S4C

Written evidence submitted by TAC

Summary

o Since its inception S4C has been a cornerstone of the Welsh language and economy

o Its position as a publisher-broadcaster has given rise to a thriving Welsh independent production sector, which has matured into a creative industry able to create high quality content which is successful both domestically and internationally

o This is an important moment to review the structure of S4C, following both the Government’s Comprehensive Spending Review and also some concerns over S4C’s overall effectiveness

o S4C must look to work in greater co-operation with independent producers to ensure long term stability and sustainability and also play a more central role in facilitating co-productions and partnerships

o Although the Government has offered a funding formula which has the potential to provide a sustainable future for S4C, statutory safeguards are essential to:

o Preserve the level of S4C’s funding going forward beyond 2015

o Protect S4C’s editorial and managerial independence from the Government and the BBC

o Ensure that S4C continues to spend 100% of its content budget solely with independent creative producers

o Ensure the BBC is not able to access any funding earmarked for S4C from the Licence Fee

About TAC

1. Formed in 1984, Teledwyr Annibynnol Cymru / Welsh Independent Producers (TAC), represents around 30 active independent TV production companies primarily involved in the production of programmes and content for the Welsh based broadcasters and other providers of audio visual services, either as production companies, or in a support capacity. Their combined turnover is in excess of £100m.

The Welsh Independent Creative Sector

2. The importance of the creative sector to the overall Welsh economy is high – as stated in Ian Hargreaves’ Report for the Welsh Assembly in 2009 "the importance of the creative industries sector at a time when Wales’ economic performance continues to suffer from relative over-dependence on sectors that deliver relatively low levels of added value" [1] .

3. The sector is an increasingly mature one, with a lively mix of new and established companies. Welsh independents have increasingly taken it upon themselves to develop co-productions and relationships with broadcasters and distributors outside Wales. These currently include:

o Cwmni Da has secured deals with two major UK distribution companies ‘The Photo’, a programme format developed for S4C as ‘Lle Aeth Pawb’, has a worldwide distribution deal and is currently being marketed in the United States.

o Calon’s award-winning animation series ‘Hana's Helpline/Holi Hana’, commissioned by S4C and Five, has now run for several series and has been sold to 25 countries as well as being widely licensed to produce children’s toys and clothing; books; DVDs; and a comic.

o 'The Saints and Sinners', a series on the history of the papacy produced by Opus, has been distributed in over 60 territories.

o ‘Rivers of Life’, produced by Cardiff company Green Bay, is a successful S4C/France 5 co-produced six-part series documenting the lives of those who live by some of the World’s largest rivers.

4. As well as being responsible for channeling S4C’s investment into the local economy, crucially the independent sector is present across a geographically wide area of Wales, including the sector’s major players:

o Tinopolis: ‘Wedi 3 a Wedi’ 7 daily strands produced in Llanelli

o Telesgop: Agricultural and rural affairs programmes produced in  Swansea

o Cwmni Da: ‘Pethe’, cultural and arts programme strands produced in Caernarfon

o Rondo Media: ‘Rownd a Rownd’, youth drama series produced in Angelsey.

o Boomerang: 'Stwnsh' and 'Cyw' children’s strands produced primarily in Cardiff

5. The Committee will be aware of the need for the retention of entrepreneurial talent in all areas of Wales, as this represents those areas’ best opportunity of being able to revitalise themselves and offer local people gainful employment and support the wider local economy.

6. These producers are close to their communities and therefore their local audience - this enables them to reflect accurately and tellingly the lives, issues, concerns and humour of those communities, thus fulfilling well S4C’s purpose of commissioning a range and diversity of programming to reflect and portray Welsh culture.

7. The existence of creative entrepreneurs across Wales also brings other benefits to the community. Those working in the creative sector are disproportionately involved in community projects, everything from being school governors to running film-making workshops for young people. This is very much the ‘Big Society’ in action, and represents an important additional benefit of having a thriving production sector across Wales.

Training

8. TAC has a memorandum of understanding, alongside S4C, Ofcom, Skillset and Pact which outlines a co-regulatory framework for delivering training. TAC contributes financially to the training framework but individual companies have also invested in significant in-house training, and the mix of companies in Wales enables this training to take place in a dynamic supportive environment.

S4C – The Story So Far

9. Established in 1982, S4C has been a cornerstone of the Welsh language and economy. It has given rise to a Welsh independent production industry that has gone on to produce a significant amount of content for UK-wide broadcasters and internationally. It has long been accepted that plurality is important to the public service broadcasting ecology. S4C contributes greatly to this plurality, both in terms of itself being an editorially and managerially independent organisation, separate from other broadcasters, and also through the many different voices, ideas and perspectives it brings to audiences by commissioning from a range of independent suppliers.

