House of Commons Welsh Affairs Committee

S4C

Written evidence - web

List of written evidence

1 URDD 3 2 Hugh Evans 5 3 Ron Jones 6 4 Dr Simon Brooks 14 5 The Writers Guild of Great Britain 18 6 Mabon ap Gwynfor 23 7 Welsh Language Board 28 8 Ofcom 34 9 Professor Thomas P O’Malley, Aberystwth University 60 10 Tinopolis 64 11 Institute of Welsh Affairs 69 12 NUJ Parliamentary Group 76 13 Plaim Cymru 77 14 Welsh Language Society 85 15 NUJ and Bectu 94 16 DCMS 98 17 PACT 103 18 TAC 113 19 BBC 126 20 Mercator Institute for Media, Languages and Culture 132 21 Mr S.G. Jones 138 22 Alun Ffred Jones AM, Welsh Assembly Government 139 23 Celebrating Our Language 144 24 Peter Edwards and Huw Walters 146

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Written evidence submitted by Urdd Gobaith Cymru

In the opinion of Urdd Gobaith Cymru, Wales’ largest children and young people’s organisation with 50,000 members under the age of 25:

• The provision of good-quality Welsh language programmes is fundamental to establishing a linguistic context for those who speak Welsh and who wish to learn it.

• It is vital that this is funded to the necessary level.

• A good partnership already exists between S4C and the Urdd, but the Urdd would be happy to co-operate and work with S4C to identify further opportunities for collaboration to offer opportunities for children and young people, thus developing new audiences.

• We believe that decisions about the development of S4C should be made in Wales.

1. The Urdd is an organisation for children and young people which has 50,000 members under the age of 25 throughout Wales. We hold cultural, social and sporting activities at a local and national level. We organise eisteddfodau, sports competitions and maintain three residential centres, where over 40,000 children and young people come to stay annually.

2. Our aim is to offer the children and young people of Wales an opportunity to live their lives through the medium of Welsh, developing confidence and respect for each other.

3. We would have serious concerns if the new arrangements were to be detrimental to the Welsh language – the language of many young people in Wales. Whatever the arrangements, we call upon S4C to develop programming for children and young people and we wish to co-operate further with S4C to develop the provision by broadcasting programmes which reflect the Urdd’s activities.

4. Adequate funding is vitally important to ensure that the quality is of good standard. It must be accepted that creating programmes incurs costs , more costly than, for example, organising social activity on a local level.

5. S4C is an important part of the linguistic context in Wales and an integral part of the effort to ensure language use and that the language is heard and used. S4C is not simply a television service but part of a language strategy. Language experts across the globe emphasise the importance of broadcasting in lesser-used languages in order to reach the audience and show that the language is contemporary, technologically modern and thus relevant to the age. Only since the advent of Radio Cymru in the 70s and S4C in the 80s have Welsh speakers heard the varied language that exists across

3 the country and this has been vitally important, as was the case with the English language and the BBC in the 1920’s.

6. The contribution of S4C can be compared to the translation of the Bible into Welsh which elevated the language to a very privileged status. It was a new use of the language and a new medium – it was a crucial development in that age and a ‘modern’ development. No comparable thing happened with other languages across Britain or Europe with the result that the Welsh language survived whilst others have died out. Therefore the existence of a Welsh channel and radio services and all other technological media are vitally important to the language.

7. Artistically S4C has provided opportunities for the talents of children and young people over the years – talents that would not have seen the light of day without the existence of S4C.

8. The partnership between S4C and the Urdd has meant we as an organisation have been able to develop young talents and have provided more opportunities for children and young people.

9. The fact that television is available in Welsh ensures that the Welsh language is a ‘normal’ language, in the same way as Microsoft in Welsh normalises the language, as do international companies that advertise in Welsh; mobile phones, websites.

10. The fact that there is so much discussion about the quality of S4C programmes proves that the people of Wales demonstrate ownership of the channel.

