Sustainable independent and impartial

news; in the Nations, locally and in the

regions

June 2009
Department for Culture, Media and Sport
Sustainable independent and impartial news; in the Nations, locally and in the regions

Our aim is to improve the quality of life for all

through cultural and sporting activities, support the
pursuit of excellence, and champion the tourism,
creative and leisure industries.
 Department for Culture, Media and Sport 3
Sustainable independent and impartial news; in the Nations, locally and in the regions

Contents

Introduction ............................................................................................................................ 4

Section 1: Securing plural sources of news in the Nations, locally and in the regions........... 5

Section 2: Funding options – a contestable element of the Television licence fee ................ 9

Section 3: Responding to this consultation and consultation principles............................... 12

Appendix A: List of consultation questions........................................................................... 14

4 Department for Culture, Media and Sport
Sustainable independent and impartial news; in the Nations, locally and in the regions

Introduction
1. The Digital Britain White Paper confirms the Government’s view that the wide
availability of high quality UK-produced content across a range of areas – from news and
current affairs to children’s programming and drama – is essential to the cultural, social and
democratic life of the United Kingdom. And there has long been a significant public
intervention to fund and secure such content.

2. In recent years provision by the market has expanded across a wide range of original
content, including light entertainment, performing arts, science, natural history and history
documentaries, and news at the UK-wide and international level. These developments are
welcome. There are however certain types of content which have significant social value but
which appear increasingly uneconomic for the market, unaided, to provide. There is thus a
growing risk that, in the future, such types of content will be provided in many places only by
the BBC.

3. The Digital Britain White Paper proposed a rebalancing of the public intervention
better to reflect these changing market realities. The Government sees an enduring role for
the BBC at the centre of this rebalanced framework, allowing it to evolve as a public service
content partner and enabler of Digital Britain; providing a modernised and recast remit for
Channel 4 that balances its public service remit alongside the BBC’s; and changing roles for
other public service content institutions and the prospect of greater innovation and content
provision by the commercial market as well.

4. The question remains whether this rebalanced framework on its own is sufficient or
whether there is a case for additional public intervention. The evidence suggests that there
is limited public appetite for any significant increase in the overall amount of
public funding for original public service content.

5. It is necessary to distinguish between where plurality is desirable and where it is

essential. The priority for the Government is to focus on what is essential, and for most
people it is news. For a significant, but smaller group, plural provision of original UK content
for children, particularly older children who are under-served by the market, is also seen as
important.
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Sustainable independent and impartial news; in the Nations, locally and in the regions

Section 1: Securing plural sources of

news in the Nations, locally and in the
regions
6. Studies and research show that news at all levels is the priority for audiences and the
most important public service content for society. News remains an integral part of
democracy which helps hold public institutions to account, informs all of us and gives a
particular voice to the Nations in the UK and to regions across the country. Having plurality
of news allows different perspectives, provides choice for the public and drives a diverse
and vibrant news industry.

7. The Government believes that it is this plurality in news, a range of editorially

independent voices, that remains important. It is vital that audiences have a range of
trusted, independent and impartial sources of news from and about the Nations (i.e.
Northern Ireland, Scotland and Wales), locally and in the English regions.

The current market

8. At the national and international level, there are plural sources and competition
between broadcasters providing impartial news (such as ITN, Sky and the BBC for
example), print providers (both the national press and periodicals) and increasing online
sources, that all attract significant audiences across the UK. Even where, as in the case of
broadcast news, the self-standing commercial case is not strong, UK and international news
is provided because it is seen as adding wider value to their brand or consumer proposition.

9. The importance of news extends right the way to the local level and it is equally
essential that there are plural sources of news providers and editorial voices focused on
local issues, local and regional democracy and decision making that affects people’s
everyday lives. This is especially true in the devolved nations where the national media
may not sufficiently cover the UK’s devolved democratic institutions. People in Scotland,
Wales and Northern Ireland expect to have news on how their public institutions are
meeting people’s expectations in their respective nation. Research has shown that this is
true in each of the Nations; similarly in the English regions, audiences want access to a
choice of news that informs them of what is happening in their area and how it affects them,
how their local institutions -hospitals, schools, police forces, and councils - are delivering.
Research carried out by Ofcom, the independent communications regulator, showed that
audiences particularly valued plurality of news provision: 86% of the audience thought news
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Sustainable independent and impartial news; in the Nations, locally and in the regions

was the area where plurality mattered most and 76% believed this mattered for nations and
regional news [1] .

