Memorandum submitted by Equity
INTRODUCTION
1. Equity is the trade union representing
37,000 actors, performers and other creative professionals working
in the UK. Our members work in a range of media and the creative
industries including visual broadcasts, sound recordings and film—principally
in drama, comedy or entertainment productions.
2. The BBC is the most significant employer
of Equity members and it plays an integral role in both the audio
and audio-visual industries, as a producer and commissioner of
original UK programming, with the freedom to lead the other broadcasters
through its standards, innovation and diversity. It also serves
an important role in supporting the creative industries, as a
key provider of education and training. However, this is only
possible because it is supported by unique sources of funding,
including the licence fee and its commercial operations.
3. Consequently, Equity believes that successful
commercial operations, which maximise the value of UK programming
and are able to provide a significant contribution to the BBC's
core activities are in the interests of audiences, citizens, consumers
and the wider creative industries.
The benefits and opportunities offered by the
BBC undertaking a range of commercial activities in the UK and
abroad
4. There are significant benefits for a
range of stakeholders in the BBC operating successful commercial
activities, which were acknowledged by the Government as part
of the BBC Charter Review process in 2006. in particular, the
Government accepted that the BBC should continue to relieve pressure
on the licence fee by generating commercial income. However, these
operations must fit with the BBC's public purposes, be commercially
efficient, support BBC brand protection and avoid market distortion.
5. The subsequent improvements in the governance
structure of the main commercial operation, BBC Worldwide (BBCW),
and its success in increasing its profits to £118 million
in 2007-08 (and returning over £150 million back to the BBC
by way of dividends and programme investment), must therefore
be seen in the context of an organisation delivering on this remit.
6. Moreover, the availability of this source
of funding in addition to the licence fee plays an important role
in securing the BBC's ability to continue as the cornerstone of
public service broadcasting, enabling it to protect its core funding
and deliver on its own obligations under the Royal Charter.
7. The success of BBCW has also enabled
it to deliver real value for audiences. Not only does it generate
£9 a year off each licence fee, but its improvements in profitability
over the past four years have also led to £921 million being
generated and invested back into the UK's creative economy, both
inside and outside the BBC.
8. This means that programmes can be better
resourced with higher production values and feature the best in
UK talent. This helps the BBC meet the ever increasing demands
of audiences who are increasingly able to access content when
they want, where they want and on a device of their choice.
9. It is also important to stress the role
of BBCW in supporting the international activities of other broadcasters
and producers. A significant proportion of the current BBCW catalogue
is non-BBC intellectual property, which may well have been commissioned
originally for other major broadcasters such as ITV or Channel
4. This demonstrates the benefits of BBCW being able to act in
the interests of UK plc and take the best of British programming
to a global market. Consequently the exports generated by BBCW
account for around 30% of the £400 million of UK exports
of finished programmes in 2006.
10. From Equity's point of view the role
that BBCW plays in enabling international television and DVD sales
not only raises the profile of British programmes and British
talent, but also provides significant financial benefits for actors
and performers. As a result, in the last two financial years Equity
members received payments worth £22 million (2007) and £24
million (2008). The nature of Equity's collective agreements with
the BBC and other programme makers also mean that the benefit
of these sales are shared proportionately amongst the cast, so
all featured performers are able to share in the success of a
production.
11. Equity does not believe that any other
organisation could be better placed or more experienced in maximising
the opportunities presented by the sale of UK programmes featuring
its members. In the past few years Equity members have seen particularly
significant returns from their work on productions such as Jekyll,
Mistresses, Primeval, Doctor Who, Torchwood,
Cranford, Sense and Sensibility and Oliver Twist.
The potential risks to the BBC, licence fee payers
and other stakeholders
12. Equity believes that there are inherent
difficulties faced by the BBC in engaging in commercial activities
that mean that it is often in a no-win situation. In particular,
if BBCW is tentative in its approach and does not maximise the
value of its assets successfully it will be criticised for being
inefficient and failing in its duties. Conversely, if it is successful
in expanding its sales and activities and in growing its profits,
it will be condemned by its competitors as an unwelcome presence
in the market place. As noted above this ignores the fact that
a successful BBCW is in fact in the interests of audiences, the
creative economy and in line with the remit set out by successive
governments.