11. The economic contribution made by S4C is significant especially in Cardiff and particularly in the north west where the percentage of people who have been employed through S4C has been a major boost to the local economy.

12. There is co-operation between S4C and the Urdd on several levels. There exists a partnership with the Urdd’s magazines which have a monthly readership of 30,000 and we are partners in the Wales Children’s Laureate Project.

13. The independence of the channel is vitally important and the model of deterring political interference has enabled the development of services that reflect the opinions of the Welsh audience. As an organisation we receive much praise for programmes from our Eisteddfod and the Bryn Terfel Urdd Gobaith Cymru Scholarship. The loss of this independence, and the funding to maintain it, will be a significant loss to the development of the language in modern Wales.

1 November 2010

4 Written evidence submitted by Hugh Evans

1. I can speak English, but my first language is Welsh. When writing about the Welsh language or Welsh language organisations, I can express my views and feelings far more precisely through the medium of Welsh than I can in English. For that reason, I have written my Submission (below), which is in the form of Bullet Points, in Welsh.

2 Submission to the House of Commons Select Committee on its inquiry into the broadcaster S4C , by a person who lives in London.

(i) It’s not only viewers in Wales that benefit from the service provided by S4C.

(ii) More and more people outside Wales can access S4C through Sky or watch S4C programmes on S4C’s website. From the figures given by S4C on their programme “Noson y Gwylwyr” (25/10/10), there is a growth of 82,000 viewers in England alone this year.

(iii) So when the Committee is considering the value of this channel, you must please remember the advantages of S4C for those Welsh who are away from home – namely culture, knowledge, language development, pure enjoyment and more. Also for Welsh speaking children who live outside Wales, to have a children programming in their first language, when perhaps they hear little Welsh outside the home and their family, is priceless.

(iv) It is difficult to put a price on these advantages. Personally, to watch a programme in my first language - when around us in London we hear English and other languages – is a deeper and more emotional experience on the whole than I feel watching programmes in English. Also, some programmes such as “Gwyl Cerdd Dant” [a music festival] and “Y Talwrn” [a poetry programme] are completely unique to the culture and language of the Welsh – it would be impossible for programmes like this to be produced on an English channel.

(v) There are many non-Welsh people outside Wales who love to watch S4C. For example, I am a member of an English choir here in London and many of my fellow choristers who are English often watch the musical programmes on S4C (on Sky or on the computer) especially choral programmes likes “Mil o Leisiau” [A thousand voices]. They say that there are no equivalent programmes on an English channel.

(vi) I do not feel too qualified to comment on Mr Jeremy Hunt's intent to transfer financial responsibility for the funding of S4C to the BBC. But, as Mr. Hunt has severely criticised the BBC on several occasions for wasting money and being ineffective in its current responsibilities, the question arises: What makes Mr Jeremy Hunt think that the BBC will be effective in the added responsibility of dealing with the budget for S4C?

November 2010

5 Written evidence submitted by Ron Jones, Chairman of the Welsh Assembly Government’s Creative Industries Panel Declaration of interest and additional information I am Executive Chairman of Tinopolis Limited, one of the UK’s largest television production groups. The group is headquartered in Llanelli with production centres also in London, Glasgow and Cardiff. S4C and the BBC are significant customers of the Company. The Welsh Assembly Government’s Creative Industries Panel was established in the last few weeks. Therefore, the Panel has not had an opportunity to discuss the future of S4C and the views set out in this document are my own. The views are consistent with advice I have already shared with the relevant WAG Ministers and other politicians at Welsh and UK levels.

1. Summary 1.1 There is an urgent need to build a political consensus in Wales and Westminster to safeguard Welsh language television services. The consensus needs to be fair and practicable. It needs to be widely accepted and, as importantly, ensure there is no conflict at political or social level.

1.2 An independent review of S4C, its governance, remit and funding requirements is urgently needed. This should deal with the short-term governance and management problems as well as addressing the long-term needs of the service.

