Memorandum submitted by Channel 4
Channel 4 welcomes this opportunity to put before
the Select Committee its principal views on the Government's White
Paper, A New Future for Communications. In this submission,
we concentrate on that part of the Committee's inquiry concerned
with the future regulation of public service broadcasting.
Channel 4 has welcomed the White Paper for setting
out a clear framework for how the converging communications industries
should be regulated in the years ahead. In particular, Channel
4 welcomes the plans to create a single regulator, which should
bring greater coherence and clear-sightedness to the ways the
communications industries develop.
We welcome the strong endorsement of public
service broadcasting and the assertion that it may have an even
more important role in the multi-platform multi-channel future
than it has now. We fully support the White Paper's commitment
to must carry/must offer provisions and to securing due prominence
for public service channels in multi-channel environments.
The White Paper recognises that the defining
elements of Channel 4's public service remit are to provide innovative
and distinctive programming and to provide both complementarity
and competition to the BBC and ITVa remit cast in terms
of not compensating for failures in the commercial market but
of catalysing change and pioneering new services to reach new
communities of viewers. The Channel's role in fostering the development
of the creative economy should also be recognised as part of its
remit. The Channel believes that the new regulatory structure
will enable its remit to be interpreted in the more positive light
that the White Paper recommends.
Channel 4 strongly welcomes the White Paper's
rejection of privatisation. Channel 4's success depends on its
unique status as a statutory corporation funded entirely by commercial
revenues. This structure has enabled us to provide a rich and
varied schedule, for some programmes to cross-subsidise others,
for creative risks to be taken and for innovative talent to be
nurtured. All our income is directed towards providing services
for viewers, as we do not have to provide dividends for shareholders;
the money to pay shareholders would have to be found by diminishing
the mix of programming we offer. By putting commercial rather
than editorial objectives at the heart of Channel 4, privatisation
would deprive the channel of the central reason for its success.
Regulators and independent commentators alike have been of the
view that policing the remit within a shareholder-driven company
would be a practical impossibility. We agree and putting Channel
4 in the private sector would mean the BBC would lose the benefits
of direct public service competition.
The White Paper says "the framework for
ensuring Channel 4's new services support its remit and are not
unfairly subsidised will be clarified". Like every other
major broadcaster, we recognise that the development of a multi-channel,
multi-platform set of services is the only viable creative strategy
of the future. While some of our new services, mainly in the field
of education, are likely to be dependent on cross-subsidy for
the foreseeable future, others such as E4 are planned not only
to be self-financing, but to generate net revenues for the channel
within a specified period.
In a fluid and fragmenting media world we do
not believe we can rely on advertising alone to guarantee an adequate
and secure revenue source for the Channel. For the Channel to
fulfil its existing public service remit, and in addition provide
the enhanced range of services that the White Paper envisages,
it must ensure it can raise the revenues it needs. There is a
risk that if legitimate medium term investments designed to safeguard
the Channel's financial future and extend the range of services
it offers are characterised as "unfair subsidy", then
Channel 4 could be gradually boxed into a corner where it will
wither and die.
We welcome the commitment to a single regulator
and the recognition that such a regulator will need delegated
powers to operate effectively in a fast-moving and fluid media
We believe the proposals for a three-tier regulatory
structure hold out the possibility of a genuinely exciting new
chapter in UK broadcasting. The structure gives clear expression
to the reasons why, how and where regulation will apply. The logic
of the White Paper is that the close and sometimes mechanistic
management of regulation for broadcasters is no longer desirable
or practical. The underlying theme of many of the government's
statements has been less regulation, more responsibilitya
sentiment that we strongly endorse.
In this context we believe it makes sense for
some fixed requirements on content and output to be regulated
at the first and second tiers while some variable requirements
are self-imposed and agreed with the regulator at the third tier.
We believe that the best way for Channel 4 to
ensure that it meets its remit requirements of innovation, distinctiveness,
competition and complementarity is through the Channel 4 Board
being empowered to make appropriate strategic decisions to give
effect to the remit. We envisage the Board taking greater responsibility
for defining how the Channel's remit should be interpreted, giving
clear targets for its implementation and monitoring how well it
is being achieved. The Board will report to the regulator on how
it is discharging its responsibility. We believe that this will
provide a more creative approach to steering the remit than some
of the traditional, more mechanistic forms of "box ticking".
As far as the second tier is concerned, we believe
that all public service broadcasters should meet certain key conditions.
Channel 4 remains committed to ensuring a large majority of its
programmes are original productions, to fulfilling its regional
production targets, and to maintaining news and current affairs
in peak time. The Channel believes that the health of the independent
production sector will be secured by maintaining the system of
independent production quotas.
The proposals for maintaining content standards
through bringing together the best aspects of existing programme
codes into a single form of content regulation at the first tier
are to be welcomed. However, we are concerned to have a clearer
understanding of what the White Paper means by generally accepted
community standards, especially in light of its recognition that
viewers are discriminating and have different expectations of
different channels and platforms at different times of the day.
We are disappointed that all major content providers
are not to be set a minimum commitment to training, along the
lines of the Channel's own requirement to invest at least half
of one percent of qualifying revenue. In a fast changing industry
as heavily dependent on creative and technical talent as our own,
we regard the failure to set any quantifiable targets for training
investment as a sadly wasted opportunity.
Channel 4 is committed to increasing the proportion
of its programmes that are subtitled for the deaf and hard of
hearing, and to meeting its commitments to provide signing and
audio description on its digital services.
Channel 4 believes the BBC should not be exempt
from many of the provisions of other public service broadcasters,
and that an opportunity to look at all of public service broadcasting
together within the context of the whole communications industry
has been missed. We do not believe it is in the interests of the
whole industry, of public service broadcasting in general or of
the BBC itself, for the BBC to maintain a privileged position
half-way outside OFCOM's remit.
We strongly endorse the need for careful consideration
of new BBC services. While Channel 4's public service role is
to be the main force for innovation, creativity and diversity
in British media, the primary responsibility of the BBC, funded
annually by more than £2 billion of licence fee income, must
be to address the issues of market failure.
We endorse ITV's continuing commitment to regional
programming as a distinctive aspect of its public service role.
However, we remain concerned, notwithstanding the need to comply
with competition law, of the effects on the airtime sales market
of greenlighting ITV consolidation in the way the White Paper
proposes. We do not see how the benefits claimed for such a consolidation
outweigh these concerns. It is vital that a competitive advertising
sales market is maintained.
Public service broadcasting has served the UK
well, and its strengths should be preserved. Channel 4 has played
a key role in the development of public service broadcasting,
and we are pleased that the White Paper is so supportive of our
achievements. We believe that if the Government is prepared to
be as supportive in the future, Channel 4 will continue to enjoy
success as a quite unique public service broadcaster.