Select Committee on Communications Minutes of Evidence

Examination of Witnesses (Questions 2260 - 2279)


Mr Luke Johnson and Mr Andy Duncan

  Q2260  Lord Maxton: I would have thought that if you say it is high quality news, different from anybody else's, does it not attract what I would call a high income audience?

  Mr Johnson: I would say that if we programmed a ruthlessly commercial strand in that hour we could at minimum double the audience we get.

  Q2261  Lord Maxton: Would that be true in the future where increasingly people can either watch their recorded programmes or recorded programmes on PVRs or they can watch it on catch up television in a variety of different ways?

  Mr Johnson: I think the ratio would still hold.

  Q2262  Lord Maxton: If I am watching one of your recorded programmes on my PVR, when it comes to the adverts I just do that and I fast forward and would not even watch the advert.

  Mr Duncan: I think that is a separate issue. Typically if you take our eight o'clock slot, for example, we get between two to three million as an audience; Channel 4 News gets around a million. I think Luke's point about going forward, even if the news audience dropped away as switchover happens, you would still get more than double in that slot if you did not run the news. If we were a for profit organisation, a commercial organisation trying to maximise profit, one of the first decisions we would do would be to change the news to half an hour.

  Q2263  Lord Maxton: Is that why are you so opposed to privatisation?

  Mr Duncan: We are there to deliver public purpose.

  Mr Johnson: If you privatised Channel 4 you would attempt to abandon all such strands of the news, Dispatches, Cutting Edge, Unreported World et cetera; they would all disappear completely as quickly as you could possibly get out of them.

  Q2264  Chairman: That is your board position, is it?

  Mr Johnson: No, that is not our board position. If commercial shareholders who were interested in profit alone owned the corporation rather than the tax payer, that is unquestionably what they would do.

  Q2265  Chairman: As a company, as a board, you are opposed to privatisation.

  Mr Johnson: Yes, because I think if you strip away those sorts of crucial elements from Channel 4, what are you left with?

  Q2266  Baroness Howe of Idlicote: As one of those who was there when the presentation was made, I think possibly one of the things we are missing is the background to the specific issues that we are discussing today which really gave more of a reason for why the extra money is needed. Just looking at what happened to the spectrum and what is likely to happen to the digital switchover dividend, let us face it, the Treasury wanted most of that. Is there any reason to think that they are less likely to want to claw the whole of that amount back?

  Mr Johnson: As I put it at the presentation the other day, it is ultimately about how much our political leaders and regulators, our stakeholders, the public at large, our viewers value Channel 4. I think if they value it as it is in terms of what it provides—the alternative voice—then there is a cost to that. If the old economic model is breaking down—which it unquestionably is—then there comes a point at which it is no longer sustainable. The Treasury and the Government as a whole will have to take some tough decisions and either there will have to be subsidy of some form or other to us or we will start diminishing what we offer.

  Mr Duncan: I think it is fair to say that from the conversations we have had with Treasury officials and indeed other government departments there is a general acceptance that for the relatively modest opportunity cost historically Channel 4 delivers incredibly good value for money. People think that the direct impact we have is a very strong one and the evidence for that is in the document published last week. Secondly I think they do believe that there are several billion pounds a year that goes into the BBC and the licence fee and free spectrum and they do think we are a pretty good value for money mechanism to make sure some of their money is spent efficiently. The other area that the Treasury are very interested in is the impact that we have more widely in the economy. The other key thing about Channel 4 is that we do not have an in-house production department; we spend all our money externally. Fewer than a thousand people work at Channel 4. PWC did a big report about a year ago which estimated that some £2 billion a year was generated for the British economy and some 22,000 jobs. The other powerful argument that we were trying to develop more with the Treasury was to say that any money invested in Channel 4 effectively gets spent outside the organisation. There is not just a creative and cultural benefit to that, but there are also some hard economic benefits to that. One of the other big things we put in the document last week was our ambition to spend more of that money outside London, in particular we could be spending more in Scotland, Wales and Ireland where we are lower than we would like to be and we have a good track record across the regions.

