Support for the creative economy

Further supplementary written evidence submitted by Channel 4 [SCE 071b]

Channel 4’s investment in the creative economy and UK originated content

Channel 4 welcomed the opportunity to provide evidence to the Culture, Media and Sport’s inquiry into support for the creative economy in March. We note that the Committee was particularly interested in the issue of broadcasters’ content spend, and as such we have provided below further details on Channel 4’s content spend and how this contributes to the UK’s creative economy as a whole. The following comments outline the level and breadth of Channel 4’s investment in original UK content-as well as the distinctive role this investment plays in fulfilling our unique public service remit, developing the creative industries and benefiting a wide range of viewers across the whole of the UK.

Channel 4 has a specific, and unique, job to do: to deliver our statutory public service remit. Our current strategy to deliver this is through "investing in innovation"-both creatively and commercially. This includes investment in creative renewal, a long-term approach to refreshing content and investing in new, innovative and risk-taking programmes that make the schedule genuinely distinctive and different, underpinned by a future-facing commercial strategy focused on maximising distribution of this content across digital platforms and building deep relationships with our viewers.

Our unique position and strategy allows us to provide a significant contribution to the vibrant mixed ecology of a broadcasting sector which is a huge success story for the UK. Concurrent public and private investment in UK content has led to a virtuous circle of increased levels of investment in content, which in turn has delivered a TV sector that offers choice, competition and diversity and delivers enormous cultural, social and economic benefits.

Channel 4’s content investment

Our creative strategy in 2012 prioritised investment in original content. Channel 4 invested £434 million in originated content in 2012-the biggest investment in original commissions in Channel 4’s history. This figure will be published in our 2012 Annual Report in May and reported to Ofcom, and can be broken down as:

· £387.4 million invested in original content for the main Channel 4 channel

· £36.4 million invested in original content for Channel 4’s digital channels

· £10.3 million invested in online Channel 4 projects and content

While the total figure of investment in original content is undoubtedly an important measure, Channel 4 would also emphasise the importance of looking beyond this headline to consider how and where this money is invested, and the impact of this investment.

As outlined above, Channel 4 has a specific remit and therefore our content investment is focused on delivering this. Our investment in originated UK content is distinctive in that it places particular focus on:

· Investment in a wide and diverse range of public service genres, such as documentaries, drama, news, current affairs, comedy, history, science and production and development of feature films.

· Supporting the creative economy through:

· Promoting new talent, both on and off screen;

· Benefiting a wide range of independent production companies, including new start-ups;

· Developing the production skills base in the nations and regions;

· Producing content that is available to all, free at the point of use

The following sections explain Channel 4’s distinctive contribution to the UK broadcasting sector in further detail.

A diverse range of public service genres

Channel 4’s investment in UK content is spread across a wide range of genres and programme formats and continues to cover ground other channels wouldn’t in a number of areas.

For example, Channel 4 is committed to continued investment in many other genres where Sky is not active in. In history, for instance, our acclaimed content includes Richard III: The King in the Car Park, which provided the exclusive story on this high-profile archaeological discovery. Similarly, Channel 4 invests in high quality, accessible science programmes, such as the recent How to Build a Bionic Man, and distinctive and thought-provoking religious content-such as our daily ethics strand 4thought. Current affairs also remains a strong focus for our output, with both Dispatches and Unreported World providing powerful investigative content.

The diversity of our investment has most recently been reflected in the number of BAFTA nominations secured by Channel 4’s original commissions: 17 nominations were spread across drama, entertainment, specialist factual, features, documentary, news, sport, and comedy.

Channel 4 also plays a vital role supporting UK feature film and remains a cornerstone of public service film-making in the UK-investing in many of this country’s most defining films and nurturing a generation of distinctive film-making voices. With a remit to participate in the making of high quality films and to develop people with creative talent in the film industry, Channel 4 continues to have a strong reputation amongst audiences for offering alternatives to mainstream films.

In 2012, Channel 4 invested £17.9 million on feature film production and development, with a number of Film4 films receiving critical acclaim. Berberian Sound Studio, for example, won more BIFAs than any other film last year, including Best Director and Best Actor, while The Iron Lady won two Academy Awards including Best Actress for Meryl Streep.