10. Talent: As well as developing a significant base of professional and popular Welsh language on-screen talent, S4C has also given rise to a swathe of talent that has achieved fame throughout the UK and beyond. Presenters such as the One Show’s Alex Jones and Blue Peter’s Gethin Jones, through to Hollywood stars Matthew Rhys, Rhys Ifans and Ioan Gruffudd - all started their careers on S4C. Off-screen, production talent trained and nurtured by Welsh independent companies, mainly commissioned by S4C, has created the environment for new opportunities for Wales to be a centre of TV production.

11. Events: Key sporting events are broadcast and achieve very strong audience figures along with other prominent cultural and agricultural events such as the Urdd Eisteddfod, the National Eisteddfod, the Royal Welsh Agricultural Show and the Llangollen International Eisteddfod.

12. Music: S4C plays a strong part in giving airtime to all aspects of Welsh music, from folk to classical, from traditional to contemporary and to new Welsh music, with the result that for the best part of two decades Welsh acts have become a regular fixture of the overall UK and international music scene.

13. Children’s: S4C also has a strong track record in children’s programming, winning and being nominated for several BAFTA UK awards. At a time when some other broadcasters are withdrawing either partly or wholly from children’s content, the role played by S4C is becoming increasingly important. In 2009 S4C commissioned a full 331 hours of children’s programming [2] .

S4C and the Welsh Language

14. S4C was primarily established for cultural reasons, and Welsh viewers continue to back the existence of a Welsh language channel, with the majority of respondents to a recent poll saying there was a need for it [3] . Given the proliferation of English language channels available through both analogue and particularly digital platforms, TAC supports the continuation of S4C as a purely Welsh language channel. This viewpoint was echoed by the Welsh Assembly Government’s Broadcasting sub-committee, which concluded that: "We would underline the argument that the S4C service is in effect a Welsh language counter-balance to all the television on offer to viewers in Wales, from all sources, noting that the number of English language channels now available has increased from four in 1982, when S4C was established, to more than five hundred now available on Sky. No one outside Wales produces programmes in Welsh, whereas there are very many sources, in the UK and across the world, of English language programmes." [4]

S4C’s Performance – Audiences and Reach

15. Criticism of S4C’s viewing figures is well-publicised but often misinformed. The recent switch to being digital-only, meaning S4C is now Welsh-only and doesn’t carry some Channel 4 programmes, has inevitably had an impact. Despite this, recent S4C research shows that "performance of the peak hours – (S4C’s) Welsh language service in the main – has been remarkably stable over a period of eight years, despite the huge changes in the broadcasting environment (and) more people are tuning in to S4C’s Welsh language hours this year than during the same period in 2009" [5] . Even then the Barb figures do not tell the whole story, for example pre-school audiences, well-served by S4C’s children’s services, are not counted. The online service Clic is also growing in popularity, with an impact on the core channel’s audience figures.

16. It is also important to take into account the reach of S4C’s commissioning across Wales, and the fact that a series can build an audience not recognised in statistical terms, for example ‘Y Porthmon’, (The Drover), produced by Telesgop, which documented a drover’s journey across Wales. Central to the series strategy was a series of live events staged and organised by communities along the route.

17. Nevertheless, there is always more work to be done to retain and increase audiences, and we will discuss below how, working in partnership with the independent sector, S4C can take steps to ensure the best and most innovative ideas and talent are being utilised. The aim will be to provide a platform to boost figures both among Welsh and non-Welsh language speakers.

S4C’s Investment in the Economy

18. Taking steps to ensure a thriving Welsh language production sector is entirely in keeping with the cultural goals of S4C – its function necessarily combines cultural and business objectives. S4C, mainly through working with the independent production sector, is able to "provide important high paid and high skilled employment opportunities in Wales ", according to a recent report on S4C and the Welsh economy [6] . The report states that : "the impact of S4C on the Welsh economy is estimated as £85 million in 2009, rising to over £88 million in 2010. In addition to these quantifiable economic impact effects, as S4C spends most of its income on the Independent Sector in Wales , the broadcaster has a significant impact on the vitality of this sector" [7] . S4C’s ambition should be to achieve a greater impact on the Welsh economy by utilising the total of the funds available to it to attract further inward investment. This will of course be a necessity if we are not to see a dramatic fall in such impact as the cuts announced in the Comprehensive Spending Review take effect.