1.3 A simple and straightforward approach to reform is best and such a solution is available. After all, the requirements are straightforward. Firstly, Welsh language television needs a funding mechanism that is appropriate and secure. Secondly, S4C itself needs reform to ensure that a better service is provided and delivered efficiently.

1.4 An independent S4C with control editorially and operationally is essential. The BBC has always been a key partner in delivering Welsh language television. However, the present proposals for an S4C with the BBC in effective control would damage accountability, tend to increase costs and further reduce the plurality of media in Wales.

1.5 To re-engage with its audience and to increase its economic added value S4C needs a strategy to develop its production and administration in those parts of Wales where Welsh remains a community language.

2. Review and reform of S4C

2.1 S4C’s current public service remit is the provision of a broad range of high quality and diverse programming in a service that is primarily in Welsh. It fulfils this remit but there is so much more it could do in terms of better serving its audiences, increasing its audience numbers and in providing added value to the Welsh economy.

6 2.2 S4C needs to change, not simply to placate critics but because it should be changing and developing all the time in line with the changing needs and expectations of its potential audience. It is there to provide Welsh-speakers with the services they want and need in a media market where commercial revenues are insufficient to do the job. These services have to be re-assessed continually as new requirements replace the old. However, there is evidence that over a long period the S4C Authority has not been sufficiently responsive in renewing the channel’s remit and relevance and there has been no challenge to its provision from its political stewards in DCMS. The result is that S4C now faces many challenges, all of which have to be resolved if the necessary services are to be provided.

2.3 The extent of today’s problems is such that an independent and comprehensive review of S4C is required. This review should involve all stakeholders including S4C itself, DCMS, the Welsh Assembly Government, the BBC, the production sector and your committee. Some of the problems we see today can be put right readily. Others will take time. All will require secure funding and structures that are sustainable and deliver value and quality. There is a need to establish a new Public Service Statement detailing what S4C is for and stating its purpose. Secondly, S4C needs a Public Value Statement indicating the criteria to be adopted in commissioning content and met when offering services.

2.4 Significant and wide-ranging as these problems are, they are capable of being dealt with effectively and within the statutory structure presently in place. There is nothing wrong with the structure that an honest review, transparency and fresh guardianship cannot put right. S4C was created in a noble cause and the early vision and success can be rebuilt.

2.5 If the Minister’s present proposals are implemented, the unique needs of Welsh language services will be overwhelmed by a BBC with so many conflicting priorities. The BBC in its recent strategic review failed to mention the needs of the devolved nations. Welsh-speakers are entitled to question what hope there would be for a Welsh language service in that environment. Also, the role S4C plays in supporting and developing the Welsh language is so important as to need greater scrutiny and accountability than would be possible within the BBC’s governance structures. The need for S4C to work alongside other Welsh Assembly Government strategies for the language and the economy make it necessary to build into the future governance of S4C mechanisms that ensure this is achieved. The Minister’s present proposals suggest a governance structure that gives the BBC certain rights and duties in respect of S4C. If these are to work effectively the BBC’s own governance structures in Wales would need significant overhaul to ensure that elected politicians in Wales are able to provide the appropriate level of scrutiny.

2.6 The necessary reforms are best left in the hands of an independent S4C.

3. Popularity and relevance

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3.1 Despite census statistics indicating that the language is in a period of recovery there have been changes in the pattern of language use that make S4C’s position much more difficult. There has been a real underlying fall in the number of first-language Welsh-speakers and this has been accompanied by two key developments. Firstly, social mobility and changes in the nation’s demographics have led to there being fewer families where Welsh is the first language of both parents. The communities where twenty years ago Welsh was the primary community language have become more linguistically diverse. This has been made even more complex by the increase in the number of Welsh-speakers in the South- East as a result of the success of Welsh medium education and the migration of significant numbers of Welsh-speakers to the Cardiff area.

