DCMS Select Committee Final Report on Draft Media Bill: levelling the regulatory playing field for VOD and linear services

On 22 September 2023, the DCMS Select Committee (the “Committee”) published its final report on the draft Media Bill (the “draft Bill”). The report follows on from the Committee’s interim report on the draft Bill’s radio measures (which was back in July), focusing on the remainder of its provisions. In this article, we explore the Committee’s findings in respect of the proposed enhanced regulation for video-on-demand services (set out in Part 4 of the draft Bill).

In the report, the Committee makes three recommendations: 

1. In the same way that the Broadcasting Code applies to all broadcasters, the new Video-on-Demand Code (the “new VOD Code”) should apply to all video-on-demand (“VOD”) services.

The Committee explains that the Government has provided that the draft Bill is aimed at ensuring audiences can be confident that all content, however it is consumed (i.e. via linear or on-demand), is subject to the same regulation (note the Government has recently opened a consultation on the regulation of electronic programme guides which also looks at the regulation (or lack off) of certain so called “FAST Channels”). However, the Committee considers that this aim will not be met by the draft Bill, which only requires the largest VOD services (so called “Tier 1 services”) to comply with the new VOD Code (that will be drafted by Ofcom). By way of reminder, smaller VOD providers that fall under Ofcom’s jurisdiction, under the proposed draft Bill would still need to comply with the current Statutory Rules and Non-Binding Guidance for Providers of On-Demand Programme Services).

The Committee has recommended on this basis that all VOD services that fall under Ofcom’s jurisdiction should be subject to the higher-code and that the current proposal “undermines the regulatory principle that the Government is seeking to deliver”. By way of comparison, the Broadcasting Code, on which the new VOD Code will be heavily based, applies to all regulated channels, regardless of audience share or size.

2. The Government should monitor the extent to which the fairness and privacy code requires Ofcom to manage complaints from abroad and resource it accordingly.

If enacted, the draft Bill will require Ofcom to create a code and guidance for Tier 1 services on the “avoidance of unjust or unfair treatment and unwarranted infringement of privacy” (the “Privacy Code”). The Privacy Code could allow for complaints to be submitted from outside the UK and, on that basis, the Committee was concerned that Ofcom may find it difficult to provide adequate resources to effectively carry out its regulatory role. The Committee stated that “it is not possible to gauge in advance the likelihood [of significant resource implications occurring]” but the government should monitor the situation and ensure Ofcom is resourced to meet the demand.

3. Should the Government proceed with its tiered approach (i.e. only apply enhanced regulation to Tier 1 services), it should be required to lay before Parliament a list of services to be designated no fewer than 5 sitting days before the statutory designation is made.

Under the draft Bill, the Secretary of State has the power to specify which VOD services are to be designated as Tier 1 services. This will follow a report by Ofcom on the same, which the Secretary of State “must have regard to” when compiling the list. However, despite the Government stating that this will allow for “appropriate scrutiny” from Parliament, there is no requirement setting out how long after the list is published the new regulations may be issued. The Committee is concerned about this process, as it could lead to a situation where the new regulations become law at the same time as the list of Tier 1 services is published.

The Committee also considered the content of the new VOD Code; in particular, they discussed the concern that some VOD services had about the new VOD Code not reflecting the differences between linear and non-linear services. For example, they questioned whether the new VOD Code’s impartiality obligations, which reflect  some of the same impartiality requirements that broadcasters comply with, was applicable to VOD service providers, given they are unlikely to be covering live or rapidly developing events.  Whilst the Committee recognised these concerns, it concluded that the concerns could be addressed prior to implementation during the consultations that Ofcom is required to carry out with Tier 1 services before the new VOD Code is finalised. On that basis, the Committee did not provide any recommendation on this point.

The CMS view – surprise score 7 / 10

The Committee’s recommendation for the new VOD Code to apply to all VOD services is the most controversial of the Part 4 recommendations.

The recommendation will undoubtedly be welcomed by many larger streaming platforms who argue that it will be difficult to determine “where a line should be drawn” and that the distinction could also create confusion for audiences.

However, smaller providers will argue that they are already required to comply with an existing code and additional regulation on them will increase costs, stifle competition and may result in a barrier to entry. By way of reminder, the impact assessment provides that the cost of compliance with a new code could be as high as £16m, which clearly for smaller providers will not be economically viable.

We are watching the Media Bill closely as it passes through Parliament, so keep an eye out for our updates on our dedicated CMS Media Bill webpage. If you would like to discuss any aspect of the Media Bill or how it may affect you, please get in touch.