By Rebecca Martin,2014-05-07 12:04
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BBC Response

Channel 4 Licence Renewal

July 2002


Since it was brought into existence, Channel 4 has played a very significant role in

    helping to deliver public service broadcasting’s distinctive contribution to audiences

    in the UK. The decade of the next Channel 4 licence will see multichannel

    television become the norm, increasing numbers of niche providers entering the

    market, and segmenting it, and considerable change in the tools that consumers use

    to view broadcast content, as well as the ways they consume channels.

Channel 4’s core responsibilities within the broadcasting ecology - to be one of the

    broadcasters at the forefront of innovation and experimentation, to serve minority

    groups within the UK, to reflect a culturally diverse society, and consistently to strive

    to be distinctive from other services give it as critical a role in the future as it has

    played in the past. We are delighted to see that this remit is articulated in the draft

    Communications Bill, and trust that the new licence will reinforce it in two key areas.

Firstly, we see a clear role for the licence in providing sufficient guidance to

    Channel 4 on its remit to ensure effective self-regulation.

Secondly, we believe that the licence must play a greater role in directing any new

    commercial ventures which Channel 4 undertakes.

Channel 4’s Remit

We welcome the public commitment made by Channel 4’s new chief executive to

    refocus the Corporation on its core channel and its core mission, “to be the channel

    most about creativity, originality, individuality, diversity”. Over recent years we have

    had the sense that the competitive pressures on Channel 4 were leading it to edge

    away from the qualitative features of this remit. Analysis of output makes clear that

    over the twenty years of its existence, Channel 4’s peak schedule has become more

    mainstream, primarily at the expense of programming in current affairs, arts, music

    and religion. This is in keeping with the trends noted by the ITC in its annual report

    across public service broadcasting as a whole, but is particularly disappointing

    given Channel 4’s remit to offer distinctive programming.

We have noticed a similar erosion of Channel 4’s commitment to original UK

    production. The substantial increases in revenues which followed from the ending

    of the funding formula in 1998 have not delivered the benefits to the domestic

    production sector which Channel 4 had promised. We have instead seen increasing

    investment by Channel 4 in non-programme areas, in commercial ventures, and in

    acquisitions; the latter culminating in the Corporation spending ?1million per

    episode for The Simpsons, at the expense of originations. Channel 4’s investment decisions in relation to its new digital services do not appear to have played a

    significant part in countering this disappointing trend.

The Statement of Programme Policy attached to Channel 4’s licence clearly has a

    key role to play in amplifying the general remit set out in legislation, and ensuring

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that the Corporation works consistently to fulfil its distinctive remit to the very best of

    its ability. We would hope that going forward, the regulator will work with Channel

    4’s leadership to ensure that the Corporation maintains focus on the fulfilment of its

    purposes as set out there, and achieves both the qualitative and measurable targets

    to which it aspires. In particular, as Channel 4’s new chief executive has recognised,

    there may be a case for greater clarity on the “distinctiveness” expected of the

    Corporation, and we would hope that going forward the practical interpretation of the

    licence might see Channel 4 consistently seeking out and serving underrepresented

    voices and perspectives, to make them accessible to mainstream audiences.

Particularly given the move away from quantitative monitoring of remit compliance to

    more qualitative self-regulation of individual public service remits, set out in the tier

    3 proposals in the Draft Bill, the BBC believes that Channel 4’s licence will have a

    critical role to play in providing a solid guiding framework for the service. While this

    should be flexible enough to allow the Channel to evolve as necessary over the

    licence period, it should ensure that Channel 4 continues to play its valuable role in

    serving particular audiences and contributing to the best of its ability to the delivery

    of the broader UK public service broadcasting remit.

Channel 4’s New Ventures

Our observation of the way that Channel 4 Corporation has developed over recent

    years has persuaded us that greater guidance is needed through the Corporation’s

    licence on the interpretation of what might constitute “incidental or conducive”

    services which the Channel might set up.

If Channel 4 is to continue to play its intended role in the development and delivery

    of public service broadcasting in the UK going forward, while it must be free to

    develop new revenue streams, and to develop new services to reach the public in

    new ways, we believe these must consistently support its core purposes. Like many

    others who have genuine concern for the future of Channel 4, we are alarmed at the

    extent to which new commercial ventures to date appear to have drained money

    away from investment in the main channel, and from investment in original UK

    production. If this were likely to lead to commercial success and a significant

    additional return to Channel 4 it would be understandable. However, the figures

    available to us do not suggest this will be the case.

The intended purpose of the additional revenues made available to Channel 4

    through the ending of the funding formula was reflected in the variation made to the

    Channel’s licence at that time: “The Channel is committed to allocating the funds to

    UK film and programme production and training as well as in meeting its new digital

    commitments… The channel will maximise the extent whereby its commercially

    earned revenue is directed towards original and distinctive programmes for British

    viewers”. It is worth highlighting that while these revenues are obtained from

    commercial sources, they are generated by Channel 4 at significant cost to the

    public purse as a result of the spectrum which is in our view, quite rightly gifted

    to the Corporation.

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    We are therefore concerned to note a widening gap since 1998 between growth in Channel 4’s revenues and growth in programming funds spent on the main service, and on original UK content in particular. Even in the worst advertising downturn the Channel has had to face, and with increasing multi-channel competition, Channel 4’s main service made a profit last year. Group losses were purely a result of commercial investments which have consumed more than ?350m since 1998, curtailing budgets on the main public service channel.

    In place of the intended additional investment in original UK content, Channel 4 has spent an increasing proportion of the additional revenues flowing to it since 1998 on additional staffing, on increasingly expensive rights to US content which is commercially attractive, and on new digital subscription channels which are some way off breaking even, let alone returning the investment made in them to the core service.

    In as far as C4’s commercial activities are founded upon investments from a public service base, it is appropriate that the regulator should subject them to greater scrutiny than has hitherto been the case to ensure on behalf of the public that

    they constitute an appropriate use of funds. We therefore welcome the increased scrutiny proposed in the new licence, and the provision for the development of a formal fair-trading framework within Channel 4 for dealings between public service and commercial areas.

    We hope that in bringing the clauses outlined into operation, the ITC will ensure that future commercial ventures by Channel 4 do not adversely affect the core service. In particular it would seem appropriate for the nature of any “other benefits” delivered by the proposed services, beyond financial returns, to be clearly set out by Channel 4 and criteria agreed for their measurement and evaluation.


    The commitments made by Channel 4’s new chief executive in refocusing the Corporation on the main channel, and on consistent delivery of innovative and distinctive original programming are very encouraging in addressing concerns about the direction which Channel 4 has appeared to be taking. We believe that the greater scrutiny of new ventures proposed through these licence revisions and the Communications Bill should ensure that there is greater guidance for the Corporation going forward in interpreting what might be “incidental or conducive” to its main purposes.

    We hope the changes will also allow Channel 4 the flexibility to continue its evolution, while providing sufficient direction to ensure it contributes to the best of its ability to the delivery of both its own and the broader public service broadcasting remit.

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