Television viewing continues to be the most popular leisure activity in the UK. On average, people spend about three and a half hours each day 'watching the box'.

British people can choose from terrestrial, satellite and cable services. Since 1999, many people have opted to subscribe to broadcasters that offer digital services, a development that is reshaping the medium.

The UK has five terrestrial television channels that most people receive through conventional (analogue) rooftop aerials Between them, these channels broadcast a mix of drama, light entertainment, films, sport, educational, children's and religious programmes, news and current affairs, and documentaries.

The BBC provides two national networks that are financed mainly by a licence fee, while the Independent Television Commission licenses and regulates three commercial television services - ITV (Channel 3), Channel 4 and Channel 5 - which are largely funded by advertising In Wales, S4C (Sianel Pedwar Cymru) broadcasts some Welsh language programmes on the fourth channel.

Cable and satellite television arrived in the UK in 1989. However, the sector was revolutionised in the late 1990s by the commercial debut of digital television, which offers many more channels, greater potential for wide screen broadcasts and interactivity, and improved sound and picture quality.

Today, people who want additional television choice can acquire a set top box, pay a monthly subscription fee and receive services by one of three main methods digital satellite (dominated in the UK by British Sky Broadcasting's SkyDigital), digital cable (dominated by NTL and Telewest) and digital terrestrial television (dominated by ITV Digital). Some people who signed up to cable and satellite before the arrival of digital television are still receiving analogue services But this option is gradually being phased out by the platform operators.

In 2001, cable, satellite and digital terrestrial television services accounted for 18 per cent of total viewing in the UK. The main source of funding for the digital platforms is subscription income but the arrival of digital has also opened up the possibility of generating revenue through interactive services like gambling, shopping and banking.

BBC Television

In 2000-01, the BBC broadcast a total of 44,834 hours of television programmes across all its channels.

Of this total 17,500 hours were aired on its two flagship channels - BBC 1 and BBC 2 - to national and regional audiences. These two channels have complementary schedules to give the viewer an extended choice of programmes.

BBC 1 is the channel of broad appeal. In 2000-01 it broadcast over 1,100 hours of features, documentaries and current affairs programmes, together with over 950 hours of drama and entertainment, 500 hours of sport and over 400 of children's programmes.

BBC 2 caters more for special audience interests. Future plans focus on 'intelligent specialist factual programmes, thoughtful analysis, key leisure and lifestyle programmes, creatively ambitious drama and comedy and sport'.

Most programmes are made at, or acquired through, Television Centre in London and six bases throughout the UK (Glasgow in Scotland, Cardiff in Wales, Belfast in Northern Ireland, and Birmingham, Bristol and Manchester in England). The BBC is obliged to make sure that at least 25 per cent of its original programming comes from the independent production sector.

The advent of digital television has led the Director-General to lay out a blueprint for seven BBC services. His view is that two mixed genre channels will 'not be sufficient in the age of digital television' and he is committing an extra £130 million a year for this. Of the seven, BBC 1 and BBC 2 are already watched by 94 per cent of the UK population every week. The other five will be available free to air on all digital delivery systems This audience will start small but grow as digital penetration in the UK gradually increases to 100 per cent.

The five services outlined by the BBC include:

• BBC 3 - a channel for original UK comedy, drama and music as well as arts, education and social action programming. This will replace BBC Choice, the first broad-based digital channel to be launched by the Corporation;
• BBC 4 - an intellectual channel based around arts, challenging music and debate. This replaces another digital experiment, BBC Knowledge;
• two children's services for preschool and older children that will be scheduled during the daytime on BBC 3 and BBC 4;
• BBC News 24, a round-the-clock news channel that is already available by cable and satellite delivery systems.

All of these are subject to regulatory approval. In September 2001 they were given the go-ahead by the Government, except for BBC 3, which the Minister responsible for assessing the plans said was 'not distinctive enough in a crowded market'. The BBC was reworking its proposal for BBC 3 at the end of 2001 with a view to getting the service on air sometime in 2002.