10. The market continues to offer to various degrees original and innovative content and
there are many websites offering local news and community information. But the provision
of impartial and accurate news sources is not guaranteed in the marketplace and there is
increasing evidence that changes as a result of audience fragmentation and shift in
commercial revenues is having an impact on commercially provided news in the Nations,
locally and in the regions. At the same time, some forecasts are suggesting that the press
advertising market could shrink by between £700m and £1.6bn by 2019 with the regional
press worst hit. [2] Television broadcasters of news in the Nations, locally and in the regions
are also facing considerable pressure as is local news on commercial radio. Taken together,
these changes all reflect the diminution of the traditional offline advertising surplus, which
funded court reporting, investigative journalism, considered and impartial coverage of the
devolved institutions and much else in the fabric of our democracy in its widest sense. The
bulk of this evidence has been explored in the public service broadcasting reviews which
Ofcom has carried out under the statutory duty entrusted to it by Parliament (section 264 of
Communications Act 2003) to consider periodically how to maintain and strengthen public
service TV broadcasting. The scope of this statutory review is currently limited to television,
but we have acknowledged in the Digital Britain White Paper that this may need to change
to allow a review of the wider delivery of public service content.

11. These pressures across the market place mean that news provided in the Nations,
locally and in the regions is diminishing or risks significant decrease. The Government does
not consider this would be in the public interest and proposes therefore that, as news at the
national and international level is delivered through a range of providers, so too should
news in the Nations, locally and at the regional level.

Consultation questions:

Do you agree that securing plural sources of impartial news for the Nations, locally
and in the regions should be a key priority?

The Government’s proposal: Independently Funded News Consortia

12. In the Digital Britain White Paper, the Government proposed the introduction of
independently funded news consortia (IFNCs). These would involve organisations such as
(but not restricted to):

[1]
Ofcom second PSB Review, phase 1, figure 10 “the public’s attitude towards plurality”, p. 34

[2]
Advertising Association forecast, P.6, From riches to rags: prospect for local newspapers,
PriceWaterhouseCoopers, 2009
 Department for Culture, Media and Sport 7
Sustainable independent and impartial news; in the Nations, locally and in the regions

Ö regional and local broadcasters;

Ö online news content providers;
Ö news aggregators;
Ö local newspapers, radio stations;
Ö investors joining together to offer an ambitious and cross-media news
proposition.

IFNCs would provide regional news which would be broadcast and syndicated more widely
within the regional and local news environment. While multiplatform regional news will be a
crucial feature, the Government envisages that in the medium term at least, it would make
sense to take advantage of the window provided in the Channel 3 licence schedule for news
across each Nation, locally and regionally to build on the existing reach and scale of access
to audiences.

13. Contracts for IFNCs would be awarded following competition against a range of key
criteria, including: the ability to achieve reach and impact; high production and editorial
standards to sustain accuracy and impartiality; and the financial stamina to sustain the
service at quality throughout the period of the award. Criteria for desirable outcomes could
include the ability to raise the proportion of total activity devoted to journalism; commitments
to distinctiveness and original/investigative journalism; commitments to multi-media training
and willingness to be involved in arrangements for syndication of news stories to other news
organisations, whether nationally, regionally or locally.

14. The Government intends to trial this proposal first on a pilot basis in Scotland, Wales
and an English region. During the pilot stage, the Government will review the effectiveness
of the IFNCs and test the use of public funding and scope of commercial revenue
opportunities.

15. We expect IFNCs to be run commercially. But the concept recognises the market reality
that commercial funding might not necessarily be able to support all the costs of sustainable
independent news in the Nations, locally and in the regions; nor yet commercial provision
supplemented by wholesale access to the BBC’s news facilities building on the welcome
partnership proposals which the Corporation has developed. A key aim of the pilots will be
to test the level of “top-up” public funding required to provide high-quality news provision. At
UK-wide level, the BBC, Sky News, ITN, and news aggregators such as PA and Reuters all
provide key benchmarks of quality of impartial and accurate news that the Government
wishes to see replicated sustainably at the level of the Nations, locally and regionally.
Estimates of the costs of required top-up public funding vary considerably. In their statutory
review, Ofcom place the cost at between £65m and £100m a year. The cost of the BBC’s
(fully-publicly funded) television news for the Nations and English regions is at the top end
of this range and significantly more if radio and online/ multi-media news provision is
included. These are useful indicators in the public policy debate. Pilot projects would help
refine this figure. But for pilots to work, those participating need to have some certainty at
the beginning of what will happen beyond the pilot stage if they are to risk commercial
investment.

