Memorandum submitted by Channel 4
INTRODUCTION
1. Of the several issues which the Committee
seeks to address in its Inquiry, the one that is of over-riding
concern to Channel 4 is the definition and provision of public
service broadcasting. In this response to the Committee's invitation
of 19 November 2001, the Channel accordingly sets out its views
on this issue at some length and then offers shorter comments
on the other points raised by the Select Committee's note.
DEFINING AND
PROVIDING PUBLIC
SERVICE BROADCASTING
2. Public service broadcasting, as it has
evolved in the UK, is not the characteristic of a particular broadcaster
or a particular type of programming but a system of regulation
in which a variety of broadcasters are required to play a variety
of roles. The key element of Channel 4s remit does not lie in
the detail of any requirement to produce a certain number of hours
of this or that type of programme all of which are exceeded, mostly
by substantial margins. It is the simple over-arching requirement
to be innovative and distinctive and to address issues of diversity.
The history of Channel 4 over the last 20 years provides ample
evidence that it has delivered on this top-line remit and has
contributed handsomely towards realising the two key objectives
of the White Paper "A New Future for Communications"—namely,
to make the UK home to the most dynamic and competitive communications
and media market in the world, and to give British viewers a choice
of diverse services of the highest qualities.
3. Never has that been more true than in
the past year. The Channel has won 130 major national and international
awards for its programmes and services, and won them across every
genre of programming from popular entertainment to education,
where it won seven of a total of 11 awards made by the Royal Television
Society more than the BBC and ITV combined. Big Brother won a
large audience and many plaudits. But so too did Channel 4 News,
Test Cricket, major new commissioned dramas such as The Navigators,
Shackleton, Swallow, and major factual series on topics that ranged
from drugs and racism to seventeenth century English history.
A dozen special programmes were commissioned in the immediate
aftermath of 11 September to provide context and analysis for
the awful events of that day. Testing God was described by one
broadsheet critic as the most intellectually demanding series
he had ever seen on television. The Black and Asian History Map
website won the prestigious Prix Italia. And, of course, there
was Brass Eye. The Financial Times nominated Channel 4 as "network
of the year" for 2001, commenting that "it has continued
to come up with material which would probably not get a slot on
any other channel".
4. These achievements are not the result
of a highly prescriptive or proscriptive remit. They stem from
a broad and positive remit, which a publicly owned not-for-profit
organisation such as Channel 4 has the freedom to interpret as
aspiration rather than restriction.
5. In the same spirit, the Channel is implementing
a wide-ranging multi-channel, multi-platform strategy in order
to grow from being a single television channel to a genuinely
multi-media business. The Channel sees this as a necessary response
to obvious changes in the market. It must maintain its visibility
in competition with hundreds of channels rather than the three
with which it had to compete when it was first established. It
must meet the increasingly sophisticated demands of its audience
for interactivity and for new services that enrich and extend
television viewing. It must develop new revenue streams to guard
against the decline of advertising as the only sure source of
income.
6. This approach was endorsed by the ITC
in its most recent annual performance review which commented:
"The ITC supports the channel's move into new services .
. . If successful they will strengthen the core channel, add value
for viewers and build assets for the future." The strategy
is also in direct response to obligations imposed when the funding
formula was scrapped in 1997 and the Channel was required to invest
some of its newly retained income in digital services, such as
E4 and the FilmFour channel.
7. In pursuing this multi-platform, multi-channel
strategy Channel 4 is fulfilling its core remit to be innovative
and distinctive. It is bringing public service broadcasting into
the digital age and funding the necessary investment entirely
from revenue earned in the market place in competition with other
commercial broadcasters.
8. Channel 4 invests £70 million a
year in education. Last year, as well as hundreds of hours of
television, this investment provided major web services for school
students, teachers and young job seekers; 450 programme-related
websites; 239 programme-related help-lines; 173 programme-related
publications, and the internationally acclaimed series of 19 films
of Samuel Beckett's plays, Beckett on Film.
