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and management resources is reducing
broadcasters’ willingness to enter into a
rights agreement, and also the price they are
willing to pay. As Europe’s regulators
collaborate more and introduce greater
consistency, the risk should decline. But this
will be a slow process, and while the risk
may become clearer, it will always have to
be actively managed – especially following
the modernisation of the EU competition
regime, which has removed the need for
companies to notify agreements to Brussels.
Emerging issues
So, regulation matters - and the landscape is
continuing to evolve. In the UK, following the
publication of the first phases of Ofcom’s two
big reviews to date - of telecoms and public
service broadcasting - the question is when it
will start to flex its muscles in the competition
arena, with press and industry speculation
focusing on the activities and structures of the
likes of BT, BBC and BSkyB. Radio, in which
the debate over public service remits and
impacts has hardly begun, let alone over the
role of independent production, is also likely
to attract the attention of the merger authorities
if consolidation takes place. To date, radio
takeovers have been reportedly held back by
high valuations, and by interventions such as
last year’s blocking of a bid from Galaxy
Radio - a joint venture between GWR and
Scottish Radio Holdings - for Bristol-
based Vibe 101, on the grounds that
it could reduce competition in
the local advertising market.
And across both radio and
TV, the momentum behind digital services and
timing of the analogue switch-off will
continue to be a major preoccupation.
A number of developments in UK
broadcasting regulation have parallels in
the utility sector, even though the industry
structures and rationale for intervention are
quite different. PSBs across the EU, in
particular, are subject to increasing
pressure to demonstrate transparency,
efficiency and effective governance from
a combination of their Government funding
departments, the EU state aid regulator and
their commercial competitors. The UK
regulatory issues list in broadcasting now
reads more and more like aspects of the
price regulation regime applied to utilities
and telcos, not forgetting the important role
of content regulation (akin to quality of
service regulation in utilities):
demonstration of value-for-money
involving cost efficiency reviews, the type
and level of funding provided to PSBs,
access terms to the increasingly important
EPG, the stimulus and action required to
drive digital penetration, quantification of
the costs and benefits of PSB obligations
and the introduction of new spectrum
charges and trading mechanisms to name
but a few. The list also shows how
intertwined all of these issues are.
In due course, such pricing and operational
issues will make way for more significant
debates, such as over the pros and cons of
structural separation of PSBs, echoing
developments in the utility market during
the 1980s and 1990s (separating
distribution and supply, for example, to
foster competition wherever possible); and
over corporate status.
A sound agenda - with vision
To help broadcasters of all types navigate
their way through these choppy regulatory
waters, we have come up with a four-point
checklist of issues for them to focus on, based
upon our experience of working on both sides
of the regulatory fence. These are:
1.
Lead the agenda – be ahead of the game
Instead of awaiting regulatory intervention and
responding when it comes, broadcasters need
to take a leaf out of other regulated industries’
books and push their own agenda, collaborate
early and often with regulators, and seek
consensus and compromise rather than
confrontation. This will involve mapping out
future business and industry scenarios, and
understanding the role of regulation, if any,
within it. Convincing evidence always plays
well, especially with regard to the impact of
challenging new developments, such as the
impact on the industry and regulation of
personal video recorders.
2.
Pick your battles
Compromise doesn’t mean rolling over for
the regulators. Broadcasters need to decide
which fights they need to win, prioritise
them, and marshal their forces to do so in
some sort of decision-making framework. It
is worth giving up on a few skirmishes to
win on the big points.
3.
Think joined-up
Historically, the national-based nature of
regulation and the sectoral divisions within
the industry have tended to restrict companies’
perspectives within those limits. But there is
much to learn from analysing, not copying
necessarily, approaches and developments in
other countries, industries and debates given
that they are often the starting point for the
introduction of new regulations and policies.
This cross-fertilisation can bring up a better
answer more quickly and more cheaply.
4.
Go outside the box
More so than ever before are regulators
reassessing the rationale for, and the costs
and benefits of, existing and hopefully future
regulatory intervention – a welcome step
forward. Companies need to do the same. The
fact that something has been done one way
doesn’t mean it should be.
Like it or not, regulation is an increasingly
important fact of life. Confrontation and
reaction will only get broadcasters so far. It’s
time for them to engage more and learn
lessons from elsewhere - for the long-term
good of their businesses.