16. It will be important that the award and management of IFNC contracts is carried out
objectively and independently from Government, in order to ensure that editorial
independence is guaranteed and seen to be so. Further work will be required on the
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Sustainable independent and impartial news; in the Nations, locally and in the regions

necessary governance arrangements (which could involve one or more existing institutions
or a new body), subject in part to final decisions on top-up funding.

Consultation question:

Do you agree that sustainable, impartial news in the Nations, locally and in the
regions is likely to require some top-up public funding?
 Department for Culture, Media and Sport 9
Sustainable independent and impartial news; in the Nations, locally and in the regions

Section 2: Funding options – a

contestable element of the Television
licence fee
Potential sources of top-up funding

17. The Television Licence Fee is an existing, transparent, large scale funding
mechanism designed to support the provision of public service content. It is a levy on a
particular set of devices - ones capable of receiving or recording television content. It has a
wide pedigree in its various forms across European and wider markets. The source of the
Television Licence Fee is the audiences who buy those devices. It is already closely
aligned, in its use by the BBC, to core public purposes in respect of value for money,
sustaining citizenship and civil society; and representing the UK, its Nations, regions and
communities [3] . The Government believes that if top-up public funding is required to secure
news in the Nations, locally and in the regions, then the Television Licence Fee revenue
can be shared for these purposes.

18. The Television Licence Fee is not the “BBC” licence fee. In principle the BBC has no
exclusive right to the Television Licence Fee. This is a matter of historical practice. This
device levy is paid into the Consolidated Fund like any other tax, for the government of the
day to determine how it should be used. Successive governments have chosen since the
1960s to allocate 100% of Television Licence Fee revenue to the BBC, but have always
reserved the right to allocate less than 100%. This fact is reflected in the Agreement
between the Government and the BBC published alongside each BBC Charter. The
Television Licence Fee has already been used to support broadcasting policy objectives
beyond the BBC’s core services. An example is the ring-fencing of broadly 3.5% of the
Television Licence Fee revenue in the current Television Licence Fee settlement to meet
the cost of the Digital Switchover Help Scheme and Digital UK’s marketing and
communications costs.

19. That is the reason why in the Digital Britain White Paper, the Government has
presented the idea of a “contained contestable element” within the Television Licence Fee
from the beginning of the next Television Licence Fee settlement period in 2013. We
envisage that this would be broadly equivalent to the 3.5% currently ring-fenced for Digital
TV Switchover, but would be independent of the overall level at which the Television
Licence Fee is set.

[3]
Royal Charter for the continuance of the British Broadcasting Corporation Section, 2006, Cm 6925 Section 4 (d)
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Sustainable independent and impartial news; in the Nations, locally and in the regions

20. This element would be used primarily to top-up fund independent, alternative providers
of news (the IFNCs). However it could also potentially be used to sustain other essential
public service content priorities (e.g. the provision of plural original content for children) if
the independent provision of Nations, local and regional news should require less than the
contestable sum set aside.

21. The Government recognises that this is a departure from current practice whereby the
BBC has been the sole recipient of the Television Licence Fee, but it must be a key option
in the absence of other solutions.

22. The Government recognises that there is an argument that the Television Licence Fee
has become associated in many people’s minds with the BBC alone and that this
association is a core reason for the wider public acceptability of the Television Licence Fee.
The Government is therefore keen to understand people’s perceptions and views on the
use of the Television Licence Fee for securing plural news in the Nations, locally and in the
regions and potentially for other essential public service content. In addition to this
consultation we will carry out specific research into the views of audiences for that purpose,
and will engage specifically with those who represent them. We will also seek specifically
the views of the organisations entrusted with special responsibilities in relation to plural
public service content provision: the BBC Trust and Ofcom.

23. Subject to the outcome of this consultation the Government proposes that the public
funding required for the pilot phase should come from the expected underspend from funds
set aside in the current Television Licence Fee settlement to meet the costs of the Digital
Switchover Help Scheme. We will discuss with the BBC Trust how that can be achieved.

24. As stated in the White Paper, the Government is open to alternative proposals that
would to the same extent deliver its objectives of maintaining a strong, independent BBC
funded by the Television Licence Fee; and providing a sufficiency of sustainable
contestable funding to support public service content from other sources than the BBC,
primarily in news for the Nations, locally and in the regions.

Consultation questions:

Do you agree that the Television Licence Fee should be used to

support impartial news in the Nations, locally and in the regions in addition to BBC
services?

Do you agree that any funding within a contained contestable element of the
television licence fee not required for impartial news should potentially be available
to fund other forms of essential public service content, or should such funding be
limited to news?

