Examination of Witnesses (Questions 420
THURSDAY 8 FEBRUARY 2001
420. In the new structure that you are creating
what is the role of Film Four? Although one may have views about
this or that film, I believe that Film Four is responsible for,
or involved in, some of the most lively and vivacious film-making
in the country. Last week I saw the new film "Sexy Beast"
and found it one of the most brilliant and entertaining films
that I had seen for a very long time. To what extent will you
use your additional finances and prosperity to foster further
film-making in this country?
(Mr Jackson) We are trying to grow our presence in
the film business. Channel 4's role historically was to act as
a catalyst for the British film revival back in 1982. That catalytic
effect has taken hold. The numbers of British films being made
has risen dramatically; and the number of successes has also risen.
In a sense, we believe that it is now our role to move on to a
new platform, perhaps to be more ambitious, to use the moneys
that we have ring-fenced for film production to attract greater
investment, to make some bigger films and, in a sense, have a
UK-based international film company. To that end, we are bringing
in money from Germany, America and all over the world to make
some more ambitious films. This week we have just started on our
most ambitious film to date: an adaptation of Sebastian Faulkes'
novel Charlotte Gray. At the same time, we recognised that
such pump-priming of new talent was as critical in the film business
as in television. Therefore, we have invented something called
the Film Four Lab which invests in new talent and makes low budget
films. That is proving to be a fantastic talent ladder for us.
We can grow talent there and perhaps hold on to it in the more
ambitious arena of the bigger budget films.
421. Has the change in the funding formula,
for which this Committee can take some credit, assisted in these
(Mr Scott) Absolutely. The unwinding of the funding
formula enables us to carry out a number of promises. At the time
that it was being unwound we said that we would double the amount
of money that we put into film production. We have done more than
that. We said that we would be able to introduce new digital services.
The Film Four channel was the first of that and was launched with
some success. It is performing better than the business plan which
we set out at the time of launch. It has also enabled us to expand
the programme budget on Channel 4. We have introduced considerably
more drama, regional productions and the training about which
we spoke earlier. It has been vital to the health of Channel 4
that the funding formula has been unwound, and we are very grateful
for the Committee's assistance in that.
(Mr Jackson) We invest about £15 million per
annum in film productions. That brings in an additional £65
million from outside sources, often outside the country, which
is a classic illustration of the creative economy in action and
the pump-priming role that public broadcasting can play.
(Mr Scott) The £15 million to which Mr Jackson
refers is the payment from Channel 4 to Film Four Limited for
the television rights. Film Four itself spends more like £40
million a year on productions and, in addition, we bring in the
money from overseas.
422. I read in my copy of The Daily Mail
last week a most remarkable encomium to Channel 4, which is not
a theme that I have always read in that newspaper. Which of you
has changedChannel 4 or The Daily Mail?
(Mr Jackson) My own theory is that perhaps The
Daily Mail tells you a lot about The Daily Mail; it
is reassessing its understanding of readers and maybe has been
out of step with the changes, lives, thoughts, habits and viewing
of the people who read the newspaper. Yesterday there was a very
interesting guide to the Kama Sutra in that newspaper,
which I commend to the Committee. There are many ways in which
The Daily Mail is changing. Perhaps you should invite the
editor to speak to you.
423. Our Chairman uses far more delicate language
in this Committee than on the Floor of the House. This morning
he has avoided using the "p" word"privatisation"but
as someone who has grave reservations about Channel 4 being privatised
I am perhaps in a position to raise the matter and give you an
opportunity to say why you believe that it would be a problem.
You say in your submission that your structure has always enabled
you to provide a rich and varied schedule and to take creative
risks, which follows on from the Chairman's point about The
Daily Mail. Do you think that perhaps it has been a little
too rich and varied in the past and that has become part of the
problem? Do you believe that you have alienated certain sections
of the media and political world through what you proudly describe
as a rich and varied schedule?
(Mr Jackson) That may be the case, but I believe that
the argument for privatisation that is made is based on a misunderstanding.
It is more of a misunderstanding than a dislike of what the Channel
does. The misunderstanding, simply put, is that the variety, richness
and difference of what Channel 4 does could be provided by the
marketplace. We could ask the regulator to regulate and there
would be no problem, but the fact is that what we are able to
do comes about because we can cross-subsidise within our output.