Supporting the creative economy

New talent

Channel 4 is committed to providing opportunities for new and emerging talent, and recognises the wider importance of supporting the development of people with creative talent for the industry as a whole. In particular:

· Channel 4 continues to fulfil its remit to support the development of people with creative talent by promoting new on-screen talent across a range of genres, such as Sharon Rooney (My Mad Fat Diary), Terry Mynott (The Mimic), David Fishwick (Bank of Dave), as well as a number of new faces recruited to our Paralympics presenting team following a £600,000 nationwide talent search to find the best new disabled presenters.

· Channel 4’s Creative Diversity department, based in Glasgow, places particular emphasis on driving the development and commissioning of content from new, diverse, grassroots talent throughout the UK.

· Channel 4 invests in a range of content allowing new talent to prove themselves in front of a national audience, and increased its hours of first-run originations in strands dedicated to new talent across the portfolio in 2012 by 9%. For example, First Cut continues to broadcast films by up-and-coming directors; Random Acts, the short-form arts strand, provides new talent with an artistic space and creative medium every weeknight; and Coming Up remains the only UK initiative offering aspiring talent the opportunity to make an authored drama with a guaranteed network broadcast.

Contribution to the independent production sector

Since its inception as a publisher-broadcaster, Channel 4 has played a vital role in supporting the UK independent production sector, providing a significant spur to its growth over the last 30 years. Today, Channel 4 continues to offer important and distinctive support to the sector, and its highest-ever spend on UK content enabled it to make a significant investment in the creative economy in 2012. For example, last year:

· Channel 4 worked with 460 companies across television, film and digital media-an increase of 6% from 2011.

· 30% of these companies were new suppliers-136 companies in total, of which 60 were new television company suppliers.

· The number of television independent production companies that Channel 4 worked with was 275-up 5% from 2011.

Channel 4 also remains firmly committed to working with new companies that might otherwise not be able to break through into the industry and continues to ensure that there is a constant wealth of opportunities for new independent producers to contribute to its output. Channel 4 has enabled small start-ups to realise their ambitions and has helped production companies to grow into world-beating export successes.

Last year, for example, all commissioning departments were tasked with building relationships with new companies, which led to a number of successes, including ACME Films, a new production company nurtured by Channel 4’s Alpha Fund, winning Company of the Year at the Creative Diversity Network Awards in 2012; and Firecrest Films, a small Scottish current affairs company, producing Secrets of Poundland, one of the highest-rating Dispatches ever.

Nations and regions

Channel 4 remains firmly committed to investing in productions in the nations and regions, and strives to ensure that its economic impact is spread across the UK. Channel 4 has an ambitious plan to increase its spend outside of London, in particular in the devolved nations, and is actively looking at ways in which it can further support new independent and digital production companies in every area of the country.

In 2012, Channel 4 worked closely with a number of independent production companies in the nations and regions on a range of high-profile commissions. In particular, we note that:

· Across the portfolio, Channel 4 invested a total of £157 million on programmes from companies based outside of London-an increase of 3% on the previous year.

· Over £21 million was invested in content produced outside England-up 37% from 2011 – with 5.4% of our total network spend coming from the devolved nations.

· 35% of Channel 4’s online commissioning budget was spent outside London-and 6.7% outside England-with 59 agencies based outside London securing work with Channel 4 including games and apps developers in Dundee, Neith and even the Outer Hebrides.

Creative companies outside London have contributed many of Channel 4’s most successful and acclaimed projects. Finestripe Productions’ Bank of Dave, for example, recently won the Nations and Regions Award at the RTS Programme Awards 2013, while Chunk Games’ online project The Bank Job won Best Game at last year’s Broadcast Digital Awards. Both of these companies are based in Scotland. In addition, Channel 4 continues to invest in several major returning drama series filmed outside of London, such as Hollyoaks in Liverpool and Fresh Meat in Manchester.

Free at the point of use

Channel 4’s status as a free-to-air public service broadcaster ensures that audiences of all backgrounds and incomes can enjoy unique and innovative content across the Channel 4 portfolio on a daily basis-not just those who pay for it.

