Appendix 3: Call for Evidence
Inquiry into the sustainability of Channel 4
The House of Lords Select Committee on Communications, under the chairmanship of Lord Best, is to conduct an inquiry into the sustainability of Channel 4. The Committee thus invites any interested organisation or individual to submit written evidence to the inquiry. Written evidence must be submitted by Wednesday 20 April.
The Committee expects to hear oral evidence from invited witnesses in April 2016 and intends to report before the summer. Reports are made for the information of the House but may also make recommendations. The Government has undertaken to respond in writing to reports from select committees.
Background
Channel 4 is a UK public service broadcaster. It has a unique remit set out in the Communications Act 2003 and the Digital Economy Act 2010. It is a publisher/broadcaster meaning that it does not produce programmes in-house, but commissions them from independent production companies. It is publicly owned and funded primarily by advertising.
Channel 4 Corporation (C4C) operates Channel 4 (the main channel), along with a portfolio of channels such as E4, More4, 4seven and Film4. In 2014 C4C made revenues of £938 million, an increase of £30 million on 2013. £602 million was spent on content, of which £430 million was spent on original content.308 Ofcom’s 2014 Review of Channel 4: Channel 4 Corporation’s performance in meeting its media content duties showed a decline in audience reach and share for the main channel. This was noted to have been largely offset by increased viewing to the other channels within the portfolio.309
In September 2015 an official was photographed carrying a document authored by a civil servant from DCMS entitled, “Assessment of Channel 4 Corporation Reform Options”.310 This led to speculation that the Government might seek to privatise C4C. In November the Prime Minister David Cameron stated, “I want to ensure that Channel 4 has a strong and secure future, and I think it is right to look at all the options, including seeing whether private investment could help safeguard the channel for the future.”311 This position was clarified by the Secretary of State, John Whittingdale, who said “I’m looking at the options, but would argue that Channel 4 is being restrained by not being privatised. It means it has less deep pockets”.312
David Abraham, Chief Executive of Channel 4, has warned of a threat to the remit of Channel 4 if the broadcaster were privatised because some of its output—such as the news and current affairs genre—is less commercially viable. He is reported to have said, “it would need to make profits of about £200m annually and the TV schedule would need to be packed with entertainment shows and popular foreign-made hits to be commercially viable.”313 Others in the industry, including ITV, have also warned of the threats privatisation might pose to those in the wider broadcasting industry, such as independent producers.314
This inquiry will seek to understand whether C4C’s current model and remit is sustainable, both in terms of viewing and finance. It will also consider possible models for the future of C4C including privatisation and assess the likely impact of these on the wider industry and the public.
The Committee invites interested people and organisations to respond in writing to the following questions and any others they think important.
Questions
Funding
- Is C4C financially sustainable? Is the revenue provided by advertising sufficient to make Channel 4 Corporation (C4C) sustainable?
- Are there any other commercial/non-commercial revenue streams which could/should be explored?
Viewing
- Is viewing of Channel 4 (the main channel) and C4C sustainable? To what extent is the decline in reach and share on the main channel a problem for C4C?
- To what extent is Channel 4 (the main channel) equipped to deal with the challenges posed by new technology and viewing habits such as online and search and recommendation?
Remit
- Would changes to the Channel 4’s remit provide greater sustainability for the broadcaster? Is the current legislation too detailed, or too vague?
- What benefits/drawbacks could there be to Ofcom’s suggestion in its PSB review315 that PSB obligations be applied to C4C as a whole rather than to the main channel alone?
- Does the current regulatory system provide for adequate assessment of C4C’s performance against its obligations?
Ownership
- What are the different models of ownership for C4C? What are the positives and negatives of these?
- Would a change in ownership, such as privatisation, affect the remit of C4C, and in what ways?
- What impact might privatisation have on:
- key PSB genres such as news and current affairs;
- the independent production community;
- those communities/audiences currently served by C4C’s remit;
- the advertising industry; and
- the viewer/consumer?
24 March 2016
308 Channel 4 Corporation, Annual Report 2014 (2015) p5: http://annualreport.channel4.com/downloads/Making-an-impact.pdf [accessed 23 May 2016]
309 Ofcom, A Review of Channel 4 (2 July 2015): http://stakeholders.ofcom.org.uk/binaries/consultations/c4-media-content/statement/Channel_4_DEA_Review_Statement.pdf [accessed 13 March 2016]
310 ‘Government may privatise Channel 4, document reveals’, The Guardian (24 September 2015): http://www.theguardian.com/media/2015/sep/24/government-considering-channel-4-privatisation-document-slip-up-reveals [accessed 13 March 2016]
311 HC Deb, 4 Nov 2015, col 965
312 ‘BBC will be ruled by No 10 appointees’, The Sunday Times (13 March 2016): http://www.thesundaytimes.co.uk/sto/news/uk_news/Arts/article1677767.ece [date accessed 13 March 2016]
313 ‘Privatised Channel 4 would need profits of £200 million a year, says Chief Executive’, The Guardian (15 October 2015): http://www.theguardian.com/media/2015/oct/13/privatised-channel-4-need-profits-200m-year-ceo [accessed 13 March 2016]
314 ‘ITV warns over Channel 4 privatisation’, The Telegraph (18 October 2015): http://www.telegraph.co.uk/finance/newsbysector/epic/itv/11937302/ITV-warns-over-Channel-4-privatisation.html [accessed 13 March 2016]
315 Ofcom, Public Service Broadcasting in the Internet Age: Ofcom’s Third Review of Public Service Broadcasting (2 July 2015): http://stakeholders.ofcom.org.uk/binaries/consultations/psb-review-3/statement/PSB_Review_3_Statement.pdf [accessed 13 March 2016]