Ofcom gets down to business

Raymond Snoddy reports back from this week’s Future of Broadcasting conference, where Ed Richards showed that Ofcom is getting on with business, despite David Cameron’s disdain for quangos.

You would think life would be very tough these days for Ed Richards, chief executive of communications regulator Ofcom.

After all, he is a quintessentially New Labour figure who worked in Tony Blair’s Downing Street and helped to draft the 2003 Communications Act.

And before he became prime minister, David Cameron showed his disdain for quangos in general and Ofcom in particular.

Ofcom would have to be slimmed down by “a huge amount” warned Cameron.

The Conservative leader went on to say that the trouble with quangos such as Ofcom was that they set up their own communications departments, appointed press officers, began making policy rather than delivering it and paying their bosses vast sums of money.

Surely Richards was toast?

Similarly, you would not have bet much on the longevity of the BBC Trust and its chairman Sir Michael Lyons, the former Labour councillor given the hostility of the Tories pre-election.

Then a strange thing happens. In power, reality strikes and both Richards and Sir Michael report positive talks with culture secretary Jeremy Hunt and the flow of rhetoric stops.

The warmer atmosphere may not be enough to get Sir Michael re-appointed when his current term ends, but Richards was positively purring at the Future of Broadcasting conference this week.

Ofcom was very much getting on with business. Out came the detailed guidelines on product placement which will allow paid product placement in film, TV entertainment and sport from next year but not in children’s, or news and current affairs. Even in entertainment there would be clear limits. The liberalising of the rules would not allow insurance companies, for instance, to start interfering with drama story lines. Absolutely no insertion of plots about the perils of uninsured houses burning down.

If the government wanted “a compliance” body rather than an agenda setter, as Hunt recently put it, that is what they will get.

The slight problem is, Richards noted, that all its duties and obligations are clearly set out in the Communications Act.

The time may rapidly be approaching for a new Act as the old one becomes increasingly whiskery – no mention for instance of social media.

But who thinks a new Communications Act will be high up the priority list of a government struggling with an historic deficit and the coming deflationary effects of impending cuts?

Of course the government can impose a 20% cut on the Ofcom budget but there would be obvious consequences. Would it then be able to carry out its legal responsibilities?

At the conference, Sue Robertson of Five called for a comprehensive review of the advertising sales market instead of  dickering at the margins with issues such as the harmonisation of advertising minutage between wholly commercial broadcasters and PSBs.

While recognising there were issues, Richards was wary of the complexity and cost of such an enterprise. It would take a year or more and eat up huge resources.

If Ofcom gets zapped you can forget all about a comprehensive review of the ad sales market, was the clear message.

Richards has already donned a new de-regulatory suit and is eager to drop some of the detailed media regulation that has most enraged the industry.

A lot could be achieved by secondary legislation – in the absence of a Big Bill, he insisted.

Naturally, Richards rejects the allegation that Ofcom is a crazed micro-regulator merely a rational evidence-based body implementing previous government policy.

Tell that to Mike Darcy, BSkyB’s chief operating officer. Darcy told the conference that in many of the issues facing the media industry there was a “degree of irresolvable complexity” and therefore  it was dangerous for bodies such as Ofcom to try to predict the outcome.

“I don’t think they can,” insisted Darcy, who will probably spend the next year or so in the courts challenging Ofcom’s pay-TV edict which will force Sky to hand over  premium football channels to rivals at a set discount wholesale price.

Darcy made it clear that the Ofcom action would affect Sky’s investment policy on content.

Money could be transferred into areas where regulators did not think they could set minimum wholesale prices.

Under the law of unintended consequences, consumers could benefit from more choice in television sports packages but football could have less money to spend, potentially damaging “the product.”

Naturally, Richards believes Ofcom have got the balance of competing interests just right and claims all consequences have been anticipated and calibrated.

Its pay-TV review would even release a burst of creativity into the sector.

One guaranteed consequence is that the legal bills of all concerned will continue to soar.

Then it was on to another Richards – Paul Richards, director of media research at Numis Securities.

This Richards sounded almost optimistic about the Future of Broadcasting. BSkyB’s earning per share had held up well in the recession and he expected rapid growth as the satellite broadcaster gets its payback from investments in HD and broadband, with 3D to come. Rupert Murdoch was therefore  spot-on in his timing in trying to take over the 61% of the company that News Corp does not already own. There was no insurmountable barrier to such a deal going ahead.

ITV had obviously been hard hit by the downturn but was now well placed for a cyclical rebound. It could not become a bid  target, Paul Richards suggested, as consolidation becomes the flavour of the moment.

All of which would of course mean yet more work for Ed Richards and Ofcom, both of which could be around for a long time yet.