3.2 These demographic changes require a more sophisticated approach than that adopted by S4C in measuring audiences. Over many years there has been a tendency to misuse viewer statistics to prove success and these same statistics are now demonstrating failure. Market share, reach and numbers of viewers have all been used when they appeared helpful but in reality the statistics were never fit for purpose. Samples are small and are unable to accommodate the linguistic complexities in Wales. BARB is not designed to provide accuracy at the levels of audience available to S4C and it is blameless in this. Its statistics for all small digital channels have the same problem. Interestingly, and presumably because of these problems, the BARB data is not used for and by BBC Alba.

3.3 The fall in the audience was also a predictable end-product of the digital switch-over and the growth of multi-channel. In its early years S4C delivered a wide range of programmes across all genres and in the limited broadcast landscape of those days the channel was successful. However, the Welsh language audiences are just as promiscuous as any other and they will no longer watch programmes just because they are in Welsh. Audiences now, for all channels, are loyal to their interests not to channels. Insufficient attention was given to designing content for S4C to meet this new landscape. The BBC in Wales has encountered similar difficulties with its programmes in Wales, including those for S4C and for BBC2W prior to its closure.

3.4 This is an editorial issue that can be resolved but it does require a new approach.

3.5 Welsh television has suffered in recent years because of broadcasters’ failure to define what the public service television needs of Wales are and to address them. ITV’s financially driven cuts are well documented. The BBC, during a time of fast increasing licence fee revenue, has cut back on its English-language television programmes for Wales in both hours and spending. Prior to the present difficulties BBC Wales had announced a unilateral and significant cut in the money it proposed to spend on its Welsh-language programmes for S4C. None of the broadcasters have taken sufficiently seriously their responsibilities to Wales and to Welsh viewers.

8 Even in their latest strategy document the BBC has not defined the public service requirements for its services in Wales. A comprehensive review is urgently required so that all broadcasters are held accountable for their role in providing the necessary range and depth of programmes.

3.6 The BBC should be required to answer for its own failings. In the case of S4C they too have failed to analyse what the real public service needs are today.

3.7 Market failure is evident for all Welsh-language content but money is always going to be limited. The channel needs to open out for consultation its view of those services it should be providing. A new definition of public service requirements is needed for Welsh language content and a review to determine what these might be is needed. It is already clear that there are a number of services that are essential and only S4C can provide them.

3.7.1 For some programme areas there is a real public and democratic need and demand. These include news and news related programmes, current affairs politics, live programming, sport and events as well as the cultural content that is uniquely Welsh or Welsh-language.

3.7.2 The Welsh language is badly served for on-line services. As is the case with stronger languages elsewhere in the world the domination of English as the internet language is evident. The BBC has shown little enthusiasm to fill this void in Wales. Notably, their Welsh on-line provision in the Welsh language is inferior to their provision in English. S4C is the obvious provider. Market failure is again permanent and there is a genuine need. Carefully orchestrated it is even possible that S4C could provide the momentum for many of these services to be commercial. Even so, the seed- corn can only come from S4C.

3.7.3 A strategic error was made by S4C in deciding to divorce its plans for a children’s service from the formal education sector. The growth and success of Welsh-medium education in Wales has been amongst the most influential factors in supporting the language in hundreds of years. A more empathetic approach to commissioning would benefit the education sector as well as help attract youngsters and their parents to S4C.

4. Political accountability

4.1 S4C has spent its life in a limbo half-way between London and Cardiff, not really accountable to either. WAG was told to mind its own business and DCMS was always going to have difficulties monitoring a body whose services were in a language it did not understand. Whether broadcasting should be a devolved issue is an entirely political judgment. However, there is a compelling case that the common interests of the Assembly, S4C and the audience suggest that meaningful and effective scrutiny is better achieved at local level. In the case of Welsh-language

9 broadcasting there are constitutional complications that need to be addressed urgently.

4.2 The Public Bodies Bill raises the possibility of the relevant Minister modifying S4C’s funding arrangements but also gives him the power to reorganise S4C’s constitutional arrangements and transfer S4C’s functions. Indeed, he could in future give himself the power to abolish S4C or force its merger with another body. This is surely inappropriate.