The fact is that there are many programmes within the body of
the Channel 4 scheduleChannel 4 News, the recent drama
"Sword of Honour" and so onwhich do not return
the cost of their production. In a properly commercial venture
which has a fiduciary duty to shareholders many of those programmes
simply would not exist. Every time Channel 4 News goes out on
that channel we could put in a programme which attracted three
times those viewers and, therefore, would be more profitable.
424. A moment ago you referred to regulation.
Do you say that by the very nature of the fact that you are new
in the commercial world you are the new boys on the block and,
pro rata, your level of regulation would in many ways be
higher because you would be pulled down to the level of others?
Is that what you complain about?
(Mr Gardam) I do not quite understand.
425. You say that you would need increased regulation
at Channel 4, or that is what the proposal for privatisation would
involve. Do you say that you would be unfairly treated because
you would need a greater degree of regulation because you would
be new to the commercial sector?
(Mr Gardam) If the argument is that you would put
increased regulation on a privatised Channel 4 it would be perfectly
possible to find ways to reach certain targets. Whether or not
those targets would be creatively reached with the result that
programmes were better is another matter. The ratchet effect that
always exists with a privatised company means that you must maximise
revenue per slot, and that you see the remit not as an opportunity
and identity but a burden. Therefore, you see it as a ceiling
that you achieve and then go on to do other things. For example,
to take the past month if I were the director of programmes of
a privatised Channel 4 I would not spend £1 million on something
like the Kumbh Mela and run it for a month. One would be able
to achieve one's remit in multi-cultural or religious programmes,
however one apportioned it, in a far less ambitious way. Similarly,
would one really take on "Sword of Honour" when one
could probably launch a soap for a year with the same amount of
money? There would be a curtailment of risk and ambition. The
interesting thing about Channel 4 is that because it is essentially
a commercial company whose dividend is a public one it takes risks
that can result in programmes, particularly in innovative comedy,
which would not otherwise be screened but which may be very successful,
even if in time the talent and the companies that have made them
are bought up by other people and go elsewhere.
426. Although we have heard your raison d'etre
this morning for E4, critics may say that that is the thin end
of the wedge. How can you say on the one hand that you do not
want to be privatised but on the other hand you are happy to put
your toe into the commercial world?
(Mr Jackson) Channel 4 has always been a commercial
broadcaster. We are publicly owned but commercially funded. In
that sense something like E4 is simply a continuation of the reality,
albeit refashioned for a multi-channel world. I do not think that
it marks any fundamental difference to what the channel is about.
427. You also say in your evidence that to put
Channel 4 in the private sector would mean that the BBC would
lose the benefits of direct public service competition. Some might
be confused by that. What benefits does the BBC see in having
you as competitors?
(Mr Jackson) Mr Gardam and I used to work for many
years for the BBC. We can testify in detail to the fact that the
competition for quality rather than simply for audience figures
between Channel 4 and the BBC has been of fantastic benefit to
both services. I used to run BBC2. Channel 4 put up creative competition
in all the main genres which made it better. BBC2 became a much
better channel post the launch of Channel 4.
(Mr Gardam) Public service broadcasting as a whole
has worked in the United Kingdom because it is a competitive system;
it is not just Channel 4. Some of the ITV's greatly ambitious
documentaries, for example on Alzheimer's disease last year, would
make Channel 4 and BBC deeply jealous. The BBC's role as a benchmark
of public service would not be able to be maintained if essentially
public service just became the BBC's brand. It is precisely because
there is competition and rivalry over who can attain that reputation
that one maintains the quality of the programmes that one makes.
428. I have a completely separate question,
although perhaps it has relevance to the issue of funding levels
whether in the public or private sector. I refer to the purchase
of sporting rights. Channel 4 has achieved one of the great successes
in recent years in terms of poaching a sporting righttest
cricketand then enhancing it greatly. The new Director-General
of the BBC has publicly announced that he wants to go out and
replenish the BBC's sporting rights arsenal so that the BBC can
get back into some major sports. Is there a future for organisations
like yours in the public sector, although commercially funded,
in being able to compete for sporting rights at the rates which
they command these days?
(Mr Jackson) Yes. A sensible sporting body is one
that seeks to promote its wares to the majority of people. One
sees what has happened with rugby, boxing and some sports which
have disappeared from the living rooms of the majority of people
in this country. Those sports do not command the attention and
engagement that they once did. For those people who like boxing,
it will be good news that that will be back in people's living
rooms. Doubtless that will regenerate people's interest in the
sport. The fact is that it is the ability to be part of a national
conversation which makes sport so exciting, makes it grow and
introduces new generations. It is the responsibility of broadcasters
and astute sporting bodies to realise that they must grow the
sport for the future and make sure that people can see them and
engage in them so that they are part of their lives.
