Media

Regulatory and institutional structure

Summarise the regulatory framework for the media sector in your jurisdiction.

Question 1 of this chapter outlines the regulatory framework for the media and telecoms sector within the UK. Press Regulation is set out later in this chapter, in question 26. Regulatory Agencies are also set out in question 28.

Broadcasting is regulated by the legislation set out in the above question with additional regulation from the Broadcasting Act 1990 (as amended by the Broadcasting Act 1996 and the Act). There have also been some minor changes to the regulatory regime through the Digital Economy Act 2017.

Subject to the outcome of Brexit, regulatory changes may come in the future as a part of the Commission’s Digital Single Market Strategy.

Ownership restrictions

Do any foreign ownership restrictions apply to media services? Is the ownership or control of broadcasters otherwise restricted? Are there any regulations in relation to the cross-ownership of media companies, including radio, television and newspapers?

Restrictions as to who can hold a broadcasting licence and control a broadcaster are set out in both the 1990 and 1996 Broadcasting Acts; these were revised by the Act, which relaxed these provisions. If at any point there is a change in control over the licence or the owner of the licence, they must notify Ofcom, which will ensure that no person disqualified from holding the licence has taken control. Ofcom will also undertake a review to ensure that change of control will not negatively affect the programme content. If Ofcom does believe certain aspects of the programming may change, it could vary the licence.

Those who will be disqualified from holding a broadcasting licence will generally fall under two categories: religious or political groups and advertising agencies.

Although religious bodies are generally restricted from holding a broadcasting licence, there are exceptions to this rule. They may own local analogue radio and satellite, cable broadcasting, local digital sound programme, national digital sound programme, television restricted service, digital programme service and digital additional service licences.

Licensing requirements

What are the licensing requirements for broadcasting, including the fees payable and the timescale for the necessary authorisations?

BBC

The main document that regulates the BBC is the founding charter. The revised charter came into force on 1 January 2017. This revised charter made multiple changes to the regulation of the BBC. A unitary board was formed to replace the BBC Trust and BBC Executive; this new board ensures that the BBC’s strategy, activity and output are in the public interest. From 2017, the BBC fell under the remit of Ofcom.

Channel 4

The most recent licence for Channel 4 came into effect in January 2015 and was varied in December 2017 following a 2014 spectrum management decision by OFCOM. Channel 4 previously operated on a digital replacement licence that replaced its original analogue broadcasting licence in 2004. The most recent licence keeps things essentially the same, although the 2017 variation provides for the clearance of the 700MHz band for mobile data use by 1 May 2020.

Channels 3 and 5

The most recent licences for both Channels 3 and 5 came into effect in January 2015 and were varied in December 2017 following a 2014 spectrum management decision by OFCOM. Channels 3 and 5 previously operated on digital replacement licences, which came into effect in 2004 and replaced the analogue Channel 3 and 5 licences. The current licence includes amendments to the regional programming commitments in Channel 3 licences for English regions; and creates a more localised Channel 3 news service, while also lowering obligations. The 2017 variations also provide for the clearance of the 700MHz band for mobile data use by 1 May 2020.

Digital television programme services (DTPS)

Other than those provided by Channel 3, 4 or 5, DTPS licences cover the provision of television programmes services. The broadcasts covered will be in digital form for general reception on a digital television terrestrial multiplex. They will also cover ancillary services such as subtitling.

Digital television additional services (DTAS)

DTAS licences cover television services text and data services including teletext and electronic programme guides. These are not covered by DTPS licences as they are not considered an ancillary service or digital television programme services. They are broadcast in a digital form on a digital television multiplex.

Television licensable content services (TLCS)

A TLCS licence covers services broadcast from a satellite, distributed using an ECN or ECS made available by a radio multiplex. Its principal purpose must be the provision of television programmes or electronic programme guides, or both. The service must also be available for reception by members of the public.

Services such as Channels 3, 4 and 5, covered by the other licences outlined in this section, do not require a TLCS licence. Internet services, pure video-on-demand services and two-way services, such as videophone, do not require a TLCS licence.

A new local television licence regime was created as part of the Local Digital Television Programme Services (L-DTPS) Order 2012. An L-DTPS will have sufficient capacity at its location for one standard definition digital service on the local multiplex. These are operated on Multiplex L with 29 L-DTPS licences awarded.

Under the Broadcasting Act 1990, Ofcom must not grant a licence to any person unless it is satisfied that the person is a ‘fit and proper’ person to hold it and is not disqualified by statute from holding the licence. The proposed service cannot be contrary to the standards objectives laid out in the Act.

The complete Ofcom tariff table is available on its website.