4.3 The Bill also requires that the UK Minister must get the consent of the Welsh Assembly Government before using his powers to the extent that what he wants to do is within the law-making powers of the National Assembly for Wales. The Government of Wales Act includes “Promoting or facilitating the use of the Welsh language” amongst the matters upon which it may make law. Welsh-language broadcasting clearly relates to promoting or facilitating the use of the Welsh language. The Assembly’s powers do include making laws about Welsh-language broadcasting, short of the imposition of duties. This probably includes funding and governance. Whatever the finer legal issues this merely underlines the need to have in place robust agreement between London and Cardiff on the funding and constitution of S4C. Sir Jeremy Beecham’s report “Making the connections Delivering Beyond Boundaries” talks about the need to ensure that WAG plays its part in non-devolved services. S4C seems a prime candidate for this approach.

4.4 In purely practical terms it is difficult to see the rationale for a continuation of the present arrangements. Clear lines for democratic accountability need to be put in place. The future of the Welsh language is inevitably fragile and the use of broadcasting as a part of the strategy for its support and development needs to be open to public consultation, review by elected politicians and transparent to all.

4.5 The proposed change in the partnership with the BBC would remove all practical and political accountability. In his letter to the S4C authority on 10th November 2010, Sir Michael Lyons refers to the licence fee funding of S4C and states the view that “The BBC Trust is the guardian of the licence fee and as a result will need to have oversight of how this money is being spent”. There is little legal substance in his point since the licence fee is in the gift of the Minister, not the BBC, but the placing of the BBC as an intermediate and controlling body would risk weakening political accountability for Welsh language television. Although the letter stresses the BBC’s commitment to a “creatively independent” S4C Sir Michael’s other points make it clear that the BBC sees the new arrangements as an opportunity to take control. Legally, S4C is an independent broadcaster set up by statute just like the BBC. It has certain statutory obligations that can only be discharged if it remains independent not just creatively but editorially and operationally.

10 4.6 The involvement of the BBC in these issues does open up an area of inquiry that I invite the Committee to consider. This is outside the scope of the Committee’s present inquiry so I will only refer to it briefly. It is widely accepted that Wales suffers a worrying lack of plurality in media. This extends to media outlets, ownership and control as well as an imbalance between media generated in Wales and provided from elsewhere in the UK. Since devolution the lack of coverage of our politics has become a danger to our democracy. Coverage of the Assembly and of Welsh affairs in Parliament has increasingly diminished in range and depth. ITV’s financially driven cuts are well understood and the announcement that local news is to be given a higher priority is welcome. S4C news is provided by the BBC. Our newspapers continue to weaken leaving the BBC as the primary provider of political coverage. This is an unhealthy trend.

4.7 However, at a time when other media outlets are weakened by economic changes the BBC has reduced its commitment to Wales as a matter of choice. Over the last years, despite the BBC’s receiving favourable licence fee settlements well ahead of inflation, it has chosen to reduce its spending on English programmes for Wales quite significantly. It has also announced its decision to reduce its funding on Welsh language television by 17% next year. Although the BBC has now received a new licence fee settlement that is much more favourable than other public bodies we should expect that further cuts will be called for in the programming the BBC provides to Wales in both languages.

4.8 The BBC’s own governance arrangements do not permit Welsh elected politicians to hold it to account for its spending and service in Wales. In the fragile media landscape of Wales we cannot afford further arbitrary cuts. I invite the Committee to consider whether significant reform of the governance of the BBC in Wales and S4C is now urgently required so that appropriate political oversight is enabled.

5. S4C governance and management

5.1 S4C needs to be a small lean organisation close to the people it serves. It is not a major global player. It should not think of itself as an institution first and service second. Over many years these necessities were forgotten. Programming strategy was replaced by gut-reactions to the latest viewing figures. Major and costly developments such as Clirlun, the children’s channel, the attempted move into English-language news and investments in technology companies were ill- considered.