Digital also allows the BBC to provide more widescreen television and interactive enhancements to existing programmes. In 2001, for example, the BBC supplemented its coverage of Wimbledon tennis and the British Golf Open with interactive channels on the SkyDigital platform.

Despite the replacement of BBC Knowledge with BBC 4, digital television and the internet are also expected to provide licence fee payers with extensive opportunities for interactive learning in the school, workplace and home.

Education is a central component of the BBC's public service commitment. A wide range of educational programmes is broadcast for primary and secondary schools (over 90 per cent of which use BBC schools television), further education colleges and the Open University (which provides non-residential degree courses), while programmes for adults cover numeracy, literacy, language learning, work and vocational training. Books, pamphlets, computer software, and audio and video cassettes are produced to supplement the programmes. A nighttime education and training service - The Learning Zone - was launched on BBC 2 in 1995. The aim is for teachers and students to video record programmes for use in their studies. Popular programmes in The Learning Zone include DynaMo, which helps children learn through activities, games and experiments.

BBC Worldwide

BBC Worldwide was formed in 1994 to develop a co-ordinated approach to the BBC's international and commercial activities. Its objective is to make the BBC a significant player in the increasingly competitive world media markets, while maintaining the editorial standards for which the BBC is internationally renowned. This aim was endorsed by the new Charter and Agreement. BBC Worldwide's commercial remit extends across the full range of television, publishing and online activities. Operationally, responsibility for exploiting BBC brands is split between a strategic centre in London and powerful regional offices around the world. It is intended that revenue generated by Worldwide's commercial activities should become an increasingly helpful adjunct to the BBC's licence fee.

In 2000, Worldwide recorded sales of nearly £600 million and its cashflow contribution to the BBC was £96 million.

BBC Worldwide is a major international broadcaster and a leading distributor and co producer of BBC programmes. In 2000, TV sales by BBC Worldwide were worth around £150 million, making the BBC the largest European exporter of television programmes. Among the most popular recent productions have been Walking with Dinosaurs, Tweenies and Teletubbies. The sale of entertainment formats has also become an important business with The Weakest Link and Dog Eat Dog both successfully adapted for US networks. Music programme Top of the Pops has also been re worked for the German market.

Worldwide Television works closely with BBC production departments, independent producers and its network of international offices to determine commercial strategies for key programmes with international licensing potential.

It is developing premium channels to compete in the international marketplace. Its most significant partnership is with factual entertainment broadcaster Discovery Communications Inc (DCI) of the USA. Under the terms of a far reaching agreement, BBC Worldwide provides programmes to DCI channels and has a 50 per cent stake in DCI channels in Latin America, Europe and Asia such as Animal Planet, and People & Arts. The deal facilitated the launch of an entertainment network called BBC America, now in 17 million US homes.

BBC Prime, an entertainment and drama channel, has more than 10 million subscribers in 100 territories. Worldwide Television's other channel involvement includes a UK-based joint venture with Telewest called UKTV. UKTV provides a range of thematic subscription channels to audiences in the UK.

In Australia, the UKTV brand is also used for a channel that reaches 890,000 viewers.

BBC Worldwide's publishing, licensing and merchandising operation covers magazines, books, video and audio sales, toys and gifts. It is active around the world, marketing products and properties alongside BBC Worldwide's television distribution operation Worldwide oversees online network www.beeb.com. Following a deal with TH Lee, www.beeb.com has now been established as a leading consumer e-commerce portal in the UK Worldwide also produces live performances.

Tweenies Live! was the top-selling arena show in the UK in 2000.

Until April 2002, BBC Worldwide oversaw BBC World, a wholly-owned advertiser funded, 24 hour international news and information channel. The channel provides news bulletins, analysis and reports, and is available to 79 million homes around the globe. From April 2002 BBC World became part of the World Service and Global News division.

