Select Committee on Culture, Media and Sport Minutes of Evidence

Examination of Witnesses (Questions 420 - 434)



  420. In the new structure that you are creating what is the role of Film Four? Although one may have views about this or that film, I believe that Film Four is responsible for, or involved in, some of the most lively and vivacious film-making in the country. Last week I saw the new film "Sexy Beast" and found it one of the most brilliant and entertaining films that I had seen for a very long time. To what extent will you use your additional finances and prosperity to foster further film-making in this country?
  (Mr Jackson) We are trying to grow our presence in the film business. Channel 4's role historically was to act as a catalyst for the British film revival back in 1982. That catalytic effect has taken hold. The numbers of British films being made has risen dramatically; and the number of successes has also risen. In a sense, we believe that it is now our role to move on to a new platform, perhaps to be more ambitious, to use the moneys that we have ring-fenced for film production to attract greater investment, to make some bigger films and, in a sense, have a UK-based international film company. To that end, we are bringing in money from Germany, America and all over the world to make some more ambitious films. This week we have just started on our most ambitious film to date: an adaptation of Sebastian Faulkes' novel Charlotte Gray. At the same time, we recognised that such pump-priming of new talent was as critical in the film business as in television. Therefore, we have invented something called the Film Four Lab which invests in new talent and makes low budget films. That is proving to be a fantastic talent ladder for us. We can grow talent there and perhaps hold on to it in the more ambitious arena of the bigger budget films.

  421. Has the change in the funding formula, for which this Committee can take some credit, assisted in these ventures?
  (Mr Scott) Absolutely. The unwinding of the funding formula enables us to carry out a number of promises. At the time that it was being unwound we said that we would double the amount of money that we put into film production. We have done more than that. We said that we would be able to introduce new digital services. The Film Four channel was the first of that and was launched with some success. It is performing better than the business plan which we set out at the time of launch. It has also enabled us to expand the programme budget on Channel 4. We have introduced considerably more drama, regional productions and the training about which we spoke earlier. It has been vital to the health of Channel 4 that the funding formula has been unwound, and we are very grateful for the Committee's assistance in that.
  (Mr Jackson) We invest about £15 million per annum in film productions. That brings in an additional £65 million from outside sources, often outside the country, which is a classic illustration of the creative economy in action and the pump-priming role that public broadcasting can play.
  (Mr Scott) The £15 million to which Mr Jackson refers is the payment from Channel 4 to Film Four Limited for the television rights. Film Four itself spends more like £40 million a year on productions and, in addition, we bring in the money from overseas.

  422. I read in my copy of The Daily Mail last week a most remarkable encomium to Channel 4, which is not a theme that I have always read in that newspaper. Which of you has changed—Channel 4 or The Daily Mail?
  (Mr Jackson) My own theory is that perhaps The Daily Mail tells you a lot about The Daily Mail; it is reassessing its understanding of readers and maybe has been out of step with the changes, lives, thoughts, habits and viewing of the people who read the newspaper. Yesterday there was a very interesting guide to the Kama Sutra in that newspaper, which I commend to the Committee. There are many ways in which The Daily Mail is changing. Perhaps you should invite the editor to speak to you.

Mr Faber

  423. Our Chairman uses far more delicate language in this Committee than on the Floor of the House. This morning he has avoided using the "p" word—"privatisation"—but as someone who has grave reservations about Channel 4 being privatised I am perhaps in a position to raise the matter and give you an opportunity to say why you believe that it would be a problem. You say in your submission that your structure has always enabled you to provide a rich and varied schedule and to take creative risks, which follows on from the Chairman's point about The Daily Mail. Do you think that perhaps it has been a little too rich and varied in the past and that has become part of the problem? Do you believe that you have alienated certain sections of the media and political world through what you proudly describe as a rich and varied schedule?
  (Mr Jackson) That may be the case, but I believe that the argument for privatisation that is made is based on a misunderstanding. It is more of a misunderstanding than a dislike of what the Channel does. The misunderstanding, simply put, is that the variety, richness and difference of what Channel 4 does could be provided by the marketplace. We could ask the regulator to regulate and there would be no problem, but the fact is that what we are able to do comes about because we can cross-subsidise within our output. The fact is that there are many programmes within the body of the Channel 4 schedule—Channel 4 News, the recent drama "Sword of Honour" and so on—which do not return the cost of their production. In a properly commercial venture which has a fiduciary duty to shareholders many of those programmes simply would not exist. Every time Channel 4 News goes out on that channel we could put in a programme which attracted three times those viewers and, therefore, would be more profitable.