5.2 Management became increasingly detached from Welsh-speakers and their interests. There has been insufficient understanding of the changes in viewer taste. Programmes became more traditional as they tried to defend their older, known

11 audience. There was an aversion to new media. There was a refusal to co-ordinate their output for children with the needs of the curriculum.

5.3 Sir John Shortridge is today undertaking a much-needed review of governance at S4C. The governance and management culture had developed to the point where they had become inappropriate for a public body. Over many years the authority has failed to discharge its duties to define the service, to devise a strategy to serve viewers and support the language that management could then deliver. The decision in recent years to formalise the authority’s separation from many aspects of S4C’s operations was a major misjudgement. The Authority has failed to keep in touch with elected politicians or to maintain their respect. One consequence has been that even those minded to support the language and Welsh language television now find it difficult to support S4C. The present Authority do not have the support needed to take S4C forward and should be replaced on the completion of a full and independent review. The Authority has started the process of finding a new Chief Executive. This process should be left to a new Authority.

6. Funding, costs and economic impact

6.1 The Minister is correct to identify the TV and Radio Licence as the appropriate funding mechanism for S4C. The licence fee is the way successive governments have chosen to fund public service broadcasting and no better option has been found. The money raised by the licence fee has colloquially been thought of as the BBC licence fee and there is in the BBC Trust’s10th November 2010 letter to S4C virtually an assertion that this is so. Legally this is not the case and the TV and Radio Licence revenue is already in the Minister’s gift. It is within his existing powers to decide on the monies to be raised and how they should be distributed.

6.2 There is no legal impediment to the Minister paying an agreed share of licence fee revenue directly to S4C and this is the best way of ensuring there is accountability for the expenditure. Agreeing the level of funding for Welsh language television should be handled in the same way and at the same time as happens with the BBC’s portion of the TV and Radio Licence fee.

6.3 An independent review would establish what level of funding was needed to provide the services required. The cuts over the next two years have been announced but the review is essential to ensure that from 2013 the service is properly funded and that this process is not left to an internal and unaccountable BBC decision.

6.4 DCMS has suggested that there may be savings in costs if S4C gets closer to the BBC and shares certain back-office functions. This appears to me to be wildly optimistic. The BBC is not generally thought of as a paragon of financial efficiency

12 and lean management. It is potentially much more cost-effective to run an organisation as small as S4C using the best principles of the private sector. Even allowing for the necessary additional costs that come from being a public body major cuts are available throughout the organisation. The key is shifting the corporate mindset from the institution to the service being provided.

6.5 The 2010 report, the Economic Impact of S4C 2007-2010 indicated a gross added value to the Welsh economy of £85 Million. Even with the lower levels of funding that are going to be available in future the channel has an important economic role. As importantly much of S4C’s expenditure is in economically deprived parts of Wales. However, I believe the expenditure could provide much more economic and social value if it tried. Too much of Welsh television production is unnecessarily located in Cardiff when much of Welsh and English language programming could be located elsewhere.

6.6 In the case of Welsh programming there is an unarguable case that more should be located in Welsh-speaking areas where quality jobs are at such a premium. The relative fragility of the production sector over the next few years is going to require S4C to use its commissions to engineer the development of the sector. They need to build geographical balance, encourage new entrants to the market, help develop producers of new media content as well as put the structures in place to work with other Welsh language organisations.

6.7 S4C itself should be relocated to North or West Wales. Culturally the organisation would benefit from being closer to its core audience. The area chosen would see a massive economic boost and, as importantly, an economic boost in Welsh.

6.8 The cost of these projects can be met by using the funds available in its commercial reserves. Properly done this could set up S4C and its supply chain for years to come.