Independent terrestrial services

ITV (Channel 3)

The first regular independent television (ITV) programmes were broadcast in London in 1955 - 19 years after the BBC launched the world's first regular television service - and the network quickly grew to cover the whole country. Today, ITV (Channel 3) is made up of 15 regionally-based television companies that are licensed to supply programmes in 14 independent television geographical regions (there being two licences from London one for weekdays and the other for the weekend). An additional licensee - CMTV - broadcasts a national breakfast-time service, transmitted on the ITV network. All of the licences were awarded by the Independent Television Commission through competitive tender in October 1991 for a 10 year term commencing 1 January 1993. Since then, all have been renewed for a further 10-year period.

ITV's federal structure is designed to protect the interests of local viewers. But the reality is that only a handful of media companies own ITV franchises Granada Media, for example, owns Anglia, Border, Granada, HTV, LWT, Meridian, Tyne Tees and Yorkshire. Carlton runs the London weekday, Central and Westcountry franchises while Scottish Media Croup owns Scottish and Grampian. The last independents are Ulster Television and the tiny Channel Islands franchise. This consolidation is expected to culminate with the amalgamation of Granada and Carlton when the Government introduces new media legislation in 2003.

Regardless of this concentration of power within ITV, each licensee is obliged to offer a diversity of quality programmes to appeal to a broad range of viewers' tastes and interests. They have a statutory duty to present programmes made in, and about, their region, and there is a requirement for district and regional programming to be aimed at different areas within regions. They must also make provision for people who are deaf or hard of hearing, and those who are blind or partially sighted.

Each company plans the content of local programmes to be broadcast in its area. These are produced by the company itself, by other programme companies, or are bought from elsewhere. In addition, the regional Channel 3 companies are obliged to operate a national programme network The ITV Network Centre, which is owned by the companies, independently commissions, acquires and schedules most of the high-profile programmes that attract large audiences.

Like the BBC, at least 25 per cent of original programming on ITV must come from the independent production sector. About one-third of the output is made up of informative programmes - news, documentaries, and coverage of current affairs, education and religion - while the remainder covers drama, entertainment, sport, arts and children's programmes. Programmes are broadcast 24 hours a day throughout the country. A common national and international news service is provided by Independent Television News (ITN).

Channel 3 licensees derive most of their income from selling advertising time. Their financial resources and programme production vary considerably, depending largely on the population of the areas they operate. Newspaper groups can acquire an interest in Channel 3 companies, although safeguards exist to ensure against undue concentrations of ownership.

As Granada and Carlton have become the major powers behind the network, they have sought to exploit the ITV brand more effectively. Although they run their own commercial activities, they have - for example - built up an ITV website. More significantly, they jointly own a digital terrestrial television platform called ITV Digital. They have also started to launch additional networks such as ITV 2 and ITV Sport for distribution on digital platforms.

Channel 4 and S4C

Channel 4 began broadcasting in 1982, and has been a public corporation since January 1993 (having previously been a public limited company). It is licensed and regulated by the ITC and funded by selling its own advertising time. Channel 4 has a duty to:

• provide programmes with a distinctive character;
• appeal to tastes and interests not generally catered for by Channel 3; and
• encourage innovation and experiment

There has been a lively debate about whether Channel 4 should be privatised and the Government has rejected the proposal. Instead, as part of its proposals for new communications legislation to be introduced in 2003, it has stated that: 'Channel 4's remit will be reviewed to make it more positive and to ensure the service continues to provide distinctive and innovative programming in the future'.

Under Channel 4's remit, a broad range of programmes must be provided, with a proportion allocated to news, current affairs, schools programmes and other programmes of an educational nature.

These and other conditions are laid down in its licence. Channel 4 does not make any of the programmes it transmits, commissioning most of them from independent producers. It also acquires shows and formats from overseas. For example, Big Brother, its biggest success in recent times, was an English version of a Dutch show.

As with Channel 3 companies, it must abide by the ITC codes on technical, programme and advertising standards and practices. Because of the nature of its remit, it is often involved in controversy over the programmes it broadcasts.

