To be published as HC 610-i




Culture, Media and Sport Committee

Channel 4 Annual Report 2011

Tuesday 16 October 2012

Lord Burns GCB, David Abraham and Anne Bulford

Evidence heard in Public Questions 1 - 104



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Oral Evidence

Taken before the Culture, Media and Sport Committee

on Tuesday 16 October 2012

Members present:

Mr John Whittingdale (Chair)

Mr Ben Bradshaw

Damian Collins

Philip Davies

Paul Farrelly

Steve Rotheram

Mr Adrian Sanders

Jim Sheridan

Mr Gerry Sutcliffe


Examination of Witnesses

Witnesses: Lord Burns GCB, Chairman, Channel 4, David Abraham, Chief Executive, Channel 4, and Anne Bulford, Chief Operating Officer, Channel 4, gave evidence.

Q1 Chair: Good morning. This is the Committee’s annual session at which we take evidence on the Channel 4 annual report. I would like to welcome this morning the Chairman of Channel 4 Lord Burns, the Chief Executive David Abraham, and the Chief Operating Officer Anne Bulford. There is one quick small question that I hope we can clear up very rapidly. Channel 4 has never at any time employed Jimmy Savile?

David Abraham: No.

Chair: Good. In which case, I think what we will do is start off with one or two of the more controversial issues of recent weeks and then move into the detail of the report. I would like to welcome on board Ben Bradshaw, the latest recruit to the Select Committee, and invite him to begin.

Q2 Mr Bradshaw: It has become apparent in correspondence to this Committee, but also through the media, that Channel 4’s behaviour over the Big Fat Gypsy Weddings programme has caused immense distress and upset in the Gypsy and Traveller community, who quite clearly feel that so far Channel 4 has not expressed a strong enough and categorical enough apology. Would you like to take the opportunity to do that now?

David Abraham: Certainly. I think you are referring to an email that a member of staff wrote in connection to the preparation of some photography and it absolutely and categorically did not reflect the approach of Channel 4. The individual has apologised. We have formally apologised as well in terms of the reaction of members of the community to the campaign, but it did not, as I say, reflect our approach to the programme. The research that we have done in the programme absolutely reflects the fact that in pursuing our remit and shining a light on marginal communities we have succeeded in informing the public about this community and informing in new ways. In actual fact, the research suggests that three times more people have a positive understanding of the community than they did before they saw the programme. The community itself, as we know, is represented by many different groups and those people who participated in the programme and in the advertising campaign were very comfortable with it.

We did submit the advertising to the Committee of Advertising Practice before we published and they did approve it. Subsequent to complaints, it was resubmitted and they re-approved it. It was only in the more recent and detailed challenge that, out of four executions in the campaign, complaints on two have been upheld. We would absolutely distinguish between the ill-advised writings of a relatively junior member of staff and the overall approach of both the programme and the campaign. If I may add to that, it is significant that the photography for the campaign was conducted by a respected photographer whose approach was entirely to observe the community rather than to construct situations. It is the case that three out of the four posters were photographed in advance of that email being sent. So although we agree that the email is unacceptable, it did not inform the overall approach that we feel was in keeping with the approach of the programme.

Q3 Mr Bradshaw: Is it not the case that the photographer herself has expressed unhappiness with the way you have handled it? You refer to this employee as a relatively junior employee, but did you not issue a press release when he was appointed, and what, if any, action has been taken against him?

David Abraham: He has been formally reprimanded. He has been put on to a training programme. He happened to be a member of staff who had joined very recently. He reviewed the original set of photographs, three out of four, as I said, that were used in the final campaign. He took a personal view to express to the photographer to take a more sensational approach, which was not what the original brief to the photographer was. She quite rightly challenged the individual. We have an email trail that demonstrates that challenge. We would say that the final outcome was in keeping with our overall approach, and that is why we believe that the campaign was approved in its first outing with the ASA.

Q4 Damian Collins: I would like to continue with some questions on that. Firstly, it is true to say that Channel 4 has stated that they used a reputable photographic journalist who has experience working with Gypsy and Traveller communities. That is clear. It is also clear from her statement she did not know how the work was going to be used, she did not know what the headline was, she did not know about the use of the word "Gypsier", and she was very unhappy about that. From my experience in advertising, it is very unusual for photographers not to know what their work is going to be used for when they are given the brief.

David Abraham: I would entirely agree with you. I think there is a certain amount of evolution in the story here, because we believe we were very clear about the approach and the headline. About the headline itself, obviously it is a play on a comedy movie that was used in the programme, and then it was adapted for the campaign. It was always intended to simply state that this was the second series and it was more playful and bigger and more interesting than the first. We did not withhold the information about the headline from the photographer, but we do understand that her view about the campaign evolved as a result of the reaction. The posters are still on her website. We understand as someone who works closely with the community that the debate about the reaction from parts of the community to the campaign has to be heard-and she has heard them and we have heard them.

As to the point about the apology, we have categorically apologised if we have offended sections of the community, but the fact remains that we are proud of the programme for its ability to shed a light on the community overall. As we have said, our research demonstrates that it has enlightened the public about a community that they may have known very little about and may have had prejudices about. If it included aspects that were not singularly positive, that is really in the pursuit of balanced journalism and balanced programme making, but there were many positive things in the programme and we are very proud of it.

Q5 Damian Collins: I must admit, my greater concern from the Advertising Standards Authority’s ruling on the adverts was their statement, "That Channel 4 has acted irresponsibly by depicting a child in a sexualised way". This refers to the poster of the two girls wearing low-cut tops, one of whom was 15 when the photograph was taken. I think that is a clear breach of the advertising code. The fact that she was 16 when the advert ran and the fact there was parental consent for it is neither here nor there. I think that was very irresponsible. I would like to know who within Channel 4 was aware of the age of the girl when the approval was given to run that advert?

David Abraham: We took great care in getting both the permissions from the individuals and from their families. We absolutely were of the view that the child was 16 when the advertising ran. Let’s remember that those photographs were taken at a New Year’s Eve party. Taken out of context, they could be described in the way that you have just described them, but we felt that they captured, because of the style of photography, the social activities of the community.

Q6 Damian Collins: With respect, Channel 4 was the organisation that took the photographs out of context and took those photographs and put them next to a headline that said "Bigger. Fatter. Gypsier.", a standalone of two young girls, one of whom was 15 when the photograph was taken, wearing low-cut tops. I think that is irresponsible. I would hope that you would think that was irresponsible too.

David Abraham: Despite the pre-publication checking that we did do, we accept the final outcome and of course we will take on board the learning of this in terms of how advertising works out of context. Our audiences have come to expect our advertising to be highly branded, to have a certain visual impact. We have used photography for some years in our posters. It is a shorthand for how we differentiate our brand in a very cluttered marketplace. We are also tasked with pushing creative boundaries and taking risks. We did the same with our Paralympics campaign, which took creative risks. There were very detailed debates about aspects of that campaign and whether or not that creative risk was acceptable. It comes with the territory. Of course, this is a dynamic area and we will learn from the findings.

Q7 Damian Collins: The advertising code is clear that children should not be portrayed in a sexualised way. That girl was a child when the photograph was taken. Even putting to one side the debate about how old she was when the advert ran and whether or not there was parental consent, in other areas of advertising where age is an issue, great care is taken to make sure that someone is clearly not within the age group where they might be perceived to be a minor. As you know, with gambling and alcohol advertising someone has to be over 25 in the advert so they don’t look like they might-

David Abraham: It is a subjective area, isn’t it? A photograph of two girls going to a New Year’s Eve party you are describing categorically as depiction in a sexualised way and I think we have to be aware these are marginal calls. The picture was of two girls at a party, dressed to go to a New Year’s Eve party. I would like to challenge the presumption that we chose the photographs because they depicted a sexualised message. We absolutely did not do that.

Q8 Damian Collins: The issue is how people interpret them, taken out of context, with the headline that was put against them. The two girls were wearing effectively what you might call, if it was a swimming costume, bikini-type tops, the bra of one of the girls is visually showing from underneath it, and they are very heavily made up. That may have been in the context of a party, but taken out of context and as it was portrayed, and given one of those two young ladies was only 15 at the time-the other was 18-I think that was wrong. The ASA’s finding that Channel 4 behaved irresponsibly by depicting a child in a sexualised way is a serious matter.

David Abraham: If the ASA had said that to us when we went to pre-vetting we would have reviewed the advertising. It cannot have been so categorically clear on two rounds of review at the ASA that this was an overtly sexualised image. They are now describing it thus because of the final finding, but you have to see it from our side as well. It was a marginal call.

Q9 Damian Collins: My concern is that this was not flagged up in the organisation. Channel 4 has a history of very creative and impactful poster advertising and I think everyone in the advertising industry has always applauded Channel 4 for that. I think that is what you should do, but in this case my concern is your internal procedures did not raise the question of, "These girls look quite young. How old are they? Regardless of whether we think we can do this, is this is a responsible thing for an organisation like Channel 4 to do?" I don’t think it was responsible, and I think the ASA was right in the ruling it gave. What is the internal process for pre-approval for adverts? How high up in the organisation does the final clearance for advertising go?

David Abraham: Obviously there is a compliance process. If there are no compliance issues that are being raised in the execution then it probably would not be referred up. It would be approved by the senior person responsible for marketing. It is only if there are legal or compliance issues would it be referred at an executive level, otherwise we would not have a workable creative system.

Q10 Damian Collins: Are you shown adverts before they run?

