Support for the creative economy

Written evidence submitted by BSkyB ("Sky") [SCE 065]

1. Sky welcomes this opportunity to respond to the Culture, Media and Sport Committee’s ("CMS Committee") call for evidence on support for the creative economy. The UK audiovisual sector is a significant British success story, sustaining thousands of jobs, supporting a global hub of artistic, technical and production expertise and underpinning the international profile, cultural vibrancy and economic contribution of the UK’s creative industries.

2. Sky is proud to have played a significant role in this success, both as an innovator in technology to deliver TV via satellite and more recently the internet; and as pioneer in UK content production through the launch of transformative services in news and sports f rom our inception 23 years ago. F rom being the first company to launch a 24 hour breaking news channel in Europe, to transforming the coverage of sport in the UK, Sky has always been a very substantial producer of UK TV content and has created in-house production capabilities of a significant scale. I n 2011 we invested almost a quarter of a billion pounds in Europe’s most advanced and sustainable digital broadcasting centre at our campus in West London.

3. Today Sky invests well over £2 billion annually in TV content, two thirds of which is spent in the UK. Of that we invested almost £450m in the production and origination of UK content last year. This is an increase of almost 20% on the previous year and puts us on course to meet our target of investing £600m in UK content (excluding rights) by 2014. Having built our business and reputation on sport, news and movies, the vast majority of incremental investment is being spent on drama, entertainment, comedy and the arts.

4. In our response to DCMS’ recent Communications Review [1] , we highlighted how the current regime works well . We cautioned against significant changes to the scale and scope of regulation of the sector - in which there is already a substantial amount of state intervention and regulation - as this could damag e the growth in investment in programming and innovation by companies such as Sky .

5. In its call for evidence, the CMS Committee i dentifies a number of issues which play a key role in facilitating innovation and growth in the creative sector and deliver real value to the wider economy. For the purposes of this consultation we will focus on the issues which are of particular relevance to Sky.

The impact on the creative industries of the independent Hargreaves Review of Intellectual Property and Growth, and the Government’s Response to it

6. In its response to the Hargreaves Review, the government recognised the vital contribution that IP makes to the UK’s economy and society: "UK business invests more in intangible assets than physical ones, and nearly half of that intangible investment-£65 billion in 2008-was in intellectual property (IP). IP’s contribution to the UK’s economy is therefore both substantial and vital. Its wider impacts on society, in terms of culture, education and basic human rights such as freedom of expression, are no less important." [2] Sky agrees with this view.

7. T he overwhelming policy imperative at this moment, when commercial incentives are delivering the growth that the government seeks, is for stability and certainty in the regulatory frameworks governing channels and TV platforms, including in the area of intellectual property rights. We have seen no evidence to suggest that the unsubstantiated benefits of regulatory change would provide a better outcome than the demonstrated growth in content investment by the commercial sector. Indeed the risk must be that changes would undermine that growth, without necessarily providing any counterbalancing benefits.

8. Certainty about IP rights allows producers to decide whether or not to take a risk in investing in content. It allows broadcasters and distributors to take a view on whether or not they will make enough income across different media to cover their costs. And above all it provides incentives for continued investment in a wide range of high quality content. Recent evidence confirms that this is the case . [3]

9. We are aware that the government is planning a consultation on the next phase of the Hargreaves review. Until there is significant evidence that the IP framework is failing to provide the necessary incentives for continued investment in high quality content, we see no case for large scale regulatory or legislative changes. We call on government to ensure that IP continues to protect creators, and existing legislation is properly enforced.

10. Any proposed changes need to be proportionate and evidence-based. Furthermore, the uncertainty caused by inevitable lengthy legislative programmes should not be underestimated. In this respect, it is worth considering the impact caused by the delayed implementation of the Digital Economy Act.