9. Channel 4 describes itself as the "R+D
lab of the creative economy". Last year it broadcast work
commissioned from just under 350 production companies, drawn from
every part of the UK. It invested £3 million in training
initiatives and a further £3 million in some 30 separate
initiatives to identify and develop new talent. Its Creative Cities
strategy is a model of how national broadcasters can work in partnership
with local and regional authorities to develop individual and
corporate talent.
10. In this, and in many other ways, the
Channel delivers public benefits beyond the television screen.
Its multi-million pound community cricket initiative and its Ideas
Factory consortium, which brings together local authorities, trade
bodies and private businesses to provide careers and business
advice, all make a significant contribution to the quality of
life in the UK beyond television, and should be recognised as
a legitimate part of the Corporation's public service role. They
come at absolutely no cost to the public purse beyond the free
spectrum used for the analogue transmission of the main Channel
4 service, informally valued by Professor Martin Cave, the author
of the government's review of spectrum management, as being worth
in the region of £30 million a year. This benefit is repaid
many times over by Channel 4s education, community and business
development services alone.
11. The combination of cost-effectiveness
and cultural effectiveness is unique. In an increasingly competitive
and commercial broadcasting environment, and in a global economy
where creativity is of ever-growing significance, it provides
a new way of securing and enhancing the values of creativity,
quality, diversity and independence which all public service broadcasting
regulation attempts to capture. Because it is now a familiar part
of the broadcasting landscape in Britain, it is easy to overlook
the extent to which Channel 4 is itself a radical re-definition
of public service broadcasting. In a recent meeting the European
Competition Commissioner, Mario Monti, wondered why every member
state of the European Union did not have a Channel 4.
12. To continue fulfilling this important
role Channel 4 looks for a number of outcomes from the proposed
Communications Bill:
(a) Its Board must have the powers and flexibility
to make necessary decisions about new investments and partnerships,
and explore new ways of building and developing content—another
arena of activity where innovation can benefit the wider UK media
sector.
(b) It must have the necessary powers to
work across all platforms in the converged digital universe.
(c) It must have a broadly framed and positive
remit to sustain and enhance its mission to be innovative, creative,
diverse and distinctive.
(d) It must be able to rely on continuing
and genuine competition in the advertising sales market. The potential
impact of ITV consolidation on this market, whilst ITV remains
the dominant player with much more than 30 per cent of the total
market, was recognised by the UK competition authorities at the
time of the proposed Carlton/UNM merger, and the Competition Commission
also recognised the importance of maintaining a competitive market
between the ITV London licencees. Nevertheless, it remains a concern
of Channel 4 and other advertising funded broadcasters that there
is insufficient recognition within the government of the volatility
and sensitivity of the advertising sales market.
(e) It must be able to maintain neutrality
between all platforms and access to all platforms. Any changes
in media ownership rules should seek to ensure that platform owners
are not able to distort or dominate the market in content supply.
There should be clear separation between platform owners and content
suppliers.
RESPONSE TO
OTHER POINTS
RAISED IN
THE SELECT
COMMITTEE'S
NOTE OF
19 NOVEMBER 2001
13. With regard to the other areas of the
Committee's new inquiry, Channel 4 has the following comments:
(i) The implications of the delay to
the expected legislation establishing OFCOM.
Channel 4 does not see this as very substantial
problem. The key issue is to ensure that there is a co-ordination
of thinking and timing between the draft Communications Bill,
the Government's response to Professor Cave's report on Radio
Spectrum Management and the evolution and implementation of the
Digital Action Plan. For Channel 4 there is an additional factor
in that its ten-year licence must be re-negotiated and renewed
in time to come into effect on 1 January 2003.
Channel 4 is particularly interested in getting
a clearer sense of where the Government sees the limits of OFCOMs
involvement in the regulation of the BBC. The Channel has already
set out in a letter to all members of the House of Lords before
the second reading debate on the OFCOM Paving Bill the following
views:
"To leave the UKs largest broadcaster
outside the new system can only diminish the significance of broadcast
content expertise as a central part of OFCOMs remit. It will tend
to diminish the potential of the BBC to act as a benchmark for
quality throughout the system and may ultimately disadvantage
the BBC by leaving it in an increasingly isolated and anomalous
regulatory position. The particular structure and role of Channel
4 means that we have a special interest in ensuring that the balance
of commercial and public service values which has served British
viewers and listeners well in the past remains a key feature of
the new regulatory structures. Our particular concern is, of course,
that OFCOM should include an adequate number of people with experience
of broadcast content regulation."