Channel 4 provides a national television service throughout the UK (for 24 hours a day from January 1997), except in Wales, where programmes on the fourth channel are run and controlled by S4C (Sianel Pedwar Cymru). S4C has to see that a significant proportion of programming - particularly between 18.30 and 22.00 hours - is in the Welsh language. At other times S4C transmits Channel 4 programmes. Like Channel 4, S4C has sold its own advertising since 1993. About 10 per cent of S4C's income comes from commercial activities such as the sale of advertising airtime, with the remainder financed by Government. Like the BBC, S4C has a commercial arm - S4C International.

Channel 5

The UK's newest national terrestrial channel went live in March 1997, its 10-year licence having been awarded by competitive tender to Channel 5 Broadcasting Limited in October 1995. Today the network is controlled by RTL Group, a European broadcasting company owned by German media giant Bertelsmann.

Before the launch of Channel 5, which serves about 80 per cent of the population, the licensee had to make arrangements to re-tune domestic video equipment that would be affected by its transmissions, to eliminate interference. This operation affected between 4 and 5 million homes and was carried out at no cost to the viewer.

Like Channel 3, Channel 5 is subject to positive programming requirements, although these are much more flexible than those imposed on its much larger rival. It must show programmes of quality and diversity, with a wide range of original productions and commissions from independent producers. It must also broadcast national and international news, and make provision for people with hearing and sight impairments. Channel 5 is supported by advertising revenue and takes around 5.5-6 per cent of the overall television audience.

Gaelic television

The Gaelic Broadcasting Committee is an independent body committed to ensuring that a wide range of quality programmes is broadcast in Gaelic for reception in Scotland. Appointed by the Independent Television Commission, the Committee distributes government money to programme makers through the Gaelic Broadcasting Fund (around £8.5 million a year). Gaelic programmes funded in this way have been transmitted since 1993. Under the Broadcasting Act 1996, the digital terrestrial multiplex carrying Channel 5 and S4C is obliged to provide a minimum of half an hour a day of Gaelic programming during peak time throughout Scotland. There are also obligations on the ITV (Channel 3) franchise holders in Scotland - Grampian TV and Scottish TV - to show regular Gaelic programming. The 1996 Act also expanded the remit of the Committee to provide support to Gaelic radio as well as television.

Digital satellite television

As its name suggests, direct broadcasting by satellite (DBS) is the means by which television is transmitted into people's homes directly by satellite. The signals from satellite broadcasting are received through special aerials or 'dishes'. Most programme services available via DBS are paid for by subscription.

DBS services have been available throughout the UK since 1989. But a major development occurred in 1998 when the dominant DBS player, British Sky Broadcasting (BSkyB), launched the UK's first and only digital satellite platform, SkyDigital.

By the middle of 2001, SkyDigital was available in 5.5 million homes. Another 250,000 people were still subscribing to BSkyB’s analogue service until it was switched off in November 2001.

SkyDigital subscribers have access to more than 100 television channels and around 40 audio channels. Aside from Sky's own sport and movie channels, subscribers can receive an eclectic range of children's, factual, entertainment, drama, music, men's and women's channels. All of the main terrestrial channels are available on SkyDigital and are displayed prominently on the Electronic Programme Guide, which is used to navigate around the system. There are also numerous film and ethnic channels that can be accessed by paying an additional subscription fee. SkyDigital also offers PayPerView movies and sport.

All channels that are broadcast in the UK must have an Independent Television Commission (ITC) licence. In addition to the services outlined above, the ITC licenses some foreign-language networks that are transmitted from the UK but aimed primarily at audiences in other countries. Viewers in the UK can also receive a variety of television services from other European countries.

In its effort to entice people into digital satellite, BSkyB has been giving away receiving equipment for free. Currently, it makes its money from selling monthly subscriptions and advertising airtime. In the future, it is expected to derive revenue through services such as home shopping, home banking and gambling. It will also launch a new generation of sophisticated set-top boxes that it will charge for. The switch to digital has been expensive. In 2000, BSkyB lost £514 million.