David Abraham: I am shown the sort of spirit of the campaign. In this instance I was aware of the overall approach but not all the detail.

Q11 Damian Collins: Were you shown the executions before they were-

David Abraham: Not the entire campaign in all its detail. I was shown the principal idea of the line and the idea of doing reportage photography. Remember this is very much coming from a programme that has been watched by up to 9 million people, that was an observational documentary about the mores, lifestyles, practices and traditions of aspects of this community. It was a programme that we felt did many positive things and our intent was to celebrate, in an accurate way, the community in its different aspects. It was entirely done in an observational way. We will absolutely learn from the findings in terms of how things can be taken out of context.

Q12 Damian Collins: Were you shown the advert that included the 15-year-old girl before it ran?

David Abraham: I can’t recall whether I saw the specific advert. I definitely saw the advert with the gentleman with the horse and the one with the boy.

Q13 Damian Collins: When I worked in the advertising industry it was usually taken as a pretty serious thing if your advertisement was pulled or it was censured after it had run. Are you instigating any kind of review process with 4 Creative as an organisation? You mentioned earlier an individual who was responsible for briefing the photographer, but he was not the only person involved in this campaign. What conversations has Channel 4 had with 4 Creative about this work?

David Abraham: Clearly we learn from all of these events but at the same time, as I said earlier, we must create appropriate impact. We are in a very crowded marketplace with a lot of competition and we want to support producers to make the public aware of all the new shows that we have, but of course we must do so responsibly. We take that very seriously and these are very fine calls. I would like to say and I would like to think that in the majority of cases in the last 12 months we have got it absolutely right.

Q14 Mr Bradshaw: You said earlier "if" you had offended sections of the community, you were sorry about that. That seems to imply that you don’t think you have offended the community.

David Abraham: Only because we do know that the sections of the community who have collaborated both in the making of the programme and in the making of the advertising are very comfortable with the work that we have done, but of course we recognise there are other sections of the community who have raised these issues. We have absolutely sought to engage with them and our doors remain open for them to engage with us. We have said that the series, for creative reasons, is not likely to carry on for ever. There may be some more episodes that will run next year. If we can learn from this experience from this part of the community we intend to do that.

Lord Burns: Could I add that at board level we keep these things under review after the event? In the last two years we have reviewed the titles of some of the programmes to see whether or not the titles depict accurately what is going to be on a programme. We have also looked at promotions that we put on to see to what extent the promotion accurately reflects it, and at some stage we will keep this under review as well. That all takes place after the event, of course, but we are interested in learning from the past because, as David has suggested, in many of these things-and it applies as well to titles and promos-you are coming quite close to the position with several of them where there are some people whose initial reaction may not necessarily be positive. We had the promo for the Paralympics that in the end turned out to be an enormous hit that was played over and over again. There were some people at the beginning that were uncomfortable with some aspects of that promo. The executives take a judgment as to whether we should run with it. After the event, when we have a few of things to look at, we try to assess whether or not we are on the right lines, whether we are getting too close to the line and whether the overall impact of them is what we want to see.

Q15 Mr Sutcliffe: It is right that you do that and it is a positive step, but clearly when the ASA are as strong as they are in terms of their condemnation and using the word "irresponsible"-I take David’s point about the fact that you are trying to show a minority community in a positive light, and I accept that some of that happened. I don’t know if you have seen the report from Brian Foster, the educational officer, in relation to the Traveller and Gypsy liaison officer, who says there has been racist abuse, there has been bullying at schools as a result of this campaign. Aren’t there still lessons to learn? Isn’t there still an opportunity to have discussions with the community about their concerns about the aftermath of this programme?

Lord Burns: It is important in all of these discussions that one distinguishes between the programme itself, the title of the programme and the advertising issue. The only thing that is in question here-in terms of regulatory involvement-has been in relation to the posters not in relation to the programme or the title of the programme.

Q16 Mr Sutcliffe: Mr Foster’s report to the ASA talks about the advertising campaign as being responsible for some of the things that have happened subsequently.

Lord Burns: Yes, and that is why we have accepted the findings of the standards board in relation to-

David Abraham: We were just handed that research on our way here and we will obviously review it very carefully. We ourselves have not found direct evidence of those cases as a result of the advertising but we absolutely want to engage with the community in terms of how we move forward.

Q17 Mr Sutcliffe: I think that is the point I am trying to make. You said at the outset you want to show the positive aspects of the community to the wider audience, which is great, but if there is a problem that clearly the community sees as being a problem, I think its incumbent upon you to continue to have those discussions.

David Abraham: Absolutely, accepting, of course, that in any balanced programme making not everything in these programmes will be perceived to be positive by everyone in the community. What is important is that it is balanced. We are very confident that the programme is balanced, and that is why if there were to be any challenges about the programme, we will defend it vigorously.

Q18 Mr Sutcliffe: I understand and accept that, but I think you said earlier in response to Mr Bradshaw that if you have caused upset to the community, you would issue an apology and, really, we are looking for a public apology for the advertising campaign.

David Abraham: We have publicly apologised to this group within the community who clearly have been offended by the campaign, and we are happy to apologise today as well.

Q19 Chair: Isn’t part of the problem, that you rightly draw attention to the achievement of the programme in perhaps conveying a more positive image, but the posters will have been seen by probably four times the number of people who watch the programme and therefore any beneficial effect of the programme is going to be far outweighed by the negative impact of those advertisements?

David Abraham: I am not entirely sure for a programme that is seen by up to 9 million people whether that is necessarily the case. The posters only ran for two or so weeks; it was a relatively short campaign. The overall reach of the programme over the two series will be much more significant.

Lord Burns: The point I was making earlier relates to that very issue as to why we have to keep under review things like titles and promotions. It is very important that titles of programmes as they are being advertised and the promotions do accurately reflect the nature and content and approach to the programme. We do like to keep that under review. At the same time, as David has pointed out, we have a very crowded marketplace. Channel 4 has worked for some time to be able to establish a particular style of posters that identify it as being a Channel 4 programme that is being promoted. I might get myself into trouble here, but I looked at a poster recently for our programme Hotel GB and I said to myself, "My goodness, I wonder if the people in the photograph really like having their faces six inches from the camera as it is being taken," but nevertheless it was quite clear that it was a Channel 4 poster and one of the points of it is to identify the thing. This one went too far. We have had a finding about it, which we accept and we are not disputing.

Q20 Chair: Do you feel in any way let down by the ASA, given that you did go and seek their initial approval?

David Abraham: All of these decisions are subjective and the public’s reaction, or sections of the public’s reaction, is a relevant issue. We would have hoped that, having had it both pre-cleared and post-cleared, we would not have found ourselves in breach, and let’s remember we were not in breach on all counts. We were in breach on half of the counts, which is significant. I would also like the Committee to always bear in mind that we keep our remit front and centre of all of our decision-making and if the remit asks us to speak and shed a light on marginal communities we should push ourselves to do that and do it in a way that is original and fresh. We do absolutely regret that parts of the community have not reacted in the way that we intended but our intention has always been clear. To be found irresponsible by the ASA is, from our point of view, very regrettable, because our intention was to deliver on our remit.

Q21 Chair: Do you think the ASA ought to look at its procedures, given that they told you that the complaints were unlikely to be upheld and then the finding was pretty severe in upholding those complaints?

David Abraham: I think that is a matter for them, and also we should respect the democratic process for all pressure groups to find a voice and say what they think. Channel 4 supports all groups being heard, and we have no issue with that.

Lord Burns: The appeals process is a natural part of all kinds of things, including the law courts, and I think one has to live with the fact that things can be appealed. I have no complaint about that at all.

Q22 Damian Collins: Would Channel 4 be able to send the Committee a copy of the evidence that was given as pre-clearance for the adverts, the evidence that was submitted in advance? I imagine that document would have been sent in as a fairly routine thing. Following on from the Chairman’s point, it would be interesting to know whether at pre-clearance they were aware of the age of the girl in the advert in particular and also whether they were told that all of the photographs were simply reportage-style photographs, where clearly some of them were contrived to portray a meaning that Channel 4 was seeking from the camera.

David Abraham: No, that is not true. Only one of the four photographs was taken after the ill-advised email. Three out of the four posters that ran were taken before that email was written. The original brief to the photographer was to do observational photographs, not photographs done in the style of the email.

Q23 Damian Collins: But one of the adverts that was submitted for pre-clearance came after the email was sent.

David Abraham: But the complaint was not upheld on that poster.

Lord Burns: It was not contrived either, because the photographer makes quite clear in her response that she does not do contrived photographs.

David Abraham: She did absolutely the right thing and she referred back to the original brief she had discussed with the more senior person.

Q24 Damian Collins: But I would be interested to know whether they were aware of the age of the girl. They find that is a very clear breach of the code, regardless of the rest of the style of the campaign, and I think, following on the Chairman’s point, it would be interesting to see what information they had in advance of the adverts running.

David Abraham: Yes, we will happily provide that evidence.

Q25 Philip Davies: Can I ask you about the Paralympic Games, which I think we can all agree was a great success? Did Channel 4 succeed in all it hoped to with its coverage of the Paralympics?

