an annual total. More than 7,000 hours were broadcast in 2005, an
increase of 233 hours on 2004 and well above the target of 6,580 hours. Additional
quotas apply on BBC One for regional news, regional news in peak time and other
regional programmes in peak. The quotas were all met and the volumes shown in
2005 exceeded the 2004 equivalents.

225

Figure 4.47: The BBC’s performance against regional programming quotas,
hours per year, 2004
Hours per year

Quota
8,000

Achieved 2004

Achieved 2005

7,048
6,580 6,815

6,000
3,920

4,000

4,400 4,656

2,010 2,156 2,217

2,000

1,030 1,069 1,084

0
All regional
programming

BBC One regional
news

BBC One regional
news in peak

Regional programming
in peak excl. news on
BBC One


The quotas for ITV1 are set for individual regions and were standardised for most
English regions following the creation of a single ITV. In 2005 the requirement was
reduced to seven hours in total each week, of which at least 5.5 hours must be news
and 1.5 hours must be other regional programmes. Higher quotas apply in the
nations to reflect their additional responsibilities while somewhat lower quotas apply
in the smaller regions. The volume of news output in the ITV regions has been
maintained and while the volume of other regional programmes has reduced, this has
generally been outside peak viewing hours. The minimum requirements were met or
exceeded in all ITV regions and nations (see Figure 4.48).
Figure 4.48: The ITV1 licensees’ performance against regional programming
quotas, 2004 and 2005
Hours per year

7:00
7:18

7:00
7:15

7:00
7:13

9:22
9:57
7:00
7:17

7:00
7:16

7:00
7:17

7:00
7:17

7:04
7:29

5:38
5:38

7:00
7:14

5:42
6:25

7:00
7:15

8:00

9:45
9:41

12:00

Achieved
9:30
10:16

Quota

4:00


226

TV
es
tc
ou
nt
Yo ry
rk
sh
ire

U

W

al
es
W
es
t
M
er
id
ia
n
Sc
ot
Ty ti sh
ne
Te
es

W

An
gl
ia
Bo
rd
er
C
en
tra
l
C
ha
nn
el
G
ra
m
pi
an
G
ra
na
da
Lo
nd
on

0:00

4.3.15 Repeats
There are no quotas limiting the number of repeats in the commercial PSB schedule
but any substantial increase could be regarded as a significant change in the service
provided and might constitute grounds for intervention by Ofcom.
Figure 4.49 shows that the proportion of repeats has increased in 2005 across all
PSB channels, except S4C, compared with 2004. A programme is regarded as a
repeat if it has been previously shown on that channel in the same or substantially
the same form.
BBC One, ITV1 and S4C had the lowest levels of repeats of all the PSB channels, at
22% (S4C), 32% (ITV1) and 33% (BBC One). In peak time the proportion of repeats
is much lower. (Figure 4.49 and Figure 4.50).
Figure 4.49: Proportion of repeats in the PSBs’ schedules, all day, excluding
programmes shown first on another channel 2005

Repeats in 2004

Repeats in 2005

120%
97%

100%
82%

80%
60%
40%

71%

79%

83%

66%

63%

56%
44%
38%40% 41%

38%

33% 34%
26%

32%
28%

28%
22%

20%
0%
BBC One
BBC Two BBC
Three

BBC
Four

CBBC Cbeebies

ITV1 Channel Five
(excl.
4*
GMTV1)

S4C

Source: Ofcom research, 2004
Note: 2004 excludes programmes first shown on another channel; 2005 includes those programmes.
*Exluding schools programmes

227

Figure 4.50: Proportion of repeats in peak time, excluding programmes shown
first on another channel, 2004 and 2005
Hours per year
64%

67%

55%

54%
43%
37%

40%

35%
30%

30%

27%

23%

23%
19%
14%

13%

10% 10%

11%

10% 9%

0%
BBC One BBC Two

BBC
Three

BBC Four

ITV1
(excl.
GMTV1)

Channel
4*

Five

S4C


4.3.16 European programming
All broadcasters, including cable and satellite companies, must comply with the
European legislation, the Television Without Frontiers Directive. This specifies that:
•
•
•

where practicable the majority of programmes shown must be European
(including UK productions);
at least 10% must be independent European works; and
at least 50% of the independent productions must be “recent works” (made
within the last five years).

