Written evidence submitted by Channel
4
FIRST-RUN
ORIGINATIONS
1. Please supply figures setting out your
investment in 2010 in first-run originations by genre to complement
the volume figures set out by genre in the chart on page 10 of
your Annual Report
Channel 4's total investment in first-run originations
across the portfolio in 2010 was £348 million.
In terms of programme genres, investment in first-run
originations across the genres reported in volume terms on page
10 of the Statement of Media Content Policy (SMCP) is set out
in Table 1 below:
[Redacted]
Channel 4 is keen to be as transparent as possible
with the Committee, and is willing to share this level of information
privately. However, Channel 4 does not publish this level of detail
in the SMCP as it is commercially sensitive both to Channel 4
and its independent production suppliers, as disclosure would
enable competitors to calculate the cost per hour of Channel 4
commissions. Suppliers may also be able to use publicly available
cost per hour data to their advantage in future commercial negotiations
with Channel 4. Channel 4 is committed to appropriate levels of
transparency, but not to the extent that it publicly discloses
information that could be detrimental to Channel 4 or its supply
base.
In addition, it is worth noting that page 154 of
the Financial Report and Statements outlines a detailed breakdown
of total expenditure by genre on the main channel—in line
with Channel 4's licence reporting requirements, and in accordance
to reporting genres as defined by Ofcom.
The data presented in the SMCP (and Table 1 above)
are structured around genres reflecting Channel 4's internal commissioning
and budgeting structure across the Channel 4 portfolio, and
as such differ from figures calculated according to Ofcom definitions.
For example, the Ofcom definition of "Education" includes
all programmes of an educational nature across the genres. In
the SMCP (and Table 1 above), "Education and Older Children"
relates to educational content specifically aimed at 14-19 year
olds.
2. Please supply volume and investment figures
for the religion and arts genres in 2010
The volume and investment figures for first-run originated
religion and arts programmes are set out in Table 2 below, and
for the reasons set out in response to question 1 are provided
to the Committee in confidence. In Table 1 above, the Arts and
Religion genres are counted as part of the "Factual"
genre.
[Redacted]
Channel 4 recognises that these genres continue to
be important to its public service delivery. In relation to Religion,
Channel 4 has recently re-commissioned 4thought.tv, its
powerful daily religion and ethics strand, for a further 365 films.
Channel 4 is also increasing its involvement in the Arts in 2011,
raising the Arts budget for the main channel to £6 million.
Channel 4 has also renewed its commitment to the Turner Prize,
sponsoring the prize fund and broadcasting a dedicated programme
featuring a live announcement of the winner—an example of
Channel 4 pursuing its new remit requirement to work with other
cultural organisations to achieve its public purposes. In addition,
Channel 4 has recently broadcast Street Summer, a
season of programmes celebrating contemporary urban art forms,
and commissioned a new arts strand, Random Acts, which
will provide a space on air and online for artists to create unmediated,
short-form pieces for the screen.
3. Please supply figures detailing the number
of hours of first-run originations for both More4 and Film4 in
2010 (in line with the figures supplied for E4 in your Statement
of Media Content Policy, published on your website)
Channel 4 understands this question to refer to the
E4 figures outlined on page 31 of the methodology document published
on its website, which sets out the full methodology underpinning
the data presented in the Statement of Media Content Policy (SMCP):
http://www.channel4.com/media/documents/corporate/annual-reports/Methodology_document_2010.pdf
In 2010, Channel 4 removed the E4 originations "input"
measure from the SMCP, instead replacing it with a new "outcome"
measure focusing on E4's impact on the audience, which Channel
4 believes to be a more meaningful way of assessing the delivery
of public value. Channel 4 is committed to transparency in the
preparation of the SMCP, and as the E4 originations measure was
removed in 2010, the data were published in the methodology document
for completeness.
First-run origination figures for More4 and Film4,
in addition to E4, are set out in Table 3 below.