David Abraham: We did. This was obviously a hugely ambitious and in many ways unknown endeavour. No broadcaster in the world had ever attempted to broadcast the Paralympics in full; nearly 500 hours in total across all of the streams. It stretched us to the absolute limit. It required us to make the public aware of the event for two years in the run-up and then do what proved to be a very successful marketing campaign to make them aware so that the Olympics did not drown out and soak up all of the attention. It challenged us because we made a commitment to bring in a new generation of young presenters on to the presentation team and disabled presenters who also had detailed knowledge of Paralympic sport. When you take all of those challenges together and you put that into an 11-day event, we feel it was one of our greatest achievements and something that we are extremely proud of, but more importantly the public’s reaction to the Paralympics has been quite remarkable. In terms of the research results that we have recently got back, over 75% of the people who watched the Paralympics had never seen any Paralympic sport at all. Over 80% of the people felt that the quality of what was done in the Paralympics was equal to what the BBC did with the Olympics.

So we were extremely pleased about the reaction, given the fact that for the majority of the population they had spent very little time with the Paralympics before. The BBC had done a good job covering it in prior years, but if truth be told the reach and the impact of the event up until now was modest and so many multiples more of people saw this event. It was absolutely helped by the wave of energy through London 2012 and the momentum. I think many people feared that perhaps there might have been fatigue going into the Paralympics and that absolutely was not the case. We are very pleased also that our campaign helped to fill the stadiums and create a lot of positive energy.

Q26 Philip Davies: How did the viewing figures meet your objectives?

David Abraham: They were at the absolute top end of our scenario planning. We could never have been absolutely sure because it was a first, but we had a range of scenarios and it absolutely hit the top end. It reached over 80% of the population during the course of the event, and we had our greatest ratings for nearly 10 years for the opening event, which peaked at nearly 11 million and peaked at around 7 million for the closing ceremony. We had a wonderful evening of sport on the Thursday night when Jonnie Peacock won the 100 metres and beat Pistorius. These were highlights that in a way matched the highlights of the Olympic Games.

Q27 Philip Davies: Did the coverage realise a profit for Channel 4 or did you run it at a loss?

David Abraham: All of the work we did prior to the event-the commitment that we made to run documentaries and magazine programmes like the Paralympic Show that we produced in Wales-was effectively produced at a loss in the sense that it required a subsidy from the rest of the business. The event itself we had to invest probably slightly more than we expected in terms of ensuring, once we had seen the Olympics, that all of the camera coverage was good and that we could produce a quality experience for the viewer. So the cost went up and the good news is because the ratings were up we managed to broadly break even on the event itself.

Q28 Philip Davies: It was obviously a massive event. Is there anything that you would do differently if you were to do it next time?

David Abraham: One of the very interesting conversations we are now involved in with the International Paralympic Committee, because of course they are about to make a decision about Rio, is what is the effect of having more broadcasters from around the world covering the event. My understanding was that the broadcast centre down at Stratford had nearly 15,000 people in it during the Olympics from nearly 200 countries. When the Paralympics began there were a small handful of countries that were there in force. One of the great things is that we now have a benchmark for a country covering it as deeply as the Olympics and that will enable the broadcast service provider of the feed to cover all of the events. There were some events, such as those at Brands Hatch with the cycling and the road race on the last day, where the camera coverage was not what we would have liked it to be. That was no fault of OBS. It was simply that the economics of being at every event with as many cameras as the Olympics is not quite where the Paralympic movement is yet. We believe that with the momentum that is now coming we can assist in the process of encouraging other countries to do deeper coverage.

Q29 Philip Davies: Have you done any research or will you do any research into the impact that the Paralympics and your coverage of it has had on people’s attitudes towards disability more generally?

David Abraham: Yes, indeed. In fact, we do have some initial findings on that very topic and they are extremely positive. The combination of sporting achievement and very compelling life stories of the individual competitors has absolutely encouraged a new and fresh view of that part of our society and that has to be a good thing for the future.

Q30 Philip Davies: Many people found the whole event inspirational, and I think particularly the focus on what people can do rather than what people can’t do is the key thing from it. I wondered what Channel 4’s plans were now more widely in its programming to build on what it has done with the Paralympics to do other things that focus on disability, and perhaps build on the theme of what people with disabilities can do rather than what they can’t do.

David Abraham: Absolutely, yes. We have a great tradition of programming in this area and in fact this year we have had a great success with a show about disabled dating, called The Undateables, that has had a very positive impact and a very good, wide audience. The critical thing we have focused on since the Paralympics is the team of presenters, the young presenters that we trained up ready for the event. We have announced recently that there is a fund that has been provided to them of £250,000 that will ensure that they will get work, both with us and in the industry, presenting not just in Paralympic sports programmes but in news programmes. We have the horse racing coverage coming. Diana Man, for example, who did the equestrian events, will be hopefully working with us on that coverage. Absolutely to your point, allowing these presenters to appear across our programming and across other genres is part of our plan.

Q31 Philip Davies: Beyond the presenters, which I appreciate, in terms of the portrayal of people with disabilities more widely, you mentioned The Undateables. Do you have any plans for other programmes, just for argument’s sake, that will show people with disabilities getting into employment, to show again what they can do rather than what they can’t do? Is that type of thing on your agenda?

David Abraham: Absolutely, and those types of programmes are constantly in development. We have also entertainment and comedy programmes that are working in that space. One of the greatest delights for us was the Adam Hills show, The Last Leg, that ran as a wrap-up show at the end of every evening. That has introduced new entertainment talent from the disabled community. We are very committed across the genres and the Paralympic Show, the magazine show, will also come back as well, so you should expect to see more from us in this area over the next few years.

Q32 Paul Farrelly: Can I congratulate you on the Paralympics? It was absolutely compulsive viewing. It was no doubt enhanced by the fact that you couldn’t get a ticket or a day pass for love nor money so, "What is this that we can’t get into?" It was absolutely fantastic. I was addicted in particular to wheelchair basketball by the end, so I would encourage you to show more of that. I have a curiosity question. When I first turned it on I thought, "That’s the lady from the BBC." How did you get Clare Balding? Did the BBC loan her to you as a national treasure, much like you might apply to the National Gallery for the loan of a painting? How did you land Clare?

David Abraham: Clare has been really committed to Paralympic sport for many years, she is deeply knowledgeable about it, and it was a no-brainer. She wanted to be part of what we were doing.

Lord Burns: She is not under exclusive contract at the BBC.

David Abraham: She is not under exclusive contract.

Q33 Paul Farrelly: We are used to anchors, aren’t we, on the programmes?

David Abraham: Yes. Interestingly, she was the anchor of our primetime show. Her role as we saw it at the BBC was quite different to that. It was a more specialised role. We had a lot of fun and it was great to see the pairings of the more familiar presenters through the day working with the new presenters, and that was a big creative risk. Nothing like this has ever been attempted before where presenters who have had almost no onscreen experience worked for hours at a time on a big national event. The dynamics between Clare and Ade and all of the other pairings worked in a very special way, and we are looking forward to working with them all in the future.

Q34 Paul Farrelly: I will just congratulate you again. The presentation was refreshing, it was informative and it was funny. It was fantastic.

Lord Burns: I went to a number of events, including the wheelchair rugby and some cycling, as well as being fortunate enough to be there on that Thursday night. I was doing the presentation on two occasions and I was also at the Thursday night with the sprint final. As many people know, I am quite an addicted sports spectator, and the thing that came over to me most of all is that great sport is great sport. When you combine that kind of competition with an audience that is hugely enthusiastic and you are told about it and you understand it and it is also very competitive, regardless of whether it is the Paralympics or the Olympics, it has a very similar effect, certainly upon me, and I think many of the people who were watching it. I don’t think there was any difference between that Thursday night and super Saturday. I was in the stadium on both occasions and I thought that the experience was very similar. One of the striking things to me was the way in which sport itself was the thing that came out so strongly from those events.

Q35 Mr Sutcliffe: What you said there is exactly right: sport was the winner. Also as the chair of the All Party Group on Disability Sports I think there is a great opportunity for Channel 4 now to speak to the sporting organisations like UK Sport, Sport England and the Youth Sport Trust about how we develop disability sport in this country. I think the expertise that you get and the information that the programme showed prior to the Paralympics is a great source that should work within sport as perhaps a bit of an income generator to talk to those bodies about how they can help you help them to understand disability sport.

David Abraham: Absolutely. One of the other innovations, of course, was the Lexi Decoder that explained all the classification systems in all the different events, not a straightforward thing to convey. Again, it was a creative challenge that I think was met in a very original way.

Q36 Jim Sheridan: You will be aware that people with disabilities live with their disability for more than three weeks, they live with them for a lifetime. I am delighted that you have had some positive research, in response to Philip Davies’ request, that some positive research had come out of the Paralympics. I wondered if you could share that with the Government to counterbalance the negative stuff we get from the tabloids that the people on disability benefits, for instance, are all scroungers, and other words that are used.

David Abraham: We will share that with all interested parties, yes.

Q37 Chair: Can we now look in a little more detail at some of the findings in the annual report? We, in this Committee, have pressed you in the past to give greater detail, particularly about your investment in original content. One of the breakdowns that we did suggest was that you should give more detail about investment in each of the genres and distinguish between acquisition and originated content. That is something you have not yet felt able to do.

David Abraham: We have shared some of that detail in the last session confidentially. We did explain that there are certain pricing metrics that we do believe are commercially sensitive. Be that as it may, the good news is that in this report you will see that using the Ofcom traditional measurements of public service investment there has been quite a marked increase from £145 million to £187 million, which we believe is very encouraging. But of course we would want to also stand back and remind the Committee that so much of what we do elsewhere in our schedule we would describe as public service. Indeed, using the Ofcom measures, ironically the Paralympics would not be included, which of course is clearly not a comprehensive view of the impact of what we are doing.