All public service channels easily exceeded these targets in 2005 (Figure 4.51). The
EU legislation recognises that some channels may not be able to meet the targets in
the early years, but they should demonstrate an incremental progression towards the
quota. There is also some leeway if it is not practicable for broadcasters to comply; if
for example, cable and satellite channels have difficulty in meeting the quotas
because by the nature of their services they are more dependent on material from
non-European sources. Data on compliance with the TVWF Directive for all UK
broadcasters is published every two years by the European Commission.

228

Figure 4.51: Broadcasters’ performance against European programming (TVWF
Directive) requirements, 2005
Proportion of transmitted programmes (percent)

European programmes

European independents

Recent works

100%

96%

99%
63%

94%
71%

52%

71%
69%
82%

100%
40%

97%

99%
18%

96%

89%

96%

93%
26%

BBC
TWO

29%

BBC
ONE

90%

91%
26%

85%

82%
24%

50%
10%
50%

40%
20%

97%

60%

82%
40%
62%

80%

0%
Target

BBC
BBC
THREE FOUR

CBBC Cbeebies

ITV1 Channel
(excl.
4
GMTV1)

Five

S4C


Listed events
There were no instances of any broadcaster failing to comply with the Code.
Access services
Until the Broadcasting Acts 1990 and 1996 were amended by the Communications
Act 2003, only public service broadcasters and digital programme service licensees
were required to subtitle, sign and audio-describe a proportion of their programmes.
From the beginning of 2004, access service obligations were extended to many cable
and satellite channels. The targets vary, according to when they started broadcasting
or at what level they are ranked (Figure 4.52).
In 2005, most channels managed to achieve the targets they were set, and many
chose to exceed them, particularly for subtitling. Music channels were not able to
obtain copyright owners’ permission to use lyrics for subtitling until late in the year, so
were not able to meet their subtitling obligations in full. A few other channels missed
some of their targets for technical or other reasons, but they have undertaken to
make up the shortfall during 2006, on top of their targets for that year.

229

Figure 4.52: Broadcasters’ performance against access services requirements,
2005

BBC One

Subtitling
Audio description
Signing
Annual
Achieved Annual Achieved Annual Achieved
quota5 (Q1,2,3 & 4) quota (Q1,2,3 & 4) quota (Q1 2,3 & 4)
88.75%
90.2%
6.35%
7.7%
3.17%
3.2%

BBC Two

88.75%

90.9%

BBC Three
BBC Four

67.5%
67.5%

CBBC

67.5%

Cbeebies
BBC News24

Service

6.35%

6.8%

74.0%

6.35%

17.8%

3.17%

3.5%

71.6%

6.35%

9.6%

3.17%

3.4%

72.2%

6.35%

11.7%

3.17%

3.6%

67.5%

80.3%

6.35%

9.1%

3.17%

3.9%

67.5%

68.1%

3.17%

3.6%

ITV1 (excl. GMTV)

