Labour’s BSkyB windfall

In the 1990s, there seemed to be two kinds of people in the Labour Party. Those who treated winning the election as the top priority, and those who were unwilling to enter into any kind of Faustian pact with Rupert Murdoch.

The whole deal was sealed by an informal – almost anti-intellectual – self-censorship among senior figures in the party. There was almost an omertà among senor advisers – a subject that could never be broached.

It is a pact that may have run its course. There is now a good deal less certainty about the degree of success that a good relationship with News Corp can guarantee, while on the wider front, newspapers generally have been gradually losing influence anyway. In a climate of hyper-scrutiny, these pacts may soon be obsolete anyway.

Tie this up with Labour’s waning electoral fortunes and it may be reasonable to guess that the deal will soon be history.

But how much has it cost us? Well, firstly there was a veto on some areas of public policy which appeared largely to reflect personal beliefs at the top of News Corp or the kind of prejudices on issues such as immigration or law and order that sell newspapers.

But the less-discussed but no-less-interesting question is the damage to the public interest arising from the regulatory free-ride that BSkyB have been given. Anyone watching OfCOM and Digital Britain’s contortions over how a relatively small funding gap in public service broadcasting can be filled can see lots of painless cut-and-dry options written off because of this veto.

In every other European Union country, broadcasters are obliged to make a reasonable quantity of TV programmes. In the UK, BSkyB have been exempted from the “Television without Frontiers” (TVwF/AMS) content regulations because of a long-standing UK-sponsored loophole (p.31) and an unwillingness to even broach a subject that would solve problem of Public Service Broadcasting’s (PSBs) funding gap at a stroke.

BSkyB’s subscription revenue is over £3 billion (subscriptions now outstrip advertising as a source of TV revenue) yet 90 per cent of UK originated content is made by PSBs. Anywhere else in the EU, this would have resulted in a regulatory obligation to re-invest substantially in locally originated content.

The 9 million BSkyB subscribers spend the majority of their time watching traditional PSB-created content – over £3 billion per year in content that BSkyB carry at no cost. Subscription revenue now outstrips advertising revenue in the UK and BSkyB take the lion’s share of this. The subscription platform that BSkyB use would only attract a fraction of those subscribers if PSBs weren’t on it. In almost every other EU country, those PSBs would receive re-transmission fees. But not in the UK.

20 per cent of UK households (projected to rise to 75 per cent by 2013) have digital receivers that allow them to record and avoid advertising. It diminishes the value of ad-slots and it’s a variation from the terms that the programmes are broadcast on. In every other major EU economy, there is a £10-£20 levy on such equipment, but as Sky+ is the most widely-sold PVR in the UK, it is not on the cards here.

By ruling out these options, the government is unable to tap and £50 billion+ marketplace of products that benefit from the fact that the UK has popular quality TV content. Un-noticeable levies that are in place throughout the EU could generate enough cash to fill the projected PSB funding gap. It could also create huge investment in drama, kids TV and a revival of local and regional news.

The costs to our democracy and culture are huge. But purely in economic terms, we can now see the price that we’ve paid for News Corp’s co-operation.

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3 Responses to “Labour’s BSkyB windfall”

  1. Paul Evans

    Not usually disloyal to Labour, but I reckon they gave a massive electoral bribe out + it shouldn’t go unnoticed:

  2. Paul Evans

    Not usually disloyal to Labour, but I reckon they gave a massive electoral bribe out + it shouldn’t go unnoticed:

  3. Paul Evans

    @johnb78 I've blogged about it in the past here;

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