Joint Committee on The Draft Communications Bill Minutes of Evidence


Memorandum submitted by S4C

1.  INTRODUCTION

  1.1  S4C (The Welsh Fourth Channel) was established 20 years ago to provide a Welsh language television service during peak hours and to broadcast the best of Channel 4's output at other times. S4C's analogue service continues to follow this pattern. During 2001, S4C broadcast an average of 36 hours of Welsh language programmes every week, ten hours of which were provided by the BBC according to the terms of the 1990 Broadcasting Act.

  1.2  S4C receives public funding according to a statutory formula set out in the 1996 Broadcasting Act and which is provided by the Department of Culture, Media and Sport. The formula ties S4C's funding to the Retail Prices and during the current year, S4C is due to receive grant-in-aid of £81.4 million. In 2001, S4C generated a further £12.84 million in gross commercial turnover mainly through the sale of commercial airtime and programmes. Part of this is transferred to the Public Fund to enhance the programme service, while part is retained for investment in commercial operations which, it is hoped will enhance future revenues.

  1.3  S4C launched a digital service in 1998 which broadcasts on digital satellite throughout the UK and which is also available on cable and digital terrestrial television in Wales. Freed from the requirement to be combined with Channel 4, the digital service broadcasts only in Welsh for 12 hours a day. S4C is able to use the greater capacity that digital provides to broadcast a wider range of programmes, consistent with the increasingly diverse expectations of Welsh-speakers and to provide extended coverage of popular national events.

2.  S4C'S DUTIES AND POWERS

  2.1  S4C very much welcomes the reaffirmation of its role that the Communications Bill provides. It also welcomes the fact that in constitutional terms, S4C's regulatory status will mirror that of the BBC. The central challenge it faces over the next few years is that of maintaining a successful and varied programme service in an increasingly competitive broadcasting environment. S4C believes that it is right that the regulation of the public service remit should remain the responsibility of the S4C Authority because that ensures that the cultural and creative challenge that S4C faces will continue to be the clear responsibility of a broadly-based organisation fully conversant with the audience's expectations and with the issues that arise therefrom. S4C does not underestimate either the scale of the challenge it faces in this regard or the importance of its continued success.

  2.2  S4C is committed to openness and accountability in the conduct of its affairs. We see the proposal (clause 226) that the Secretary of State should in future have the power to review the Authority's performance in discharging its duty as an extension to this. It will also reflect the process whereby the BBC's Charter is subject to review on a 10-yearly basis. In order to maintain parity with the BBC, S4C believes that the provisions contained in clause 226 should be amended to provide that the review process should be able to be undertaken at ten year intervals rather than the five years currently provided for. A ten year review period would also tend to make it more likely that any review could focus on the more significant changes to the broadcasting landscape within which S4C operates.

  2.3  S4C believes that the terms of our statutory remit have stood the test of time. Our responsibility has always been, and continues to be, to provide a broad ranging television service of the highest possible quality. We, therefore, take comfort from the fact that the effect of clause 145 and paragraph 3 of Schedule 8 is to re-state, but not alter, S4C's core public service remit. Granting the Secretary of State the power to amend the more technical aspects of the remit contained in sub-paragraphs (2) and (3) of paragraph 3 will bring S4C into line with similar provisions relating to the public service remits of the other main broadcasters.

  2.4  S4C is pleased that the Government has agreed to its suggestion that it should be allowed to provide additional public services, subject to the approval of the Secretary of State. This will enable us to overcome the current anomaly whereby, for example, our coverage of the proceedings of the National Assembly of Wales on S4C2 has been licensed as a "commercial venture" by the ITC. In future this will be able to be delivered as a public service by the S4C Authority in its own right. This expansion to the remit has not been included in this draft of the Bill but it is in the Policy Document.

  2.5  The changes proposed for S4C's commercial powers (also not yet drafted) will bring us more closely into line with the arrangements that apply in the case of the BBC. S4C has no difficulty in principle with a change of this nature. We will, however, be anxious to ensure that the detailed provisions giving effect to this reflect our particular circumstances and the very different scale of S4C's commercial activities when compared with those of the BBC. We are particularly anxious that they should not represent a disproportionate administrative burden that would deflect us from our main priority of devoting the maximum possible level of resources to the programme service.

