Monday, 6 March 2017

The Telegraph: ITV's court victory over online broadcasts sets up showdown with Virgin Media

Story from The Telegraph:

ITV has scored a court victory over services that retransmit its broadcasts without permission, setting the scene for a battle this summer with its biggest shareholder, Liberty Global, the owner of Virgin Media.

The broadcaster took to the European Court of Justice to stop it offering ITV’s channels for free streaming online.

Channel 4 and Channel 5 also backed the challenge.

The court ruled that could not claim it was exempt from copyright rules under EU laws that allow free retransmission of public service channels over cable.

The decision removes a potential hurdle in ITV’s campaign to charge Virgin Media tens of millions of pounds annually for rebroadcasting ITV, its main channel.

The cable operator currently enjoys a copyright exemption under UK law, which is due to be repealed by the Digital Economy Bill currently making its way through Parliament.

An ITV spokesman said: “We are delighted that the European Court has ruled that our channels should not be retransmitted online or on cable without our authorisation.

“This finding recognises the vital importance of intellectual property protection in maximising investment in original UK TV content and preventing free-riding. The Government has already confirmed that the current UK law on retransmission is no longer relevant.”

The Intellectual Property Office last month rejected a call from Virgin Media to wait two years to allow the proposed new system to bed in.

It means ITV is likely to issue a bill in the summer.

The cable operator had warned that if ITV demands payment for its main channel there was “a high risk of failed negotiations leading to a negative impact on consumers”.

In the US, fraught negotiations over retransmission fees have triggered channel blackouts.

The Government has previously said it does not expect the repeal of cable’s copyright exemption to trigger bills for Virgin Media, but last month the culture minister Lord Ashton said: “We think it should be left to the market to decide that.”

The apparent policy shift was highlighted by ITV’s chief executive, Adam Crozier, at the company’s results last week.

His plan to send a bill as soon as the cable copyright exemption is repealed will thrust ITV into a commercial row with its biggest shareholder.

Liberty Global, with a 9.9pc stake, is viewed in the City as a potential buyer of ITV.

Both Liberty Global and Virgin Media have indicated they have no intention of paying to broadcast ITV’s main channel.

Last night the cable operator, which has around 3.7 million television customers, attempted to hold ministers to their earlier statements that the change in the law should not mean ITV is able to charge for its main channel.

A Virgin Media spokesman said: “Culture Secretary Karen Bradley and digital minister Matthew Hancock have repeatedly told Parliament they do not want the public service television companies to force Virgin Media to charge free-to-air television viewers to watch ITV.

“Virgin Media has confidence the Government will ensure public service free channels continue to be free.”

While the EU court decision and change in tone from the Government has encouraged ITV, analysts have warned that making demands could backfire.

Under its public service licence, the broadcaster is obliged to ensure its main channel is freely available via Freeview, weakening the threat of a blackout on cable.

Barclays analysts told clients: “Even if ITV goes black, users will be able to continue watching the main channel by just switching the remote control.

“It is because of this diminished negotiating power that we remain sceptical about retransmission fees upside.”

There could also be complications in ITV’s relationships with suppliers.

Some producers, who retain elements of programme copyright, told the IPO that they would expect to receive a share of any fees from Virgin Media.

However, ITV said it buys “comprehensive” rights to transmission.

ITV’s spokesman said: “We’ve long argued that the carriage of ITV’s main channel on cable and satellite platforms should be subject to the same commercial negotiations as our non-public service channels.”

© Telegraph Media Group Limited 2017.