Memorandum submitted by Equity
INTRODUCTION
1. Equity is a trade union representing
37,000 performers and creative personnel who work across the whole
spectrum of entertainment in the UK. Our members work in a range
of media and the creative industries including visual broadcasts,
sound recordings and film. These Equity members work principally
in drama, comedy or entertainment roles.
2. Therefore any decisions regarding the
future of public service media content are likely to have a direct
impact upon the production, distribution and funding of our members
work, as well as the creative process and the content of programmes
in which they are involved.
3. This submission does not provide a response
to all of the issues raised in this inquiry, but seeks to address
the most relevant matters to Equity's membership.
BACKGROUND
What is public service content?
4. In the most recent and detailed review
of public service broadcasting (PSB), Ofcom provided details of
what it believed to be its key characteristics—namely high
quality; original; innovative; challenging; engaging; and widely
available. It also provided details of the purposes of PSB, which
it believes include informing ourselves; stimulating interest
in the arts, science and history; bringing audiences together
through shared experience and original programming; and making
us aware of different cultures and viewpoints.
5. The public service remit of the BBC has
traditionally been summarised in its duty to "inform, educate
and entertain". However, this was recently updated to assess
what these purposes actually mean in a digital age. Therefore
the BBC Charter defines its key public purposes as sustaining
citizenship and civil society; promoting education and learning;
stimulating creativity and cultural excellence; reflecting the
UK, its national regions and communities; bringing the world to
the UK and the UK to the world.
6. Equity broadly accepts these definitions of
PSB, which correspond to our own views and principles. However,
the emphasis and application of these definitions in practice
will inevitably differ.
The prospects for maintaining plurality in public
service broadcasting in the digital age
7. There is no doubt that plurality in the provision
of PSB is vital to its success. Not only does this create the
conditions for competition to spur innovation and drive higher
quality, but it also avoids an over-reliance upon the BBC as the
sole provider of PSB programming. Although the current system
of PSB does depend largely on the role of a publicly funded BBC,
the system is sustained by the obligations that also rest with
other main providers of terrestrial television channels—that
is ITV, Channel 4, S4C and Five.
8. Undoubtedly the proliferation of digital
television channels and other content providers will put pressure
on this method of providing PSB. As a result the system cannot
and will not remain static, as there will need to be an appropriate
balance between allowing advertising-funded PSB broadcasters to
continue to operate in a new environment; providing opportunities
and incentives for new providers; and avoiding leaving the BBC
as the single provider.
9. While Equity believes that the methods
of delivery will change, the principle of plurality should remain
constant in a digital age. This will help to encourage and enable
the continuation of original high-quality production. However,
the prospects for maintaining plurality will also depend upon
appropriate regulatory and legislative support, so it is helpful
that Section 264(3) of the Communication Act 2003 provides Ofcom
with "an obligation, with a view to maintaining and strengthening
the quality of public service television broadcasting in the United
Kingdom". Moreover, in its review of PSB, Ofcom stated
its ambition to ensure an enduring pluralist system of PSB in
a digital age, with a variety of providers.
10. Rather than stifling growth and innovation,
Equity believes that this support for a broad range of high quality
of public service content in a digital age will help to differentiate
providers of content on new platforms. This will help to support
their business by attracting an increasingly fragmented audience
to the new technology and platforms. In short, technology is nothing
without content.
The practicality of continuing to impose public
service obligations on commercial broadcasters
11. There is little doubt that the same
mix of institutions, funding and regulation that have supported
PSB over many years will not survive the move to digital. In particular,
we acknowledge that digital switchover will undermine the previous
business model of commercial broadcasters, which provided PSB
in return for access to the valuable analogue spectrum
12. The fragmentation of audiences and the
growth of digital television will impose particular pressure on
commercial broadcasters such as ITV, which are dependent largely
upon revenue generated from advertising. However, despite the
threat and uncertainty caused by technological developments and
the negative pressure on commercial broadcasters, Equity rejects
the assumption that this should automatically lead to a withdrawal
from PSB obligations.
13. It is at best unproven that a reduction
or removal of PSB obligations will automatically unburden commercial
broadcasters of costly commitments and enable them to compete
more successfully in a digital age. Moreover, a failure to impose
any future PSB obligations would not be desirable for the continued
plurality in the system (as outlined above), which supports the
provision of high-quality original content. Conversely a narrower
range of content could lead to reduced audience reach and the
type of broad appeal valued by advertisers.
14. In addition, it should be noted that
many large commercial broadcasters, which previously had access
only to a small subscription audience (e.g. BSkyB), will be able
to reach a significantly wider audience through their free-to-air
channels. Equity would argue that a basic level of PSB provision
should be a condition of these licences, in return for the benefit
of reaching this audience. This could operate in much the same
way as PSB is delivered currently, in return for access to the
spectrum, but with obligations at a lower level provided by an
increased number of channels.
The viability of existing funding models for ITV,
Channel 4 and Five
15. According to Ofcom, ITV1, Channel 4
and Five receive approximately £400m a year in implicit subsidies
for PSB. These subsidies are a result of their access to the analogue
spectrum. By the time of digital switchover, the declining value
of the analogue spectrum will have reduced these implicit subsidies
close to zero.
