Ofcom ad proposals ‘putting niche broadcasters at risk’
Ofcom’s proposals to increase the amount of ads that ITV and Channel 4 can broadcast will cost £180m a year in ad revenue for non-public service broadcasters and hit niche channels hardest, according to research by multi-channel broadcasters.
The Commercial Broadcasters Association (Coba), the industry body for multi-channel broadcasters, said it shows the proposals, currently under consultation, will have a huge and disproportionate impact on niche, specialist channels dedicated to faith, specific ethnicities and localities.
Ofcom’s plans would see an increase in the total amount of advertising on public service broadcasters of up to 48 minutes a day on each channel. The analysis also suggests the changes would create “unsustainable losses of nearly 20%” for small broadcasters.
There are more than 200 channels in the “long tail” of broadcasting, making up around half of all channels available in the UK. COBA’s modelling suggests that this sector could face a loss in advertising revenue of between 11% and 17%.
Simon Poole, CEO of Media15, an ad sales house representing smaller channels, said: “There is no doubt that these smaller channels, who cater for specific audiences, will see a significant reduction in revenue, meaning many may no longer be able to survive.
“It is extremely disappointing that Ofcom has not conducted any work itself to understand the effect its proposals will have on these smaller channels, as they do not have the resources to undertake their own detailed analysis of the impact.”
The UK’s broadcasting regulator is considering softening rules introduced in 1991 by Ofcom’s predecessor the Independent Television Commission, which saw ITV, STV, Channel 4, S4C and Channel 5 subject to tighter advertising restrictions than non-PSB commercial channels.
Ofcom has argued that TV audiences are moving away from primarily watching on linear broadcast channels, and now enjoy a wide range of advertising-supported and subscription services over broadcast and online, so they need more ad inventory to better compete with streaming platforms.
“Allowing the PSB channels slightly greater flexibility in the scheduling of advertising may strengthen their commercial position as they continue to manage their transition to digital-led organisations, and would afford them greater opportunity to monetise their content,” Ofcom said in April.
But Adam Minns, executive director of COBA, said the vast majority of smaller channels’ turnover comes from ad revenue and many do not have other areas where they can cut costs, as some already broadcast during only part of the day to keep down costs.
Minns added: “Many of these channels in this so-called ‘long tail’, whilst being small, play a vitally important role in representing specific interests and communities.
“Losing such channels would diminish the richness of the sector, harm audience choice, and have a damaging impact on media diversity and plurality, which Ofcom has a statutory duty to protect.”
Martin Radford, director of research & insight at Ebiquity, a leading marketing and media consultancy, added: “The proposed changes have big implications for the main broadcasters, and that’s where the immediate focus will be. But in their shadow is a long tail of channels who face a very real threat to their business model.”
The report comes as detailed economic analysis from COBA last week indicated public service broadcasters would lose nearly 28 minutes of news per weekday due to increased adverts.
COBA’s study showed that because public service broadcasters currently have strict requirements on how advertising is distributed across peak and off-peak times, the increase in advertising hours would force broadcasters to place more adverts around the news, leading to the large cuts in news editorial output.