Table 3
VOLUME OF FIRST-RUN ORIGINATIONS ON E4, MORE4
AND FILM4, 2010
| E4 | More4
| Film4 |
| Hours of first-run originations | 48 (excluding Big Brother)
| 63 | 4 |
For Film4, by its nature as a film channel, nearly all films broadcast
on Film4 are counted as either acquisitions or repeats, even if
Channel 4 has invested in the production of the title. Channel
4 therefore believes that hours of first-run originations on Film4
is not a meaningful measure for assessing Film4's public impact
or contribution to showcasing British film. In Channel 4's view
other measures are more relevant, such as the percentage of output
on Film4 from the UK—which amounted to 25% in 2010.
PUBLIC SERVICE
BROADCASTING
4. Please supply figures setting out your investment in
key public service broadcasting genres, broken down by genre,
as has been the practice in past Annual Reports
In 2009, Channel 4 included a measure in its Public Impact Report
(the predecessor to the SMCP) which outlined total expenditure
on first-run originated programming shown on the main channel
in a number of "key PSB genres": Channel 4 defined these
genres as News; Current Affairs; Education (covering broad appeal
programmes with educational intent as well as specific teen-focused
educational/schools material); Comedy; single dramas, drama series
and Film 4 Productions; Religion; and Arts. Total expenditure
on these genres was published in 2009 as "Originations by
genre on core channel", and these data were not broken down
by genre.
This measure, with the corresponding figure for 2010, is set out
in Table 4 below.
Table 4
EXPENDITURE ON FIRST-RUN ORIGINATIONS IN "KEY PSB
GENRES"
| 2010 (£m) |
2009 (£m) |
| Originations in "key PSB genres" |
145 | 145 |
While Channel 4 sought to keep the range of measures used in the
SMCP as similar as possible to measures used in previous Public
Impact Reports to enable year on year comparison, the evolution
to create the new SMCP led to a decision to drop the expenditure
on first-run originations in "key PSB genres" metric
and instead focus on the broader delivery and impact of Channel
4's content investment.
The measure has been replaced by two new charts: "Investment
in programming by genre" and "Volume of first-run originations
by genre". These new measures present Channel 4's total output
and spend on a genre basis across the portfolio, and are published
on page 10 of the SMCP. Channel 4 believes that these measures
provide a clearer visual representation of Channel 4's activity
in each genre than the presentation in previous reports.
AUDIENCE SHARE
AND REACH
5. Please supply figures for the share and average 15-minute
weekly audience reach for each of the genres set out in the chart
on page 10 of your Annual Report
AND
6. Please supply figures for the share and average 15-minute
weekly audience reach for each of the key public service broadcasting
genres detailed in your response to question number 4, above
WEEKLY REACH
Share and average 15-minute weekly reach figures for the genres
set out in the "Investment in programming by genre"
chart on page 10 of the SMCP are set out in Table 5 below.
As discussed in response to Question1, the data presented here
are structured around genres reflecting Channel 4's internal budgeting
and commissioning structure. Therefore, the genre here marked
"Education and Older Children" relates to educational
content specifically aimed at 14-19 year olds. Broader educational
content will generally be captured as part of the "Factual"
genre.
Table 5
SHARE AND AVERAGE 15-MINUTE WEEKLY REACH TO ANNUAL REPORT
GENRES
| Annual Report genre | Share
(portfolio)
| Reach %
(portfolio) | Reach 000s
(portfolio)
|
| Drama | 3.03 | 18.2
| 10,403 |
| Film | 2.06 | 26.1
| 14,900 |
| Entertainment | 2.05 | 26.2
| 14,945 |
| Comedy | 1.92 | 16.1
| 9,225 |
| Factual | 3.60 | 43.2
| 24,684 |
| News | 3.73 | 7.1
| 4,078 |
| Current Affairs | 4.80 |
2.5 | 1,438 |
| Sport | 4.57 | 2.8
| 1,615 |
| Education and Older Children | 1.81
| 0.3 | 182 |
| Other | 0.31 | 1.3
| 766 |
Share and average 15-minute weekly reach figures for the "key
PSB genres" discussed in response to question 4 are set out
in Table 6 below.
