Written evidence from Channel 4
1. Channel 4 was launched in 1982 with a
mission to provide an alternative public service offering to the
BBC and to fulfil a specific remit of innovation, creativity and
diversity—providing programmes for minority interests otherwise
not well served by the mainstream public service broadcasters.
Channel 4 is a network broadcaster with no opt-out functions,
and is therefore dedicated to producing programmes for the UK
as a whole. Nonetheless, given its key role as a major investor
in the UK's independent production community and in reflecting
the UK's cultural diversity, Channel 4 has a significant role
to play in supporting production across the nations and regions
of the UK and in reflecting the diversity of the UK's culture
across its output.
CHANNEL 4'S
CONTRIBUTION TO
CREATIVE INDUSTRIES
OF UK
2. As a publisher-broadcaster, Channel 4
plays a pivotal role in supporting the creative industries by
commissioning content from production companies across the UK.
This has a significant impact on the wider economy: analysis from
a 2007 Channel 4 commissioned PWC report suggests that the overall
economic impact of Channel 4 could be worth up to £2 billion
in UK Gross Value Added per year, and could support up to 22,000
jobs spread across the creative economies of the UK.[12]
3. In particular, Channel 4 does more than any
other broadcaster to support independent production across the
UK's nations and regions.[13]
Channel 4's licence requires a minimum of 30% (by both volume
and spend) of original commissions to be sourced from companies
based outside of London, and Channel 4 has consistently met this
quota, investing more than £1 billion since 1998.[14]
4. In addition to commissioning, C4 also
has a wide range of initiatives aimed at offering strategic support
to companies based outside London—including a dedicated
development fund, training and talent development programmes and
broader partnership and sponsorship initiatives. According to
a 2007 report commissioned from Channel 4 by EKOS, only Channel
4 has a clear and sustained strategy to support independent production
across the nations and regions: "Channel 4 seems alone amongst
the main PSBs in articulating within its nations and regions strategy
the role of the broadcaster within a wider creative economy."[15]
CHANNEL 4'S
WORK IN
NORTHERN IRELAND
5. Channel 4 recognises that to date network
commissions in Northern Ireland have been limited in comparison
to other parts of the UK. Based on available data, Channel 4 commissioned
23 projects in Northern Ireland with a combined value of £4.3
million from 1998 to 2007,[16]
and in 2008 Channel 4's network spend in Northern Ireland was
£0.1 million. The majority of these commissions are in factual
programming.
6. While Channel 4 firmly believes that there
is a range of high-quality talent in Northern Ireland, it should
be noted that most independent production companies there are
of limited scale—and this has had an effect on their ability
to offer large-scale returning series (in contrast, for example,
Scotland's production sector has the capacity to deliver long-running
series such as IWC's Location Location Location).
7. To help address this, Channel 4 recognises
the importance of building scale in this sector, and over the
last five years Channel 4 has provided ongoing development funding
and support to several companies in Northern Ireland, including
Double Band, Green Inc, Waddell Media, Stirling Films, Mint, Tern
Northern Ireland and Wild Rover. Support has included research
and development, international access to broadcasters, digital
media development and access to TRC Media schemes—a training
centre hosted and supported by Channel 4 that works with SME indies.
8. We have also proposed a number of additional
initiatives to strengthen capacity in the devolved nations, as
outlined in more detail below. We anticipate that these efforts,
combined with external investment from the all-Ireland market,
and RTE in particular, as well as other UK broadcasters, will
grow the sector to ensure it can deliver network programming at
a greater scale.
9. It is important, however, that Channel
4's contribution to broadcasting in Northern Ireland is considered
beyond its specific work with the television production sector.
For example, as a network broadcaster, Channel 4 is able to reflect
the lives and experiences of people from all parts of the UK to
a pan-UK audience. Channel 4 seeks to ensure that Northern Ireland—just
like the other Nations and regions—is represented within
many of its most popular programmes, including Dispatches,
The Secret Millionaire, Come Dine With Me, The Big Art Project
and Grand Designs, as well as in major dramas, such as
the forthcoming commission about former Northern Ireland Secretary
Mo Mowlam (made in partnership with NI Screen).
10. Equally, Channel 4 has worked with partners
in Northern Ireland in a number of areas beyond television—for
example, last year's Hunger, a major Film4 feature about
the 1980's IRA prison protests, was developed in partnership with
NI Screen, and has garnered international critical success, including
awards at the Cannes and Venice film festivals and a BAFTA for
Best British Breakthrough.
11. Digital media provides further opportunities;
Channel 4's 4iP fund is working with the digital media sector
in Northern Ireland on a number of dedicated projects, including
developing the informal democracy blog, Slugger O Toole.
CHANNEL 4'S
ASPIRATIONS FOR
THE DEVOLVED
NATIONS
11. In March 2008, Channel 4 launched Next
On 4, a strategic blueprint articulating Channel 4's role
in the digital age. As part of this review, Channel 4 recognised
that there were specific strategic issues affecting production
in the devolved nations, and Next on 4 contained specific
commitments on strengthening the role of Channel 4 in the nations,
including;
— spending at least 3% of total programming
expenditure in the nations by 2012 (a 50% increase from its 2007
nations spend); and
— establishing a Nations Pilot Fund of
£1 million in 2009 to address the lack of critical mass in
the production sector in the devolved nations. The focus of its
spend will be finding returning series in genres such as drama,
comedy and factual entertainment.