  424. A moment ago you referred to regulation. Do you say that by the very nature of the fact that you are new in the commercial world you are the new boys on the block and, pro rata, your level of regulation would in many ways be higher because you would be pulled down to the level of others? Is that what you complain about?
  (Mr Gardam) I do not quite understand.

  425. You say that you would need increased regulation at Channel 4, or that is what the proposal for privatisation would involve. Do you say that you would be unfairly treated because you would need a greater degree of regulation because you would be new to the commercial sector?
  (Mr Gardam) If the argument is that you would put increased regulation on a privatised Channel 4 it would be perfectly possible to find ways to reach certain targets. Whether or not those targets would be creatively reached with the result that programmes were better is another matter. The ratchet effect that always exists with a privatised company means that you must maximise revenue per slot, and that you see the remit not as an opportunity and identity but a burden. Therefore, you see it as a ceiling that you achieve and then go on to do other things. For example, to take the past month if I were the director of programmes of a privatised Channel 4 I would not spend £1 million on something like the Kumbh Mela and run it for a month. One would be able to achieve one's remit in multi-cultural or religious programmes, however one apportioned it, in a far less ambitious way. Similarly, would one really take on "Sword of Honour" when one could probably launch a soap for a year with the same amount of money? There would be a curtailment of risk and ambition. The interesting thing about Channel 4 is that because it is essentially a commercial company whose dividend is a public one it takes risks that can result in programmes, particularly in innovative comedy, which would not otherwise be screened but which may be very successful, even if in time the talent and the companies that have made them are bought up by other people and go elsewhere.

  426. Although we have heard your raison d'etre this morning for E4, critics may say that that is the thin end of the wedge. How can you say on the one hand that you do not want to be privatised but on the other hand you are happy to put your toe into the commercial world?
  (Mr Jackson) Channel 4 has always been a commercial broadcaster. We are publicly owned but commercially funded. In that sense something like E4 is simply a continuation of the reality, albeit refashioned for a multi-channel world. I do not think that it marks any fundamental difference to what the channel is about.

  427. You also say in your evidence that to put Channel 4 in the private sector would mean that the BBC would lose the benefits of direct public service competition. Some might be confused by that. What benefits does the BBC see in having you as competitors?
  (Mr Jackson) Mr Gardam and I used to work for many years for the BBC. We can testify in detail to the fact that the competition for quality rather than simply for audience figures between Channel 4 and the BBC has been of fantastic benefit to both services. I used to run BBC2. Channel 4 put up creative competition in all the main genres which made it better. BBC2 became a much better channel post the launch of Channel 4.
  (Mr Gardam) Public service broadcasting as a whole has worked in the United Kingdom because it is a competitive system; it is not just Channel 4. Some of the ITV's greatly ambitious documentaries, for example on Alzheimer's disease last year, would make Channel 4 and BBC deeply jealous. The BBC's role as a benchmark of public service would not be able to be maintained if essentially public service just became the BBC's brand. It is precisely because there is competition and rivalry over who can attain that reputation that one maintains the quality of the programmes that one makes.

  428. I have a completely separate question, although perhaps it has relevance to the issue of funding levels whether in the public or private sector. I refer to the purchase of sporting rights. Channel 4 has achieved one of the great successes in recent years in terms of poaching a sporting right—test cricket—and then enhancing it greatly. The new Director-General of the BBC has publicly announced that he wants to go out and replenish the BBC's sporting rights arsenal so that the BBC can get back into some major sports. Is there a future for organisations like yours in the public sector, although commercially funded, in being able to compete for sporting rights at the rates which they command these days?
  (Mr Jackson) Yes. A sensible sporting body is one that seeks to promote its wares to the majority of people. One sees what has happened with rugby, boxing and some sports which have disappeared from the living rooms of the majority of people in this country. Those sports do not command the attention and engagement that they once did. For those people who like boxing, it will be good news that that will be back in people's living rooms. Doubtless that will regenerate people's interest in the sport. The fact is that it is the ability to be part of a national conversation which makes sport so exciting, makes it grow and introduces new generations. It is the responsibility of broadcasters and astute sporting bodies to realise that they must grow the sport for the future and make sure that people can see them and engage in them so that they are part of their lives.