Channel 4 notes that analysis of these "key PSB genres"
is based on a slightly different dataset to the genres outlined
on page 10 of the SMCP (and in Table 5 above)—as it is only
possible to calculate reach data according to BARB datasets. In
order to calculate the reach of the "key PSB genres"
Channel 4 has mapped programmes to BARB datasets, which has required
Channel 4 to make a number of assumptions.
Table 6
SHARE AND AVERAGE 15-MINUTE WEEKLY REACH TO "KEY
PSB GENRES"
| "Key PSB genres" | Share
(portfolio)
| Reach %
(portfolio) | Reach 000s
(portfolio)
|
| News | 3.73 | 7.1
| 4,078 |
| Current Affairs | 4.83 |
2.5 | 1,438 |
| Arts | 2.81 | 0.4
| 255 |
| Religion | 3.95 | 0.2
| 140 |
| Comedy | 3.52 | 2.4
| 1,384 |
| Drama | 5.83 | 5.5
| 3,160 |
| Education | 3.40 | 32.2
| 18,395 |
MONTHLY REACH
For comparative purposes, Channel 4 has also outlined below share
and audience reach figures on a monthly basis. Channel 4 is not
a "mass market" broadcaster that expects to attract
large audiences to its programmes all of the time—rather,
Channel 4 has been historically, and remains, a "something
for everyone, some of the time" broadcaster. In a number
of genres, programming is not broadcast regularly throughout the
year, which pulls the weekly reach figures down. In other genres,
audiences do not necessarily watch week in, week out—so
monthly reach gives a truer picture of the reach that such strands
have over a period of time.
Share and average 15-minute monthly reach figures for the genres
set out in the "Investment in programming by genre"
chart on page 10 of the SMCP are set out in Table 7 below.
Table 7
SHARE AND AVERAGE 15-MINUTE MONTHLY REACH TO ANNUAL REPORT
GENRES
| Annual Report genre | Share
(portfolio)
| Reach %
(portfolio) | Reach 000s
(portfolio)
|
| Drama | 3.03 | 37.0
| 21,124 |
| Film | 2.06 | 54.9
| 31,356 |
| Entertainment | 2.05 | 50.0
| 28,560 |
| Comedy | 1.92 | 34.2
| 19,519 |
| Factual | 3.60 | 71.4
| 40,800 |
| News | 3.73 | 19.4
| 11,108 |
| Current Affairs | 4.80 |
8.3 | 4,739 |
| Sport | 4.57 | 7.6
| 4,330 |
| Education and Older Children | 1.81
| 1.0 | 592 |
| Other | 0.31 | 4.8
| 2,762 |
Share and average 15-minute monthly reach figures for the "key
PSB genres" is outlined in Table 8 below.
Table 8
SHARE AND AVERAGE 15-MINUTE MONTHLY REACH TO "KEY
PSB GENRES"
| "Key PSB genres" | Share
(portfolio)
| Reach %
(portfolio) | Reach 000s
(portfolio)
|
| News | 3.73 | 19.4
| 11,108 |
| Current Affairs | 4.83 |
8.3 | 4,734 |
| Arts | 2.81 | 1.7
| 950 |
| Religion | 3.95 | 0.8
| 471 |
| Comedy | 3.52 | 7.1
| 4,086 |
| Drama | 5.83 | 15.8
| 8,998 |
| Education | 3.40 | 60.0
| 34,232 |
7. Please supply the average 15-minute weekly reach figures
for the Channel 4 portfolio, broken down
¾ by
channel;
¾ by
first-run originations; and
¾ by
key public sector broadcasting content.
15-minute weekly reach figures for the Channel 4
portfolio, broken down by channel, are set out in Table 9 below.
The 15-minute monthly reach figures published in the SMCP are
also included for ease of comparison.
