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UK regulator: Legislation needed to address gap in broadcast, online rules

In response to growing calls to level the regulatory playing field between internet platforms and public service broadcasters in the U.K., a top official with the country's media watchdog said new legislation is needed to grant it the authority to expand rules designed to protect young viewers.

"It's not an issue that Ofcom can tackle alone," said the agency's group director for content and media policy, Kevin Bakhurst, at a Westminster Media Forum conference in London on Jan. 15.

Among the rules in question that do not apply to internet video platforms such as Netflix Inc. or Alphabet Inc.'s YouTube are restrictions on advertising for products that are high in fat, salt or sugar. Ofcom also limits the hours when broadcasters can air graphic images, including violence and bad language, with no equivalent requirement for internet video platforms.

The difference in how regulators treat broadcast and online video platforms has given online viewing an edge in the U.K. market, Enders Analysis founder Claire Enders told S&P Global Market Intelligence at the event. In 2018, the BBC revealed that funding for its U.K. services had fallen 18% in real terms since 2010 as a result of British public service cuts, and that it was losing younger viewers to platforms such as YouTube.

Without changes in the regulatory environment, the growing prominence of online players poses a threat to local British programming, said Clare Sumner, BBC director of policy.

'Huge strength'

"For the public service broadcasters, it is important to recognize our cultural importance. We have a special duty to make programs and services about British people and British culture," Sumner said.

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Europe's parliament this year voted in favor of new legislation requiring Netflix and other video-on-demand platforms to include a minimum of 30% of European content in their catalogs.

But not everyone agreed that extending regulations to global streaming platforms would benefit U.K. broadcasters.

"I don't think anybody believes that global trends and players can be held back or somehow compelled by regulation to fundamentally alter their business models, but nor should they," said Ali Law, head of U.K. at pay TV giant Sky PLC.

Allowing competitive forces to thrive gives viewers the choice they are seeking, Law said, while noting that traditional TV still accounts for the majority of viewing in the U.K.

While TV ad spending has stayed flat in recent years, it is forecast to grow by 1% in 2019 to $5.09 billion, delivering 3.1% growth between 2015 and 2021, according to advertising measurement company Zenith.

Law pointed to Comcast Corp.'s $40 billion acquisition of Sky as an example of the allure of local U.K. programming.

"The Comcast investment wasn't simply about Sky ... It was a vote of confidence in the U.K.'s creative industries as a whole," he said. "This is a sector of huge strength."

Waqar Jamshed contributed to this article.