429. You show overseas sports, for example Italian
football or whatever. There is an audience for those sports and
you can carry on running them viably on Channel 4?
(Mr Jackson) There is. But the success of test cricket
lies in taking something which is supposedly a pillar of the establishment
and regenerating it. One of the things that we said to the ECB
when we bid for the rights was that we wanted to bring it to a
younger audience and reflect the multi-cultural nature of the
sport and innovate in the form of coverage. It illustrated how
one could take something that basically had been covered in the
same way since the 1930s, if you like the view from the pavilion,
and bring to it a new perspective. What we had learnt in minority
sports we were able to apply to a supposedly majority sport.
430. Given the unique broadcasting position
in which you and BBC find yourselves, and the review of your remit,
do you think that there should be a comparable review of the BBC's
remit in the same way?
(Mr Gardam) From where we sit the most important thing
is that there is clarity of purpose. That is why we welcome the
idea of a single regulator. By and large, our role in competing
with and being complementary to both the BBC and ITV means that
we want to ensure that we are on the same playing field. In terms
of content, what is important in any new Bill is that there are
clear definitions in terms of spend on UK-originated programmes
and regional production and an acceptable programme code. At the
moment the BBC is outside that loop. I believe that it would not
damage the BBC and would benefit everyone if there were such clear
definitions across all public service broadcasters.
431. Given the level playing field that you
want to see, is there an equal obligation between Channel 4 and
BBC in terms of public service broadcasting and its remit?
(Mr Gardam) The obligation is equal, but we have different
roles to play. Essentially, the role of Channel 4 is to be in
the vanguard of ideas and bring new ideas to a broader public
than would otherwise be the case. One of the key roles that we
must play is in the creative economy. The fact that we are driving
400 small and large businesses a year which make programmes for
Channel 4 gives us a particular role which it is not the role
of the BBC to play. The BBC's role in terms of universality and
market failure is greater; our role should be more in projecting
forward new ideas, companies, talent and particularly, in the
commodified world of digital television, to ensure that there
is scope for individual authorship, and that people can break
out from the larger converged broadcasters to set up on their
own and make their own programmes and businesses. That is the
key role that Channel 4 will pursue, which I believe is every
bit as much a public service role which we can perform as a commercial
broadcaster, without the shareholder pressures which would otherwise
certainly mean that we would not dream of having so many suppliers.
(Mr Scott) In terms of its vision and strategy in
recognising a multi-channel and multi-platform world, the BBC
is absolutely correct. That applies also to all successful broadcasters.
The BBC has been very fortunate with the additional funding that
it has received by way of the licence fee as a result of Gavyn
Davies' review. It is very important that that money is used for
the purposes set out in the prospectus at the time of the review.
Particular reference was made to education and multi-cultural
services, and it is important that the BBC comes up with them.
432. What is the difference between your board
and the BBC Governors in terms of role?
(Mr Scott) We have an integrated board of executive
and non-executive directors. The non-executives are appointed
by the ITC and are accountable to the ITC. They are in the majority
on our board. I believe that the structure is very successful
and gives the ITC proper regulatory control over Channel 4. The
Governors of the BBC are in a difficult position in that they
are both regulators and the managers of people involved in the
day-to-day matters. That is the distinction between our role with
the ITC and our board.
433. In the long term would you like to see
a privatised BBC?
(Mr Scott) The difficulty is how one funds it. The
BBC licence fee adds considerably to the variety of funding of
broadcasting. As has been estimated many times in the past, from
Professor Peacock onwards, there is not enough advertising in
the marketplace to fund all the presently funded services and
the BBC as well. If one looks for privatisation of the BBC the
question is: how would it be funded?
434. On the question of content regulation,
would you show any film that had been passed by the film censor
for general release on your channel?
(Mr Gardam) I believe that as a matter of general
principle we would, subject to where it is shown and the time
at which it is to be shown. With any film, the use of the film
censor's decision and the BBFC certification is a very good benchmark
for us. We would certainly show a video version rather than a
cinema version. But in television one learns to be very empirical
about these things and look at every individual film that is to
be screened and make a decision on the basis of content rather
than give a broad-brush yes or no.
Mr Maxton: I hope that you will be prudent
but not prudish.
Chairman: The complaint made against
you is that you show films which have not been passed by the censor.
Thank you very much.