12. In addition to these broadcast-related
commitments, Next on 4 sought to acknowledge the changing
nature of public service content by announcing 4iP—a three
year £50 million pilot fund for projects that deliver publicly
valuable content on digital media platforms. Recognising that
digital media and technology hubs have often emerged away from
traditional broadcasting centres, 4iP has had a regional dimension
from its outset, and through a network of regional funding partners
and dedicated commissioning managers based across the UK (in Birmingham,
Glasgow and Sheffield), 4iP will seek to develop new digital talent
wherever it is from.
13. 4iP aims to have a catalytic affect
on digital media companies across the UK, and presents a significant
opportunity for the Northern Irish production sector. 4iP has
a dedicated commissioner for Scotland and Northern Ireland who
is in regular contact with the Northern Irish digital media community,
hosting events, indigenous NI initiatives such as BarCamp Belfast
2009 and Refresh Belfast and developing project ideas.
14. For example, 4iP will shortly be announcing
significant investment in the Northern Ireland political blog
Slugger O'Toole. This funding will help strengthen the site's
contribution to digital democracy by providing it with open source
tools—allowing other political bloggers and commentators
to feed content from Slugger to their own sites, thus expanding
the debate more broadly.
15. While these are already substantial
investments, Channel 4 has recently announced a set of additional
initiatives to grow the production sectors of the devolved nations
further. This includes appointing a commissioner, based in Channel
4's Nations and Regions office, who will have a specific remit
to commission programmes from companies in Northern Ireland, Scotland
and Wales, as well as ring fencing a number of slots in all of
Channel 4's key programming strands (including Dispatches,
Cutting Edge, Comedy Lab and Comedy Showcase) for companies
from the nations. This commissioner will be in place from summer
2009, but discussions are already taking place with companies
in Northern Ireland to develop comedy commissions.
16. Channel 4 also recognises that there
are particular issues around the provision of dedicated news for
the devolved Nations. While Channel 4 is established as a pan-UK
network broadcaster, we would be willing to explore ways in which
Channel 4 could help deliver news in the devolved Nations, for
example through an opt-out from the main Channel 4 News bulletin.
This would of course be subject to funding being made available
to support this objective in the wider context of the Digital
Britain process.
17. Channel 4 believes that these plans
will increase Channel 4's investment in the nations by several
million pounds and build a stronger independent production capacity
in those nations, as well as providing content valued by audiences
in the devolved nations.
CHALLENGES FOR
CHANNEL 4
18. While these are significant ambitions,
it is also important to highlight that Channel 4 must balance
these nations commitments against its other PSB and commercial
obligations—including meeting existing contractual obligations
across the board, maintaining its commitment to the growing creative
economies of other regions outside London, investment in new talent,
single documentaries and one-off dramas, as well as the significant
financial pressures currently facing Channel 4.
19. In particular, it is important to emphasise
that the success of these commitments is dependent on Channel
4 securing a sustainable funding solution as soon as possible.
It is broadly accepted that the traditional funding model for
commercially-funded public service content is not fit for purpose
in the digital world, with Channel 4's economic model being undermined
by increased competition and a structural shift in advertising
revenues from TV to online -despite consistently outperforming
its competitors over the last five years. These structural challenges
have led Ofcom to conclude that Channel 4 is facing an annual
deficit of up to £100 million by 2012 (excluding the costs
of the additional Next on 4 commitments outlined above),
and the Government is currently examining possible structural
solutions as part of its Digital Britain review. In the absence
of additional funding being made available Channel 4 would not
be able to deliver on the proposals set out in Next on 4
and would be forced to make cuts across its activities. It is
therefore important that any consideration of Out-of-London commitments
is understood within the context of these ongoing discussions
over Channel 4's future.
20. The interim Digital Britain report proposed
establishing a second PSB institution with sufficient scale to
provide competition for quality to the BBC and a plurality of
provision of UK content—including content for and about
the UK's nations and regions. Channel 4 believes that a large
scale combination between itself and BBC Worldwide is the best
way forward for achieving this objective. Both organisations share
a commitment to public service values, operate very similar business
models and have a range of complementary capabilities and assets—and
Channel 4 believes that a combination building on these assets
could provide the scale and sustainability needed to secure a
plurality of public service provision.
21. While these discussions are currently
ongoing, the uncertainty over Channel 4's future funding, combined
with the current economic downturn, is already leading to reductions
in Channel 4's programming budget. In 2008 Channel 4 undertook
a comprehensive efficiency drive—reducing headcount by around
30% and cutting its programme spend by more than £50 million
across 2008 and 2009, and these cuts will impact across the board—including
Channel 4's ability to invest in the nations and regions. For
example, while it is only returning series that have the kind
of scale needed to significantly strengthen production in the
nations, there is limited scope within the current budget to make
a new returning series of the scale of Deal or No Deal or Shameless
(both of which are produced outside London already). It is therefore
vital that urgent action is taken to secure Channel 4's ongoing
provision of a range of public service content.
