Select Committee on Culture, Media and Sport Minutes of Evidence

Memorandum submitted by Channel 4


  1.  Of the several issues which the Committee seeks to address in its Inquiry, the one that is of over-riding concern to Channel 4 is the definition and provision of public service broadcasting. In this response to the Committee's invitation of 19 November 2001, the Channel accordingly sets out its views on this issue at some length and then offers shorter comments on the other points raised by the Select Committee's note.


  2.  Public service broadcasting, as it has evolved in the UK, is not the characteristic of a particular broadcaster or a particular type of programming but a system of regulation in which a variety of broadcasters are required to play a variety of roles. The key element of Channel 4s remit does not lie in the detail of any requirement to produce a certain number of hours of this or that type of programme all of which are exceeded, mostly by substantial margins. It is the simple over-arching requirement to be innovative and distinctive and to address issues of diversity. The history of Channel 4 over the last 20 years provides ample evidence that it has delivered on this top-line remit and has contributed handsomely towards realising the two key objectives of the White Paper "A New Future for Communications"—namely, to make the UK home to the most dynamic and competitive communications and media market in the world, and to give British viewers a choice of diverse services of the highest qualities.

   3.  Never has that been more true than in the past year. The Channel has won 130 major national and international awards for its programmes and services, and won them across every genre of programming from popular entertainment to education, where it won seven of a total of 11 awards made by the Royal Television Society more than the BBC and ITV combined. Big Brother won a large audience and many plaudits. But so too did Channel 4 News, Test Cricket, major new commissioned dramas such as The Navigators, Shackleton, Swallow, and major factual series on topics that ranged from drugs and racism to seventeenth century English history. A dozen special programmes were commissioned in the immediate aftermath of 11 September to provide context and analysis for the awful events of that day. Testing God was described by one broadsheet critic as the most intellectually demanding series he had ever seen on television. The Black and Asian History Map website won the prestigious Prix Italia. And, of course, there was Brass Eye. The Financial Times nominated Channel 4 as "network of the year" for 2001, commenting that "it has continued to come up with material which would probably not get a slot on any other channel".

  4.  These achievements are not the result of a highly prescriptive or proscriptive remit. They stem from a broad and positive remit, which a publicly owned not-for-profit organisation such as Channel 4 has the freedom to interpret as aspiration rather than restriction.

  5.  In the same spirit, the Channel is implementing a wide-ranging multi-channel, multi-platform strategy in order to grow from being a single television channel to a genuinely multi-media business. The Channel sees this as a necessary response to obvious changes in the market. It must maintain its visibility in competition with hundreds of channels rather than the three with which it had to compete when it was first established. It must meet the increasingly sophisticated demands of its audience for interactivity and for new services that enrich and extend television viewing. It must develop new revenue streams to guard against the decline of advertising as the only sure source of income.

  6.  This approach was endorsed by the ITC in its most recent annual performance review which commented: "The ITC supports the channel's move into new services . . . If successful they will strengthen the core channel, add value for viewers and build assets for the future." The strategy is also in direct response to obligations imposed when the funding formula was scrapped in 1997 and the Channel was required to invest some of its newly retained income in digital services, such as E4 and the FilmFour channel.

  7.  In pursuing this multi-platform, multi-channel strategy Channel 4 is fulfilling its core remit to be innovative and distinctive. It is bringing public service broadcasting into the digital age and funding the necessary investment entirely from revenue earned in the market place in competition with other commercial broadcasters.

  8.  Channel 4 invests £70 million a year in education. Last year, as well as hundreds of hours of television, this investment provided major web services for school students, teachers and young job seekers; 450 programme-related websites; 239 programme-related help-lines; 173 programme-related publications, and the internationally acclaimed series of 19 films of Samuel Beckett's plays, Beckett on Film.

