Select Committee on Culture, Media and Sport Appendices to the Minutes of Evidence


Further Memorandum submitted by the Producers Alliance for Cinema and Television


  I am writing to you as Chairman of the Culture, Media and Sport Select Committee, to draw your attention to one of our major proposals for regulation for the forthcoming Bill on communications reform.

  As you will recall from previous correspondence and meetings with PACT, we are the UK trade association that represents independent producers. The independent production sector has been an enormous creative success and has helped to increase and sustain the quality of UK television through the provision of price and creative competition. As a measure of their success, independents took 61 per cent of the BAFTA programme awards in 2001, and have just taken 57 per cent of the 2002 "Broadcast" awards. In spite of this critical success the sector still remains heavily under-capitalised and therefore faces difficulties in competing with larger vertically integrated producer-broadcasters.

  The Government's recent consultation document on media ownership proposes to sweep away the regulations that prevent ITV merging into a single entity. The document does mention that a merger would have to satisfy competition law, but the Government's thinking in this area seems to be focussed on the television advertising market. If ITV did merge, then it and the BBC would have combined shares of around 70 per cent of the markets for both the production and distribution of UK television programming. Such scale monopolies would be very damaging to others in the production and distribution markets, such as independent producers, and independent programme distributors.

  Many of the newer channels available on cable, satellite and digital terrestrial television already find it hard to obtain UK-produced content and have to rely heavily on imports. If a single ITV, and the BBC, control the majority of programme and distribution rights for UK television programmes then it may squeeze others out of the market. The combined market power of the BBC and ITV could make it very difficult for the Government to achieve its ambition to "make the UK home to the most competitive and dynamic media and communications market in the world".

  We are not opposed to a single ITV provided the Government introduces measures to prevent the BBC and ITV from using their market power to thwart competition in the markets for production and distribution, and enables other channel operators to compete effectively. In our written evidence to your Committee, and our response to the media ownership consultation (a copy of which I enclose for reference), we have therefore proposed that OFCOM should be given a specific duty to promote competition in the markets for the production and distribution of content. Furthermore, we propose that broadcasters who already enjoy significant market power, which we believe to be any with more than 5 per cent of the total television audience, should be subject to a Code of Practice to balance their interests against those of independent producers and distributors of content, and help sustain competition in the market. We believe that such a Code would go a long way in assisting independent producers to retain programme rights, which they need to develop assets for their businesses and benefit from secondary income streams. This would begin to address the historical under-capitalisation of the sector, enabling independents to invest in the research and development of new programme ideas.

  The promised Bill in the next session of Parliament presents a golden opportunity to correct the way in which the television market has operated to the benefit of large incumbent broadcasters and against new competitors in the markets for programme channels, and television production and distribution.

  We understand that we may not be invited to give oral evidence to the current Select Committee inquiry. We would welcome the opportunity to brief you personally on PACT's proposals and the contribution we feel they can make. We hope that you will be able to find the time to see us in the coming weeks.

  We have also, through the Committee Clerk, extended an invitation to the Committee to arrange a screening to view our video "Think Independent". This illustrates some of the better-known independent productions and features interviews with prominent producers about the challenges they face in the current market. If the Committee could find time for such a screening, we would arrange for some of the UK's top producers to be present so they could explain more to the Committee about their businesses and how the current market is skewed against them.

31 January 2002

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