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Raymond Snoddy 

Government's Ofcom plan to regulate Netflix fraught with problems

Government's Ofcom plan to regulate Netflix fraught with problems

Yes, streaming platforms have an unfair advantage over UK broadcasters, but much of the Government's white paper on regulating them is wrong-headed, warns Ray Snoddy.

The Government’s new proposals on broadcasting amount to the ultimate Curate’s Egg – good in part.

Unfortunately the good bits seem largely impractical and the bad bits are very bad indeed.

Who could not issue at least two cheers for a government desire to even up the playing field for the UK’s public service broadcasters in the unequal struggle against the US streaming giants?

Culture Secretary Oliver Dowden is right to say that, in this new world, Britain’s main broadcasters are operating with one one hand tied behind their backs.

He is also right in articulating the main issues – due prominence on smart TVs and services for the public service broadcasters and similar standards of regulation on fairness, impartiality, accuracy and decency.

Location, location, location

An obvious problem with the output of the likes of Netflix is that their programmes are available 24-hours a day, effectively to any subscriber of any age. Seven-year-olds can press the smiley face on-screen face of their mother (I have watched it happen) and access totally unsuitable material, unlikely to be deterred by the voluntary age-related warnings.

In the age of streaming, traditional protection devices such as a 9pm watershed look increasingly redundant.

Yet The Times portrayed the Government’s new proposals rather optimistically with an intro that ran: “Netflix and other streaming services will be regulated by Ofcom for the first time as part of an attempt to ‘level the playing field’ for public service broadcasters such as the BBC and ITV.”

Leaving aside the issue of an endlessly expanding role of Ofcom as the go-to regulator for almost everything, there are just a few small problems with this concept.

How can the Government simply decree that the main American streaming organisations will in future be regulated by Ofcom?

Netflix is an American company with its headquarters in The Netherlands. The Disney Company has its European headquarters in Paris.

As John Whittingdale, who campaigned vigorously for Brexit will know, the UK is no longer in the European Union, and if both organisations said no to Ofcom regulation it is difficult to see what any British government could do.

The California majors might even invoke the First Amendment of the US Constitution to back up American distaste for Government-imposed regulation.

Some sort of voluntary deal could be concocted but you can be sure such a thing would have limited impact at best.

The case of Amazon is different because its European headquarters are in London. The company could, as things stand, be caught by new British broadcasting legislation. But it is equally clear what could happen if the company found such conditions too onerous.

It would be a very short hop and a skip to Dublin to join other communications companies with European headquarters in Ireland, such as Twitter.

To earn a third cheer for such proposals, the Government will have to manage to deliver on such hopes of evening the playing field. It will be a considerable challenge to say the least.

Channel 4: If it ain't broke, why fix it?

The really, really bad bit of the egg is the crystal-clear desire to privatise Channel 4 obscured by a three-month consultation and talk of the need to find a new ownership model to protect the future of the channel for the next 40 years.

Some consultation. Dowden says he is already proceeding on “the basis that an alternative ownership model may be better for the broadcaster and better for the country.”

Unfortunately for the Government, Channel 4 produced its annual report a day before Dowden's announcement and was able to show it was doing just fine despite the pandemic.

There was digital growth of 26% last year and more than 30% so far this year. Revenues are set to break the £1bn barrier for the first time and just about everything is  heading in the right direction.

As chief executive Alex Mahon declared in the channel’s soon-to-be-opened new Leeds headquarters: “ As our results show, we are in excellent health. Our viewing and streaming is up significantly, we have grown our digital revenues ahead of the market, and with a record financial surplus and a clear digital transformation strategy we are well positioned to continue delivering impact for UK audiences, particularly younger viewers, well into the future.”

Into this British success story blunders a British Government determined to go for a quick and dirty privatisation, motivated by either right-wing ideology, political malice or both.

As Amol Rajan put it to Whittingdale on Radio 4’s Today programme: “If it ain’t broke why fix it?”

Whittingdale could only reply – repeatedly and without any evidence – that the Government felt the time was right for looking at the channel’s ownership status.

The trouble is that Whittingdale first started trying to “fix” Channel 4 through privatisation 25 years ago and had to be reined in by Chancellor George Osborne in 2016 when he again tried to push his fixed idea.

Streaming challenge to broadcasting is serious but exaggerated 

The only argument of any substance being put forward is that new ownership – presumably by a major American player – would provide more working capital for the channel.

Perhaps, but Channel 4 is doing just fine and is neither seeking nor needing such capital and certainly not through the disruption that a change of ownership would bring.

Alas, not very well-informed politicians (Dowden among them), tend to exaggerate the level of change wrought by the streaming giants.

It is very significant but most people spend most of their viewing time with the public service broadcasters – live and time-shifted. The exception is the young but, ironically, that is one of Channel 4’s greatest strengths.

Dowden claimed in The Times that when Line of Duty broke live viewing records it was “a rare exception to the new broadcasting rule”. Maybe, but it is not that rare. How about the 20 million that watched England play Scotland at football live on ITV last Friday?

There are many practical problems about privatising Channel 4, not least Dowden’s insistence that as it moved to an “alternative ownership model” (as he calls privatisation), it would keep its public service remit.

If that was genuine it would mean that Channel 4 would be worth very little for a private operator with the ever-present danger that going forward corners would be cut to protect profit levels.

And what if such a new owner had it corporate headquarters in the European Union?

There is also the small paradox that of the first part of the Government’s Curate’s Egg were to be successful then that would further reduce the need for “an alternative ownership model.”

Those who think that the privatisation of Channel 4 is a solution in search of a problem might do well to express their views in the Government consultation – lest Dowden and Whittingdale mistake silence for acceptance.

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