Author Archives: GK Strategy

The Draft Media Bill: A wolf in sheep’s clothing?

GK Consultant and resident specialist on digital policy, Robert Blackmore, takes a look at the recently published Draft Media Bill, and discusses one of the Bill’s most controversial aspects.

Little fanfare met the long-awaited publication of the Media Bill during the early hours of March 29th . This was perhaps not a surprise – it was, after all, published in draft form. Furthermore, the Government’s previously publicised decision to U-turn on its highly contentious proposal to privatise Channel 4 certainly took the ‘sting’ out of its release.

However, the importance of the legislation cannot be understated, and nor should the potential for it to become another front in the Government’s delicate attempt to balance freedom of expression with the ‘safety’ of its citizens.

But first, why is the Government proposing an update to media law?

The draft bill represents the Government’s understandable desire to refresh the rules that govern a broadcasting landscape that has altered dramatically since New Labour’s 2003 Communications Act.

Back in 2003, notwithstanding the ascendancy of Sky Television and its monopoly over coverage of the Premier League, the linear model of television consumption still dominated, and few questioned the prominence of the Public Sector Broadcasters (PSB), namely, the BBC, ITV, STV, S4C, Channel 4 and Channel 5. Ofcom define these broadcasters as those that deliver “impartial and trusted news, UK-originated programmes and distinctive content.”

Two decades on and the market has been transformed. 75% of households use online Video-on-Demand (VOD) platforms, such as Disney+ and Netflix, with few viewers limiting their media habits only to linear television channels. This, combined with the consolidation of the global broadcasting market by global media entities in recent years, has raised questions regarding whether PSBs are so “prominent” after all.

The draft bill proposes several solutions to the so called ‘crowding-out’ of PSBs. Some are relatively minor, such as compelling set-top boxes and streaming sticks to provide PSB VOD services with priority in terms of discoverability, while others more substantial, like allowing online programmes to count towards PSBs meeting their public service remit.

However, one proposal has proven particularly contentious and far-reaching.

With echoes of the Government’s attempt to reign in ‘global big tech’ through the Online Safety Bill, written into the draft Media Bill is an extension of Ofcom’s remit that would grant it regulatory oversight of global (‘Tier One’) VOD platforms with a UK customer base, likely to include the likes of Netflix and Amazon.

This would take the form of a new code of practice that would seek to protect audiences from ‘harmful content’ and place impartiality requirements on non-news programmes. Indeed, for the first time, a UK viewer would be able to file a complaint against a non-PSB VOD platforms, which if upheld, could lead to Ofcom issuing fines of up to £250,000.

For global VOD platforms that operate in the UK, such a proposal is an unwelcome development, and an example of what they would describe as ‘government overreach’.

At a recent Westminster Forum event, Benjamin King, UK and Ireland director of public policy at Netflix, stated this proposal could have a “chilling effect” on the provision of its service, and undermined “freedom of expression”. He cited that it would significantly undermine “Netflix’s appetite to make available our many documentaries, which are so beloved by UK members”. He also called for legislators to carefully reflect on attempts to transpose UK regulations across international content.

Mr King will have welcomed, therefore, that the publication of the Bill was in draft form. This (relatively unusual) step allows the Bill’s text to receive pre-legislative scrutiny, and a potential re-drafting, prior to its formal introduction to Parliament.

Legislators are not naïve to the concerns of global VOD platforms. The Culture, Media and Sport (CMS) Committee immediately launched an inquiry into the draft bill in April. Amongst the questions the Committee highlighted in its terms of reference was: “Do the proposals in the draft Media Bill create any risks to UK’s desirability as a market for VoD content?” Interested parties have been granted the opportunity to feed into the inquiry via written evidence that will support the Committee in their scrutiny of the draft bill.

For their part, PSBs have broadly welcomed the proposals, with ITV crediting the draft Bill for providing them with the confidence to apply for a 10-year renewal to its PSB licence. However, they are also impatient for the Government to allocate parliamentary time to the Bill.

So what are the next steps for the draft Bill?

While it is believed that the Department for Culture, Media and Sport is very keen for the Bill to be formally introduced in the 4th (and final) session of this Parliament, the legislative timetable is already highly concentrated. Indeed, if following the pre-legislative scrutiny the Government decides that major changes to the draft Bill are necessary, publication this side of an election (expected in 2024) could, ultimately, prove difficult.

What does the ongoing conflict in Ukraine mean for private equity investment in UK defence?

GK Senior Adviser Hugo Tuckett analyses the historical challenges for private equity investment into the defence sector, and takes a look at investment landscape in the years ahead. 

Defence has historically been a challenging area for private equity. The nature of contracts, cash flow models and high barriers to entry have often been cited as reasons for a lack of investment. This is alongside the perception that the industry is dominated by a relatively closed shop of actors.