Table 9
SHARE AND AVERAGE 15-MINUTE WEEKLY AND MONTHLY
REACH TO C4 PORTFOLIO
| Share | Ave weekly reach: %
| Ave weekly reach: 000s | Ave monthly reach: %
| Ave monthly reach: 000s |
| C4 | 7.0 | 56.4
| 32,195 | 82.1 | 46,887
|
| E4 | 1.8 | 19.5
| 11,156 | 38.8 | 22,150
|
| More4 | 1.1 | 16.1
| 9,179 | 36.4 | 20,802
|
| Film4 | 1.2 | 13.7
| 7,822 | 31.7 | 18,122
|
| 4Music | 0.3 | 3.9
| 2,226 | 10.3 | 5,871
|
15-minute weekly reach figures for the Channel 4 portfolio, broken
down by "key PSB genres" are set out in Table 6 in response
to Question 6 above.
Finally, Channel 4 notes the Committee's request for 15-minute
weekly reach figures for the Channel 4 portfolio, broken down
by first-run originations. Unfortunately, Channel 4 is unable
to provide these data as its systems do not readily allow this
analysis to be conducted and a substantial amount of manual calculation
would be required. Channel 4 believes that the comprehensive reach
and share figures provided in the Statement of Media Content Policy
and elsewhere in this response provide a full, transparent account
of audience engagement with Channel 4 and, given the costs associated
with providing the requested data, hopes the Committee understands
the difficulties in providing this additional information on first-run
originations.
8. Does Channel 4 set weekly reach and share targets for
the viewing of its public service content and, if so, what are
they?
Channel 4's content continues to reach a significant majority
of the population, with reach and share of the Channel 4 portfolio
increasing in recent years. Channel 4 believes that the reach
and share of its television channels will continue to be important
measures for assessing public impact. That said, Channel 4 does
not set weekly reach and share targets for the viewing of its
public service content, as Channel 4 believes public impact should
be assessed with reference to a fuller set of measures that capture
public value.
For example, Channel 4 News attracts an audience of around
1 million viewers each evening, but its impact in public
service and democratic terms is much more important than audience
size alone suggests: it continues to be regarded by the public
as more independent—from the Government and from the influence
of big businesses—and it is also disproportionately popular
among harder to reach audiences, such as younger viewers and Black,
Asian and Minority Ethnic viewers.
FILM
9. What percentage of films that Channel 4 invests in have
a commercial cinema release?
In 2010, Channel 4 invested in production for six films made for
cinema, all of which had a commercial theatrical release. Films
released in 2010 included Chris Morris' directorial debut Four
Lions, and Mike Leigh's Another Year.
As well as investing in production, Film4 currently spends between
£1.5-2 million a year on development finance—only a
small proportion of such projects convert into actual production,
but development finance is an important part of Channel 4's remit.
Channel 4 has recently increased its commitment to investment
in film, raising the Film4 budget for production and development
to £15 million per year for five years from 2011. This overall
budget represents funds available each year for investment in
both production and development of films for cinema. However,
due to the long lead times involved in film production, this overall
figure will differ from the figure reported in the SMCP methodology
(and replicated in response to Question 10 below) on the amount
of money Film4 invests in films each year. This figure is based
only on Film4's investment in films that have received a theatrical
release in that year, the timing of which is controlled by the
UK distributor of each film, not Film4. For example, in 2010,
Film4 invested £11.6 million in feature film production and
development—for films that could be released any year from
2010 onwards—while the £3.6 million investment
figure for Film4 (set out in the SMCP methodology and copied below)
represents Film4's past investment in feature films that were
actually released in cinemas in 2010.