  429. You show overseas sports, for example Italian football or whatever. There is an audience for those sports and you can carry on running them viably on Channel 4?
  (Mr Jackson) There is. But the success of test cricket lies in taking something which is supposedly a pillar of the establishment and regenerating it. One of the things that we said to the ECB when we bid for the rights was that we wanted to bring it to a younger audience and reflect the multi-cultural nature of the sport and innovate in the form of coverage. It illustrated how one could take something that basically had been covered in the same way since the 1930s, if you like the view from the pavilion, and bring to it a new perspective. What we had learnt in minority sports we were able to apply to a supposedly majority sport.

Mr Fraser

  430. Given the unique broadcasting position in which you and BBC find yourselves, and the review of your remit, do you think that there should be a comparable review of the BBC's remit in the same way?
  (Mr Gardam) From where we sit the most important thing is that there is clarity of purpose. That is why we welcome the idea of a single regulator. By and large, our role in competing with and being complementary to both the BBC and ITV means that we want to ensure that we are on the same playing field. In terms of content, what is important in any new Bill is that there are clear definitions in terms of spend on UK-originated programmes and regional production and an acceptable programme code. At the moment the BBC is outside that loop. I believe that it would not damage the BBC and would benefit everyone if there were such clear definitions across all public service broadcasters.

  431. Given the level playing field that you want to see, is there an equal obligation between Channel 4 and BBC in terms of public service broadcasting and its remit?
  (Mr Gardam) The obligation is equal, but we have different roles to play. Essentially, the role of Channel 4 is to be in the vanguard of ideas and bring new ideas to a broader public than would otherwise be the case. One of the key roles that we must play is in the creative economy. The fact that we are driving 400 small and large businesses a year which make programmes for Channel 4 gives us a particular role which it is not the role of the BBC to play. The BBC's role in terms of universality and market failure is greater; our role should be more in projecting forward new ideas, companies, talent and particularly, in the commodified world of digital television, to ensure that there is scope for individual authorship, and that people can break out from the larger converged broadcasters to set up on their own and make their own programmes and businesses. That is the key role that Channel 4 will pursue, which I believe is every bit as much a public service role which we can perform as a commercial broadcaster, without the shareholder pressures which would otherwise certainly mean that we would not dream of having so many suppliers.
  (Mr Scott) In terms of its vision and strategy in recognising a multi-channel and multi-platform world, the BBC is absolutely correct. That applies also to all successful broadcasters. The BBC has been very fortunate with the additional funding that it has received by way of the licence fee as a result of Gavyn Davies' review. It is very important that that money is used for the purposes set out in the prospectus at the time of the review. Particular reference was made to education and multi-cultural services, and it is important that the BBC comes up with them.

  432. What is the difference between your board and the BBC Governors in terms of role?
  (Mr Scott) We have an integrated board of executive and non-executive directors. The non-executives are appointed by the ITC and are accountable to the ITC. They are in the majority on our board. I believe that the structure is very successful and gives the ITC proper regulatory control over Channel 4. The Governors of the BBC are in a difficult position in that they are both regulators and the managers of people involved in the day-to-day matters. That is the distinction between our role with the ITC and our board.

  433. In the long term would you like to see a privatised BBC?
  (Mr Scott) The difficulty is how one funds it. The BBC licence fee adds considerably to the variety of funding of broadcasting. As has been estimated many times in the past, from Professor Peacock onwards, there is not enough advertising in the marketplace to fund all the presently funded services and the BBC as well. If one looks for privatisation of the BBC the question is: how would it be funded?

Mr Maxton

  434. On the question of content regulation, would you show any film that had been passed by the film censor for general release on your channel?
  (Mr Gardam) I believe that as a matter of general principle we would, subject to where it is shown and the time at which it is to be shown. With any film, the use of the film censor's decision and the BBFC certification is a very good benchmark for us. We would certainly show a video version rather than a cinema version. But in television one learns to be very empirical about these things and look at every individual film that is to be screened and make a decision on the basis of content rather than give a broad-brush yes or no.

  Mr Maxton: I hope that you will be prudent but not prudish.

  Chairman: The complaint made against you is that you show films which have not been passed by the censor. Thank you very much.

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