Ways to establish a strong skills base to support the creative economy, including the role of further and higher education in this

11. Alongside its vital role of informing and entertaining people, the UK audio-visual sector also plays a wider educational and social role. Reliable evidence shows that "around £13bn flows directly into the UK audiovisual sector each year", and "supports a host of highly-skilled jobs in distribution, marketing, technical and support services. Estimates put direct employment in the sector at 132,000 jobs". [4]

12. We share the Government’s commitment to developing skills in the UK. Sky is a key employer in the creative industries, committed to developing and growing the skills of all those who work directly or indirectly with us. At the end of 2011, Sky alone employed 22,800 people (direct and full time contract) in the UK. To give a sense of scale, this means that Sky employs more than twice as many people as the entire software publishing industry in the UK and more than half as many people as the entire pharmaceuticals industry in the UK. [5]

13. Moreover, Sky has hired 3,800 young people (16 to 24 years old) in the past three years, including nearly 300 graduate trainees and apprentices. These staff are making a valuable contribution to Sky’s business, but are also gaining valuable skills and enhancing their prospects in the labour market. Sky is also an active member of the Association of Graduate Recruiters [6] which aims to raise standards of graduate recruitment and development across the UK, and a key partner of the National Film and Television School (NFTS) [7] , which attracts the best students, tutors and filmmakers from across the globe. To better support young people from all backgrounds to make the best start to their careers, Sky has signed up to the Deputy Prime Minister’s Social Mobility Business Compact. [8]

14. Sky also regularly engages with the UK economy’s research base to develop new products and services. This helps hone the commercial viability of the research base’s technological efforts. In 2011, Sky’s product research group engaged with 15 universities, 5 research or technological development centres, and over 50 suppliers about new technological development. [9]

15. Finally, our Sky Skills Studios initiative helps young people gain insight into media careers by taking schools behind the scenes. Students (aged 8-18) are able to see how we create TV on a tour of Sky Studios. We also offer them the chance to work with our technology, including broadcast quality cameras, green screens and touch screen edit tables to make their very own television report on subjects they're studying at school. We aim to introduce 12,000 young people a year to the Sky Skills studio in the first year.

The importance of "clusters" and "hubs" in facilitating innovation and growth in the creative sector

16. Sky welcomes the CMS Committee’s assumption that "clusters" and "hubs" will play a key role in facilitating innovation and growth in the creative sector. The government backed East London TechCity initiative was a positive step towards more innovation and growth in the IT sector. Similarly, Sky is a supporter of the recently inaugurated "TV Triangle" [10] , a commercially backed broadcast hub in West London with three out of the four major pay TV companies in the UK (including Sky), and over half of the major broadcasters. Benefits of the Triangle are expected to be manifold, both to those companies directly involved (a number of which are SMEs) and the wider UK economy. These include:

· attracting inward investment from international TV / media companies;

· encouraging start up media tech companies to work closer to the established companies in the Triangle;

· supporting cross fertilisation between the broadcast and the web industries, including in areas such as production and advertising; and

· attracting and providing jobs to the best talent (including interns and graduates) from around the country.

The work of the Creative Industries Council and other public bodies responsible for supporting the sector.

17. Whilst Sky is supportive of the Creative Industries Council (CIC), there is an opportunity for the CIC to achieve more, both for the commercial sectors involved and Government. Primarily, we believe that the most pressing concern facing the creative sector-the support and protection of intellectual property-deserves and ought to be a standing item on the CIC’s agenda. Whilst recognising that there are other forums where IP is discussed, it seems anomalous that this vital policy area is not even touched upon at CIC level. We have recently had the Hargreaves Review of IP, the IPO’s Consultation on Copyright, and significant developments in the High Court on the Digital Economy Act and site-blocking actions brought under the Copyright Act. However, the CIC has not had the opportunity to discuss any of these hugely significant developments. We recognise that not all members of the CIC may wish to be involved in detailed policy discussions. Accordingly, we would support the creation of a CIC "sherpa" group formed of senior policy representatives from the creative industries.

November 2012

[1] Sky response to DCMS’ seminar paper on competition in content markets


[3] “Creative UK — The audiovisual sector and economic success”— A report by Robin Foster and Tom Broughton, April 2011

[4] Ibid.

[5] “The economic impact of Sky in the UK - A report prepared for Sky”, Oxford Economics, July 2012




[9] Ibid.


Prepared 17th November 2012