10. Please set out the methodology used to support the
claim that its "early involvement helped to attract total
funding worth 16 times its own investment for feature films released
in 2010"
Channel 4 publishes the full methodology underpinning the data
presented in the Statement of Media Content Policy on its website:
http://www.channel4.com/media/documents/corporate/annual-reports/Methodology_document_2010.pdf
In relation to film investment, details are published on page
35 of the methodology document, and are reproduced below.
| Contribution by Film4 to UK film production
| Funding sources for Film4 productions released theatrically, £m
|
| Data |
| |
| | 2009
| 2010 |
| Investment by Film4 in feature films released in cinemas
| 10.0 | 3.6 |
| Other funds | 28.8
| 53.7 |
| Total | 38.8
| 57.3 |
| Uplift from Film4 investment to total production budgets
| X 4 | X 16 |
| | |
|
| Source: Chanel 4
| | |
| Commentary
| | |
| Film4's investment in films that were released in UK cinemas in 2010 was £3.6 million across 6 titles (The Lovely Bones, She, A Chinese, Scouting Book for Boys, Four Lions, Chatroom and Another Year). This was 64% less than the corresponding totals for 2009, reflecting fluctuations in the timing of theatrical releases, which is controlled by the UK distributor of each film. Film4's involvement in these films helped to attract additional funding worth 16 times its own investment in 2010.
|
| | |
|
| Methodolgy
| | |
| This measure reflects Film4's investment in films released theatrically in each year, excluding films that only received festival premieres in that year. The amount spent on films released in cinemas each year will differ from production budget, depending on the release patterns of individual films (which is controlled by the distributors rather than by Film4). Small adjustments have been made to the final figures for Film4 spend in 2009; due to rounding differences these cannot be seen in the Film4 investment figure, but total funding for 2009 has increased from £38.7 million to £38.8 million.
|
FOLLOW-UP
FROM LAST
YEAR'S
SESSION
11. Further to the additional information that Channel
4 provided to the Committee last year—partly on an in confidence
basis—the Committee would now like the following information
for 2009
¾ The
individual profitability of its non-core (E4, More4 and Film4)
channels, including each channel's revenues, programme budget
and operating surplus.
Channel 4's digital channels generate substantial
profits to be reinvested in public service content, and are a
vital part of Channel 4's strategy to address the structural financial
pressure caused by digital switchover. As set out in the Statement
of Media Content Policy, the digital channels are also making
an increasing contribution in creative and public service terms.
In total, Channel 4's digital channels generated
operating profits of £54 million in 2010. Table 7 below
shows the operating surplus of each digital channel in 2010. Channel
4 is happy for the Committee to publish the revenues, programme
budget and operating surplus for the digital channels in total,
but is providing the individual channel financial details in confidence
since, as previously explained, disclosure could damage Channel
4's commercial interests.
Table 7
DIGITAL CHANNEL
FINANCIALS—2010 (£M)*
| Total |
| Revenues | 205 |
| Programme budget | (91)
|
| Operating surplus | 54
|
| * Information on individual digital channels redacted
|
¾ Total
investment on each of the non-core channels since their inception,
and when Channel 4 expects the start-up costs and total operating
losses on each of the non-core channels to have been fully recouped
As discussed with the Committee in previous years,
the financial performance of Channel 4's digital channels is best
considered in two phases. First, the years in which the digital
channels were available only on pay TV ("the pay TV years");
and second, the years after Channel 4 took the strategic decision
to shift the digital channels to freetoair TV ("the
freetoair years"). Film4 was launched on pay
TV in November 1998 and was moved freetoair in July
2006; E4 was launched on pay TV in January 2001 and was moved
freetoair in May 2005. More4 has been available
freetoair since its launch in October 2005.
During the pay TV years, Channel 4's digital channels
received insufficient revenue from satellite and cable platform
operators to generate profits. As a result, Film4 and E4 incurred
losses in the years prior to the channels moving freetoair.
Since Channel 4 took the strategic decision to move these channels
freetoair, Film4 and E4 have been more successful
than they ever were as pay TV channels and have both generated
net profits. Table 8 below sets out the total expenditure and
the operating surplus (or loss) of each digital channel over the
two time periods: the pay TV years and the freetoair
years. Channel 4 is providing this information to the Committee
in confidence.
