BBC and ITV to save millions on Sky carriage charges
The news was revealed in a joint statement. Broadcast reports that the deal between ITV and Sky was reached during negotiations over the carriage of forthcoming pay TV drama channel ITV Encore. The BBC/Sky deal also paves the way for the continued availability of the iPlayer on Sky.
The Platform Contribution Charge, often referred to as "retransmission fee" was levied by Sky on top of charges for inclusion on the Sky EPG. Until July 2012, the BBC was paying £10 million a year in Platform Contribution Charges. It was lowered to £4.7 million a year following the addition of BBC iPlayer on Sky and was due to fall to £3 million a year from July 2014, according to figures in a recent report on BBC Distribution commissioned by the BBC Trust. The figures in that report shows an additional charge of £1.4 million a year to Sky for standard EPG listing and regionalisation from 1st July, which will continue to be paid by the BBC.
Broadcast states that ITV will save £2 million a year from the deal.
Freesat, in comparison, charges £75,000 per BBC TV channel, £37,500 per regional variant and £6,000 per radio station every year. Unlike Sky, the Freesat fees are solely standard EPG and regionalisation charges.
Sky's Platform Contribution Charge is a contribution towards the development of its pay TV platform, in addition to standard EPG listing and regionalisation fees. Some argued that the fee in effect meant that licence fee money was subsidising a commercial platform.
The Charge has long been a source of contention, with former BBC Director General Mark Thompson raising the issue of the cost back in 2010 and Sky stepping in to defend the charge, such as in this blog published in 2011. The BBC was given a discount off the Charge in return for providing access to the iPlayer via Sky's On Demand service.
The Government stepped in during 2013, when Communications Minister Ed Vaizey hinted that regulation would be introduced if a settlement to reduce fees could not be reached. At the 2013 Oxford Media Convention, he said "Retransmission fees have been raised as part of the Communications Review process. It has been argued that PSBs are at a disadvantage when negotiating fees, as they are obliged to try to ensure they are available on all major TV platforms, while satellite platforms have argued they are covering costs incurred carrying PSB channels."
The BBC/ITV/Sky deals mean that Channel 4 and 5 can now progress towards reducing their carriage costs on the Sky platform.
Platform Contribution Charge or "retransmission fee"?
The term "retransmission fee", often used in the media, is technically inaccurate, as Sky does not retransmit BBC and ITV channels. Sky does not uplink and broadcast the BBC and ITV's free-to-air channels on satellite, rather the broadcasters have made their own uplinking and satellite carriage arrangements with satellite operator SES. The same signal is used to feed both Freesat and Sky homes. The Platform Contribution Charge, being separate from standard EPG listing and regionalisation charges, is not seen as being related to the actual cost of satellite transmission.