Our free to air status also means that we maximise the impact of UK content spend with the widest possible audiences. In 2012 88.1% of all TV viewers were reached across Channel 4’s TV channels every month, and we saw substantial audiences across a range of genres - including The Snowman and the Snowdog (more than 11 million viewers across the Christmas period) The Queen’s Mother in Law (4.6 million viewers); and The Plane Crash (4.2 million viewers).

Sky content investment

Channel 4 understands that its own level of investment in UK content, as compared with Sky, was the focus of discussion at a later Committee evidence session.

We note that Sky committed itself in 2011 to increasing its investment in original content by 50% over the course of three years, saying that the level of investment will reach £600 million in 2014. In addition, in its written evidence to the Culture, Media and Sport Select Committee’s current inquiry into support for the creative economy, Sky noted that "we invested almost £450m in the production and origination of UK content last year."

Like-for-like comparisons

Channel 4 welcomes the Committee’s efforts to ensure greater clarity of content investment amongst broadcasters as part of its current inquiry. While it is clear that Sky are increasing their investment in originated content, which is welcome, Channel 4 believes that like-for-like comparisons on their content investment remains difficult. Channel 4 notes that, during the evidence session, Sky stated that this investment excluded any rights or acquisitions, and was a like-for-like comparison with public service broadcasters. However, Sky’s decision not to publish on an annual basis their specific level of investment in originated content, a breakdown by genre or source or information on what is included in their definition of UK content spend, hinders any attempts to fully understand the nature of such spending or to make insightful and like-for-like comparisons between broadcasters. Channel 4 believes that a fair comparison can only be achieved if Sky opts to publish their content investment figures based on Ofcom definitions-as required by public service broadcasters-on an annual basis.

Contribution to the creative economy

Channel 4 welcomes all additional investment in UK content-whether from Sky or any other media organisation-as this helps the television sector to deliver further cultural, social and economic benefits across the UK. Nevertheless, in relation to Sky’s increased investment, we believe that it is important to recognise that Sky’s contribution to the overall UK broadcasting ecology remains largely separate to Channel 4’s contribution, and as such we regard any additional investment as complementary to our own.

In particular, we believe that Sky’s increased investment will benefit aspects of the creative economy separate to Channel 4’s focus, such as:

· Established talent. While Channel 4 recognises that Sky provides a number of opportunities for emerging talent to develop their skills through their commissions, it notes that a significant number of their  programmes are fronted by established talent. Many of these individuals have been first developed by Channel 4, such as Ricky Gervais and Chris O’Dowd, and by other public service broadcasters, such as Ruth Jones and Ralf Little.

· Contribution to independent sector. Channel 4 welcomes Sky’s increased investment in UK independent productions and recognises the benefits that this will have for the wider production sector, but notes that the £139 million that Sky invested on independent productions from 129 indies is significantly lower than the figure for Channel 4 provided above. Nevertheless, while in-house productions continue to comprise a majority of its overall UK content spend, Sky’s investment in independent productions will help to further strengthen the independent sector and will supplement the benefits derived from Channel 4’s more extensive collaboration with the sector as a publisher-broadcaster.

· Genres. We note that Sky intends to spend the vast majority of its incremental investment on drama, comedy and the arts, which will complement our own award-winning programming in these areas, as outlined above. Nevertheless, it remains unclear whether Sky will invest in wider public service genres-such as science, history, religion and current affairs-where Channel 4 has a strong track record. In addition, Channel 4 notes that Sky does not invest in the development and production of UK-originated feature films.

· Different audiences. Sky’s status as a pay-TV broadcaster inherently limits the reach and impact of its new content as compared with free-to-air PSBs. In 2012, for example, Channel 4’s comedy programming across the portfolio reached 31.6 million viewers, as compared with 12 million for Sky, and there was a similar gap in drama (22.9 million for Channel 4 compared with 14.9 million for Sky). Given that much of Sky’s new content will remain behind a paywall, it is unlikely that these differences in audience reach will narrow substantially, and as such original UK content will continue to have the biggest impact on free-to-air PSBs.

April 2013

Prepared 24th May 2013