The Statement of Media Content Policy is really the overall metric that we have used since the last Bill to measure our impact and we are very proud of what we have been able to achieve through the increased budget in Film4, what we are continuing to achieve in news and current affairs. If you take shows like Educating Essex, 24 Hours in A&E, Hugh’s Fish Fight in Sri Lanka from this report, or from this year shows like The Undateables, which we have mentioned, Make Bradford British and Homeland, these are shows that we believe have quality and value in providing viewer choice but are not necessarily captured by the strict measures. But the metrics are entirely going in a positive direction. I think you pushed me last time and said would we spend more. I said I hoped to, and indeed we have. This is a report that demonstrates that Channel 4, in very challenging circumstances, is continuing to deliver to its remit very strongly, way beyond the minimum requirements of the remit, and it has done so in a way that has enabled us also to increase our cash reserves over this period. When taken as a whole, we would say that the public service delivery of Channel 4 has continued to evolve over the last two years.

Q38 Chair: Certainly it appears that while there has been a significant increase, and that is something we would welcome, it has focused on particular genres like comedy and entertainment. I think we would remain concerned about some of the others.

Lord Burns: Drama in series and singles is also a category that increases sharply.

David Abraham: There are some anomalies in the presentation because Big Brother was coded as a factual programme, and so once you take that out it would appear that some of those metrics have gone down.

Q39 Chair: I wanted to ask you about that. The report says that the number of hours of factual programming has gone down from over 2,000 to 1,000. I assume that is entirely due to Big Brother?

David Abraham: Exactly.

Q40 Chair: What have you, therefore, filled that gap with?

David Abraham: That money has gone into many other genres, as I said last time. It has gone into drama and comedy and more documentaries, and we think it has helped to diversify the schedule and make it much more varied. One of the great bits of news to report from this year is that two-thirds of the highest rating programmes on Channel 4 this year are new programmes. I think if you go back two or three years and the debate around whether the schedule had become too dominated by Big Brother, we have gone through quite an extensive shift in the balance of the schedule and we believe that the Channel 4 schedule continues to become more diverse as time goes on. We rely less than some of our commercial competitors on individual big titles that have been around for many years. Part of our remit is to innovate and do new things and that is a testing and challenging process for the commissioning team but it is one we are very committed to.

Chair: Can we look at various specific areas, starting with Ben Bradshaw?

Q41 Mr Bradshaw: Can you outline to us what you are doing to fulfil your obligation under the Digital Economy Act and your own stated ambition to improve the content for older children?

David Abraham: Certainly. In terms of programming that appeals to that age group we focus on what we do in our core schedule and what we do in the digital space. We have had great success with a new show called Fresh Meat, which deals with the transition from school to university. That has now been extended into an online proposition. The issues that that show deals with we say are generally part of what we deliver to that group. We are in production at the moment with a series for teenagers called My Fat Mad Teenage Diary, based on a very popular book. It is about teenage obesity and self-image. That is going to come on to the E4 schedules in a few months time. We continue to have great success with our citizenship programme for young people called Battlefront, which has won several Digital Emmys and continues to be strong online and has also been manifested in a TV programme. So that is for the older children. Obviously E4 is the strongest digital channel for 16-34s in this country and it gives us a great platform to showcase original content and original voices for young people, albeit that it is a digital channel and it has a different kind of repeat schedule to Channel 4.

Q42 Mr Bradshaw: So you would contest the suggestion from the Children’s Media Foundation that you have not really done much so far? They could only detect one new programme called Nightmare High, which was an interactive Grange Hill type of story-based programme.

David Abraham: The question you originally put to me was about older teenagers, so that is how I answered that. We have a whole slate of projects for younger children. The most prominent of those is about to come at Christmas because we have remade the original Snowman movie, which will come in the run-up to Christmas, which we are very excited about. We have three projects, Cover Girl, Nightmare High and a game on Facebook called Beauty Town. All of these deal with issues of self-image, transition between junior school and senior school, and are very innovative projects for which we have won awards. So we have made some good progress. Do we remain committed to doing more? Yes, we do. I would highlight to the Committee that obviously so much of our primetime schedule we would say is educative in its nature and creates massive conversation among young people. If you take a show like The Undateables, there is an unbelievably young profile for the show and very positive discussions among young people about issues that probably they are not getting from other channels.

Q43 Chair: Can I look at audience share? You have maintained, indeed slightly improved, your overall share of viewing, but it is the case that the share of the main channel has continued to fall. Is that something that is causing you concern?

David Abraham: Like all terrestrial channels over the last 10 years, with digital switchover there has been erosion due to the fragmentation and the proliferation of choice. If you look at it on a long-term basis, Channel 4 has held up reasonably well versus its terrestrial competitors. On a short-term basis, it is a challenge but it is one that I believe we are meeting well. Why do I say that? The level of decline on Channel 4 is actually reducing. The level of decline in 2011 we could attribute almost wholly to the end of Big Brother and this year we brought in a new innovation on Channel 4. It is called 4seven, and 4seven is designed to give an extra window to new shows on Channel 4 that are creating a lot of conversation from that week. We are using digital media to allow viewers to talk about the programmes and reshow them in hours and days following their first transmission. In its first few months 4seven has already clawed back some of the share loss that Channel 4 experienced in the first half of this year. Of course all terrestrial channels have had a really competitive year with the Jubilee, with great tennis and the great Olympics. Those are non-commercial audiences, obviously, and it is the case that Channel 4, while it has faced a very competitive year, has done somewhat better than ITV1 and BBC Two, for example, facing that competition.

Q44 Chair: Would you accept, however, that the vast majority of your public service genre content is on the main Channel 4 channel and therefore, if that is slowly continuing to decline, then the number of people who are seeing your public service content is by definition falling?

David Abraham: Due to those forces that we have just talked about, proliferation of choice, both online and in digital linear platforms, inevitably there is pressure on reach but the reach over the period of a week is still extremely strong. We still have very significant impact. It is the case that we run our portfolio as a portfolio, so we do repeat the programmes across the different digital channels and make the best use we can of them. What we are increasingly seeing is that many of our programmes can double their overall share if you consolidate the ratings over a period of days and weeks and include all of the different catch-up services. So I think this is as much a reflection of changing habits as it is anything specific to do with Channel 4. This is one reason why-and I talked about this last time as a strategy but we have now executed on it-we have set about a much more direct relationship with our viewers than any other broadcaster is attempting. In the period of the first 18 months we have invited and recruited over 5 million of our viewers, at a rate of almost 10,000 a day, to register with Channel 4 in order to access content on 4oD and to enter competitions and get involved with us. This week, for example, we are running our first very big fundraising event, Stand Up To Cancer, which we are doing in concert with Cancer Research UK.

These events are a great way of having direct contact with viewers, and we see part of our future is more regularly being in direct contact with our viewers. That will inform a different measurement system that will evolve in the years to come, which will combine all of the accumulated viewings of a piece of content together with its broader impact and a level of connection directly with the audience. Channel 4 is very strong in that engagement with the audience. It has always been very competitive. Our programming is distinctive and advertisers do engage with us through sponsorships and deployment of our airtime because of that.

Q45 Chair: This would apply not just to you but to other broadcasters, but do you therefore see the traditional measures of number of viewers and reach and so on as essentially becoming outmoded because of the different ways people access the material?

David Abraham: I wouldn’t say they are becoming outmoded. I think we are going to move to a more sophisticated series of measures to get to the heart of both commercial value and public value, and those will evolve over time. Our own annual report shows that we have evolved those accountability structures over time.

Lord Burns: We share the ambition, and I think what you are saying is that clearly it is in our interests to keep the viewing figures for the main channel as stable as possible. As David said, it has been a tough time in recent years as more and more choice has become available to more and more families. It is not surprising that viewing has fragmented as people have made their choices about what it is that they want to watch. But the main channel is very important to us. It is where we put most of our new commissioned programming and, as you say, it is where we do have the largest amount of intensive public-service television. All of the broadcasters have faced similar pressure and what they are all doing is much the same as Channel 4, which is to have a portfolio of channels where you then try to manage your whole portfolio of programming, including repeats, in order to engage as wide an audience as possible.

David Abraham: We would also contend that those channels are capable of delivering public value. Last night on More4 we had a wonderful documentary with Richard Dawkins talking about religion and science. We have had a very strong series about art and about film on More4 in the last year or so. These have been well-reviewed, high-quality pieces of content. Remember we are spending between £30 million and £40 million on original content on our digital channels. So, while we agree with the premise that it is Channel 4 where we deliver the majority of public value, it is not the case that we deliver no public value elsewhere.

Lord Burns: Digital switchover is now complete. The pattern of the decline has been very much affected by the penetration of digital television into different regions, so as the different regions get it and as people take on the digital service then that fragmentation becomes apparent. We are now at the end of that journey. I think we will probably see some greater stability of the numbers as a result.

Q46 Mr Sanders: Statistics can be really complicated. I am trying to get my head around some of the statistics in the 2011 report, and comparing them with other broadcasters is not easy. The 2011 report shows that Channel 4 has a higher proportion of 16 to 34-year-old viewers for genres such as comedy and entertainment as well as drama after 6 pm. Does that mean Channel 4 reaches more 16 to 34-year-olds in absolute numbers than the other public service broadcasters?