13. Nevertheless the success of BBCW presents
particular risks and challenges at a time when broadcasting is
changing so quickly and fundamentally. The expansion of digital
television and new technology has led to audiences fragmenting
and reduced advertising revenue. Consequently other public service
broadcasters, regulators and politicians charged with finding
sources of additional funding are understandably examining all
of the options available. Most recently this has included the
suggestion of transferring the ownership or profits of BBCW to
Channel 4, as outlined in the recent Ofcom review of public service
broadcasting.
14. Equity believes that such a measure
presents a significant risk for the BBC and licence fee payers,
as well as the range of creative organisations and individuals
who depend on its success. Quite aside from the significant legal
and technical difficulties of arranging a transfer of ownership,
Equity would be concerned that such a proposal would undermine
the important contribution BBCW makes in funding original programming
by the BBC.
15. It is infinitely preferable for BBCW
to continue to support the activities of the BBC, licence fee
payers and the creative industries by operating in partnership
with a range of broadcasters and producers, whilst being subject
to the scrutiny and governance of the BBC Trust.
The future of BBC Worldwide and other BBC commercial
subsidiaries
16. As noted above, the future of BBCW has
been the subject of a significant amount of speculation. Most
recently this has led to the Ofcom proposals, which are currently
under consideration as part of phase two of its consultation on
the future of public service broadcasting.
17. However, Equity would argue that the
future of BBCW and other commercial operations should not be dominated
by further debate over their organisational structure and governance
arrangements. These considerations are time-consuming and often
fruitless, unless they are able to deliver real value to the operations
of the business.
18. At this challenging time for the future
of broadcasting Equity would instead emphasise the need to make
progress on BBCW ensuring that it can continue to deliver real
value to the BBC, licence fee payer and creators. For this reason
it must not be diverted by arguments over ownership, but be able
to concentrate on enabling UK content to be showcased as widely
as possible, using new technology and platforms.
19. As a representative organisation for
key rights holders Equity is a crucial partner in making high
quality content available legally online—and capable of
ensuring payment to these rights holders. This has been achieved
successfully in a range of new areas through BBCW in recent partnerships
with YouTube, MySpace and iTunes.
20. While new business models are still
in relatively early stages of development, it is clear that these
will eventually become replacement technologies for the viewing
of audiovisual material. Video-on-demand and catch-up television
services are currently an addition to linear broadcasts, but are
increasingly likely to become the alternative to these broadcasts
for many viewers. This means that successful partnerships and
flexible approaches to licensing and payment are even more important.
21. The way in which Equity has been able
to exercise exclusive rights for the secondary use of performers
work is a good example of this approach. This is currently enabling
a genuine choice of new media for consumers, while also providing
payments to performers. These payments are then distributed by
British Equity Collecting Society (BECS), acting as the appointed
distribution agent for Equity.
How the money returned to the BBC by its commercial
operations is invested
22. As noted above, the money returned to
the BBC by its commercial operations is a vital addition to licence
fee income, particularly at a time when the BBC is expected to
engage in a broader range of activities under its Royal Charter
and operating under the constraints of a lower than expected licence
fee settlement.
23. Against this background, the fact that
these activities are able to depress the cost of a licence fee
by £9 is a helpful and impressive contribution. More impressive
still is the significant investment that has been made directly
into BBC programming due to success of BBCW.
24. It should also be noted that the money
returned from the BBC's commercial operations does not go to the
BBC alone, with large numbers of the new television programmes
sold by BBCW being from independent producers.
CONCLUSION
25. Equity is pleased to have the opportunity
to contribute this inquiry and hopes that the Committee will consider
the points made—particularly in relation to the contribution
of the BBC's commercial activities to programme making; meeting
its remit; promoting and rewarding UK talent; the risk of transferring
ownership; focussing on future activities; and the importance
of this additional investment.
26. The BBC's public service broadcasting
activities provide the bulk of employment for our members. However,
commercial ventures such as BBCW are vital, both for the added
financial security that it gives the BBC and for its investment
in the creative economy in its own right. It is essential that
BBCW is allowed to be as successful a business as possible so
that the maximum amount of profit goes back into quality BBC programme
making and investment in talent.
27. We would welcome the opportunity to
provide oral evidence to the Select Committee on this issue. As
the representative organisation of actors, singers, comedians,
and other creative contributors who feature in many of the productions
sold and distributed by BBCW, we believe that we could provide
a valuable perspective on the inquiry.
October 2008
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