Ofcom Media Office

Ofcom announces new ITV licence review process

    Ofcom today announced a consultation on its new approach to the review of licence terms for Channel 3 (ITV) broadcasters.

    Ofcom plans to introduce a unified and streamlined process in order to reduce the regulatory burden of licensing regulation. The proposals recognise the important challenges facing the television industry in the years ahead, including the need to plan for digital switchover, the need to maintain public service broadcasting obligations and, importantly, the need for the timetable for the Channel 3 licence reviews to allow Ofcom to take full account of its PSB Review.

    The regulator is proposing to align the licence review periods for all 16 Channel 3 licences so that all reviews can begin from 31 December 2004. This would enable licensees to operate according to a consistent licensing timetable going forward.

    Under previous plans, reviews for 8 licensees could begin from 31 December 2004, but the remaining 8 would be delayed until early 2007.

    The Communications Act 2003 allows Channel 3 licensees to ask for reviews of the financial terms of their licences from 31 December 2004. Ofcom's consultation document sets out proposals to simplify the process for these reviews, to improve clarity and transparency and to reduce the regulatory burden upon broadcasters.

    Ofcom is proposing:

    - to price all Channel 3 licences simultaneously by seeking to
         align the review periods of different licences;  

    - to complete the reviews by the end of June 2005 for any Channel
        3 broadcasters applying on 31 December 2004;  

    - that licensees should be entitled to apply for a review only
        once during a review period; and,  

    - to reduce broadcasters' information requirements for the
        reviews, wherever possible, to bring greater simplicity and
        transparency.  The full consultation document is available on  
        Ofcom's website at www.ofcom.org.uk. Responses are invited by
        1 March 2004.

    Ofcom intends to publish a statement on the results of the consultation, including a decision on the final timetable for the reviews, by early April 2004. Views submitted on the general approach to the reviews will be incorporated into a second consultation, planned for June 2004, on a more fully-defined proposition for the valuation methodology.  

    Background information

    Ofcom is required to set financial terms for broadcasters' payments for Channel 3 licences based on what it believes each broadcaster would bid in order to win its licence in a competitive tender. Payments take the form of a percentage of the broadcaster's qualifying revenue (PQR) plus an annual fixed cash sum.

    Section 225 of the Communications Act 2003 permits each holder of a Channel 3 digital replacement licence to apply for a review of its financial terms for payments to the Treasury, within a window of time starting four years prior to the expiry date of its old analogue licence. Ofcom is required, under Section 215 of the Communications Act 2003, to offer to replace the existing Channel 3 analogue broadcasting licences with new digital licences in 2004.

    There are 16 Channel 3 analogue licences. These currently have three different expiry dates; 31 December 2008, 31 December 2010 and 31 March 2011, which means that they have three different review periods. The earliest review period, for licences with an expiry date of 31 December 2008, begins on 31 December 2004. The review period for later licences would begin on 31 December 2006 and 31 March 2007 respectively.  

    Ofcom is allowed, with the consent of relevant licensees, to vary the licence periods under Section 3(4)(a) of the Broadcasting Act 1990. The shortening of the analogue licence periods will have no effect on the duration of the digital replacement licences.

    Ofcom is proposing the following review timetable for licensees with an analogue licence expiry date of 31 December 2008:

      Date                                        Action                                          

      31 December 2004                    Earliest date on which                
                                                    relevant Channel 3 broadcasters        

                                                    could submit applications

      By end June 2005                    Ofcom determines new                  
                                                    financial terms for                          

                                                    broadcasters who submit                    

                                                    applications on 31 December 2004

      1 January 2005                        New fixed annual cash sum          
                                                    backdated to take effect on              

                                                    this date for broadcasters who        

                                                    submit applications on
                                                    31 December 2004

      Start of licensee's next        New PQR rate to take    
      effect accounting period  



    Ofcom is the independent regulator for the UK communications industries, with responsibilities across television, radio, telecommunications and wireless communications services.

    Our duties include:

    - The promotion of choice, quality and value in electronic communications services, where appropriate by encouraging competition between the providers of those services

    - Ensuring the most efficient use of the radiocommunications spectrum - the airwaves used for the transmission of all non-military wireless communications services

    - Ensuring a wide range of electronic communications services, including broadband, is available across the UK

    - Ensuring a wide range of TV and radio programmes of high quality and wide appeal

    - Maintaining plurality in the media by ensuring a sufficiently broad range of ownership

    - The protection of audiences against offensive or harmful material, unfairness or the infringement of privacy on TV and radio

    For further details please visit www.ofcom.org.uk.

                          This information is provided by RNS

          The company news service from the London Stock Exchange

ots Original Text Service: Ofcom Internet: www.newsaktuell.ch/f

Ofcom Media Office
E-Mail:    mediaoffice@ofcom.org.uk
Phone        +44/20 7981 3033
Internet: http://www.ofcom.org.uk

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