David Abraham: Most of the time that is correct. Obviously when there are big shows on other channels they will have a higher volume but the profile of Channel 4’s primetime audience is absolutely superior to our competitors. That is important because it is back to the Channel 4 brand and what the audience expects to find on Channel 4 and the kind of topics they would expect to see explored. But in both commercial terms and in public value terms that is correct.

Q47 Mr Sanders: Your own figures show that the proportion of your viewers aged 16 to 34 is greater than, for example, the BBC. Is it not likely that Channel 4 reaches significantly fewer 16 to 34-year-olds than either ITV or the BBC in terms of actual numbers?

David Abraham: Well, if you are talking to an advertiser, they want to buy efficiently, so if they are trying to talk to young people, they will only want to buy young people. The proportion of young people and efficiency of the audience is the critical measure. If you are talking about public value, there are probably many parts of the schedule where we do deliver a higher volume. Of course, against very big shows and other channels, the volume will be less. This is to do with targeting and profile as opposed to absolute volume at different times of the day.

Q48 Mr Sanders: I think the news programmes broadcast-

David Abraham: E4 is the biggest single channel for young people both in terms of profile and in terms of volume, so it has more young viewers even than Channel 5.

Q49 Chair: I understand your argument that perhaps advertisers may want to target and, therefore, do not want a programme for which 75% of the viewers are not in the demographic they are targeting. But the actual point that in terms of absolute numbers it is likely that more 16 to 34-year-olds are going to be reached by the BBC or ITV; do you accept that?

David Abraham: It depends on what time of day you are talking about because if you are talking about who is-where are the young people in the middle of the day, they are probably watching E4.

Q50 Mr Sanders: Yes; well, the figures were for after 6 pm in your report, so they were not about daytime viewing figures.

David Abraham: We could certainly provide you with a whole series of measures of both volume and profile and you can get those proportions to compare.

Lord Burns: Yes.

David Abraham: The fact is that, yes, a big show like X Factor will deliver a higher volume but a lower profile.

Lord Burns: I have not got them to hand, but I suspect in terms of the absolute number that the BBC and ITV numbers are higher than the Channel 4 numbers but the difference between them will be much smaller than it is for the total. We do better amongst that group in absolute numbers than we would do for other groups.

David Abraham: I think the thing we look at is how many parts of primetime are we delivering both the highest profile and the highest volume. There are many occasions where we are doing that.

Lord Burns: We are doing both.

David Abraham: We are doing both, but we can certainly provide you with more detail.

Q51 Mr Sanders: The news programmes broadcast on the main Channel 4 channel experienced a reduction of viewers between the ages of 16 and 34 and only a small increase in black and minority ethnic viewers. Now, are you concerned by these figures and to what do you attribute them?

David Abraham: Certainly it is something we are focusing on. The viewing to news programmes is changing for all broadcasters and this is not an issue that is very specific to Channel 4. Behaviours are changing. People are finding their news online, 24-hour news channels are much more established now, but what we focus on is the absolute distinctiveness of the Channel 4 news proposition. An hour of in-depth news analysis in early primetime is still, we think, an unbelievably important public service attribute. We have refreshed the programme in the last year. We have a bigger presenting team. Michael Crick and Matt Frei have joined us. We are very proud of the programme and the fact that it won a BAFTA this year. It does more international coverage than our competitors and it is regarded by viewers as the most independent broadcast news programme in the UK that we think is very important. What we are doing is focusing on investing in the programme. In fact, you will see we are spending more on news and current affairs in 2011 and we remain committed to our investment. It is a creative challenge that we remain very focused on.

Q52 Mr Sanders: Despite the revamping, despite the recent Twitter and social media which I have seen has become part of the overall package that the news programme offers, you have seen this reduction in this key age group. What is it attributed to?

David Abraham: Well, a slight clarification. When the riots happened in 2011, we had a very large spike in young viewers coming to the channel, and some of what you are seeing is the prolonged euro crisis, the nature of some of the news stories themselves, but there are certainly occasions where we do see that we are the first port of call for young audiences when big events occur. The brand is still very strong, and I think this is something we keep working at. But we are very, very proud of the show and the fact that it does what it does so distinctively.

Lord Burns: This is another striking case to me of where the whole issue of fragmentation is affecting the viewing figures. In this case it is not just fragmentation across the number of channels, but it is also other ways of people receiving news. We, as David said, try very hard. We are putting a lot of investment into it. But I suspect if you look at your own behaviour you will find that you watch fewer standard half-hour or one-hour news programmes than you did a few years ago.

Q53 Mr Sanders: I think we are fairly atypical-

Lord Burns: No, no, but I find from the first off, without doubt-I myself get my news from all kinds of other sources-not only do you have 24-hour news services, but you have news on the Internet and news by a whole series of ways in which news summaries get pushed to us. This is affecting behaviour and we have to work very hard. It means that we are facing in a bit of a head wind when it comes to keeping people for an hour to watch a news programme when they can obtain their news in so many different ways and their commentary of that comment as well.

Q54 Chair: Both you and the BBC produce 15-minute brief figures, but the BBC is a weekly figure, whereas you use a monthly figure that arguably is not quite as challenging.

David Abraham: Yes.

Q55 Chair: Why don’t you use a weekly figure?

David Abraham: The data is available and if you want to have it, we will provide it to you.

Q56 Chair: I think we would appreciate that. The other thing I just want to quickly touch upon, you have a number of licence obligations which are targets that you are set to achieve and actually in most cases you exceed them by quite a significant way. Do you think, therefore, they should be made a bit tougher?

David Abraham: Which aspects?

Q57 Chair: There are a whole series of targets for things like independent production and number of hours for schools and subtitling. Actually, you are way ahead of most of those, are you not?

David Abraham: We regard these metrics as absolute minimum requirements of what it is we are actually seeking to do. The Statement of Media Content policy and the Programme Quality Standards that the board sets, the executive, are the stretching targets that we work to. I think if we can comfortably meet those minimum requirements, then we should focus on the added value aspects of what it is that we are also trying to do.

A lot of effort has gone in to engaging with nations and regions in terms of the production base since Jay Hunt arrived. Both of us have personally been several times to engage with producers and we have an Alpha Fund that has been in play for some time now that is succeeding in creating a conveyor of new companies that are beginning to work with Channel 4. This takes time, but that has been the big leap forward in terms of what we discussed last time in terms of engaging with producers from round the country because, of course, our view is it entirely underpins the diversity of our schedule.

Lord Burns: That said, in monitoring this, I pay more attention to how we are doing one year compared to another on these measures than I do by comparison with the minimum requirement.

Chair: We are going to come on to nations and regions very shortly, but, just before we do, Paul Farrelly.

Q58 Paul Farrelly: I am tasked with turning to your finances, but in October 2012 asking about your 2011 annual report is rather like asking about the Beijing Olympics, quite frankly. You have both, or all of you really, have had the great fortune, unlike Michael Grade at ITV, of being in post when TV advertising has been buoyant and not in the doldrums. As you are reliant on TV advertising in great amount, can you just say how it is now, and how you see the next couple of years?

David Abraham: Yes, yes. I would not describe the last two or three years as buoyant.

Paul Farrelly: Relatively buoyant.

Lord Burns: Yes.

David Abraham: What happened is that there was a calamitous experience in 2008. There was a deep depression in TV advertising revenues which from 2010 was mostly recovered. In actual fact, 2011 ended just around flat. This year will probably end, we hoped, flat but slightly down and sentiment is not necessarily looking at all buoyant for the TV market going into the early months of next year because, of course, we do not have any of these exciting events to engage with advertisers.

Things do remain very challenging, but what we focus on is the way in which the traditional segment of TV advertising is evolving. We have very considerable momentum in online video where 4oD is the market leader and we have, as you have seen in our results, growing revenues in that area to complement the revenues we already have in our digital channels. The diversification of the Channel 4 model is starting to occur, and we have successful commercial partnerships as well that are starting to bear fruit.

Whilst it is the case that we still are in general terms an ad-funded business, the traditional 30-second spot is definitely something that is only part, not the whole, of the revenue model. From a financial point of view, in those two prior years, we were able to store up reserves up additional to what we feel is the comfortable threshold of £200 million, see a figure of north of £290 million in these results. I think that is why the stability of Channel 4 is more sure at this stage of the cycle than perhaps it was coming out of 2008.

What we have also said, when we delivered these results publicly earlier in the year, is that because of that we intend to use some of those reserves to deliver the public service on Channel 4 over the next two to three years. Effectively we are taking this accounting-

Q59 Paul Farrelly: In which way?

David Abraham: Taking the surplus above £200 million and distributing it and smoothing it into the next two or three years. When we come to see you next year, you should expect to see a reasonable proportion of that £90 odd million being allocated into the public service delivery of Channel 4 and particularly obviously in 2012 when, as we said, we had many of the extra investments around the Paralympics.

There is an accounting deficit that is drawing down on the surplus that you will see in the 2012 numbers and you will see them over the next two to three years. What we then see is a stabilisation in the outer years of our plan because we see the online video and other connected TV markets opening up because they will compete much more effectively with direct marketing expenditure that marketeers are currently deploying out of print and into online. This is the key thing. We increasingly look at the advertising market in its totality, not necessarily the segment that was traditional TV because if more and more of our content is available through connected devices-which it is-then that opens up many more opportunities to do things in new segments of the overall market.

