Ofcom trading review: a little too late?
Jim Marshall says Ofcom needs to spend its time managing a TV market that is evolving very quickly, and it will best do that, not by introducing new rules, but by letting existing regulations apply until such a time when the market decides that they are obsolete and no longer relevant…
Last week Ofcom announced that it was going to conduct the long awaited review of TV trading. Long awaited because the Competition Commission, when reviewing the Granada and Carlton merger in 2003, recommended that Ofcom should examine the overall commercial TV trading market along with finding a remedy to ITV’s potentially anti competitive position (and hence the creation of CRR).
So, some eight years on and following a number of subsequent reviews of CRR, Ofcom has finally chosen to embark on a full review of the market.
It takes me back to the consultation in 2003 when I was part of an IPA team giving evidence to the CC. I remember the then chairman of the CC, the eminent Professor Geroski, saying that the way TV was traded (station average price, share, etc) didn’t make much sense. I quickly (and I thought cleverly) countered by saying that we agreed but no one had yet come up with a better way of doing it. He looked at me disdainfully (actually even more disdainfully than previously) and said that he could easily come up with something than would be much more effective (and he clearly relished the challenge).
In the event he didn’t get the opportunity because Ofcom prevaricated over conducting a full market review and unfortunately and very sadly Geroski died in 2005. (The story is that when he was comfortably ensconced in heaven, he started working on the problem anyway only to find that a rather distinguished old man with a white beard was also trying to find a solution. When he asked who the old man was, he was told: Oh ‘that’s God, but he thinks he’s Steve Platt’).
Anyway, why the review now? The short answer is: why indeed? The longer answer is: CRR, though still relevant today, as the CC found last year (and irrespective of the views of a bunch of unelected ‘toffs’ in the House of Lords), it is clearly coming near to the end of its usefulness. Ofcom have therefore decided that it is now worth re-looking at all aspects of TV trading and deciding whether it needs to put in place a revised set of regulations.
It will be looking specifically at pricing transparency (including station average price), bundling (better known as conditional selling) and agency deals. In fact all the stuff that Professor Geroski found such an anathema. Ofcom has also suggested that TV trading could be conducted much more cheaply and efficiently managed through alternative methods, which is very decent/paternalistic of them but TV sales companies and agencies can probably work this out for themselves.
The small irony in this recent announcement is that Ofcom have taken eight years to get around to conducting the review but are giving the industry little more than a month to respond.
The large irony is that, eight years on from the recommendation to conduct a full market review, it is now arguably too late. Airtime sales regulations were undoubtedly required when the still largely analogue market was dominated by a few free to air broadcasters. As digital – and specifically broadband internet – has developed, the application of regulations will not only be unworkable but also increasingly unnecessary.
We aren’t quite there yet, hence the continued application of historical regulations, working practises and the CRR remedy. But over the next two to three years or so, as commercial television opportunities expand across the new platforms (Connected TV’s, mobile, etc), rules governing airtime trading will start to get in the way of a burgeoning and freely competitive market.
I guess it’s a case of a market moving from a position where demands exceeds supply, particularly for the best high audience channels, to one where supply will outstrip demand. As any economist will tell you, in circumstances where true competition exists, the market will regulate itself. For me, Ofcom needs to spend its time managing a market which is evolving very quickly. And it will best do that, not by introducing new rules, but by letting existing regulations apply until such a time when the market decides that they are obsolete and no longer relevant.
I obviously can’t know for certain, but I feel that Professor Geroski would approve of this approach, as would his friend with the white beard.
Your Comments
Thanks John, you are right to point out my blatant prejudices. In fact I thought I might get a hard time because of some the opinions expressed in the piece, but I was actually more concerned about my rampant blasphemy as opposed to my (mildly) left wing views on the ‘second chamber’.
This exchange made me laugh out loud. Jim is spot on to say that things in the world of connected/converged/IPTV/social TV call it what you will are moving at a pace none would have foreseen, and any attempt to dive in at this point and try and regulate it is doomed. We have raced through the typical cycles of any techy evolution in less than ten years, and who knows which content from which providers on which screens consumers will take to – and what or who will help them get there.
The idea that the likes of Lords Bragg and McDonald – fine Grande Fromages of broadcasting though they may be – have the handle on this world is a hoot. Of course attempts at regulation are part of any cycle that begins with a new invention and rapid proliferation, but the pace of this consumer led communications revolution is such that no one – not even those granted a nice ermine collar and padded seat in the unelected House can call where it might end, let alone how it should.
Why does Jim Marshall so consistently shoot himself in the foot? His often provocative, thought provoking and well worth reading observations on the media scene have to be ruined by his insistence on inserting unwise and ill-informed social comment on the standing of those with whose views he disagrees.
On this occasion he lam-basts the House of Lords report on broadcasting just because it stems – in his words – from “Unelected toffs”. He cannot leave aside his bitter prejudices and recognise that the House of Lords team includes Lords Bragg, Gordon & McDonald, who between them have more intimate and proven track record on the inside of commercial TV operations than the sum of such experience in the aggregate of the House of Commons plus media agencies and Ofcom put together.
Perhaps Jim could listen more to open debate and leave his writing to one side from time to time