22. In addition to these current challenges,
it is also crucial to recognise that as a publisher-broadcaster,
Channel 4 is entirely dependent on the existence of production
companies with sufficient scale and capability to produce network
content. While there are several hundred production companies
based in England, and particularly in London, there is a much
smaller number in the nations—Ofcom's latest research found
that 62% of independent companies are based within the M25 area,
and just 6% were based in Scotland, 5% in Wales and only 3% in
Northern Ireland.[17]
As previously noted, these companies are also likely to be significantly
smaller—around half of companies with revenues of less than
£5 million are based outside the M25,[18]
and therefore lack the scale generally needed to immediately deliver
high-value returning series.
23. Channel 4's dependency on independent
production companies also means that, unlike the BBC, Channel
4 does not have production bases or facilities that it can move
around the UK, and it cannot dictate to external suppliers where
programmes should be made or where production talent should live
and work.
CHANNEL 4 AND
THE NORTHERN
IRISH BROADCASTING
ECOLOGY
24. Channel 4 believes that it can play
an important role within the wider broadcasting ecology in Northern
Ireland—with strong local media providing news and regional
content, RTE providing all-Ireland content, the BBC commissioning
both in-house and independent production across a range of genres,
and Channel 4 nurturing new businesses by giving network slots
to small companies, working with the digital media sector and
providing an international platform for innovative Northern Irish
talent. However, the challenges outlined above, and Channel 4's
size relative to the BBC and ITV, highlight that Channel 4 alone
is not large enough to grow and support the creative community
in Northern Ireland by itself.
25. For example, whilst the BBC has announced
intentions to increase their in-house production in Northern Ireland
by increasing expertise in genres such as factual drama and current
affairs programmes, their investment in the indigenous production
sector has been limited. The current structure of the UK's broadcasting
landscape means that there is little broader benefit to the independent
production sector in Northern Ireland from any increased in-house
production at the BBC because these resources are not accessible
to the rest of the sector. C4 would therefore encourage the BBC
to invest in the independent production sector as well as its
own production capacity to ensure that the sector as a whole can
benefit.
26. Similarly, it is important that Channel
4 works with other broadcasters, regional partners, national bodies
and the independent sector on initiatives to build companies of
scale. For example, in 2008 Channel 4 worked with partners including
Skillset, BBC, ITV and Creative Business Wales to develop a Talent
Attraction scheme located in Cardiff, aimed at bringing in executive
producers and series producers with network experience to help
companies secure larger commissions. Channel 4 is keen to explore
the potential of similar partnerships to help build stronger and
more sustainable production sectors across the devolved nations
of the UK, including Northern Ireland.
FINAL REMARKS
27. Channel 4's ability to deliver its Next
on 4 ambitions to stimulate and grow production in the Nations
is dependent on the Government's Digital Britain process securing
a sustainable outcome for Channel 4—one which will enable
it to continue to invest in high quality content and to take creative
risks. Recognising and sustaining this ecology is essential to
the future of broadcasting in Northern Ireland, and—with
the right policy decisions being put in place—Channel 4
believes it can and should have an essential role in supporting
content creation across the UK, including Northern Ireland.
28. However, as outlined in paragraphs 18-20,
the commercially funded public service broadcasters are currently
facing major structural challenges, which are only being exacerbated
by the current economic downturn. To put this in context, this
has opened up a very substantial gap between the current revenues
of the BBC, which in 2009 has a guaranteed income of around £3.6
billion, and the combined UK TV advertising market, which is forecast
to be up to £1 billion less than licence fee income this
year.[19]
Traditionally the combined advertising income of the commercially
funded PSBs has broadly tracked the level of licence fee funding,
enabling these broadcasters to maintain competition for quality
with the BBC. However, these economic challenges are eroding Channel
4's ability to deliver its Next on 4 ambitions. In short, Channel
4 would not be able to deliver the range of proposals set out
above in relation to the Nations in the absence of a new funding
settlement.
29. Evidence over the past 20 years demonstrates
that the market alone will not deliver the high levels of investment
in original content across the whole of the UK that citizens and
viewers consistently tell us that they want. We would, therefore,
urge the Committee to recommend to Government that it ensures
the necessary interventions are introduced via the Digital Britain
process to support Channel 4 and help us play our part in sustaining
PSB beyond the BBC in Northern Ireland.
12 The impact of Channel 4 on the UK independent
sector, creative industries and the economy, PriceWaterhouseCoopers,
2007. Back
13
Production Trend Report 2007, Pact, October 2008. Back
14
Channel 4's contribution to the nations and regions, EKOS,
2007. Back
15
Channel 4's contribution to the nations and regions, EKOS,
2007. Back
16
Channel 4's contribution to the nations and regions, EKOS,
2007. Back
17
The Communications Market 2008, Ofcom. Back
18
Ibid. Back
19
UK TV NAR forecasts 2009. Back
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