Q60 Paul Farrelly: When I looked at your balance sheet with nearly £250 million cash last year, and I speculated it would otherwise be nearly £300 million this year, the temptation is to ask you whether to use Terry’s experience at the bank, quite frankly. But you are saying that-

David Abraham: We did do a show called Bank of Dave, which was a great show on that topic. But no, you should not expect that figure to remain over the next two or three years. We are drawing it down in a controlled way because what you obviously can see in these accounts, and you will see it again in the next couple of years. We have gone from a position of Channel 4, as it were, within the overall accounts, delivering a surplus to fund for development of our digital activities. You are now seeing surpluses in the digital activities funding the public service delivery of Channel 4 which, we would say, is very much as it should be. It is a transparent model. I think there was some concern in previous years in this Committee that somehow Channel 4 was funding commercial activities. The opposite is really the case.

Q61 Paul Farrelly: Just without revealing any commercial secrets, do you have any intentions to launch additional revenue streams with the problems that you are-new channels, new-

David Abraham: We don’t have any-well we have obviously launched 4seven this year. We are in the second year of a very fruitful partnership with UKTV representing their advertising sales. We have obviously had great success with the Inbetweeners movie and the sale of those DVDs, all of which have contributed to the revenues beyond the traditional television area. But do we have plans to launch a radio station or buy a magazine? No, we don’t.

Lord Burns: Could I make a point? As David says, the reserves that we had at the end of last year are higher than we think are necessary for the ongoing health of the company and it is our intention to bring them down. In part it is to finance some of the additional expenditure of using new methods of transmission and new methods of reaching our viewers. We are also putting a lot of emphasis upon using it to be able to afford the content that we think that we should be putting on. It is that, rather than the idea of investing it in some grand scheme of things that we are concentrating on.

Q62 Paul Farrelly: A possible future demand on your finances might be paying for spectrum that you would probably get for free. What sort of impact would that have?

David Abraham: It would be very concerning to us were spectrum pricing to be imposed because effectively it would mean that we would have to pull money out of delivering public service content. Money would go from producers to Ofcom. So we absolutely would discourage that line of thinking.

Q63 Paul Farrelly: How much might that potentially cost you if you-

David Abraham: It is tens of millions potentially, so we are very concerned about it.

Q64 Paul Farrelly: That would presumably have an impact on-

David Abraham: Yes, it would come straight of the programme budget.

Q65 Chair: Would you accept the argument that spectrum pricing actually will lead to a more efficient use of spectrum? Obviously, your having to pay for it is going to come out of your bottom line, so if Ofcom were to, for reasons of efficiency, introduce spectrum pricing, would you hope to receive some kind of public support to take the place of the free spectrum support you get at present?

David Abraham: As Lord Burns said, we are already spending a high proportion of our income on distribution costs than ever before. We are continuing to pay EPG fees to pay platforms. Although they are reducing, we are still paying them. So if we were to deliver to our remit, we would be very concerned of an additional cost. It is not obviously for us to instruct regulatory solutions; we are just simply highlighting the concern we have about our ability to continue to remain competitive in a technical, technological sense with the additional challenge that this would represent.

Q66 Chair: You are having that discussion with Ofcom, are you?

David Abraham: Yes.

Lord Burns: Yes.

Q67 Jim Sheridan: Thank you, Chair. David, notwithstanding your previous comments on regional diversity, it does seem that the production, the proportion of production in the rest of the UK has fallen compared to 2010 and it worries some of us, particularly north of the Watford Gap. What investment is being done?

David Abraham: There were some phasing issues on some shows that ended up not succeeding and timing issues but I am confident that when you look at our 2012 numbers you will see positive momentum on all of these measures. There has been some great success with shows that have been made in Scotland that we want to re-commission as well as in Wales and Northern Ireland as well.

Q68 Jim Sheridan: What are these shows?

David Abraham: Well, Bank of Dave is one of them. That is coming out of Glasgow. The Paralympic Show comes out of Cardiff. We have done 4thought.TV that comes out of Northern Ireland and there have been a series of great one-off documentaries coming from Northern Ireland as well. The combination of nations and regions and also new companies, helping new companies to get going, we are making a lot of progress. I was extremely pleased and proud that in the Broadcast Survey, Channel 4 was voted by producers in the UK as the best broadcaster to work with for the first time in six years. We are making progress, not complacent and we want to see many more shows coming from the nations in the future. We are quietly confident that that will happen.

Lord Burns: We are putting a lot of effort into it.

David Abraham: And there is a lot of effort. Jay does workshops very regularly up there. Our commissioners are tasked with ensuring that the Alpha Fund projects, which start small, end up being primetime shows. There are a growing number of examples of shows like The Queen’s Cousins that are made by companies that have never done a primetime show for Channel 4 and they got the first show to work for us.

Q69 Jim Sheridan: I can understand the shows you have identified but the BBC, warts and all, does try to reflect the aspirations, the desires and the life of people in various communities.

David Abraham: And so, and so-

Q70 Jim Sheridan: What is Channel 4 doing?

David Abraham: Representation is something that we work incredibly hard on. If you look at the casting of any of our shows, our regular shows like Come Dine with Me, Million Pound Drop Live, Hollyoaks, you will see it is important for us to make sure the casting and representation of our shows is as balanced as it possibly can be. I think we have a very good record both in terms of regionality and gender and communities there.

Q71 Jim Sheridan: Hopefully this time next year we will see an increase in production outside of London?

David Abraham: You will see that.

Lord Burns: Yes.

Q72 Jim Sheridan: Another question, you will probably guess, coming from somebody who is from Scotland, in the unlikely event that the UK breaks up, what impact, if any, would that have on Channel 4 and the rest of the UK?

Lord Burns: I was proposing to face this hurdle when we reach it. We are a national broadcaster. We have one output that goes to all regions of the United Kingdom. We do not have different regional programmes in different areas.

Q73 Jim Sheridan: No, as a perfectly serious question. People need to understand the implications and consequences of the break-up of the UK. Part of that is broadcasting and if people are going to lose, potentially lose programmes or jobs or productions, I think it is incumbent on people like yourselves to say that.

David Abraham: We are obviously a market-

Lord Burns: Of all the issues that I feel like getting involved in with Channel 4, this, at this moment, does not qualify.

David Abraham: What I would say is that we are a marginal broadcaster that delivers meaningful amounts of content in all of the nations. I think the model would be seriously challenged were it to be broken up in any way. What we want to do is engage, as we do with Scottish producers, on programmes that could be made for the whole country and we are continuing to do that.

Q74 Mr Sutcliffe: Thank you. Can we move on to what perhaps sometimes is a sensitive subject, but remuneration packages and issues around that?

Lord Burns: Oh God, no.

Q75 Mr Sutcliffe: You will be aware that the public and Parliament are concerned in terms of the packages that are around. In the report, as all of us are, it is public knowledge about what the salaries are, what the packages are and you can see from the report that you three, in particular, have salaries above those of the BBC at a time when the BBC are reducing their salaries. The new Director General of the BBC’s salary is to be-has been-reduced. It is always a thorny issue about how do you manage the situation in terms of acting responsibly as a publicly-owned body and how you motivate staff. The question to you, Terry, is how do you achieve that? What do you take into consideration and how do you support the figures that are there?

Lord Burns: We are very aware of the fact that Channel 4 is publicly owned. It is commercially funded. We try to balance having competitive pay rates whilst also exercising, as you say, restraint that is consistent with our public sector status. We give a lot of weight to this. Obviously the main criterion is about how to attract, motivate and retain the people that we want to retain.

Since I have been Chairman, it has coincided with the time where we have been seeking to reduce the rates of pay of the senior executives. Obviously we cannot change the pay arrangements of those people that we are already contracted to. But as we have come to replace people, we have generally recruited them on lower rates than their predecessors. It has certainly happened with David. It has happened with Jay Hunt. It has happened with our Head of Ad Sales. The BBC are also now following a similar route. For the moment, as far as the Chief Executive is concerned, they have moved ahead. At the time we recruited David, the salary that he was recruited on and the arrangement that he was recruited on was substantially below that of his predecessor. In a sense that is the set of arrangements that we now live with.

What we have done in remuneration of course is try to be much clearer about the basis upon which the variable pay is awarded. We set out the criteria, we set out the ranges that we were comparing with and the reasons for the variable pay awards that were made.

Q76 Mr Sutcliffe: The trend, from what you are saying, is that when people are replaced, the trend will be downwards rather than upwards?

Lord Burns: Yes. I think for the time being that is the case. I do not know how long that will go on. There was a period back in 2005 to 2009 when the media market was very strong and as people moved from job to job and the basic rates did rise quite considerably. I think we have now been in a process of some of that coming back. Although when I look around the commercial world of commercial television, and of the independent producers, which we do have to keep an eye on because those are areas where within the company we are often competing, their rates remain quite some way ahead of our own.

Q77 Mr Sutcliffe: I think it is a problem, but obviously there is public concern.

Lord Burns: It is something we are very conscious of and we spend a lot of time on this trying to get the balance right. In this past year, when the contract that we had with David was that he would have a 50% bonus potential, he decided this year that he wanted to reduce that to 30%, the same as the other senior directors, because there was a lot of attention being paid to the issue of bonuses-or variable pay as we prefer to call it. That was done very much of being conscious about our public-not only our public service obligations but our obligations as a publicly-owned company. We have to try to drive that line between that status and the fact that, like it or not, we are in a marketplace competing for talent.