Radio

Under the Act, Ofcom has the authority to regulate the following in relation to independent radio services:

  • analogue sound broadcasting services at a national or local level;
  • radio licensable content services (services provided in digital or analogue form, broadcast from a satellite or via an ECN, for use by the public and consisting of sound programmes);
  • additional radio services (a service consisting of the sending of signals for transmission by wireless telegraphy using space capacity within signals carrying any sound broadcasting service);
  • digital radio multiplex services;
  • digital sound and digital additional sound services at both a national and local level (text and data services not intended to be related to programming); and
  • radio restricted services (licences intended to cover small-scale community uses).

Fees, duration and permissible content vary depending on the type of licence to be granted. Ofcom suggests that the easiest way to set up a radio service is to start an online radio station. Ofcom currently does not regulate online-only radio services which, therefore, do not require a licence from Ofcom.

Foreign programmes and local content requirements

Are there any regulations concerning the broadcasting of foreign-produced programmes? Do the rules require a minimum amount of local content? What types of media fall outside this regime?

The Act contains a limited number of provisions covering the broadcasting of foreign programmes. Regulations set out in the Audiovisual Media Services Directive 2010/13/EU (as amended by Directive (EU) 2018/1808 and incorporated into the Broadcasting Code), require that, where practicable, European production should account for over 50 per cent of the transmission hours of each broadcaster established in that market (subject to certain exclusions). The amending Directive (EU) 2018/1808 provided, among other things, for an increased European content quota for on-demand services, raised from 20 per cent to 30 per cent. In addition, the Secretary of State maintains powers under the Act to disallow foreign television and radio should it fall foul of provisions in the Act (such as those that offend against taste or decency). Regarding online and mobile content, there are no equivalent foreign restrictions.

The Act gives Ofcom the power to require local programming be included in the output of broadcasters where appropriate. An example of this is in Ofcom’s inclusion in every Channel 3 licence of a condition requiring a regional channel with programmes targeted at persons living in the area.

Advertising

How is broadcast media advertising regulated? Is online advertising subject to the same regulation?

Ofcom’s role under the Act is to regulate advertising on broadcast media to ensure advertising rules and standards are met. These rules and standards can be found across a number of instruments. Primarily broadcast media must follow the UK Code of Broadcast Advertising (the BCAP Code) which covers misleading advertising, protection of children, harmful and offensive content, a ban on political advertising, and rules on environmental claims, to name but a few. Additional rules are contained in Ofcom’s Broadcast Codes, which cover issues such as taste, decency and product placement. Enforcement of the aforementioned rules, while ultimately Ofcom’s responsibility, has been largely contracted out to the Advertising Standards Authority and its associated bodies.

One of the key amendments to the Audiovisual Media Services Directive, which were approved by European Parliament in October 2018, was to introduce new rules concerning the proportion of daily broadcasting time that would be taken up by advertisements. Under the new rules, advertising can take up a maximum of 20 per cent of the daily broadcasting period between 6.00 am and 6.00 pm, but broadcasters can adjust their advertising slots within this time period so long as they do not exceed the total 20 per cent limit. The new rules also introduce a prime-time window between 6.00 pm and midnight, during which advertising will also only be allowed to take up a maximum of 20 per cent of broadcasting time.

Product placement, while allowed in films, series made for television, sports programmes and light entertainment programmes (both foreign and national), is prohibited in news and children’s programmes. This was a change brought in during Ofcom’s February 2011 change to the Broadcasting Code, and includes rules requiring special logos to be shown at the beginning and end of the programme, as well as at the end of each advertising break to signify the use of product placement.

There are strict rules on advertising and product placement in children’s television programmes and content available on video-on-demand platforms introduced under the amendment to the Audiovisual Media Services Directive approved in November 2018.

Online advertising is subject to the CAP code which imposes similar standards and rules. The CAP code also contains the rules that apply to video-on-demand services. While there are some differences between the codes, the BCAP Code states that BCAP works closely with CAP to provide, as is practicable and desirable, a consistent and coordinated approach to standards setting across non-broadcast and broadcast media. The CAP code was amended in November 2018 to align with the GDPR and provide rules and guidance in respect of use of data for direct marketing generally and the rules on the transparency and control of data collected and used for the purpose of delivering ads based on web-users’ browsing behaviour.

As of 14 June 2019, advertisements containing gender stereotypes will be banned in both broadcast and non-broadcast media (including online and social media).