The regulation of satellite programme services in the UK is confined to preventing abuse in the form of unacceptable programming or advertising. All such services must comply with the ITC's programme, advertising and sponsorship codes, but they are not subject to any positive programming obligations.

BSkyB's majority owner is News International, publisher of The Times, The Sunday Times, The Sun and The News of the World. As a result, the group's further expansion in the UK is subject to cross-media ownership and competition laws.

The internet

The internet is among the most far-reaching of recent developments in electronic communications. It now plays a pivotal role in the provision and dissemination of information and entertainment.

Broadly speaking, the internet is a loose collection of computer networks around the world - it links thousands of academic, government, military and public computer systems, giving literally millions of people access to a wealth of stored information and other resources. No one owns it - there is no centralised controlling or regulating body. To access - or send out - information an internet user needs only a computer with the necessary software, a telephone and a modem (which allows computers to talk to each other over a telephone line).

The system dates from the 1960s, when it began life in the military and academic communities in the United States. But it has only assumed widespread significance in commercial and consumer terms during the last five years.

For most people, it is the World Wide Web (www or Web) that has given the Internet its user appeal and accessibility. The World Wide Web was invented by British scientist Tim Berners-Lee, and became available on the internet in 1991. The Web now consists of millions of pages or 'sites' on the internet that can be viewed by a browser (a programme that provides a window in a computer screen on which the pages are displayed). Users can move from page to page (called 'surfing') in search of whatever information or service they are after.

In terms of internet household penetration, the UK has one of the most developed markets in Europe (comparable in size with Germany). Around 15.6 million people go 'online' every month in the UK. The most popular destinations are web portals like www.MSN.com, www.Yahoo.com and www.Freeserve.com, which provide a wide range of news and entertainment content. In July 2001, for example, 7 million people visited the Microsoft-owned www.MSN.com.

With around 30 per cent of the UK connected to the internet, the medium has become a real alternative to more traditional media. And many publishers and broadcasters have established their own sites on the World Wide Web. The most comprehensive of these is the BBC's website www.bbc.co.uk, which attracts 2 million people a month.

Other popular broadcaster-based websites are www.CNN.com and www.Sky.com, that attract around 275,000-290,000 users a month. Leading UK radio companies like Capital and GWR have also spent heavily on establishing websites that can narrowcast music as well as provide the usual mix of text and visual content.

Among newspaper publishers, the most successful website is The Guardian's Guardian Unlimited, which reaches 370,000 people a month. However, The Times, The Financial Times and The Telegraph also have popular sites. Regional newspaper publishers have also been busy. Aside from the launch of Fish4 (see below), more than 700 regional newspaper websites have been created by individual newspaper titles, which hope to build subsidiary businesses on the back of trusted print brands.

Magazine publishers like EMAP and IPC nave also opened up websites based around their core magazine businesses. Indeed, I PC was recently acquired by the world's biggest media organisation AOL Time Warner, which is keen to establish a presence in the UK internet market using IPC content.

Between 1998 and 2000, the internet attracted heavy investment from most UK media owners. But few have generated any meaningful revenues from these activities. Online advertising is stagnant & proved difficult for media owners to impose subscriptions on visitors to their websites.

There is some hope that the internet will become a major channel for banking, shopping and pay-as-you-play games, but these markets are still undeveloped. Some media owners expect classified advertising to migrate to the internet. For example, regional newspaper owners have clubbed together to launch an internet service called Fish4, which displays thousands of small ads (jobs, cars, property etc) that have been gathered from local newspapers all over the country.

As a result of problems in making a profit from the internet, many media companies are being forced to cut back on their internet investments and wait and see how the market develops. Most analysts believe that the market will not really take off until there is widespread availability of high-speed internet connections (broadband). This will allow media owners to distribute more attractive content -including video footage - via the World Wide Web. The BBC recently announced plans to invest heavily in broadband.