  9.  Channel 4 describes itself as the "R+D lab of the creative economy". Last year it broadcast work commissioned from just under 350 production companies, drawn from every part of the UK. It invested £3 million in training initiatives and a further £3 million in some 30 separate initiatives to identify and develop new talent. Its Creative Cities strategy is a model of how national broadcasters can work in partnership with local and regional authorities to develop individual and corporate talent.

  10.  In this, and in many other ways, the Channel delivers public benefits beyond the television screen. Its multi-million pound community cricket initiative and its Ideas Factory consortium, which brings together local authorities, trade bodies and private businesses to provide careers and business advice, all make a significant contribution to the quality of life in the UK beyond television, and should be recognised as a legitimate part of the Corporation's public service role. They come at absolutely no cost to the public purse beyond the free spectrum used for the analogue transmission of the main Channel 4 service, informally valued by Professor Martin Cave, the author of the government's review of spectrum management, as being worth in the region of £30 million a year. This benefit is repaid many times over by Channel 4s education, community and business development services alone.

  11.  The combination of cost-effectiveness and cultural effectiveness is unique. In an increasingly competitive and commercial broadcasting environment, and in a global economy where creativity is of ever-growing significance, it provides a new way of securing and enhancing the values of creativity, quality, diversity and independence which all public service broadcasting regulation attempts to capture. Because it is now a familiar part of the broadcasting landscape in Britain, it is easy to overlook the extent to which Channel 4 is itself a radical re-definition of public service broadcasting. In a recent meeting the European Competition Commissioner, Mario Monti, wondered why every member state of the European Union did not have a Channel 4.

  12.  To continue fulfilling this important role Channel 4 looks for a number of outcomes from the proposed Communications Bill:

    (a)  Its Board must have the powers and flexibility to make necessary decisions about new investments and partnerships, and explore new ways of building and developing content—another arena of activity where innovation can benefit the wider UK media sector.

    (b)  It must have the necessary powers to work across all platforms in the converged digital universe.

    (c)  It must have a broadly framed and positive remit to sustain and enhance its mission to be innovative, creative, diverse and distinctive.

    (d)   It must be able to rely on continuing and genuine competition in the advertising sales market. The potential impact of ITV consolidation on this market, whilst ITV remains the dominant player with much more than 30 per cent of the total market, was recognised by the UK competition authorities at the time of the proposed Carlton/UNM merger, and the Competition Commission also recognised the importance of maintaining a competitive market between the ITV London licencees. Nevertheless, it remains a concern of Channel 4 and other advertising funded broadcasters that there is insufficient recognition within the government of the volatility and sensitivity of the advertising sales market.

    (e)  It must be able to maintain neutrality between all platforms and access to all platforms. Any changes in media ownership rules should seek to ensure that platform owners are not able to distort or dominate the market in content supply. There should be clear separation between platform owners and content suppliers.


  13.  With regard to the other areas of the Committee's new inquiry, Channel 4 has the following comments:

    (i)   The implications of the delay to the expected legislation establishing OFCOM.

    Channel 4 does not see this as very substantial problem. The key issue is to ensure that there is a co-ordination of thinking and timing between the draft Communications Bill, the Government's response to Professor Cave's report on Radio Spectrum Management and the evolution and implementation of the Digital Action Plan. For Channel 4 there is an additional factor in that its ten-year licence must be re-negotiated and renewed in time to come into effect on 1 January 2003.

    Channel 4 is particularly interested in getting a clearer sense of where the Government sees the limits of OFCOMs involvement in the regulation of the BBC. The Channel has already set out in a letter to all members of the House of Lords before the second reading debate on the OFCOM Paving Bill the following views:

      "To leave the UKs largest broadcaster outside the new system can only diminish the significance of broadcast content expertise as a central part of OFCOMs remit. It will tend to diminish the potential of the BBC to act as a benchmark for quality throughout the system and may ultimately disadvantage the BBC by leaving it in an increasingly isolated and anomalous regulatory position. The particular structure and role of Channel 4 means that we have a special interest in ensuring that the balance of commercial and public service values which has served British viewers and listeners well in the past remains a key feature of the new regulatory structures. Our particular concern is, of course, that OFCOM should include an adequate number of people with experience of broadcast content regulation."