On 13 March 2019, Phillip Hammond, chancellor of the exchequer, wrote to the CMA asking them to carry out a market study of the digital advertising market as soon as is possible. Such a market study would seek to explore: (i) the importance of data in digital advertising including in programmatic trading; (ii) whether the market is sufficiently transparent, including to advertisers and publishers as well as to consumers in how their data is used; and (iii) the extent to which digital platforms grant preferential treatment to their own businesses across the value chain or act in other ways which are likely to disadvantage third-party competitors. This market study was a recommendation of the Furman Report.

Must-carry obligations

Are there regulations specifying a basic package of programmes that must be carried by operators’ broadcasting distribution networks? Is there a mechanism for financing the costs of such obligations?

Under the Act, public service broadcasters, including (but not limited to) the BBC, ITV, Channel 4 and Channel 5, must provide public service broadcasting (PSB) channels to all the main distribution platforms. As a result, such channels have a right to be carried on all the main platforms on a ‘free-to-air’ basis. Ofcom has a responsibility under the Act to review and report on the extent to which the PSBs have fulfilled the purposes of PSB and make recommendations regarding how to maintain and strengthen the quality of PSB in the future, with reviews taking place every five years. The purposes of PSB in the UK are:

  • to provide a variety of programmes on a wide range of subject matters;
  • to provide television services that are likely to meet the needs and interest of as many different audiences as practicable (as well as those of the actual available audiences); and
  • to maintain high standards in respect of programme content, development and skill, and editorial integrity.

In March 2018, Ofcom published a review of PSB. It concluded that PSB fulfils an important and valued role in broadcasting in the UK. However, it also noted the greatly increased choice of platforms and content available to viewers. It also commented on the ‘rush to scale’ through M&A activity, such as the Fox and Comcast bids for Sky and the Disney bid for Fox. Despite such challenges, Ofcom believes that PSB in the UK has fared well. PSB television channels still account for 50 per cent of viewing and revenue streams (advertising and the licence fee for the BBC) providing a consistent and reasonably resilient revenue stream.

Regulation of new media content

Is new media content and its delivery regulated differently from traditional broadcast media? How?

New media content is regulated under the same broadcast content rules and legislation as broadcast media, so, for example, internet protocol television services simply require the same licences as they would for the same content offline. Following the Audiovisual Media Services Directive, the UK must regulate VOD content and advertising. Ofcom brought regulation of VOD in-house in January 2016 to ensure the efficient and effective control of regulating VOD programme services. Rules include a number of minimum content standards, and on-demand services are subject to the UK Code of Non-Broadcast Advertising, Sales Promotion and Digital Marketing. The amendments made to the Audiovisual Media Services Directive in November 2018 extend its scope to video-sharing platforms in addition to VOD providers, such as Netflix and YouTube.

In February 2019, the Culture, Media and Sport Committee published its report into the dissemination of ‘fake news’ published predominantly in non-traditional news media outlets and via social media. The report calls for social media companies to be obligated to take down known sources of harmful content, including proven sources of disinformation and a Code of Ethics for tech companies overseen by an independent regulator.

Digital switchover

When is the switchover from analogue to digital broadcasting required or when did it occur? How will radio frequencies freed up by the switchover be reallocated?

The UK digital television switchover commenced in 2008 and was completed in 2012. The 600MHz band was auctioned in 2013 and the remaining freed analogue television channels have yet to be allocated.

Under the Digital Economy Act 2010, the Secretary of State is given the power to nominate the digital switchover for radio broadcasting. The UK government has set criteria to be met before the switchover can commence: digital listening must reach 50 per cent of all radio listening (including via television and DAB); national DAB coverage must be equal to analogue coverage and local DAB reaches 90 per cent of the population. Ofcom’s Communications Market Report, published on 2 August 2018, indicates that DAB radio listening had reached 50.9 per cent.

Digital formats

Does regulation restrict how broadcasters can use their spectrum?

Although licences may set out certain restrictions in terms of information requirements and governing codes or guidance, broadcasting licences are not restrictive in terms of how the spectrum may be used.

Media plurality

Is there any process for assessing or regulating media plurality (or a similar concept) in your jurisdiction? May the authorities require companies to take any steps as a result of such an assessment?

In its fifth report to the Secretary of State, dated 23 November 2018, Ofcom stated its statutory duty to review, at least every three years, the operation of Parliament’s ‘media ownership rules’ as found under section 391 of the Communications Act 2003. Ofcom note that the aim of the rules is to protect the public interest by promoting plurality and preventing undue influence by any one, or certain types of, media owner.

