APPENDIX 14
Further Memorandum submitted by the Producers
Alliance for Cinema and Television
COMMUNICATIONS REFORM
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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