This consultation started on 15th October 2009 and ends on 10th December 2009.

1.1 In July of this year, the Secretary of State for Culture, Media and Sport brought into effect The Communications Act 2003 (Commencement No. 4) Order 2009 (-1-). One of the effects of this order is that the holders of Channel 3 and Channel 5 licences may apply for a review of the financial terms attached to their digital replacement licences.

1.2 The earliest date from which revised terms could apply is 1 January 2010. In order for this to happen, licensees would need to apply for a review before the end of this year. The review of terms would then take into account the remaining period of the licence until expiry in 2014.

1.3 For each licence in respect of which an application has been made, the legislation requires Ofcom to determine two different types of payment. The first is a percentage of the licensees qualifying revenue and the second is a fixed annual cash payment. To assess the amount that is appropriate for the annual cash payment, Ofcom is required to determine the amount which, in its opinion, would have been the cash bid of the licence holder were the licence being granted afresh in a competitive auction process. (-2-)

1.4 This consultation sets out Ofcoms proposed approach to undertaking reviews that licensees may request before the end of this calendar year. The last time such reviews were undertaken was in 2005. Overall, we propose that the approach taken by Ofcom to those reviews remains appropriate, subject to a small number of proposed adjustments which we set out in this consultation.

1.5 Ofcoms objectives for these reviews are to determine a fair and reasonable value for each licence which is in accordance with the statutory requirements and to set new financial terms according to a fair and objective process. To the extent possible, the process should also allow Ofcom to set terms that are reasonable within the context of the current market environment and that will continue to be reasonable for the period of the licence. This means that we need to take into account changes in the market and regulatory environment that will impact the financial terms for each licence.

1.6 This consultation invites views from stakeholders about our proposed approach. The consultation is open for eight weeks, until 5pm on 10th December 2009. This is shorter than our standard ten week consultation period. However, we consider this is appropriate given that the consultation is primarily of interest to a limited number of stakeholders who are aware of the issues involved and the proposals contained in this document are generally consistent with those we previously consulted on and used when Ofcom last conducted such reviews in 2005.

Footnotes:

1.- This is available at http://www.opsi.gov.uk/si/si2009/uksi_20092130_en_1

2.- An application made in accordance with section 15 of the Broadcasting Act 1990

The following documents relating to this consultation are available: Reviews of the financial terms for the Channel 3 and Channel 5 licences Reviews of the financial terms for the Channel 3 and Channel 5 licences How To Respond Responses

http://www.tellthemwhatyouthink.org/consultation/con-2610-reviews-financial-terms-channel-5-licences