Are there alternative funding mechanisms that you believe would deliver the above
objectives more effectively?
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Sustainable independent and impartial news; in the Nations, locally and in the regions

Protecting the BBC’s funding

25. In order to protect the BBC’s security and independence, the Digital Britain White Paper
proposed that the BBC Agreement should be amended to set out an agreed maximum
percentage of the Television Licence Fee income that could be set aside as a contestable
element. The Government is open to discussing with the BBC Trust other options for
containment.

26. It will be important to ensure that appropriate governance arrangements are in place to
guarantee proper scrutiny of any contestable fund. All Television Licence Fee expenditure,
whether by the BBC or a third party, must meet high standards of transparency, public
accountability and be in the public interest. The BBC’s Royal Charter already contains a set
of Public Purposes which govern the BBC’s use of the Television Licence Fee. These are:

ƒ sustaining citizenship and civil society;

ƒ promoting education and learning;
ƒ stimulating creativity and cultural excellence;
ƒ representing the UK, its nations, regions and communities;
ƒ bringing the UK to the world and the world to the UK;
ƒ in promoting its other purposes, helping to deliver to the public the benefit of
emerging communications technologies and services and, in addition, taking a
leading role in the switchover to digital television.

The Government proposes that the use of any contained contestable element should be
required to fall within these purposes too. The Government would work the BBC Trust and
Ofcom to ensure that the governance model for IFNCs and any wider contestable
expenditure delivers these guarantees so as to continue to protect the interests of the
Television Licence Fee payer.

Consultation questions:

Do you agree with the proposal to set a maximum percentage of Television Licence
Fee revenue which could be set aside as a contained contestable element?

Do you agree that amending the BBC Agreement could provide the necessary
protection to the BBC’s future funding and independence?

Do you agree that the use of any contained contestable element within the Television
Licence Fee should be restricted to the public purposes set out in the BBC Charter?
12 Department for Culture, Media and Sport
Sustainable independent and impartial news; in the Nations, locally and in the regions

Section 3: Responding to this

consultation and consultation principles
27. The purpose of this consultation exercise, which will run for 12 weeks until 22
September 2009, is to secure the widest possible range of views from the public and the
media industries on the issues that the consultation addresses.

28. This will inform Government’s views and decisions on the funding of plurality of local,
regional and Nations news.

29. This consultation document is available in hard copy on request and online (see below).
It is also available in the Welsh language.

30. Submissions should be sent by 22 September 2009 (at the latest) to:

Maria Schlee
Media Team,
Department for Culture, Media and Sport,
5th Floor,
2-4 Cockspur Street
London SW1Y 5DH

or by e-mail to [email protected]

31. Responses to the questions posed in this document can also be completed online at
http://www.bis.gov.uk/digitalbritainconsultation.

32. We can also provide documents to meet the specific requirements of people with
disabilities. If you need assistance please email [email protected]

33. This consultation is guided by the Government’s Code of Practice on Consultation

which is available at: http://www.berr.gov.uk/files/file47158.pdf

34. Respondents are asked to note that all information in responses, including personal
information, may be subject to publication or disclosure under the Freedom of Information
 Department for Culture, Media and Sport 13
Sustainable independent and impartial news; in the Nations, locally and in the regions

Act 2000. Confidentiality cannot be guaranteed to any respondents, and will only be
possible if considered appropriate under the legislation.

35. A summary of responses will be published after the closing date.

36. Respondents’ attention is also drawn to the Digital Britain website on which further
background material is available
http://www.culture.gov.uk/what_we_do/broadcasting/5631.aspx
14 Department for Culture, Media and Sport
Sustainable independent and impartial news; in the Nations, locally and in the regions

Appendix A: List of consultation

questions

1. Do you agree that securing plural sources of impartial news for the Nations,
locally and in the regions should be a key priority?

2. Do you agree that sustainable, impartial news in the Nations, locally and in the
regions is likely to require some top-up public funding?

3. Do you agree that the Television Licence Fee should be used to

support impartial news in the Nations, locally and in the regions in addition to
BBC services?

4. Do you agree that any funding within a contained contestable element of the
television licence fee not required for impartial news should potentially be
available to fund other forms of essential public service content, or should such
funding be limited to news?

5. Are there alternative funding mechanisms that you believe would deliver the
above objectives more effectively?

6. Do you agree with the proposal to set a maximum percentage of Television

Licence Fee revenue which could be set aside as a contained contestable
element?

7. Do you agree that amending the BBC Agreement could provide the necessary
protection to the BBC’s future funding and independence?

8. Do you agree that the use of any contained contestable element within the
Television Licence Fee should be restricted to the public purposes set out in the
BBC Charter?
2-4 Cockspur Street
London SW1Y 5DH
www.culture.gov.uk