ITV goes into battle with BSkyB and Virgin

ITV goes into battle with BSkyB and Virgin over £100m fees for main channel

Chief executive Adam Crozier calls for Government to force pay-TV operators to   pay to carry popular terrestrial channels as American cable operators do


ITV argues BSkyB and Virgin Media should pay to carry its main channel and access ratings hits such as Downton Abbey Photo: Nick Briggs/ITV

Adam Crozier, the chief executive of ITV, has gone into battle with BSkyB and   Virgin Media by urging the Government to force them to pay to carry the main   ITV channel, in line with how Rupert Murdoch’s Fox Networks is paid by cable   operators in the United States.

Mr Crozier’s campaign to secure so-called retransmission fees for ITV could   add £100m annually to the broadcaster’s earnings, analysts estimate.

On Monday he appealed to the Government and the regulator, Ofcom, to intervene   to bring Britain into line with the US, where terrestrial broadcasters   receive the fees for supplying free-to-air channels to pay-TV operators.   American broadcasters shared a total of $3.3bn in retransmission fees last   year, according to research commissioned by ITV from NERA Economic   Consulting.

Mr Crozier said: “Introducing retransmission fees would have clear benefits to   the UK creative industries and the wider economy – as well as to viewers   right across the UK – by enabling public service broadcasters to continue to   invest in the original programming people love to watch.

“The majority of viewing on these pay-TV platforms is public service   broadcaster programming yet ITV, whether as producer or broadcaster   investing in creating that content, doesn’t receive any payment – despite   the fact that pay-TV platforms pay commercial terms for other channels.”

The main channels still account for the lion’s share of viewing on pay-TV   platforms and would attract the biggest payments under a US-style   retransmission fees system.

Mr Crozier said the current regime was “wholly outdated”.

He said: “UK public service broadcasters are forced to subsidise major pay-TV   platforms. In today’s highly competitive media marketplace that is simply   wrong.

“It is in the interests of all broadcasters that we encourage the regulator   and government to look again at this issue for the benefit of the industry   and viewers.”

ITV’s campaign is supported by Channel 4, which also stands to add tens of   millions to its bottom line if a US-style system of retransmission fees is   introduced. The attack is focused on BSkyB and Virgin Media. BT and TalkTalk   roughly a million pay-TV customers each, but are partners with the ITV and   Channel 4 in the YouView broadband TV platform.

The BBC previously campaigned on the issue to reduce what it pays out to   pay-TV operators, but is unlikely to demand payment itself as its would face   accusations of double-charging viewers who already pay the licence fee.

As part of its attack, ITV highlighted the apparent difference between BSkyB’s   stance and that of Fox Network’s, Mr Murdoch’s free-to-air broadcaster in   the US. Fox told American regulators in 2010 that retransmission fees were   crucial to the health of the broadcast industry. Mr Murdoch owns 39pc of   BSkyB via 21st Century Fox.

BSkyB and Virgin Media rejected Mr Crozier’s arguments on Monday.

Graham McWilliam, group director of corporate affairs said: “ITV wants to keep   the very significant benefits of its public service broadcaster status while   cherry-picking from the fundamentally different US market.

“If additional charges were introduced, the reality is that millions of   households would end up paying for public service channels that are supposed   to be free.”

Tom Mockridge, Virgin Media’s chief executive officer, said: “The   law requires public service broadcasters to make some channels available to   cable and satellite companies and equally requires that we make them   available to our subscribers. This system has worked well for decades.   Viewers already pay one TV tax. ITV is asking for another.”

Liberty Global, Virgin Media’s owner, is also a major shareholder in ITV after   it bought 6.4pc of the company this summer, sparking takeover speculation.   One investment banking source suggested a bigger stake could act as a hedge   against a regulatory decision in favour of retransmission fees.

Ofcom is due to publish a consultation on the relevant regulations later this   year. A spokesman for the regulator confirmed that potential changes to   funding models for ITV and Channel 4 will be considered.

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