16. The fragmentation of audiences and the
growth of alternative methods of viewing audiovisual content will
impose particular pressure on commercial broadcasters, which are
dependent largely upon revenue generated from advertising.
17. In the past year ITV has been portrayed
as an organisation in perpetual crisis. The pressures on its existing
funding model are clearly being felt, as ratings continue to fall,
accompanied by declining advertising revenues, a struggling share
price and uncertainty over ownership and control.
18. ITV's initial response has been to seek
cost savings internally and reduce the level of public service
commitments. Equity has been particularly concerned at the proposed
move away from valuable and respected drama production. Moreover,
there appears to be arbitrary moves to drive down drama budgets
in ITV Productions, the in-house programme making division, from
£750,000 an hour to £500,000 an hour.
19. However ITV, principally through ITV1,
forms an essential part of the plurality in PSB that is so important.
The peer group pressure and rivalry between itself and the BBC
helps to set standards for the production of high quality, innovative
drama and other programmes. Despite its current difficulties,
the infrastructure and track record of ITV in providing PSB programming
means that it is better placed than any other organisation to
provide a real alternative to the BBC.
20. While there will undoubtedly be increasing
pressure on ITV's funding model in future, it is defeatist and
counter-productive for the Government and regulators to accept
that this model will automatically become defunct after digital
switchover. There is no doubt that the digital age will necessitate
a new approach to content regulation at ITV, which may mean greater
flexibility as outlined in the Communications Act. Yet we remain
unconvinced that it is in the commercial interests of ITV, or
in the wider public interest of the viewer, for it to withdraw
from PSB and assume fully digital licences.
21. Channel 4 has articulated its concerns
regarding its existing funding model very clearly. In particular,
it has stated that it believes that falling advertising revenue
and underlying costs will leave it with a funding gap of £100
million a year by the time of digital switchover. As a result
Equity has welcomed the proposal for Channel 4 to receive short-term
targeted assistance of around £70m to help meet some of the
initial capital costs of switchover. However, this will not address
the more fundamental problem of a fall in advertising revenue
reducing its ability to buy in and commission programmes, as highlighted
in its recent annual results.
22. In the longer term we reject the concept
of gifting income-generating assets from BBC to Channel 4. Aside
from the legal and technical difficulties, we believe that such
a reorganisation is only likely to undermine and reduce the funds
available to the BBC to provide programming as the cornerstone
of PSB. Moreover, such a move will not lead to a net increase
in the funding available for PSB in the UK. If the Government
and Ofcom are keen to examine alternative funding methods for
Channel 4 we believe that it should look again at its proposals
for distributing any additional funds it could make available
for PSB.
23. Equity welcomes the fact that privatisation
does not appear to be on the Government's agenda as a solution
to these issues. This could be damaging to the unique status and
standing of Channel 4, as well as a diversion away from its core
function.
24. Five is afforded far more flexibility
than any other major terrestrial channel. While some of this can
be justified by the fact that it does not have universal UK coverage,
we are opposed to measures that would allow it to pursue programming
based solely upon commercial objectives.
25. We continue to believe that Five needs
regulatory encouragement to be bolder in investing in new programmes,
and suggest that this should become a requirement of Five retaining
PSB status. This type of requirement would be good for PSB and
will assist Five in preparing for the commercial realities of
a post digital era. More original production also makes commercial
sense for a broadcaster seeking to establish a distinctive and
identifiable service in the run up to switchover.
The case for public funding of broadcasters in
addition to the BBC
26. As noted above, Equity is not opposed
in principle to injections of public funding to broadcasters other
than the BBC. For example, if the appropriate case can be made
it may be appropriate to provide Channel 4 with targeted assistance,
or to enable other broadcasters and content providers to access
funds available from a future Public Service Provider (PSP).
27. However, Equity would reject the concept
of "top-slicing" or sharing the BBC licence fee with
other broadcasters. Such a change would only undermine the credibility
and support for the licence fee in the eyes of those who pay it.
Licence fee funding should fund BBC programme making and services
and not be distributed directly to commercial broadcasters to
support the dividends and value available to private shareholders.
28. Proposals to share the licence fee in
future are also potentially damaging in an environment where the
licence fee settlement will mean that it fails to keep pace with
inflation between now and 2012. These concerns are compounded
by the proposed ring-fencing of £600m to help viewers move
to digital. While the aim is both praiseworthy and necessary,
there should have been an additional budget given to the BBC for
this work. Taking the £600m out of the BBC's operating budget
runs the risk of further damaging its programme-making abilities.
29. The BBC has a unique role as the cornerstone
of PSB, which is wider than PSB content and this should not be
undermined. It sets the standards for other public service broadcasters,
both radio and television. Crucially for Equity members, the BBC
is also the most important employer and trainer in the audio-visual
sector. It has provided a consistent source of employment in a
variety of programming, both audio and visual, and heavily invested
in the training and development of the industry.
