ITV and satellite rivals butt heads over pay-TV fees for free channels

The X Factor broadcaster said its fees compensate for public-service duties

A war of words broke out on Monday between ITV and its cable and satellite rivals over the X Factor broadcaster’s demand that it should get fees from pay-TV platforms for airing its free channels.

The Commercial Broadcasters Association (Coba), representing Sky, Discovery, Disney and other big pay-TV firms, claimed ITV already receives a net benefit of at least £87 million a year because it gets regulatory perks as Britain’s biggest public-service commercial broadcaster.

Coba said ITV’s prominent slot on channel three on the electronic programme guide (EPG), the menu of channels on the TV set, and “privileged access” to the TV spectrum “significantly outweigh” the costs of its public-service duties.

Coba added so-called retransmission fees could give ITV a benefit of up to £221 million, according to independent research that it commissioned, and that could “risk harming the rest of the market”.

ITV hit back, insisting it calculated the present benefit at only around  £40 million and it was “purely compensation” for its public-service  duties such as regional news. One source close to ITV dismissed Coba’s claim of an £87 million benefit  as “ridiculous”.

Coba and ITV spoke out as regulator Ofcom launched a consultation on the future of public-service broadcasters including ITV, Channel 4 and the BBC.

ITV has been lobbying for such fees, which are commonplace in America. Analysts estimate the fees could add tens of millions of pounds a year to ITV’s profits.

But Coba fears retransmission fees would suck money away from its members. Adam Minns, executive director at Coba, said: “ITV is calling for additional concessions that risk harming the rest of the market.

“The UK benefits from a thriving mixed ecology of PSB broadcasters and non-PSB broadcasters that has made us the biggest TV sector in Europe, and we caution against intervention that favours one side at the expense of another.”

ITV said it was already “well established” by Ofcom that PSBs required prominence on the EPG and “subsidised” spectrum access to underwrite costs such as regional news “that is extremely expensive to sustain and could not otherwise be provided”.

ITV pointed out Ofcom found recently during a review of the Channel 3 licence that the broadcaster received “no surplus” from such subsidy.

Paul Richards of Numis Securities said he thought it “unlikely” that retransmission fees will happen, despite some favourable noises from Culture Secretary Sajid Javid.

“The UK is very different to the US market,” said Richards.

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