  Mr Johnson: And investing more in small independent production companies which again there is an argument for saying they have more of an alternative voice which otherwise would not necessarily find broadcast time.

  Q2267  Lord Hastings of Scarisbrick: In your document, which I have to say is a very good read, you call for new legislation to redefine public service broadcasting in the light of the additional developments and new media that you are involved in. Could you say what it is that you want?

  Mr Duncan: To be very specific, from the way that the Communications Act is currently written up Channel 4 is legislated in a way where we only deliver public purpose through one core linear channel and everything else we do is there so make money commercially to then re-invest back in that core linear channel. I think that a few years on it already looks very out of date. First of all it has not taken account properly of the internet and the most obvious example is 4 On Demand which is our online broadband service. The idea that a public service programme that appears on the On Demand internet version is suddenly not public purpose because it happens to be delivered on the internet and not on a linear channel is a bit of a nonsense. What we said last week very clearly is that we want to deliver our purposes in the way that an increasing audience wants to get programmes and content which is cross-channel, cross-platform. At the appropriate moment the legislation should be updated to reflect the fact that we already effectively deliver public purpose in many more ways than the linear channel. That is not to say that we do not also want to earn money commercially with the mixed model we have always had. Quite clearly we are already—and will continue to—increasingly offer news, current affairs, drama, other documentary programmes and so on beyond just the one channel.

  Q2268  Lord Hastings of Scarisbrick: Your list of programmes then are the list of what you do to give teeth to your purposes; what are your purposes?

  Mr Duncan: I think the same four purposes we put in the document. I think the nurturing talent and creative ideas, helping people to see the world differently, the idea of actually inspiring people to make a change in their lives, those very same purposes would be the same purposes we believe we already deliver against on some of the multi-channel activity and also online and in other platforms. It is essentially saying that to deliver those purposes going forward in the modern world we have to recognise now it is a multi-media world and we can and should be delivering those purposes in a way that the audience wants to get programme and content.

  Q2269  Lord Hastings of Scarisbrick: In the closing remarks of the document you probably give what is quite a tidy definition of what those purposes might be. There is a bullet point which defines your role as "an alternative voice, entertaining, questioning, challenging, sometimes infuriating" (which is certainly true) "but always with the potential to have `a positive impact on the lives of our viewers and on society as a whole'." "Positive impact" implies that there is something you wish to create about society and endorse about society. Could you just explain how you line that up with some of your current content and most notably one of the programmes in the document you say has boosted your audience and therefore your revenue is Shameless which you describe in the document as being "dysfunctional". How can you have a positive impact on society from a programme which is about a dysfunctional society?

  Mr Duncan: On the broad point I think throughout the schedule and throughout the whole range of genres of programming that we show, I think we always aspire over time to have a positive impact through the programming we show.

  Q2270  Lord Hastings of Scarisbrick: Does Shameless have a positive impact?

  Mr Johnson: Do you watch Shameless?

  Q2271  Lord Hastings of Scarisbrick: I have watched it many times in fact.

  Mr Johnson: Do you enjoy it?

  Q2272  Lord Hastings of Scarisbrick: I did not say I enjoyed; I said I watched it.

  Mr Johnson: I think there is an argument, which is obviously subjective, that Shameless can often be an uplifting view and also there is a touch of realism about it. There is a touch of farce as well. It is a creative programme. I think that not through every hour and every programme genre are you going to have a uniformly positive view; that would be bland and dull.

  Q2273  Lord Hastings of Scarisbrick: The real point I am making here is that in order for you to increase your revenues—which is the point of this conversation—for you to fund public service broadcasting, the examples you have given of programmes which drive your audience are all the examples which have questionable impact on the positive lives of people in society.