The future of key areas of public service media
content such as news provision and children's programming
30. Equity members work principally in drama,
comedy and light entertainment. Therefore we will not seek to
comment on news provision. However, Equity does have a direct
interest in other key areas of public service media content, including
children's programming and crucially in drama.
31. Equity is concerned that public service
broadcasters concentrate too much on low budget, popular programming,
in order to win audiences rather than take risks with more challenging
programmes. This is particularly evident on the terrestrial or
flagship channels.
32. However, as a result of representations
from Equity, the drama provision in the Communications Act is
stronger than first proposed. Consequently, drama is not simply
listed as a genre, leaving interpretation to the broadcasters,
but has to be defined to include a variety of different formats
as well as new writing and ideas. This should help to ensure that
drama continues to be challenging for audiences and those performers
who appear in them.
33. Children's programming is another key
area of public service media where Equity members work. Children's
television in the UK has been widely acknowledged as amongst the
most creative and innovative in the world. Children are the viewing
generation of the future, and need programmes which reflect their
lives back to them in a way that can be entertaining, educational
and safe. This is a vital ingredient for a healthy, balanced childhood
and to produce engaged and empowered citizens of the future.
34. However, this programming is coming
under pressure from the same technological challenges and changes
to the market that face a number of genres, along with changing
tastes; viewing habits; financial pressure on broadcasters; and
the recent ban on junk food advertising.
35. Nevertheless, it is disappointing to
see a reduction in the variety of programming available, with
ITV ceasing all new production for children and Channel 4 no longer
commissioning such programmes. This is damaging in an environment
where the programmes available to children are already mainly
cartoon-orientated, with few domestic, original dramas or light
entertainment programmes.
36. Therefore Equity was pleased at Ofcom's
recent decision to reject the attempts by ITV to remove any commitment
to weekday children's programming. In the future there will undoubtedly
be an expanding role for the digital channels such as Cbeebies,
CBBC, and CiTV. However, the future of this public service media
content just as there needs to be competition between broadcasters
to improve the quality of other genres, the same can be said of
children's programmes.
The value of the Public Service Provider concept
as advanced by Ofcom
37. Equity acknowledges the PSP is a creative
and original approach to maintaining the plurality of PSB in the
new broadcasting environment. Moreover, we are heartened by Ofcom's
willingness to argue for a significant amount of financial support
of up to £300m a year to enable the production of high quality
original content. However, we are not convinced currently that
the creation of a new entity outlined by Ofcom is feasible or
even desirable. There are still reservations as to the levels
of bureaucracy such a body would necessitate, as well as a lack
of clarity as to the precise operating remit of a PSP.
38. That said, the PSP may be a useful mechanism
of supporting a future system of plurality if it is able to make
funding available to existing broadcasters with PSB obligations,
but pressure on their current funding model. In particular, ITV
or Channel Four should be considered as possible recipients for
this support in their capacity as existing providers of PSB with
a positive track record, brand value and wealth of experience.
39. The biggest hurdle to the establishment
of a PSP would appear to be the difficulty with funding—whether
through direct taxation, an increased licence fee or a levy on
existing broadcasters. Equity would support a levy on the income
of non-PSB licensed broadcasters operating in the UK, discounted
against the level of PSB provision agreed in their licence.
The case for provision of public service material
on new media
40. Equity believes that it is essential
for public service material to be widely available in all types
of new media. In the coming years viewing habits are likely to
change dramatically, creating a range of opportunities for the
use of audio and audiovisual work that were unthinkable only a
few short years ago.
41. There are now ways of accessing the
work of Equity members that were unimaginable only a few short
years ago. The availability of programmes on the numerous digital
and satellite channels has now been joined by increasingly affordable
Personal Video Recorders (PVRs), through suppliers such as Sky+
and Home Choice; video-on-demand services available over the internet;
mobile phones downloads and simulcasts; and multi-media devices
such as the video iPod and games consoles for viewing audiovisual
material. It is likely that these changes are only the beginning
of dramatic changes that will shortly be joined whole host of
new "non-linear" platforms.
42. In this new and exciting environment
there will be a dizzying array of content available, with no guarantee
of quality or production values, other than the fact that it may
be produced or made available by a trusted source. Therefore there
is a strong argument that citizens and consumers would benefit
from the ability to identify a source of original high quality
content on new media. Moreover, the provision of public service
content by content providers will be helpful in supporting their
new business models.
43. In order to support this process, Equity
believes that certain non-linear media services of this nature
should be subject to the same common principles of regulation
and minimum standards as traditional television broadcasts. In
particular, there should be a clear protection of fundamental
public interest objectives referred to in the European Audio Visual
Media Services Directive, specifically regarding content of programming,
the free movement of broadcasting services within the EU and support
for media pluralism.
CONCLUSION
44. Equity is pleased to have the opportunity
to contribute to the Committee's inquiry into this area and hopes
that the Committee will consider the points made—particularly
in relation to the need to maintain plurality and high quality
and original production in future.
45. We would welcome the opportunity to
provide further evidence to the Select Committee on this issue.
As the representative organisation of actors, singers, comedians,
and other creative contributors whose work will be vital for the
future of public service media content, we believe that we could
provide a valuable perspective on the inquiry.
January 2007
| 
