BBC Trust

The BBC Trust has today published its provisional conclusions on the BBC Executive’s proposals to reinvent BBC Three as an online-only service, launch a +1 channel for BBC One; evolve BBC iPlayer; and extend the hours of CBBC:

Provisional conclusions on proposed changes to BBC television and online services

In assessing the proposals, the Trust carried out a Public Value Test, which requires it to judge whether any adverse market impact is justified by the likely public value.

The Trust will carry out a further round of consultation on its provisional conclusions before it reaches any final decisions.

The Trust’s provisional conclusions are as follows:

BBC Three

The Trust’s provisional conclusion is that the public value test is passed and that it should approve this proposal.

The Trust’s public value assessment identifies clear long-term potential in a new online service that would save £30m a year and that it thinks will be more distinctive than the existing BBC Three channel, whose audience is currently falling.  Those aged 16 to 34 are already far more likely than any other group to use online video services and the BBC is right to anticipate the need to serve this audience in new ways.

Ofcom’s market impact assessment suggests that the switch to an online service is likely to create a positive market impact for rival TV channels.

But the Trust has identified some clear concerns about the short-term impact of this change, given the projected loss of reach to younger and other under-served television viewers (particularly those who do not watch other BBC TV services or do not have reliable broadband) and the potential impact on the BBC’s ability to try out new ideas and develop new talent.

The Trust has concluded that it should be possible to address these concerns by imposing some conditions, to require:

• A more carefully managed transition from broadcast TV to an online service, to raise awareness of the change.  The Trust will consider whether this should include a period of running both services in parallel.
• Clearer commitments to programmes on BBC One and/or BBC Two that appeal to a younger audience, including the use of those channels to continue broadcasting long-form BBC Three programmes.
• A commitment to a space on broadcast television (not just on BBC Three online) where risks can be taken with new talent and new ideas of the sort that BBC Three has been successful in developing.

The Trust has asked the BBC Executive to provide further, detailed information in these three areas, including a costed proposal and timetable for a managed transition that evaluates options for a period of parallel running. The Trust will publish this information for consultation ahead of final conclusions.

Final approval would be dependent on receiving a satisfactory response from the Executive, as well as our review of the responses to the Trust’s consultation. If the Trust imposes the above conditions, it would incorporate new commitments in the service licences for BBC One and/or BBC Two.

BBC One +1 channel

The Trust’s provisional conclusion is that this proposal fails the public value test and should be rejected.

Ofcom has concluded that the launch of a +1 channel would have the greatest adverse market impact of any of the proposals, capturing viewing share for the BBC at the expense of commercial channels and reducing the profitability, in particular, of ITV and Channel 5.

The proposal would have limited public value given the need for 24 per cent of UK television households to upgrade their equipment in order to receive +1; the inability to offer ‘opt-out’ programmes for the nations and regions; the lack of distinctiveness of the proposal; and the limited impact on reach to 16 to 34-year-olds, which means it would be unlikely to mitigate the impact of changes to BBC Three.

BBC iPlayer

The Trust’s provisional conclusion is that the public value test is passed and this proposal should be approved.

Audiences will benefit from the development of iPlayer beyond its original remit to include more online-first and third party content, delivered at minimal cost.

The Trust is satisfied with Ofcom’s conclusion that the proposed changes are too limited in scale to have a notable market impact.

Ofcom has identified the possibility that any future acceleration in consumers’ use of iPlayer for browsing and discovering content (for example through the new online BBC Three service), rather than using it for catch-up viewing, could have a greater impact on commercial channels and on-demand providers. While this falls outside the current assessment, it is a point the Trust would need to consider, particularly if the BBC were to propose significant changes to iPlayer.  In the meantime, the Trust notes that the amount of BBC Three content that will be available is very limited compared to leading commercial on-demand services.

Ofcom recommends that the BBC sets clear, objective criteria in relation to any third party content on iPlayer, and we intend to make this a condition of approval.

CBBC

The Trust’s provisional conclusion is that the public value test is passed and this proposal should be approved.

The proposal would expand choice for younger viewers, can be implemented at minimal cost and represents a good use of the licence fee.

Ofcom’s work suggests that the market impact of the proposal is likely to be small.

This proposal is dependent (for spectrum) on BBC Three moving online, and the Trust approval is therefore also dependent on the final decision about BBC Three.

BBC Trust Chairman Rona Fairhead said:

"We want a strong, sustainable BBC which is innovative, distinctive and relevant and has clear boundaries with the commercial market. We have reached our provisional conclusions with this over-arching objective in mind.

"It is clear that the long-term future of broadcasting is online and the BBC needs to find new and exciting ways to help audiences make that transition, while bearing down on costs overall.

"We know young audiences are already moving towards the online future, but we do recognise that in the short term some of them will feel the immediate impact of the BBC Three proposals. We are therefore asking the BBC for commitments to ensure it uses the full range of its television services to better serve young people and others who make up BBC Three’s audience."

The Trust has asked the BBC Executive to provide it with further detailed information on BBC Three by 28 July 2015.

That information will be included in a further period of consultation on these provisional conclusions before final decisions are taken and published in the autumn.

Notes to editors

Public Value Test process

The Public Value Test is a formal regulatory process that includes a public value assessment (PVA) of the proposals, undertaken by the Trust, and a market impact assessment (MIA), undertaken by Ofcom.

The PVA considers the likely value of the proposed changes to licence fee payers and to society more broadly. This is assessed in terms of four key drivers of public value: reach; quality; impact and value for money. The Trust also assesses the extent to which the proposals support the delivery of the BBC’s public purposes.

The market impact assessment (MIA) assesses the impact of the proposals on alternative products and services.

The Trust considers the responses to the public consultation, the PVA and Ofcom’s conclusions on the MIA before publishing provisional conclusions.

A second period of public consultation on the provisional conclusion then begins – although here, that second period of consultation will not formally begin until the additional information about BBC Three has been received from the BBC Executive.

Once this period of consultation has concluded, the Trust analyses the results and reaches a final conclusion, based on all the information it has gathered.

The Trust’s provisional conclusions and supporting documents can be found here: 

http://www.bbc.co.uk/bbctrust/our_work/services/service_changes