(ii) Developments in policy, since the
previous Committee's report on these issues, with regard to the
government's overall objectives on: the UK communications and
media market; access to high quality diverse services; and the
safeguarding of the citizens and consumer.
With regard to the need to make the UK communications
and media markets more dynamic and competitive Channel 4 wishes
to stress three points:
(1) In its initial submission to the Government
in the run-up to the White Paper, Channel 4 argued that all major
licensed broadcasters should be required to replicate its own
requirement to commit at least half of one percent of qualifying
revenue to training. In a fast-evolving and talent-driven sector
such as media, it is only by practical commitment to training
that the UK can maintain its competitive edge.
In its response to the White Paper Channel 4
commented, "We regard the failure to set any quantifiable
targets for training investment as a sadly wasted opportunity
and would urge the government to think again". That view
remains unchanged.
(2) There is a powerful lobby arguing that
a single consolidated ITV would be a more effective and competitive
player on the international media stage. Channel 4 remains sceptical.
Last year Carlton and Granada made profits of some £300 million
from their ITV licences, and that is after substantial payments
to the Treasury. The ITV system is in good financial health. Its
difficulties relate to decisions on DTT services and ITV Sport.
But these difficulties, self-inflicted as they are, should not
be the cause of a distortion of competition in the advertising
sales market.
(3) In an initial submission to government,
in advance of the White Paper's publication, Channel 4 drew attention
to the government's own role as a purchaser of content and services
in the communications sector, particularly with regard to education
services. The long-established remit requirements on BBC and Channel
4 have now been augmented by the use of Exchequer and lottery
funding, producing a confused market for publicly purchased learning
content. The arguments over the establishment of Curriculum-on-line
are a case in point.
The development of a "dynamic and competitive"
market in UK originated learning content (which has a very particular
cultural as well as commercial significance) would be greatly
enhanced by more coherence in the commissioning of publicly funded
content and a clear separation between commissioning and content
supply. The Bill provides a logical moment at which to address
this issue and the role of all the public service broadcasters
in providing learning content.
With regard to the need for high quality diverse
services Channel 4 would re-iterate points made in its response
to the White Paper, in particular:
(1) It welcomes the commitment to retaining
the independent production quota and the recognition that the
independent sector is now more varied and diverse than it was
20 years ago. Independent production companies have been a vital
ingredient in the dynamism of UK broadcasting and a major contributor
to the growth and success of Channel 4. Their role is even more
important at a time when much of the industry is consolidating
into ever bigger trans-national vertically integrated businesses.
(2) It welcomes the proposal in the White
Paper to consider Channel 4's role in promoting regional production.
In response to the White Paper Channel 4 urged that this "should
take into account the Channel's growing role in training, development
and other off-air activity".
The Channel's "Creative Cities" strategy
is a case in point providing a model of good practice in ways
in which national broadcasters can help develop both individual
and corporate talent in the creative industries at a regional
level. It is an exemplar of the idea explored by Philip Dodd and
Wilf Stevenson in their essay in the recently published ITC book
"Culture and Communications" that "the public service
role of broadcasting should be to facilitate `joined up' culture
so as to ensure that all institutions, whether corporate or local,
independent or community based, have the best chance of reaching
an audience for their works, maintaining their creativity and
contributing to the knowledge economy."
(3) It welcomes the commitment in the White
Paper to maintain must carry/must offer provisions for public
service broadcasters and believes that free carriage should be
extended to all platforms, including satellite.
(4) It urges the government to adopt an
open standard for digital services, such as MHP, to facilitate
the eventual migration of existing DTT text services toa format
common to all UK and European delivery platforms.