There are currently four broad media ownership rules that Parliament has put in place in the UK (and which are set out in Ofcom’s November 2018 report to the Secretary of State):

  • the national cross-media ownership rule: preventing a newspaper operator with a 20 per cent or more market share of newspaper circulation from holding a Channel 3 licence or a stake in such a licence of more than 20 per cent; and preventing the holder of a Channel 3 licence from holding an interest of 20 per cent or more in a large national newspaper operator;
  • the Channel 3 appointed new provider rule: requiring regional Channel 3 licensees to appoint a single news provider among them;
  • the Media Public Interest Test: which allows the Secretary of State to intervene in a merger involving a broadcaster or newspaper enterprise, where that merger meets certain value or market share requirements. The Secretary of State may choose to issue an intervention notice triggering a review if a merger might result in harm to the public interest (see further below); and
  • the Disqualified Persons Restrictions: where certain bodies or persons must first be approved by Ofcom prior to holding certain kinds of broadcast licence to prevent undue influence over broadcasting services.

Intervention by the Secretary of State on the grounds of public interest under the EA includes the need for accurate presentation of news and free expression of opinion in newspapers, the need for plurality of persons who control the media and the need for UK-wide broadcasting that is both of high quality and likely to appeal to a variety of tastes and interests. Where a public interest ground applies, it is not necessary for the Secretary of State to carry out an assessment as to whether there would be a substantial lessening of competition by the merger (as would otherwise be required).

Detailed guidelines from 2004, by the former Department for Trade and Industry, set out those situations where the Secretary of State may intervene in merger situations involving media organisations, including cross-media mergers (where there is a merger between a newspaper and a Channel 3 or 5 licence holder, for example). The Secretary of State may intervene where the merger involves entities from outside the EEA. The policy is not for the Secretary of State to intervene where the mergers are related to satellite and cable television and radio services.

Key trends and expected changes

Provide a summary of key emerging trends and hot topics in media regulation in your country.

Brexit

As with telecoms, broadcasting regulation is founded on EU law. Although in the short to medium term there are unlikely to be any significant changes to these laws, the UK government may choose to take a more divergent approach in the future. For example, whereas television broadcasting is subject to greater levels of regulation than over-the-top services (such as VOD), the UK government would have the freedom to regulate more closely the laws on VOD services.

Brexit would also likely impact on the current ‘country of origin’ principle whereby broadcasters that are regulated in one member state do not need to apply for additional licences to transmit in another member state. As this is set out in the current Audiovisual Media Services Directive, the UK could lose this benefit going forward, increasing the regulatory burden on UK broadcasters and making it harder for UK broadcasters to sell their content in the EU. The UK government recently published the Broadcasting (Amendment) (EU Exit) Regulations 2019, which will come into force in the event of a no-deal Brexit and will make a number of changes to primary and secondary legislation to address certain deficiencies arising from the UK’s withdrawal from the EU. The Regulations will amend the UK’s authorisation system to a ‘country of destination’ principle, whereby any television services available in the UK must be licensed and regulated by Ofcom. However, the Regulations also implement the European Convention on Transfrontier Television (ECTT) which, in effect, would mean the country-of-origin principle would be retained in relation to ECTT countries.

At the time of writing, the UK’s future relationship with the EU remains uncertain. With the original date for the UK’s departure of 29 March 2019 having passed, it is unclear whether the UK will now leave the EU on 12 April 2019, or whether a ‘long’ extension to Article 50 may be sought and granted by the EU to extend the period for the UK’s exit.

The battle for Sky

As noted above, there is a rush to scale in the broadcasting sector and this was evidenced recently in the tussle between Fox and Comcast to acquire ownership of Sky. In a rare blind auction process set by the UK’s Takeover Panel in September 2018, Comcast outbid Fox with a bid of £30.5 billion, which equated to £17.28 per share. This was £1.61 per share higher than Fox offered at £15.67 per share.

Taxation on social media

There has been some indication that new taxes will be introduced in the near future to target social media companies. In the UK Budget 2018, delivered on 29 October 2018, the Chancellor of the Exchequer, Philip Hammond, announced plans to introduce a digital services tax from April 2020 following a consultation. The proposed tax would be a 2 per cent tax rate against the sales that large digital companies make in the UK and would be levied against social media platforms, as well as internet marketplaces and search engines. The Chancellor emphasised that start-ups would be protected from the levy. The consultation ran from 7 November 2018 to 28 February 2019 and, at the time of writing, the UK government were reviewing public feedback. A similar proposal from the European Commission, which would tax revenues for some digital services at 3 per cent, has thus far not been agreed upon by the member states.

On 18 March 2019, the All-Party Parliamentary Group on Social Media and Young People’s Mental Health and Wellbeing released its report on the effects of social media on mental health problems in young people. The report called for a tax of 0.5 per cent of social media companies’ profits to create a Social Media Health Alliance. At the time of writing, the UK government has not yet published its own proposals.