    (ii)   Developments in policy, since the previous Committee's report on these issues, with regard to the government's overall objectives on: the UK communications and media market; access to high quality diverse services; and the safeguarding of the citizens and consumer.

    With regard to the need to make the UK communications and media markets more dynamic and competitive Channel 4 wishes to stress three points:

    (1)  In its initial submission to the Government in the run-up to the White Paper, Channel 4 argued that all major licensed broadcasters should be required to replicate its own requirement to commit at least half of one percent of qualifying revenue to training. In a fast-evolving and talent-driven sector such as media, it is only by practical commitment to training that the UK can maintain its competitive edge.

    In its response to the White Paper Channel 4 commented, "We regard the failure to set any quantifiable targets for training investment as a sadly wasted opportunity and would urge the government to think again". That view remains unchanged.

    (2)  There is a powerful lobby arguing that a single consolidated ITV would be a more effective and competitive player on the international media stage. Channel 4 remains sceptical. Last year Carlton and Granada made profits of some £300 million from their ITV licences, and that is after substantial payments to the Treasury. The ITV system is in good financial health. Its difficulties relate to decisions on DTT services and ITV Sport. But these difficulties, self-inflicted as they are, should not be the cause of a distortion of competition in the advertising sales market.

    (3)  In an initial submission to government, in advance of the White Paper's publication, Channel 4 drew attention to the government's own role as a purchaser of content and services in the communications sector, particularly with regard to education services. The long-established remit requirements on BBC and Channel 4 have now been augmented by the use of Exchequer and lottery funding, producing a confused market for publicly purchased learning content. The arguments over the establishment of Curriculum-on-line are a case in point.

    The development of a "dynamic and competitive" market in UK originated learning content (which has a very particular cultural as well as commercial significance) would be greatly enhanced by more coherence in the commissioning of publicly funded content and a clear separation between commissioning and content supply. The Bill provides a logical moment at which to address this issue and the role of all the public service broadcasters in providing learning content.

    With regard to the need for high quality diverse services Channel 4 would re-iterate points made in its response to the White Paper, in particular:

    (1)  It welcomes the commitment to retaining the independent production quota and the recognition that the independent sector is now more varied and diverse than it was 20 years ago. Independent production companies have been a vital ingredient in the dynamism of UK broadcasting and a major contributor to the growth and success of Channel 4. Their role is even more important at a time when much of the industry is consolidating into ever bigger trans-national vertically integrated businesses.

    (2)  It welcomes the proposal in the White Paper to consider Channel 4's role in promoting regional production. In response to the White Paper Channel 4 urged that this "should take into account the Channel's growing role in training, development and other off-air activity".

    The Channel's "Creative Cities" strategy is a case in point providing a model of good practice in ways in which national broadcasters can help develop both individual and corporate talent in the creative industries at a regional level. It is an exemplar of the idea explored by Philip Dodd and Wilf Stevenson in their essay in the recently published ITC book "Culture and Communications" that "the public service role of broadcasting should be to facilitate `joined up' culture so as to ensure that all institutions, whether corporate or local, independent or community based, have the best chance of reaching an audience for their works, maintaining their creativity and contributing to the knowledge economy."

    (3)   It welcomes the commitment in the White Paper to maintain must carry/must offer provisions for public service broadcasters and believes that free carriage should be extended to all platforms, including satellite.

    (4)   It urges the government to adopt an open standard for digital services, such as MHP, to facilitate the eventual migration of existing DTT text services toa format common to all UK and European delivery platforms.