[Redacted]
In 2008, the portfolio of digital channels fully
recouped its costs since moving free to air. On an individual
basis, each channel has also fully recouped all its costs since
moving free to air.
[Redacted]
Moreover, the recoupment analysis above is based
on cumulative operating profits, and does not reflect the
balance sheet position of the digital channels—which provides
a more complete indication of the digital channels' financial
performance. Channel 4 notes that the portfolio of digital channels
was in a net assets position by 2009, with reported net assets
of £8.1 million for the 4Channels segment. In 2010, net assets
for 4Channels grew to £46.9 million.
12. Please detail the results of the review
of targets for commissioning from the nations, mentioned by David
Abraham in last year's oral evidence session
In the July 2010 oral evidence session, in response
to a question from David Cairns MP as to whether Channel 4 would
consider "increasing your targets for production outside
the M25?", David Abraham stated:
"I think it is something that three months in
I probably need a little bit of time to give you a more informed
response, to be honest. I have spent some time in the regions,
not as much as I would have liked to yet, but I can give you my
commitment that when I sit here in a year's time I will give you
a fuller assessment of this […] If you would allow me to
spend a bit more time to review it I look forward to following
up with you."
Channel 4 has made significant progress in increasing
its commissioning from the devolved nations over the last 12 months.
In 2010, a new quota was introduced for Channel 4 to commission
3% of its network spend in the devolved nations of the UK. Despite
2010 being the first year this new target has been in place, it
was significantly exceeded—with the main channel spending
£13.4 million on network programming outside of England—4.5%
of Channel 4's network spend. This is an increase of £8 million
over the last two years (2008 spend was £5.4 million, 1.6%
of network spend). Beyond these headline network spend figures,
Channel 4 also makes vital investments beyond television programming,
through involvement in both feature film and digital media production.
In particular, investment in digital media production is going
to be increasingly important part of Channel 4's strategy in the
nations in future.
Since the oral evidence session in July 2010, David
Abraham has made it a priority for Channel 4 to work with a more
diverse supply base, particularly new and emerging companies and
companies based outside of London. In his first keynote speech
at the Salford Nations and Regions Media Conference in January
2011, David Abraham stated that Channel 4 "may have become
too reliant on too narrow a range of companies", and
needs to "reach those parts of the creative culture that
other broadcasters cannot or dare not visit".
Channel 4 is seeking to further broaden its supply
base, including by establishing a new Creative Diversity Department.
The Nations and Regions Team based in Scotland has been expanded
into a larger, integrated Creative Diversity Department, with
seven staff members working across the country. This includes
three new commissioning posts each tasked with specific regional
responsibilities:
¾ Scotland
(Ian Mackenzie, based in Glasgow).
¾ Northern
Ireland and the North East (Suzie Wright, based in Glasgow).
¾ Forthcoming
appointment for Wales and South West.
The Creative Diversity strategy is focused on ensuring
Channel 4 commissions the most creative ideas from the most diverse
supply base possible, regardless of their background. The Creative
Diversity Department has met with over 300 new and emerging companies
so far in 2011, including over 100 companies in the nations. This
work is being supported by the launch of a new £2 million
fund, the Alpha Fund, dedicated to providing development funding
to grassroots television and digital companies with innovative
content ideas. Channel 4 has funded over 50 companies through
the Alpha Fund so far in 2011, including over 30 companies from
the nations.
Beyond TV commissioning, Channel 4 has also recently
appointed a new commissioner with responsibility for games, who
will be based in Scotland. This post will be the key contact for
games creatives, and will tap into the thriving gaming community
in Scotland. This post, as well as the new regional commissioners,
will play a vital role in bringing new talent to the channel.
However, Channel 4's focus remains on encouraging all Channel
4 commissioners to spend more time with production companies based
in the nations and regions.
Finally, Channel 4 has also announced new internal
target of at least 35% of its expenditure in 2011 on digital media
commissioning to be from companies outside London, to stimulate
innovative digital media companies across all areas of the UK.
September 2011
| 
