Will the Sun Set on the Terms of Trade?

Last week’s The Royal Television Society’s conference (28.9.10) had a number of themes. One is getting more insistent. The UK commercial broadcasters do not like the Terms of Trade for independent producers and want to make more content in-house, thus controlling its exploitation.

Public interest set the Terms in the first place. (OK, effective lobbying should get some credit, too.) A public policy perspective can often yield perceptions and insights that do not come up when you look, as most of us do, to the immediate interests of your firm or industry. That is why, back in the 90’s, broadcasters vigorously opposed them.

For those who are unfamiliar with the Terms, Ofcom eventually introduced them in 2002 because, in Britain, the public service broadcasters, collectively, dominated the commissioning of new content. Producers and others also accused them of “warehousing” content, -- that is, starving satellite and cable channels of available content. The result? Producers got ownership of the secondary rights to the content they made for broadcasters (where previously they had ceded rights) and could license it to domestic and overseas players. This made some producers extremely rich and helped to build some very large companies – like Shine, All3Media, and Tinopolis.

The Courage to Compete, PACT, 1997

 Our company, Attentional (then called DGA) strongly supported this initiative and helped to make the terms happen. With support from producers’ trade body, PACT, and a hugely talented steering group, we wrote The Courage to Compete, a key document in the campaign, published by PACT in 1997. The document promised – and the reforms delivered – a boost to exports from the UK creative industries, a much more dynamic production sector, and a new global media profile for the UK.

However, things move on.

Now many of those producers have created very large companies, some larger than the broadcasters subject to the Terms.

Moreover, some might argue that the Terms have, in their way, frozen the very situation they were intended to free up. First, they made the traditional public broadcasters the preferred destination for larger producers. Second, they drove a wave of energy and innovation among independents, helping the traditional channels to get access to the best content available and keep their dominant shares.

Now some of the larger independent companies are being bought out by even bigger firms – such as Hollywood studios – controlled from overseas.

If over time these Terms are “sunsetted”, as similar rules were in the US many years ago, it should not happen quickly. There will be many arguments, many questions to think about. What, for instance, of the smaller producers, whose gains from the Terms have been modest? Would it mean revisiting the quotas for independent production? What are the appropriate rules for a new era? What new models will emerge for the production of expensive content? Should broadcast policy now aim to encourage a new level of diversification in the commissioning of content? Or is that best achieved by simple deregulation?