    With regard to safeguarding the citizen and the consumer, Channel 4s views were fully expressed in response to the White Paper, but the Channel takes this opportunity to re-iterate the view that:

    The Government should ensure OFCOM has the necessary powers to enforce transparency of pricing arrangements between platform owners and service providers; and that the positioning and presentation of information on electronic programme guides (EPGs) or on systems that pre-record programmes according to personal preference and habit should demonstrably reflect consumer expectation and consumer convenience.

    (iii)   The development and promotion of digital broadcasting, including local/community services and radio

    In its formal response to the government's draft Digital Action Plan, Channel 4 welcomed the Plan and the proposal to establish a project team to take digital forward, and expressed a wish to be fully involved in its implementation. The Channel's principal reservations about the draft Plan, also expressed in its response, are summarised in section 4 below.

    With regard to the development and promotion of digital services, Channel 4 commented "Although the Plan does not deal with how released spectrum may be re-used [at the time of analogue switch-off] we believe that an early decision on whether more spectrum is to be released for public service broadcasters will help the planning process".

    The Channel also commented "The amount of spectrum available to the DTT platform is severely restricted compared to that available to DSat and as a result the enhanced or interactive experience available to the DTT viewer is poor in comparison with that available to the digital satellite viewer. For DTT to successfully develop and take up the major position envisaged within the Digital Action Plan, consideration should be given to releasing more spectrum to allow some enhancement of services."

    The Channel made no particular comment with regard to local or community services or radio services.

    (iv)   Progress towards analogue switch-off

    In its response to the Government's draft Digital Action Plan, Channel 4 commented:

      " . . . the Plan as currently written adds up to less than the sum of its parts. While each of the tasks identified is important, what seems lacking is an overarching strategy and a timetable into which all the tasks fit . . . Channel 4 is especially concerned that there should be greater clarity and stability in the years ahead. We would like early decisions about the spectrum planning issues involved in switch-over, about licence fees for multiplex use and about the issues raised by the Cave review."

    With regard to the possible use of spectrum released at the time of analogue switch-off Channel 4 said:

      "Thought should also be given to the possibility of Channel 4 and ITV having separate multiplexes rather than sharing one."

    Whilst additional DTT costs would be most unwelcome, Channel 4 is aware of the limitations of the present DTT capacity allocation. This means, for example, that the scope for interactivity is much less than on the satellite platform and that the full range of FilmFour channels available on satellite is not available to DTT viewers. It also means that the ability to improve and extend ancillary services for the disabled, such as signing and audio-description, is more constricted on DTT than on other platforms.

    (v)   Cross-media ownership

    Channel 4 is preparing a submission to the DCMS consultation on media ownership.

    (vi)   In addition, the Committee asks for responses on three broader issues:

    (1)  Progress towards universal internet access in the UK.

    Channel 4 considers it important that, along with other public service broadcasters, it should be able to play as effective a role as possible in using television, interactive television and related services to increase familiarity with and access to internet services for the population as a whole. That is part of our understanding of the observation in the White Paper that "public service broadcasting will continue to have a key role in the digital future, potentially an even more important role than it has now" and is particularly true of Channel 4 because of our remit obligation to be innovative in the form and content of what we do. Furthermore, our audience expects it of us and failure to meet their expectations would lead to the long-term decline of the Channel as a prominent and competitive force in homes in the UK.

    (2)  Progress towards broadband and higher bandwidth networks.

    In our response to the White Paper we welcomed the commitment to a broadband strategy. We see this as an area in which Channel 4 has a significant role to play in developing imaginative ideas for content, in all genres, including entertainment but especially with regard to education.

    (3)  The impact of technological developments on the protection of privacy.

    Channel 4 has no particular observation it wishes to make in response to this point. The Channel is mindful of the rights and obligations enshrined in the Human Rights Act of 1998 and the need, where appropriate, to give these practical expression through codes of practice. To that end, the Channel has drawn up its own code of practice to ensure that all its online and internet services are in accordance with the provisions of the Act.

January 2002

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