S4C Budget

19. Overall, S4C has the audience base, and the production talent available, to be successful for the foreseeable future. Since the General Election, TAC has consistently argued that S4C, whilst playing a vital role, is in urgent need of review, with the aim of restructuring the organisation to ensure it is best placed to maximise the funds available to it. The reduced funding for S4C as announced in the Comprehensive Spending Review makes this review even more pressing.  The aim must be to make S4C more efficient whilst minimising the effects of any cuts on the ‘front line’ of creative content production in Wales.

20. In terms of efficiency, Welsh producers have consistently sought to offer maximum value for money, and the cost-per hour of independent production for S4C actually fell between 2008 and 2009 [8] . Welsh indies are currently discussing savings of 10% in 2011 and are engaged in talks with S4C regards level of work, but S4C is not as far as we aware looking beyond 2011 and how savings can be driven over a longer term. We see the need to work in close partnership with S4C to devise a workable strategy that will give S4C and the independent sector much needed stability.

21. TAC notes the case made by the Minister for Culture, Communications and Creative Industries, when he stated in a debate in the House on October 20th that S4C has a settlement which can provide a sustainable future.

22. Ensuring this sustainable future is not just an aspiration but a set commitment depends on assurances being put in place to guarantee the future of Welsh language broadcasting in the long term. The current timetable laid out by DCMS only runs to 2014-15, beyond which the Minister has conceded that "no decisions have been made about the funding levels for S4C" [9] . It is obviously of concern to have S4C writing, (as it has recently to independent producers) warning of future cuts to programme budgets and the amount of hours commissioned in future schedules.

23. Only a guarantee of continued long-term investment will allow S4C to effectively plan a strategy for maintaining and strengthening Welsh language broadcasting going forward. It is also crucial that the Welsh independent production industry is able to plan and invest appropriately, in order to be in a position to contribute the best ideas and talent over the years ahead.

24. A commitment to guaranteed investment should include a clear stipulation that the funds from the License Fee are in addition to the BBC’s contribution to Welsh language programming, recently reduced from £24.5m to £19.5m.

A Formal Review of S4C

25. TAC believes that the lack of regular formal review has led S4C to become unnecessarily insular, and has been subject to insufficient scrutiny to ensure that it continues to operate at the maximum of efficiency and effectiveness.

26. A TAC Task Force, incorporating a range of the industry’s leading players, has been established to draw up TAC’s own vision of how the broadcaster should be restructured, in anticipation of what we hope will be a formal, independent and transparent review of S4C in the coming months.

27. Specific issues in need of review include:

a. Restructuring within S4C: The Welsh language media industry needs informed and experienced decision makers in key posts. A broader commissioning structure is needed, with less micro-management of production. This would enable broadcasters and producers/content providers to work together equally to create a better long term "joined up" media strategy for the Welsh language and culture, while also insuring far better value for money for the audience. 

b. Fair and open competition.  In an increasingly fractured media environment, the broadcaster needs to trust creative and entrepreneurial talent to develop the market. S4C’s commissioning model needs to encourage sufficient competition whilst at the same time encouraging successful companies to invest in the future and use their scale to develop their business further across the UK and internationally.

Enabling new companies to break through can partly be achieved through mechanisms such as partnering new companies with established ones, ensuring that this is done on equitable terms. S4C could also look to targeted commissioning opportunities with funding aimed at encouraging new programme makers. A fresh look needs to be taken at the uses of tenders versus proposal-based commissioning, to ensure that the balance is right.

c. Ambition. S4C’s role in promoting the Welsh language and culture has previously extended to working with independent producers to help them export programmes and formats. In recent years this role has not been carried out with enough clarity and sense of purpose, and any review needs to put in place a renewed commitment and clear strategy, devised and delivered in close partnership with the producers themselves. The S4C brand, still of significant value in the international market, must be fully utilised in gaining access to co-production deals. S4C should also give consideration to setting up an IP fund. In the past commissioners were brokers - pairing up broadcasters and producers, this is now the domain of the indies. A more strategic approach, funded perhaps in partnership with the sector, would be welcome.

d. Relationship with the independent sector. TAC, as the representative of the Welsh independent creative production sector, has regular discussions with S4C, and was instrumental in establishing the detail of the Terms of Trade, following the establishment of the Code of Practice within the 2003 Communications Act. However there needs to be a greater sense of partnership by S4C going forward, for example in terms of how it approaches its commissioning strategy in a way that is sympathetic with the dynamic and shape of the independent sector which produces its content. S4C needs to show at all levels a clear understanding and commitment that it must move forward in full partnership with the creative sector.

