Supplementary memorandum submitted by
the UK Film Council
UK FILM COUNCIL AND THE TERRESTRIAL AND PAY-TELEVISION
BROADCASTERS
1. The UK Film Council successfully lobbied
the Government to back an amendment to the Communications Bill
that includes feature films amongst the areas to be considered
by Ofcom when examining terrestrial broadcasters' compliance with
their public service remit.
2. The Government's aim is for a sustainable
UK film industry. This can only be achieved with support from
the broadcasters
3. Despite an attempt by the Government
in the late `90s and promises from the broadcasters themselves,
nothing significant has been done. Only 2.8% of films shown on
the five main UK terrestrial television channels in 2002 were
recent (less than eight years old) British films.
4. Leaving broadcasters to decide how they
support the UK Film Industry, just doesn't work.
5. We believe that part of the broadcasters'
public service remit is to make a contribution to the cultural
vibrancy and diversity of the nation and its audio-visual industry.
We believe they have an obligation to support the UK film industry
because it is a key contributor to such vibrancy and diversity.
The broadcasters already have very specific obligations in respect
of, for example, independent television production, and regional
production. Film should be no different. The broadcasters need
to step up to the plate and deliver.
6. In Europe the picture is very different—German
broadcasters have doubled their contribution to the Germany Federal
Film Board, Spanish law has been amended to provide obligations
to Spanish television to invest in film productions, and in France
Canal Plus was obliged to invest
136 million in film in 2001.
7. As the Government's strategic agency
for film, we believe we can play a key role in helping Ofcom to
interpret the public service remit regarding film.
8. We believe that in order to fulfil the
remit, an individual broadcaster should have to demonstrate that
they are reflecting, supporting and stimulating film across several
of the following activities; film development, film production,
film acquisition, film distribution, film exhibition, film diversity
and inclusion, film culture, film literacy/education, film promotion,
and film training.
9. This is a virtuous circle; a more successful
UK film industry, will mean better films on television, which
in turn will stimulate the audience for films.
BACKGROUND
10. The relevant amendment id to sub-section
6 of Clause 260 of the Communications Bill which is concerned
with the fulfilment of the purposes of public service television
broadcasting in United Kingdom.
11. The amendment inserted the word "feature
film" in the sub-section of this clause which specifies;
"that a manner of fulfilling the purposes
of public service television broadcasting in the United Kingdom
is compatible with this subsection if it ensures . . .
(b) that cultural activity in the United Kingdom,
and its diversity, are reflected, supported and stimulated by
the representation in those services (taken together) of drama,
comedy and music, by the inclusion of feature films in those services
and by the treatment of other visual and performing arts"
12. It is now for Ofcom to interpret how
this provision within the Communications Bill impacts on the broadcasters.
CURRENT POSITION
FEATURE FILMS BROADCAST ON NETWORK TELEVISION
2002
| Channel | Total no
of films
| UK films | UK films more
than 8 years old
| UK films less
than 8 years old
| UK films less than
8 years old as %
of total films
|
| BBC1 | 342 |
67 | 54
| 13 | 3.8
|
| BBC2 | 388 |
86 | 73
| 13 | 3.4
|
| ITV1 | 255 |
43 | 41
| 2 | 0.8
|
| Channel 4 | 544
| 180 | 149
| 31 | 5.7
|
| Five | 574 |
48 | 47
| 1 | 0.2
|
| Total | 2,103
| 424 | 364
| 60 | 2.8
|
| Data source: BARB; Film Council Research and Statistics Unit
|
PAY-TV
13. UK Film Council has received a number of complaints
from independent film distributors alleging that they have been
unable to licence the UK pay-TV rights to films which they have
acquired for UK distribution.
14. This is because the overwhelmingly dominant market
player, Sky has exclusive output deals with US studios and is
unwilling to deal in any significant way with other parties. Most
Favoured Nations (MFN) clauses are built into the agreements between
Sky and the studios which effectively ensure that all studios
are guaranteed to receive equivalent terms.
15. This means that the only way an independent distributor
can access a pay TV window is by putting its film through one
of the deals between Sky and the studios. This results in the
realisation of a lower price than if Sky were willing to deal
direct. It also means unless a studio agrees to put the film through
its deal, then the distributor cannot sell UK pay-TV rights to
their film. As a consequence, there is a clear detriment to the
consumer since the available choice of films is diminished.
16. Legal advice received suggests that the distributors
have a case to challenge the conduct of Sky on two particular
issues: foreclosure of the market and discrimination by Sky.
17. This legal case is in line with the European Commission's
current investigation into the MFNs between pay television operators
and US studios. The European Commission has indicated informally
to the UK Film Council that it believes the MFNs breach Community
competition law.
18. The UK Film Council have had preliminary discussions
with Ofcom who, subject to clarification of their locus, expressed
an interest in taking up this case.
7 July 2003
| 