3.  S4C FUNDING

  3.1  S4C will only be able to compete successfully in an increasingly harsh broadcasting environment if it has sufficient resources to invest in programmes. Over recent years, efficiency savings and commercial income have enabled S4C to launch a digital service, which offers the ability to extend substantially the hours available to Welsh-language broadcasting. It has done so from within its inflation linked funding formula. Unlike every other public service broadcaster, it has not received any form of additional funding to reflect the considerable additional costs that digital transmission involves nor with which to provide new programming for a digital service or services. With costs in the industry increasing at a rate in excess of general inflation, S4C's ability to offer a competitive and comprehensive service, as required by statute, is gradually being eroded. This is happening at a time when competition for audiences across all channels, particularly in peak hours, is becoming ever fiercer. If anything, the changes being introduced in this Bill will only serve to intensify these competitive pressures. S4C believes that this brings our request for additional funding, currently being considered by the Government, into even sharper relief. We are concerned that the legislative provisions governing our funding limit the discretion available to the Secretary of State in deciding how to respond. Section 80 of the Broadcasting Act 1996 only allows the Secretary of State to move beyond providing an inflation uplift in relation to the costs associated with the transmission of the service.

  3.2  S4C's RPI linked funding formula provides an important means of reaffirming the Channel's independence. We believe that there are very good public policy reasons why this link should continue to be set out in statute. Any change therefore needs to be secured through primary legislation. We believe the formula should be amended so that the current base level to which RPI is applied annually is raised to take account of the costs of digital transmission and of providing a digital service in Welsh. This would be in line with the financial concessions already accorded to other broadcasters to incentivise and allow investment in English language digital services. It would also provide a means of reflecting the actual scale and nature of a Welsh language digital service in a manner, which was simply not possible in determining the formula included in the 1996 Act. We would invite the Committee to express its support for a change along these lines to be incorporated in the Bill.

4.  GENERAL COMMENTS

  4.1  There are four aspects of the broader statutory framework that the Bill describes, and their impact on S4C, that we would wish to draw to the Committee's attention:

i.  OFCOM

  4.2  S4C generally welcomes the establishment of a single regulator with responsibilities extending across all aspects of the communications industries. This could bring particular benefits in a country like Wales where the challenges of delivering an advanced telecommunications infrastructure in rural areas are not dissimilar to those surrounding the delivery of digital television. S4C welcomes the explicit recognition within OFCOM's proposed functions that its role includes the need to secure a wide range of television services in all parts of the United Kingdom (clause 3(1)) and that in carrying out is duties it should also have regard to the different needs and interests of viewers and consumers in different parts of the UK (clause 3(2)). The wide ranging nature of OFCOM's role also underlines the need for it to develop effective links with the devolved administrations as suggested in the policy document.

  4.3  Given the challenge of securing digital television services in all parts of the UK, S4C would invite the Committee to consider whether the Bill should go further and place OFCOM under a specific duty which more closely reflects the Government's commitment towards achieving 95 per cent coverage for digital television services. We would also repeat our concern regarding the need to ensure that this test is met in each part of the UK ahead of digital switch-over.

  4.4  OFCOM has the power to charge for its services under clause 19 of the Bill. S4C's relationship with OFCOM will be broadly comparable with its relationship to the Broadcasting Standards Commission. S4C would wish to ensure that any contribution it is required to make towards the cost of OFCOM relates solely to the relevant parts of OFCOM's activities.

  4.5  S4C sees the proposals requiring the publication of annual statements of programme policy (Schedule 8, paragraph 4) as an extension of our existing policy of publishing an annual Corporate Plan with associated programme targets. We believe it is right that in S4C's case these statements should be the responsibility of the S4C Authority given that they will reflect just one aspect of S4C's general programme strategy that is already approved by the Authority. S4C is, however, concerned that the machinery surrounding statements of programme policy may not sit easily alongside our statutory duty to publish an Annual Report, which is laid before Parliament and which provides comprehensive information for our viewers both on the sorts of programmes we broadcast in the previous year and on our activities more generally. The Committee may wish to recommend that the processes by which OFCOM carries out its responsibilities do not unnecessarily result in duplication of existing provisions.