S4C Independence and the Licence Fee

28. The Government has set out a funding formula for S4C that will see the large majority of S4C’s funding changing from being a direct grant from Government to being supplied from the Licence Fee.

29. S4C has a current partnership with the BBC in the sense that it receives some £24m worth of programmes from BBC Wales, but it should be noted that S4C has little control over the content of these programmes. This is a situation that in itself needs rectifying, but it also highlights the concerns that independent producers have regarding any future involvement of the BBC in the use of Licence Fee funds earmarked for S4C.

30. Provided concrete safeguards are put in place to guarantee S4C’s independence, status as a publisher-broadcaster and level of budget, TAC accepts the principle of using the Licence Fee to part-fund S4C. But such funding must be provided in a way that ensures there is no possibility of those funds being appropriated by the BBC for any purpose, whether or not it relates to S4C or Welsh language broadcasting.

31. Logically this would be best be ensured by ‘top-slicing’ the Licence Fee upstream, prior to the point at which those funds pass to the BBC, with S4C receiving its share directly.

32. TAC’s understanding is that this would preclude the need for any involvement from the BBC Trust, and therefore presents the simplest, clearest solution to ensuring S4C’s independence from outside influence.

BBC Trust

33. In the event that ‘top-slicing’ and/or separation from the BBC Trust were to prove impossible for practical reasons, careful thought needs to be applied to any role played by the BBC Trust, to ensure that S4C’s independence is not compromised. The Secretary of State for Culture, Olympics, Media & Sport has said that he will ensure editorial and commercial independence, but has not so far committed to S4C’s independence as an organisation. In theory therefore S4C could end up being in full control of only the £7m that comes directly from the DCMS.

34. TAC recognises the move by BBC Trust Chairman Sir Michael Lyons to allay concerns over the new funding arrangements, but these assurances have stopped short of providing the kinds of clear cast-iron commitments that will ensure S4C’s integrity is maintained. For example Sir Michael has stated that "S4C should retain its strong relationship with the independent production sector in Wales" [10] , but TAC is adamant that a clear statement must be made ensuring that 100% of the content funded under the new arrangement will be for commissioning content from the independent sector.

35. The same principle applies to Sir Michael’s assurances, given in the same letter, that the Trust wishes to see the continued editorial independence of S4C.

36. If the money is channeled via the BBC, TAC rejects the BBC Alba comparison as an example of how the arrangement might work. The BBC Alba model would not work for S4C.

37. It should also be stated clearly within the BBC Charter that the BBC management has no jurisdiction over any aspect of the licence fee funding diverted to S4C.

Guaranteeing a Future for S4C

38. TAC asks the Welsh Affairs Committee to consider the case for the introduction of concrete safeguards to ensure that beyond the CSR settlement, there is a long-term, future for an independent and sustainable S4C:

o A guaranteed minimum level of funding from the Government and BBC Licence Fee, the latter of which funding should be made available to S4C via ‘top-slicing’ and being supplied direct to S4C..

o An ironbound commitment that 100% of the planned Licence Fee contribution is spent with independent producers in Wales.

o A guarantee of continued editorial and managerial independence for S4C.

o S4C must going forward be subject to regular, transparent, formal strategic review, to allow continuing clarity of purpose and the stability needed to encourage investment.

39. To ensure genuine and long-lasting stability for Welsh language broadcasting and the Welsh creative economy, all of the above should be written into the current Public Bodies Bill and/or forthcoming Communications Act.

40. To this end, TAC asks that consideration is given by the Committee that a way to achieve the above would be to introduce a binding agreement, akin to the BBC Charter, for S4C, outlining its structure and purposes, which would be subject to regular systematic review, according to a pre-agreed process and timetable. This would allow regular periods of review between which would be time for both S4C and its independent production partners to plan effectively and deliver the best content services to the people of Wales and beyond.

Relationship with the Welsh Assembly

41. The Committee asked respondents to give consideration to whether the finance and accountability of S4C should become a devolved matter. This has historically given rise to the question of whether that level of funding could be maintained by the Assembly in the face of other pressure on public funds. The landscape has to some extent shifted with the move over the next few years to transfer most of the source of funding of S4C to the Licence Fee. TAC would at this point simply reinforce the point that at present the key issue is for this funding transition to be handled in a way that preserves in statute the future of S4C’s independence, funding, and status as a publisher-broadcaster. It may subsequently be the case that the debate can be had about the respective merits of Welsh Assembly and DCMS oversight. One immediate thought would be that any future involvement of the Welsh Assembly Government should be in a way that joins up broadcasting and creative industries in Wales, and at the appropriate time TAC would willingly play a part in any discussions on how this might work.

November 2010