A report commissioned by Digital Britain has urged the Government to consider making the likes of Virgin Media and Sky pay to carry public service broadcasters.

The report, by consultancy Perspective Associates, investigates how the value from content commissioned by PSBs is shared, addressing issues such as the terms of trade.

The 34-page document accepts that changes to the market have eroded some of the value that PSBs can extract from content they order, but rejects three common solutions in favour of more radical suggestions.

It describes solutions such as allowing broadcasters to make more shows in-house, reallocating new media rights between broadcasters and producers, and adjusting the split of back end rights to content as “zero-sum solutions”, and argues that they re-distribute existing value rather than generating additional revenue.

Instead it suggests the Government look at forcing pay-TV companies to pay for PSB content.

£90m fees by 2015

It says pay-TV operators “benefit significantly from the PSB channels' presence while making no contribution to the content they carry” and suggests there may be “significant potential value captured by pay-TV platforms that is attributable to UK PSB content but which does not accrue to that content's originators or rights-holders”.

It suggests the proposed Digital Britain Rights Agency could collect and distribute these fees, which could be as much as £83 million per year in 2012, rising to £90 million by 2015.

Levy on PVRs

The other radical idea is copying the levy that many European countries place on sales of PVRs and similar devices, with the revenue pumped into PSB content. The report says the potential for “significant compensation for primary broadcast PSB content is clear”, but accepts there may be “considerable resistance from industry”. Oliver & Ohlbaum estimate that re-use payments in the UK could be as much as £176 million per year.

The Perspective Associates report acknowledges that is recommendations could be controversial, but recommends they be given serious consideration.

It says: “It is clear that any decision to pursue such options would be highly contentious: and the transfer of a charge imposed in one area might lead to adjustments in charges to other parties - consumers, or content providers - which might undermine such benefits as might have accrued.

“However, the focus of our report is the adequacy of the rights regime to continue to fund high quality PSB content. With the structural shift away from linear broadcasting, and with the growing importance of multi-platform distribution, all content creators will be looking for the appropriate mechanisms to monetise the use of their content.

“We therefore think it appropriate for government to give full consideration to the potential of other revenue sources that are linked to the exploitation of copyright, which might be used to support future provision.”

The report is intended as a starting point for discussion and does not represent Government thinking. Interested parties are asked to make their views known by 7 May.