ii.  Due prominence

  4.6  S4C welcomes the confirmation (clause 209) that OFCOM will be required to draw up codes of practice governing the operation of electronic programme guides (EPGs). The proposals concerning the prominence that should be given to public service broadcasters on EPGs is of particular relevance in the case of channels such as S4C that are required to carry a broad range of programming. Information presented on EPGs is increasingly broken down by programme category and frequently conveyed in a manner that tends to accord a particular prominence to those channels that only carry programmes within that category. It is not possible to classify S4C according to any single category of programmes. Part of its output is aimed at children, part at those interested in sport, part at those interested in music and so on. Already it is clear that children in digital homes consider the EPC to be a prime source of information about the ability of programmes of interest to them. S4C is the only provider of Welsh-language programmes for children. Its children's strand Planed Plant does not however, appear as an option when the children's category on the EPG menu is selected. In an already difficult environment, the likelihood of a Welsh language option being selected is thereby reduced. Similar considerations will increasingly apply in drama, film and other programme categories. The policy governing EPGs also has important implications for areas of the country like Wales, where there is only very limited competition between digital platforms. If EPGs are to be helpful tools for viewers rather than marketing tools for certain channels the powers suggested for OFCOM in this area must be sufficiently powerful and flexible to deliver a level playing field for all.

iii.  Complaints handling

  4.7  The aspect of the proposal to create regulator about which we do have concerns relates to the extent to which in future all matters to do with programme content will fall to one group of people to determine. S4C believes that the arguments in favour of a single regulator are stronger in respect of economic matters than they are with regard to content. S4C was encouraged by the White Paper support for the principle of self-regulation. We saw this as an important defence against the potential risk to plurality and free speech, which could other wise surround the establishment of a single regulator of content on all the broadcast media. We see considerable merit in a system that grants broadcasters a certain degree of discretion in the way that they interpret and apply centrally determined guidelines.

  4.8  We were, therefore, concerned by the suggestion that the Government was now contemplating a move away from the principle of self-regulation in relation to dealing with complaints about programme content (other than matters of fairness or privacy) and the extent to which these might be referred direct to OFCOM without expecting the broadcaster to respond in the first instance.

  4.9  S4C believes that there is an important policy decision to be made here. Is it the intention to establish a framework whereby individuals that have complaints about matters of programme content should be able to have direct access to an organisation independent of the broadcaster (as is currently the case with the Broadcasting Standards Commission), or should complaints be seen as an important means of providing feedback to broadcasters and or developing a dynamic and meaningful relationship between broadcasters and viewers so that each broadcaster fully understands its own viewers' concerns in respect of taste and decency issues. S4C would argue very strongly in favour of this second option and that the Bill should reflect this. If it was felt desirable, OFCOM could be charged with developing guidelines concerning the sorts of procedures that broadcasters should have in place, including lay members on complaints panels. The regulator could also be placed under a duty to monitor the way in which broadcasters discharge their responsibilities in this regard. OFCOM could also be provided with backstop powers, which would enable it to intervene where necessary, though preferably with a view to these only being used in cases where it was felt that the broadcasters had dealt with a matter in a manner that was perverse or unjust. We have no difficulty with the concept that individuals should have ready access to an independent organisation with regard to complaints relating to fairness or privacy.

iv.  Spectrum pricing

  4.10  S4C notes that the Government has yet to come to a final view on spectrum pricing. S4C recognises the desirability of ensuring that broadcasters use the spectrum allocated to broadcasting as efficiently and effectively as possible. We would, however, be very concerned by any move to seek to impose this discipline by charging public service broadcasters for their use of spectrum. Under current arrangements any move towards requiring S4C to pay for the spectrum it uses could only be achieved at the cost of the programme service. Given that it is funded from the Exchequer, S4C would suggest that it be excluded from such arrangements. This would seem preferable to an arrangement whereby the Exchequer was required to increase the funding it provides to S4C simply in order that it might receive it back in due course.

5.  CONCLUSION

  5.1  This response to the Communications Bill has been based on our assessment of the extent to which we believe it will further S4C's core mission of reflecting and enriching the lives of the people of Wales and beyond. The increasingly competitive nature of broadcasting creates particular pressures for small broadcasters. The regulatory framework, which the Bill will establish should be sufficiently flexible and sensitive to reflect this. This will ensure that S4C can continue to play as full and creative a role as possible in contributing to the distinctiveness and diversity of public service broadcasting in Wales and the rest of the UK.

June 2002


 
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