With regard to safeguarding the citizen and the
consumer, Channel 4s views were fully expressed in response to
the White Paper, but the Channel takes this opportunity to re-iterate
the view that:
The Government should ensure OFCOM has the necessary
powers to enforce transparency of pricing arrangements between
platform owners and service providers; and that the positioning
and presentation of information on electronic programme guides
(EPGs) or on systems that pre-record programmes according to personal
preference and habit should demonstrably reflect consumer expectation
and consumer convenience.
(iii) The development and promotion
of digital broadcasting, including local/community services and
radio
In its formal response to the government's draft
Digital Action Plan, Channel 4 welcomed the Plan and the proposal
to establish a project team to take digital forward, and expressed
a wish to be fully involved in its implementation. The Channel's
principal reservations about the draft Plan, also expressed in
its response, are summarised in section 4 below.
With regard to the development and promotion
of digital services, Channel 4 commented "Although the Plan
does not deal with how released spectrum may be re-used [at the
time of analogue switch-off] we believe that an early decision
on whether more spectrum is to be released for public service
broadcasters will help the planning process".
The Channel also commented "The amount of
spectrum available to the DTT platform is severely restricted
compared to that available to DSat and as a result the enhanced
or interactive experience available to the DTT viewer is poor
in comparison with that available to the digital satellite viewer.
For DTT to successfully develop and take up the major position
envisaged within the Digital Action Plan, consideration should
be given to releasing more spectrum to allow some enhancement
of services."
The Channel made no particular comment with regard
to local or community services or radio services.
(iv) Progress towards analogue switch-off
In its response to the Government's draft Digital
Action Plan, Channel 4 commented:
" . . . the Plan as currently written
adds up to less than the sum of its parts. While each of the tasks
identified is important, what seems lacking is an overarching
strategy and a timetable into which all the tasks fit . . . Channel
4 is especially concerned that there should be greater clarity
and stability in the years ahead. We would like early decisions
about the spectrum planning issues involved in switch-over, about
licence fees for multiplex use and about the issues raised by
the Cave review."
With regard to the possible use of spectrum released
at the time of analogue switch-off Channel 4 said:
"Thought should also be given to the
possibility of Channel 4 and ITV having separate multiplexes rather
than sharing one."
Whilst additional DTT costs would be most unwelcome,
Channel 4 is aware of the limitations of the present DTT capacity
allocation. This means, for example, that the scope for interactivity
is much less than on the satellite platform and that the full
range of FilmFour channels available on satellite is not available
to DTT viewers. It also means that the ability to improve and
extend ancillary services for the disabled, such as signing and
audio-description, is more constricted on DTT than on other platforms.
(v) Cross-media ownership
Channel 4 is preparing a submission to the DCMS
consultation on media ownership.
(vi) In addition, the Committee asks
for responses on three broader issues:
(1) Progress towards universal internet
access in the UK.
Channel 4 considers it important that, along
with other public service broadcasters, it should be able to play
as effective a role as possible in using television, interactive
television and related services to increase familiarity with and
access to internet services for the population as a whole. That
is part of our understanding of the observation in the White Paper
that "public service broadcasting will continue to have a
key role in the digital future, potentially an even more important
role than it has now" and is particularly true of Channel
4 because of our remit obligation to be innovative in the form
and content of what we do. Furthermore, our audience expects it
of us and failure to meet their expectations would lead to the
long-term decline of the Channel as a prominent and competitive
force in homes in the UK.
(2) Progress towards broadband and higher
bandwidth networks.
In our response to the White Paper we welcomed
the commitment to a broadband strategy. We see this as an area
in which Channel 4 has a significant role to play in developing
imaginative ideas for content, in all genres, including entertainment
but especially with regard to education.
(3) The impact of technological developments
on the protection of privacy.
Channel 4 has no particular observation it wishes
to make in response to this point. The Channel is mindful of the
rights and obligations enshrined in the Human Rights Act of 1998
and the need, where appropriate, to give these practical expression
through codes of practice. To that end, the Channel has drawn
up its own code of practice to ensure that all its online and
internet services are in accordance with the provisions of the
Act.
January 2002
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