  Mr Duncan: Very specifically Shameless was an award-winning programme and it was a highly innovative drama. When it first came through I think it was a break-though drama in tackling, albeit in a humorous and quite unusual way, real social issues and throwing a light on parts of modern Britain and I think it has actually had some sort of wider role to play there as well. More generally, there are a lot of programmes for example The Food Season where I would say that the campaign we did in January with Jamie Oliver and with Gordon and with Hugh had a very positive social impact in raising issues around diet and food. That one actually did quite well in terms of ratings as well. So there are occasions where you can have both a clearly public purpose, social purpose programme that also rates well. There are many other occasions, for example, Battle for Haditha on Monday night, that only had about a million in terms of the audience. That sort of film will never get much more than that but I think it is a really valuable programme to have. We have to have a balance across the schedule of programmes that hopefully have a public purpose that can rate sometimes but on other occasions they do not. We do other things, in a sense, that plainly play more of a commercial role. For us acquisitions definitely play a commercial role.

  Chairman: Can we move on from Shameless to the future of ITN?

  Q2274  Lord Grocott: When ITV has its contracts renewed or otherwise with ITN in 2012 I think you say in your evidence to us that "ITN would in all likelihood cease to be a viable news supplier to Channel 4 because ITN would not be able to provide sufficient newsgathering base ... " et cetera. I know you might simply respond by saying that this is speculative, but you presumably have to give some thought to this. What would happen to your news output if, as you say, ITN ceased to be viable news provider?

  Mr Duncan: It would obviously be a very significant concern for us. The situation at the moment is that ITN do a very good job for us, as we talked about earlier on. One of the reasons is actually the fact that we are getting the benefits of a wider infrastructure, a good example of which would be regional coverage. Because ITV also source their news from ITN in share newsgathering and access to some of the regional news stories, for example, Channel 4 News is strengthened from being part of that wider infrastructure. To the extent that that is reduced or diminished over time, that clearly is a worry for us. We went through this in the last contract of what happens if we cannot agree sensible commercial terms with ITN? What are our alternatives? At the moment we have Sky as an alternative; there is always the possibility of going to a new third party to try to source the news.

  Q2275  Chairman: Like?

  Mr Duncan: For example some of the suppliers that have a strong tradition in current affairs.

  Mr Johnson: We would essentially create a new provider from scratch, but I think it would be a tremendous wrench and extremely difficult to pull off.

  Mr Duncan: To keep the quality as high would be almost impossible, I would say.

  Lord Maxton: Would you go to somewhere like the Guardian?

  Lord Hastings of Scarisbrick: Or the Telegraph?

  Q2276  Lord Maxton: You are closer to the Guardian.

  Mr Johnson: One can see immediate issues over the point you have just made. We are very happy with ITN; we think they do an outstanding job and clearly we will do all we can to try to encourage them to continue to provide the overall package that we need for both national and regional news.

  Q2277  Lord Grocott: This does trespass into ITV I know, but you said that the cost of the seven o'clock news as opposed to the income was £10 to £20 million (£20 million cost, £10 million income), is that in any way comparable to the gap in income and expenditure that ITV would have with its flagship now normally at ten? Are the economics quite similar or how do they contrast?

  Mr Duncan: Clearly in ITV's case they have the early evening bulletin, they have a late evening bulletin, they then have the regional news with different infrastructure costs around the country, but we do not have access to their information on that. I think our model is really quite a different model to their model.

  Q2278  Lord Grocott: They are obviously putting it out when it is a less expensive time to put it out.

  Mr Duncan: The opportunity cost of them putting it out later on in the evening would be less than if they did it, for example, at seven o'clock, certainly for them because of course they have very highly rating soap programmes; Emmerdale and Coronation Street in particular tend to dominate the early evening schedule. I think it is a worry if there is a reduction in investment over time in ITN generally; there would be a knock-on effect.

  Q2279  Chairman: In your written evidence you say that "Consideration might also be given to how future legislation might safeguard the editorial independence of Channel 4 News and ensure that there remains plurality of news supply". I am not quite sure where the need for that was and what kind of legislation you mean.

  Mr Johnson: Currently there is no need because we believe Channel 4 is very much independent; we think ITN is broadly independent; we think there is plurality of providers in that there is Sky out there as well. If there were not both ITN and Sky, for example, that would be a concern and we might well have to consider the possibility of creating our own newly formed news provider because the alternatives might not work.

previous page contents next page

House of Lords home page Parliament home page House of Commons home page search page enquiries index

© Parliamentary copyright 2008