Appendix 2: Response from Channel 4
Letter from Lord Burns GCB, Chairman, Channel
4, dated 22 February 2011
I am writing following publication of your Committee's
recent report [HC 423] on the Channel 4 Annual Report 2009. Channel
4 welcomes the Committee's report, and in particular the support
for our redefined remit as enshrined in the Digital Economy Act.
I note that some of the report's recommendations are for the Government
or Ofcom, and I understand Ed Vaizey and Ed Richards are responding
to you directly on these points. This letter sets out Channel
4's comments on the remaining conclusions in the report.
FUNDING
The Committee's first three recommendations broadly
relate to Channel 4's funding and commercial strategy. As the
Committee notes, Channel 4 is seeking to fulfil its remit by pursuing
a strategy of commercial self reliance, and we welcome the Committee's
continued interest in ensuring Channel 4 has sufficient funding
to maximise its public service delivery.
I also note the Committee's comments on the importance
of non executive Board members challenging the executive on its
strategy. Following a period of transition, a number of new non
executive Board members have been appointed who are all aware
of their important oversight role. I can assure the Committee
that the Board takes very seriously its role in ensuring Channel
4 is effectively governed and held to account.
PUBLIC SERVICE DELIVERY AND ACCOUNTABILITY
I welcome the Committee's support for our updated
remit, and the Committee's agreement that the remit broadly captures
the activities Channel 4 needs to undertake to maximise its potential
as a public service broadcaster. One of the key elements of the
redefined remit is a requirement to provide public service content
across a range of digital networks, and I note the Committee's
concerns about the balance of Channel 4's public service delivery
across its portfolio of services.
In this context, the Committee recommends that Channel
4 articulates clearly its strategy for public service delivery
across a range of channels and online. The Digital Economy Act
provides a new accountability framework for Channel 4, and as
part of this Channel 4 is required—in its new Statement
of Media Content Policy—to set out forward looking plans
for public service delivery across all of its services. These
plans will be published alongside Channel 4's Annual Report and
Financial Statements later this year, and I hope this new report
will better allow Ofcom—as well as the Committee—to
assess the balance of our public service delivery across the Channel
4 portfolio.
The Statement of Media Content Policy will also assess
Channel 4's performance against these objectives in the previous
year. As you know, in recent years we have developed a set of
measures to try and capture the value and distinctiveness that
Channel 4 brings to UK viewers and the wider creative economy,
including audience research alongside more traditional indicators
such as levels of investment and volume of output. The Statement
of Media Content Policy will incorporate these measures, and I
look forward to discussing them with the Committee in due course.
COMMERCIAL CONFIDENTIALITY
I note the Committee's comments on the commercial
confidentiality of financial information relating to Channel 4's
individual channels. Channel 4 is committed to transparency and
accountability, and as part of the new Statement of Media Content
Policy Channel 4 plans to express more clearly how budgets have
been spent across different genres, and how the audience is spread
across different channels. This should give a much clearer indication
of how Channel 4 has arrived at investment decisions across its
portfolio, allowing further scrutiny of its activities.
Channel 4 has provided detailed channel by channel
financial information to the Committee in private and we would
be happy to share similar information in future, as well as answer
any specific questions posed by the Committee. However, as we
have explained in previous written and oral evidence, there remain
substantial issues of commercial confidentiality in relation to
the wider publication of this information.
Channel 4 remains concerned that disclosure of detailed
financial information would put these channels at a competitive
disadvantage. It is common practice to aggregate this type of
information, and neither ITV, Channel 5 or BBC Worldwide disclose
financial information on individual digital channels. Channel
4 already discloses a greater level of segmental information and
financial detail than its commercially funded public service competitors.
We will, of course, keep this position under review,
but given the fundamental importance to Channel 4 of commercial
revenues in sustaining public service delivery, I hope the Committee
will now accept the sensitivities around disclosing publicly greater
levels of financial detail.
OTHER CONCLUSIONS
Finally, I note the Committee's remaining conclusions
in relation to nations and regions commissioning, film investment,
creative renewal and remuneration. These issues were discussed
in evidence and the conclusions largely reflect this dialogue,
so I do not propose to comment on them individually. However,
Channel 4 will take the Committee's conclusions into account as
it develops its plans for the future, and I am sure many of these
issues will be revisited when Channel 4 next appears before the
Committee.
I trust this information will be of assistance to
the Committee.
February 2011
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