Q78 Mr Sutcliffe: I think that is the link in how you develop the public service content and reward that but also look at the commercial side. From what you were both saying earlier about the changing nature of the sector, you are going to keep that under review all the way through. But it is an interesting question given the height of the public concern there is about salaries.

Lord Burns: I am highly conscious of this, and I spend a good deal of my time in the banking sector where, of course, it is has been an even bigger issue. I may say the numbers that I see here, of course, do not quite compare with those in the banking sector. But everywhere in my life I go, people are very conscious of this issue of senior executive remuneration and the extent of which we have to keep this balance.

The problem is it is never possible for one company on its own to really make an enormous difference because you have to keep an eye on the competition which is one of the reasons why these things adjust relatively gradually.

Q79 Philip Davies: Can I move to my favourite subject of all, which is diversity, on which I tend to lock horns with Channel 4 on a regular basis, although not just Channel 4. This has to be one of the most politically correct documents that has ever been produced, I have to say. We simply do not have time to go through it all, Chairman. I just want to pick out a few highlights from it just to tease out exactly where Channel 4 stands on these things because it is unclear. We just have randomly in page 16 of the report it says, "We also continued to champion Black and Minority Ethnic talent, successfully growing our relationships with BAME-led indies". On page 27, "Film4’s slate featured an impressive string of films from female directors including"-a long list. The bit I am trying to get at is, I would have hoped that Channel 4 would want to champion all talent, irrespective of the race of the people concerned and irrespective of the gender of people concerned. Is that true, or if what I have just said is true, why does it not say that in your annual report? If it is not true, why is it not true?

Lord Burns: If I can make a general point about this, I think we are conscious that there are certain areas where people-partly on race grounds but it can be on other grounds, it probably also applies to disability-are under-represented in companies. They are particularly under-represented at senior levels in companies. One of the reasons they are under-represented at senior levels is because people do not get the same start often coming from those areas. As we said earlier, we do feel that we, as a public body, as a publicly-owned body, we have a commitment to try to make sure that there are people who are not being locked out of this world and out of the media world simply because of either where they live or what their background is or what advantages or disadvantages they had at an earlier age. I think it is right that we should be seeking, where we find this under-representation of particular areas, that we should be seeking to put an extra bit of effort into that to make sure that we are doing all that we can, not to match that, not doing something unfair in terms of giving people huge positive discrimination but one should be aware of where these things are and see if there is anything that we can do to make sure that people are not being locked out for reasons that can be overcome.

Q80 Philip Davies: These things that you are highlighting here, the question it leads to is: were these programmes only commissioned because they were promoting black and minority ethnic talent or female directors? If these programmes had been produced by white males, would Channel 4 have shown then?

David Abraham: You are trying to prove a point that those projects were commissioned in such a way that they disadvantaged opportunities-

Philip Davies: I am going to ask-I am not, I am asking you.

David Abraham: You are pretty much saying that and we are saying absolutely not.

Philip Davies: So these programmes would have been-

David Abraham: Because the balance of our schedule reflects the country in all of its diversity and we believe, categorically, that all parts of the community are well represented.

Philip Davies: So these programmes would have been commissioned if they had have been produced by white males in just the same say as they were commissioned because they were produced by-

David Abraham: There are two types of programmes. There is a programme that may be on a topic relating to those communities and then there are programmes that are, perhaps, on broader topics that happen to have those communities behind them, and they are two distinctive things. But it is absolutely not the case that we are operating in a way that disadvantages any community because it is part of our remit to ensure-if you read our remit, it is part of our remit to ensure that we represent all aspects of the community.

Philip Davies: I just need a simple yes or no, really. Those programmes that are listed in the schedule there with the string of female directors, the ethnic minority companies and producers: would Channel 4 have shown those programmes if exactly the same programme had been produced and directed by a white male?

David Abraham: Yes.

Philip Davies: They would?

David Abraham: Yes.

Q81 Philip Davies: So in which case, can I urge you in your future reports to say that you promote, champion talent irrespective of race, irrespective-rather than focusing on something-

David Abraham: We say that as well.

Q82 Philip Davies: Not in here, you don’t.

David Abraham: We do say that. It is in the remit and we do talk about developing all kinds of talent; young talent, so we provide a lot of investment, a skill set where we are investing directly in young people coming into the industry as well as people from different communities. It is not done to the exclusion of the mainstream at all.

Q83 Philip Davies: Lord Burns, you mentioned about fair representation, equal representation; under-representation I think was the word you mentioned. In your report on page 132, it says, "The representation of ethnic minorities amongst permanent staff in 2011 was 14%, which was up from 13% in 2010 and 12 % in 2009". Is that increase a deliberate strategy on the part of Channel 4 or has that just happened by accident and coincidence?

David Abraham: We are not achieving any set targets to ourselves on this matter. What we are trying to do is to ensure that we provide opportunities in the way that the Chairman has set out. Are we trying to beat some target? No, we are not.

Q84 Philip Davies: I did not ask if you were trying to hit a target. I was asking if you had made a conscious effort to increase the number of ethnic minority people in your organisation.

Lord Burns: This particular paragraph in this place I think should simply be seen as reporting what the position is.

Q85 Philip Davies: No, no I understand that, but I am now asking you, after you have reported what the position is-it is a simple question-have you made a specific effort to increase the number of ethnic minority people working at Channel 4, or has that happened by coincidence? It is a perfectly simple question to answer.

Lord Burns: It is neither of those, really. What it is that we try to conduct our approach and we try to advertise in places, we try recruitment processes that will give everybody an equal chance. By that process, we would expect that the numbers of people that we would employ would more closely reflect the community that we serve. For example, women continue to form the majority of staff of 57%. That does not mean that we are now going to set up a policy of trying to balance that to 50%. But if we have an area where people are clearly under-represented, what you do is you look at your policies and say, "Is there something about the way that we are recruiting people that is a disadvantage in this particular group?" and you then try to identify the reasons for it and try to then correct it. That is what it is about. This is about reporting.

Q86 Philip Davies: Sure, I understand that. You are a national broadcaster. You said so in an earlier answer.

Lord Burns: Yes.

Philip Davies: The proportion of people in the country who are from an ethnic minority is, I think, 8% at the last count. You employ, according to your annual report, 14% of ethnic minorities in your organisation. Would you, as a national broadcaster, therefore conclude that white people are under-represented within Channel 4, and if not, why not?

Lord Burns: Well, from the point of view of many of these jobs, I think you would have to look at what the position is in London.

Q87 Philip Davies: But you just said you are a national broadcaster.

Lord Burns: We are a national broadcaster, but it is inevitable that a large number of the people that we employ in many of our jobs are going to be recruited from London because we are based in London.

Q88 Philip Davies: What you are trying to do is reflect the country as it is in London, not the country as it is in the rest of the UK even though you claim to be, in earlier answers, I think to Jim Sheridan, a national broadcaster?

Lord Burns: That is where we commission programmes from. We try to commission programmes that reflect the country as a whole. But if you take the people that we employ in Channel 4, to a large extent those jobs are going to be filled by people who happen to live in London.

David Abraham: That also is the production companies are under-represented with people from these different communities, and we have the role, obviously, as a broadcaster but we will have the role within our industry. It is the case, and I am a proud supporter of the Creative Diversity Network that is putting in place measures to improve, from an industry point of view, because obviously people move between broadcasters, and it is absolutely the case that people at very senior levels of our industry tend to come from less diverse backgrounds and that is something as an industry we are committed to addressing.

Q89 Philip Davies: You have a big thing here about sex education. Lots of people would argue that sex education has made absolutely no difference to levels of teenage pregnancy and unwanted pregnancies in this country or maybe even point to the fact that these figures are now worse than when we started having sex education. I am not entirely sure how many organisations do the same thing for 35 years, find it does not work, and then keep on promoting it and doing it. Does Channel 4, which makes a big song and dance about sex education or how marvellous it is doing on that, actually give equal weight to pursuing the arguments that people have made that actually it is not a desirable thing, it has not actually made any difference, and actually-

David Abraham: If you were to actually watch those programmes, you would see that they are not encouraging behaviours that are unsafe or ill-advised. They are entirely providing information in a supportive way that is as supportive to certain behaviours as it would be to help to avoid behaviours that might be harmful. These are, in our view, not programmes that are encouraging a behaviour that you would be concerned about.

Q90 Philip Davies: But it has not worked, has it? So my point is has Channel 4-

Lord Burns: Well you don’t know that, do you-you don’t know that?

Philip Davies: We have been trying it for 35 years. Given that you have indicated-

Lord Burns: You don’t know what the base case would be.

Q91 Philip Davies: The point I am making is will Channel 4 give equal weight to explore the other side of the argument-

David Abraham: Well, if you watch the programmes-

Philip Davies: -that sex education may not-and perhaps focus on what countries like Italy and Holland do to reduce sex education that basically concentrate on having much tougher benefit systems for single mothers than in this country? Is Channel 4 going to explore the alternative rather than-

David Abraham: From a journalistic point of view we would certainly give platform to people who wanted to express those views. But we express many different views much of the time that would be supportive of that. If you watched 4thought.TV, for example, you will see people expressing those views regularly in primetime. We are a platform for all of these views but we do feel that this programming is done in a very responsible way and the online support material that goes with it is used in a way that is positive and helpful.