84%

93.0%

6%

8.2%

3%

3.6%

GMTV1

71%

85.9%

6%

3.1%

3%

3.4%

Channel 4

84%

86.7%

6%

9.5%

3%

3.3%

Exempt

3.17%

3.3%

Five

66%

68.2%

6%

6.5%

3%

3.2%

S4C

67%

66.7%

6%

7.2%

1%

1.4%

ITV2

14%

53.7%

4%

6.3%

1%

4.0%

GMTV2

14%

48.7%

4%

8.4%

1%

4.6%

10%

10.5%

2%

2.8%

1%

1.4%

10%

43.7%

1%

5.0%

Level One

ITV3
ITV News

6

Exempt

E4

10%

47.8%

Sky News

10%

80.8%

1%

1.2%

1%

1.3%

Sky One

10%

63.6%

2%

7.7%

1%

1.4%

Sky Two

10%

53.9%

2%

6.3%

1%

1.7%

Sky Sports 1

10%

19.2%

2%

3.0%

1%

1.1%

Sky Sports 2

10%

16.4%

2%

4.4%

1%

1.3%

Sky Sports 3

10%

15.2%

2%

5.3%

1%

1.4%

Sky Sports Extra

10%

13.2%

2%

5.2%

1%

1.6%

Sky Sports News

10%

19.6%

1%

1.8%

Sky Travel

10%

16.1%

2%

4.7%

1%

1.6%

Sky Movies 1

10%

46.0%

2%

5.8%

1%

1.1%

Sky Movies 2

10%

40.2%

2%

5.6%

1%

1.2%

Sky Movies 3

10%

45.3%

2%

6.2%

1%

1.2%

Sky Movies 4

10%

38.4%

2%

5.9%

1%

1.1%

7

5

2%

11.9%
Exempt

Exempt

Twelve-month targets for audio -description and signing on BBC channels run from 1 November, and for subtitling
from 1 April. The relevant twelve-month period for audio description and signing on ITV’s regional services runs from
15 November. The annual subtitling targets shown for BBC channels shown in this table are a weighted average of
those applying during 2005. Further details of the targets can be found in the Code on Television Access Services
(http://www.ofcom.org.uk/tv/ifi/codes/ctas/?a=87101).
6
The ITV News Channel closed in December 2005
7
Sky Mix changed its name to Sky Two on the 31 October 2005

230

Sky Movies 5

10%

46.6%

2%

4.8%

1%

1.1%

Sky Movies 6

10%

39.4%

2%

5.8%

1%

1.1%

Sky Movies 7

10%

48.5%

2%

5.2%

1%

1.3%

Sky Movies 8

10%

38.4%

2%

5.4%

1%

1.3%

Sky Movies 9

10%

49.7%

2%

5.3%

1%

1.3%

Sky Cinema 1

10%

22.9%

2%

3.3%

1%

1.0%

Sky Cinema 2

10%

22.9%

2%

3.3%

1%

1.1%

Sky Box Office

10%

87.1%

2%

1.6%

1%

1.7%

Disney Channel

10%

96.4%

2%

0%

1%

0.7%

Disney Playhouse

10%

65.6%

2%

0%

1%

1%

Disney Toon

10%

99.6%

2%

0%

1%

0%

MTV

10%

11.5%

2%

5.8%

1%

2.8%

MTV Hits

10%

5.1%

Exempt

1%

2.7%

MTV Base

10%

5.8%

Exempt

1%

1.6%

VH1

10%

9.5%

Exempt

1%

1.4%

VH1 Classic

10%

6.0%

Exempt

1%

2.8%

TMF

10%

11.0%

Exempt

1%

1.6%

Nickelodeon

10%

70.24%

2%

4.3%

1%

1.6%

Hallmark

10%

11.6%

2%

3.0%

1%

1.2%

Sci Fi Channel
Paramount Comedy
Channel

10%

10.4%

2%

3.1%

1%

1.0%

10%

10.8%

2%

2.3%

1%

3.6%

Living TV

6.66%

48.7%

2%

15.4%

1%

2.0%

Discovery Channel

6.66%

21.6%

2%

1.7%

1%

0.4%

Bravo

6.66%

28.1%

2%

7.5%

1%

2.6%

Challenge TV

6.66%

31.6%

2%

6.2%

1%

1.4%

Trouble

6.66%

45.5%

2%

8.6%

1%

2.3%

Cartoon Network

6.66%

5.7%

2%

3.8%

1%

4.2%

UKTV Gold

6.66%

54.5%

2%

10.8%

1%

1.3%

UKTV G2

6.66%

46.4%

2%

15.5%

1%

1.5%

UKTV Food

6.66%

37.0%

2%

4.8%

1%

1.0%

UKTV History

6.66%

40.5%

2%

16.4%

1%

1.9%

UKTV Style

6.66%

54.0%

2%

6.3%

1%

0.6%

UKTV Documentary

6.66%

56.0%

2%

13.7%

1%

1.8%

History Channel
Discovery Real
Time UK
National
Geographic
Jetix

3.33%

8.9%

2%

3.4%

1%

1.5%

3.33%

15.8%

2%

2.2%

1%

0.8%

3.33%

5.2%

2%

5.0%

1%

0.6%

3.33%

13.1%

2%

5.4%

1%

2.2%

The Box

3.33%

14.3%

Exempt

1%

1.8%

The Hits

3.33%

16.3%

Exempt

1%

1.8%

Level Two

Level Three

231

Tv

Recommandé

Recommandé

Contenu connexe

Tendances

Tendances (20)

Similaire à Tv

Similaire à Tv (20)

Dernier

Dernier (20)

Tv