APPENDIX 21
Memorandum Submitted by The Producers
Alliance for Cinema and Television (PACT)
I enclose a copy of PACT's response to the consultation
exercise on the BBC Funding Review[86].
A copy was sent to your Committee Clerk as our written submission
to your inquiry. Regrettably, because of the limited time available
for your inquiry, we have not been asked to give oral evidence.
PACT is the main trade association for independent
television and film production companies. It represents the interests
of over 1,000 production companies throughout the UK. PACT's priority
for television is to see a healthy, vibrant and competitive television
production sector.
Independent producers have made a substantial
contribution to programme innovation and diversity. They have
also helped to provide effective competition in the production
sector. Independent productions which have recently appeared on
screen include: The Major Years, 1900 House, Staying Lost, Who
Wants to be a Millionaire?, Ballykissangel, The Cops and The Teletubbies.
Independent producers are key suppliers to the
BBC and other broadcasters. In giving evidence to your Committee
in November 1997, Sir John Birt, commenting on independent producers
said:
"It is undoubtedly creative competition
that has kept us on our toes: it has kept BBC Production on its
toes and price competition has undoubtedly placed pressure on
us to become more efficient . . . the independent sector . .
. has certainly been a vital stimulus to greater efficiency".
PACT believes there is substantial scope for
the BBC to make further efficiency savings. In relation to programme-buying,
we consider the BBC could achieve better value for the licence
payer if it committed itself to a policy of always buying the
best programme ideas at the best prices. This would preclude any
tacit output deals with BBC Production guaranteeing levels of
in-house production. Additionally, we believe the BBC could be
more selective in the programme rights it acquires. It could often
get programmes at less than the cost of production if it allowed
independent producers to contribute to programme budgets in exchange
for retaining some of the secondary programme rights.
While we support more resources for the BBC,
we believe it is essential that these are devoted to investment
in original programme production to restore confidence in the
BBC's core public services. The BBC's own consultation document,
"The BBC: 2000 and Beyond" acknowledges that it needs
to strengthen the quality of BBC 1 and BBC 2.
We do not, however, support the proposed digital
licence fee supplement. Media inflation has been fuelled by the
expansion in commercial broadcasters' revenues, which have averaged
some 5-8 per cent per annum, whereas the BBC's revenue has grown
by an average of 1 per cent. We think the BBC should be allowed
more resources to help it counter the effects of inflation and
we should therefore prefer to see an increase in the general licence
fee as opposed to the digital supplement. Although we have not
said as much in our response to the Review, we recognise that
the licence fee is a regressive tax and any increase above inflation
is unlikely to find favour with consumers. Nevertheless, we think
this could be made more acceptable if concessions are extended
to more of the disadvantaged, so that the increase falls mainly
on those with the ability to pay.
We reject advertising on the BBC's public service
television channels. However, we consider there is scope for further
examining whether advertising could be allowed on BBC Online.
Advertising on television necessarily interrupts the flow of content,
whereas banner advertising on the Internet need not do so. Public
expectations for online services are different to those for television
services.
We do not believe the BBC should have a free
rein to develop whatever services it wishes. There must be limits
to how far a publicly funded broadcaster can expand. Any new services
must follow a clear public service remit and must not be allowed
to crowd out services provided by the commercial sector.
We have serious concerns about the BBC's accountability
and fair trade, which are set out in detail in our response and
which were acknowledged in the Gavyn Davies' Report. The BBC's
Fair Trading Commitment may cover relationships between the BBC's
public services and its commercial activities, but does not cover
competition between in-house and independent producers.
We do not believe that BBC Worldwide operates
at a sufficient arm's length from the BBC and consider it abuses
its dominant position in the programme distribution market. We
would welcome any proposals that would result in Worldwide operating
on a more commercial footing and trading more fairly. In our view,
a better alternative to selling off 49 per cent of Worldwide would
be for the BBC to contract out the bulk of its distribution and
publishing activities, leaving Worldwide to manage rights and
the BBC's commercial partnerships.
We welcome the proposed scrutiny of the BBC's
Fair Trading Commitment and Commercial Policy Guidelines by the
Office of Fair Trading (OFT). We also welcome the proposed reviews
by the National Audit Office (NAO), who we believe should have
a continuing role in scrutinising the BBC's efficiency. However,
we question whether the NAO is best placed to audit the BBC's
compliance with its Fair Trading Commitment, which we believe
should be undertaken by the OFT.
I am also enclosing a copy of our Report "The
Courage to Compete"[87]
which we published last year, which goes into more detail about
the trading relationships between broadcasters and independent
producers. Allowing producers to retain more rights is a key issue
for independent producers as it would allow them to develop an
asset base on which to grow their businesses. This would benefit
broadcasters who could share the risks of making programmes with
producers, while still sharing in the rewards from successful
programme sales. The OFT has been investigating the relationship
between independent producers and broadcasters since publication
of "The Courage to Compete".
I would be happy to provide you with further
briefing on our response to the BBC Funding Review and our "Courage
to Compete" campaign. If you would find it useful to talk
to some our independent producer members, then please let me know
November 1999
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