However, has the Russian invasion of Ukraine changed the outlook for private equity in this space? Does an on-going war in the Europe open the door to investment in technologies with an offensive application?

ESG considerations have certainly softened. While private equity houses have traditionally steered away from investing in defence due to ethical considerations, public attitudes in the UK indicate a continued desire to provide military support to Ukraine. YouGov polling, conducted in February 2023 on the one-year anniversary of the Russian invasion, found that 65% of Britons supported sending additional weaponry and supplies to the country. There was also more support (45%) than opposition (25%) for cyber-attacks against Russian military capabilities.

Furthermore, the Government’s continued desire to financially back UK defence points to a healthy procurement environment in the years ahead. The Defence Secretary’s very public lobbying efforts to secure additional funding on top of the multi-year settlement agreed in 2020 have certainly been fruitful. At the recent Budget, the Chancellor, Jeremy Hunt, announced that the Government will commit an extra £11bn to the defence budget over the next five years and confirmed the decision to increase investment by £5bn over the next two.

Where, therefore, does private equity most stand to gain in the industry? KPMG analysis from 2021 highlights two possible areas private equity houses might look to explore. Firstly, supply chain consolidation. Liquidity issues amongst the supply base lends itself to lower-tier suppliers joining together to create economies of scale and gain access to more capital. Secondly, in innovation. For growth-orientated investors, cutting-edge assets that become available to the market via divestments from parent companies presents an opportunity for private equity houses to bring their expertise to assets that could go onto become extremely successful businesses.

While, of course, some parts of the defence industry remain outside the scope of private equity, shifting public attitudes to offensive military technology and growing Government financial backing certainly point to a welcoming investment landscape in the years ahead.

GK consultants are on hand to offer investment professionals our expertise helping to assess the UK’s political and regulatory outlook. Please get in touch at hugo@gkstrategy.com for more information.

Could carbon capture be the silver bullet in our push for net zero?

GK consultant Hugo Tuckett takes a look at the potential of Carbon Capture Usage and Storage, assessing the UK’s credentials as a leader for a sector in its infancy. 

It is abundantly clear that the Paris Climate Agreement’s aim of limiting global warming to 1.5C above pre-industrial levels is under serious threat. The recently published report by the Intergovernmental Panel on Climate Change (IPCC) makes clear that there is very little chance of keeping the world from warming by more than 1.5C (which would substantially reduce the effects of climate change). Indeed, the world has already warmed by 1.1C and experts now expect to breach 1.5C in the 2030s.

While significant progress has been made towards developing methods of clean energy generation – such as wind, solar and hydro – innovative new technologies continue to come forward which balance the other side of the equation, removing carbon directly from the atmosphere. A vital tool in our arsenal to hit the 2050 net zero target. Technology such as this not only buys us time to develop effective solutions to some of the most intractable challenges we face decarbonising our economy, but also provides us with a route to the eventual return to pre-industrial global temperatures.

In step Carbon Capture Usage and Storage (CCUS). Exciting research has identified a new method of sucking carbon dioxide out of the air and storing it in the sea, which promises to be three times more efficient that current approaches. The stored CO2 can be transformed into bicarbonate of soda and stored safely and cheaply in seawater. The development, although in early stages, has been welcomed by many in the field.

In the public policy world this begs the question; how can Ministers foster an innovative green economy and help bring these solutions to market?

The Government is undoubtedly moving in the right direction. The recent Budget allocated £20 billion of funding for early development of CCUS, far exceeding the reconfirmation of the £1 billion CCUS Infrastructure Fund at the 2021 Spending Review. Given the publication of the Third Climate Change Risk Assessment in January 2023 showed that for eight individual risks economic damages could exceed £1 billion per year each by 2050 with a temperature rise of 2C, those in industry will be relieved that Ministers are finally grasping the problem.

With a general election on the horizon, attention has inevitably turned to Labour and its approach to CCUS. Positive rumblings have certainly been forthcoming, not least the proposed National Wealth Fund which would seek to invest in and grow green industries. Moreover, Keir Starmer’s keynote New Year’s speech specifically cited investment in carbon capture as a central element of his ambition to hit 100 percent clean power generation by 2030.

In the absence of substantive detail, businesses involved in CCUS have the opportunity to shape Labour’s policy development to its advantage at a vital period in the pre-election cycle. Furthermore, given the significant uplift in funding announced at the 2023 Budget, chances to shape Government priorities in the rollout of CCUS will be abundant in the months and years ahead.

Positive advances in CCUS should grab everyone’s attention given the scale of the challenges we face decarbonising our economy and possibly one day returning to pre-industrial global temperatures. It is vital that Ministers work to create an environment in which green technologies such as CCUS can thrive in the UK.

GK consultants are on hand to offer our expertise helping companies navigate the UK’s political and policy landscape. Please get in touch hugo@gkstrategy.com for more information.