Q92 Philip Davies: One final question, Chairman, which is on a slightly different note. Can I first of all commend Channel 4, and this is a subject close to Gerry’s heart as well, for its commitment to horse racing? To be perfectly honest, I for one, I am probably in a minority, but I am delighted that you have taken on all of the horse racing coverage because I think you have given it the respect over many years that it deserves, the full coverage. The BBC have gone to races right at the start and they have cleared off to something else the moment the race is finished where you actually give it proper full coverage, and I think it has become part of the Channel 4 brand, and I certainly commend you for that. I just wanted to know why Highflyer, who have done so much to make Channel 4 Racing the brand that it is, a good Yorkshire production company, have been elbowed out of the way for another company that you seem to have very close commercial links to.

David Abraham: Thank you for your comments about the horse racing. We are very, very excited about the coverage that we are now planning for next year. I would agree that Highflyer have done a spectacular job for us for many years.

Channel 4, of course, is not obliged to tender every creative decision that it makes but this was quite a sizeable one and so we invited, as we have done in previous occasions, five companies to respond to a very detailed and specific brief as to how they would do something different with the horse racing. We had these rights because we have a creative vision for how we want to engage with the public more broadly now that all of the horse racing is in one place for the first time in a very long time. This is an exciting moment and a good moment to do what we have done periodically with this contract which is to put it out to tender.

Highflyer, on several previous occasions, have been successful in that. On this occasion, we came to a tough but we think strong decision to appoint IMG. IMG happen to be the partners that we have worked with on the Paralympic Games. We are very impressed with what they have been capable of demonstrating there. They have a very strong pedigree across the sports arena in football, golf and many other areas. Their creative solution, this was a creative presentation, convinced us and the team that they put together that incidentally involves some people who have been involved in broadcasting things like the Grand National at the BBC, their senior team has come together and impressed us and they have won this contract.

It is unfortunate that Highflyer have decided to question that decision. We contest absolutely the claims that they have made which, if necessary, we will do so legally.

Lord Burns: It is always a difficult thing in life when one goes through these tender processes and the people who have been successful in the past are not successful in the future. Both Anne and I, who were not involved in this process at all, in making the original decision, have looked at all of the paperwork and the trail of how the decision came to be made. I am personally content with what I saw there. There was no prejudice against Highflyer. The whole thing was conducted in a systematic and rigorous way. In the end, the people making the decision had to make a choice and that choice was made on creative grounds.

David Abraham: For your information, we have also been reassured that IMG will be basing the bulk of their team in Manchester, and they are a qualifying indie because they are not linked to any broadcasting organisation at all. It happens to be the case that most of the operations at Highflyer were actually occurring in west London. We are confident this is a good opportunity for jobs in this sector and we want to take horse racing in this country from strength to strength and that is what we want to get on with doing. This is an unwelcome distraction. We do commend Highflyer for all the work that they have done, but it is very unhelpful for the industry and for horse racing for this to drag on any further.

Q93 Mr Bradshaw: You said in answer to the Chairman right at the beginning that you had the good fortune or good judgment never to employ Jimmy Savile, but I assume you are checking your child protection policies are fit for purpose?

David Abraham: Yes, indeed. I think insofar as we have had time to reflect on this topic, central to our thinking is a robust and clear whistle-blowing policy. I am pleased to report that we have had one in place for some time and that includes contractors as well as full-time staff. We work hard on a culture that allows referral up of difficult issues to parts of the organisation when line managers may be causing issues. But of course we are looking at our files extremely carefully. I think this is going to be an issue for all organisations, media and non-media included. It is a very sad set of revelations that we are all reflecting on.

Q94 Jim Sheridan: Comrade Davies has articulated and established a view that many of us hold, that organisations like Channel 4 have far too much looked through the view of London Eye in terms of the rest of the UK, but just in terms of race and gender-perhaps I should know this-what is the make-up of the senior board at Channel 4 in terms of race and gender?

Lord Burns: In terms of gender, I would say the balance is very good by comparison with most company boards.

Q95 Jim Sheridan: What is it-95% white male?

Lord Burns: But, as I say-gender, I said. No, no.

David Abraham: Executive is 60:40 female. The board is 60:40 male. So our board is far more gender balanced than the average board of the British institution on gender.

Lord Burns: Exactly. But in terms of race, it is entirely white.

Q96 Chair: Can I just ask you quickly-YouView, of which you are a partner, has finally arrived. How much have you spent on YouView?

Anne Bulford: We spent a number of millions over a period of years. In terms of these accounts, I think there is £4.8 million is shown there. But there are different sorts of expenditure because there is contribution to YouView itself, and then there is our own work internally which is about building our portal going into the YouView box, so when you go to Channel 4, so that is a different sort of investment. In terms of these accounts, it is the contribution to YouView in the year which you see and then we are building portals moving on through.

Q97 Chair: You don’t have a figure for the amount?

Anne Bulford: I don’t have a figure for the total investment over the full period.

Q98 Chair: It would be useful to know. Do you think there is any chance you are ever going to get a return to match your investment?

Anne Bulford: YouView is a tremendously important investment for us, both in terms of our public service remit and commercially, because our view is it is essential to moving on the DTT platform and providing the service of free to air television across the UK, that is the environment in which we, as a commercial broadcaster do best, but in terms of our remit we think it is essential for people to be able to see our content free at the point of use.

Lord Burns: But also, Chair, it is always very difficult to do an evaluation of investments which are defensive investments where you are doing it in order to maintain your position because Freeview, if just left to us, Freeview would become rapidly overtaken by the other technologies and the other offerings that are in place. We believe it is in not only our interests but actually it is in the interests of the whole community that the DTT platform should prosper and should be available and it should offer the kinds of services that would be available through other platforms.

David Abraham: As broadband penetration just continues to reach its conclusion, it is an important moment for free to air public service broadcasting to re-evaluate the way in which it links to the broadband network. In this partnership with BT and TalkTalk and Arqiva and others, we have found a way that is simple, compelling and I hope the Committee has seen the platform in operation. It is a box that works very smoothly and is now being offered by BT and TalkTalk and recently we have started the marketing campaign. I think there was concern last time as to whether it would launch in time for the Olympics. Indeed, it was available at that time and now you are seeing all of the platforms offer propositions that join broadband and television channels into packages. So it is important for us to not allow the Freeview platforms, as has been said, to become weakened by that.

Q99 Chair: You say it was available by the Olympics. Theoretically it was available by the Olympics, but the number of houses that actually had it would probably run into double figures.

David Abraham: Yes but we were asked, "Would the box actually be-". It was presented to the press and reviewed very well and I think it surprised everyone with its simplicity and its clarity of proposition despite the inevitable competitive reaction.

Lord Burns: We will only really see how this works when the broadband suppliers begin to offer the service in numbers, and that partly depends upon box availability and just how rapidly that can be got into people’s homes.

Q100 Paul Farrelly: This is a tangential question but interesting, I hope, none the less. When Lord Justice Leveson reports, hopefully sometime this side of Christmas, we are going to start grappling within here and in the country with the thorny question of media self-regulation. You are members of a board and one of your remits is to uphold standards and codes of conduct across Channel 4. You produce a report saying how, in part, you have done that and exercised your role. You are accountable for that report to various bodies including coming to talk to us. I have just two questions. Would you in any way stylise that accountability as being tantamount to government censorship in any way?

Lord Burns: No, no. My belief is that the broadcasting system works very effectively. It is something that we take very seriously in what we do in terms of the requirements that we have, in terms of accuracy, in terms of context, in terms of treating people correctly. If there is a problem, people refer it to Ofcom and we get a judgment. It is something that we take enormously seriously. It is not politically motivated in any way.

Of course, it is tangential but the key thing of course is we have a licence and we have a licence to broadcast and that is a licence that gives Ofcom the power to regulate us. Underneath it, although we choose to take very seriously what it is that they say, the reality is that we have no choice in the end but to take notice of what they say if we want to continue in business as a broadcaster. Of course, that is where the move to the regulation of other forms of media becomes more difficult because Ofcom does require a licence to undertake their trade and so whatever body you set up, the question arises as to what do you do if they do not take their obligations as seriously as we take our obligations under the Broadcasting Code.

Q101 Paul Farrelly: I have a second and final tangential question. Most of the time you get it right. Sometimes you might it wrong.

Lord Burns: Yes.

Paul Farrelly: For example, with Big Fat Gypsy Weddings.

Lord Burns: That was a different broadcaster, but we do occasionally get it wrong with Ofcom as well with regards to the content of our programmes.

Q102 Paul Farrelly: Would you stylise those people here who have asked you difficult questions about the Gypsy Weddings, have had the temerity to ask you questions about that programme, as, in any way, enemies of free speech?

Lord Burns: I regard it as part of the necessary accountability of a broadcaster like Channel 4 that we should be accountable to the public and we should be accountable-in fact, we are required to be-we are effectively required to be accountable to Parliament because we are set up under a remit from Parliament but in all the activities I have been involved with, I regard being accountable to Parliamentary Select Committees as a very important part of my life.

Chair: Good.

Q103 Paul Farrelly: So that would be a no, then?

Lord Burns: Would I sometimes rather not do it? The answer is yes, you know, when I am spending my weekend looking back through the papers. Is this a bit of an inconvenience? There are moments when I might wrongly get that feeling. But no, for most of us who are working in any of these types of areas, we do regard accountability through the mechanism of Parliament, whether we are publicly owned or not, as a very important part of our democratic accountability.

Q104 Chair: I think if you did not feel uncomfortable having to do that, we would not be doing our job properly.

Lord Burns: Exactly.

Chair: Can I thank all three of you very much for coming?

Prepared 23rd October 2012