November 2010

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Written evidence Submitted by Dr Simon Brooks, School of Welsh, Cardiff University

Summary

• This submission looks at S4C from the point of view of language planning (i.e. attempts to maintain and preserve the Welsh language) • S4C is an important player in terms of language planning for the Welsh language • There has been a crisis in Welsh-language media over the past decade, and this has increased the relative importance of S4C • The emphasis by S4C on broadcasting for children shows a corporate awareness of the importance of language planning – this age group is key to Welsh language maintenance and preservation • The Welsh language service provided by S4C for young children is held in high esteem and is a good use of public money • The BBC may not place a similar emphasis on Welsh-language broadcasting for children, and the loss of S4C’s independence represents a strategic risk to the future of Welsh-language broadcasting for children • A reduction in this service would damage the future prospects of the Welsh language; and it would hit children from non-Welsh-speaking homes hardest • S4C should have access to a defined, sustainable, long-term source of finance • S4C should be independent • S4C has brought more economic benefit to deprived communities in Wales than the BBC • S4C should be devolved • The current members of the S4C Authority should be removed

Main body of submission

1. I am an academic at the School of Welsh, Cardiff University where I lecture in Welsh. My main research interest is multiculturalism and minority language communities. I am a member of Cardiff University’s Language, Policy and Planning Research Unit which “undertakes research on language policy and planning issues”. I was previously Editor of the Welsh language current affairs magazine, Barn.

14 2. My interest in S4C derives from its importance in minority language maintenance for the Welsh-language community in Wales and the United Kingdom.

3. Welsh has declined considerably as a community language in Wales during the past 50 years. As the language declines at a community level, it will require increasing support from dedicated Welsh-language institutions. These institutions enable the Welsh language to be socially reproduced although it is no longer the language of the whole community.

4. Mass media in minority languages has a crucial role to play in order to secure the cohesion of minority language communities (such as the Welsh-language community) which are geographically dispersed.

5. The committee should not treat S4C as a “broadcasting issue” alone. Of course, S4C is a broadcaster and the committee should take evidence from broadcasters about the effectiveness of its broadcasting strategy. However, S4C was set up in response to public pressure regarding the maintenance of the Welsh language. The success (or not) of S4C from a language planning point of view is of the greatest importance.

6. There has been a crisis within Welsh-language mass media since 2000. There has been a shift within radio stations in north and west Wales from bilingual to mainly English-language output. The Welsh-language weekly newspaper for Gwynedd, Yr Herald Cymraeg, has closed, and attempts to establish a Welsh-language daily newspaper, Y Byd, have failed. The presence of Welsh on the world wide web and on various multimedia platforms is severely restricted. All these failures put an increased importance on S4C as a Welsh-language public broadcaster.

7. The BBC in London has very little interest in the use of Welsh on multimedia platforms (apart from some video material on the web). S4C has developed Welsh-language Apps and interactive websites: the BBC has no Welsh-language material on any of its Apps. There is an argument for asking S4C to invest further in the development of multimedia platforms for the Welsh language: transferring responsibility for S4C to the BBC threatens this. The creative use of technology is important for minority language maintenance strategies among young people.

8. Despite the banner headlines that S4C is failing and that many programmes, to quote some parts of the tabloid press, have “no viewers”, S4C has fulfilled its remit from a language maintenance viewpoint reasonably well. On weekdays, the channel broadcasts some six hours a day of programmes (branded as Cyw) aimed at pre-school age children. As BARB does not record viewing figures among the under four age group, these programmes often have technical viewing figures of zero. In reality however, the programmes are extensively viewed. The channel also broadcasts on weekdays two hours a day of programmes aimed at the pre- teen age group (branded as Stwnsh). Both services also broadcast at weekends. On

15 weekdays, S4C thus broadcasts some 8 hours a day of Welsh-language programmes for children.

9. The decision to concentrate on the pre-teen age group is important and correct. This is when it is easiest to acquire language skills. Together with the Welsh- medium education system, S4C represents the main way in Wales of socialising children through the medium of the Welsh language. The service is vitally important for children from non-Welsh speaking homes as it often provides their main, and perhaps only, opportunity to have exposure to the Welsh language outside the school system. S4C children’s programmes are relevant to both English and Welsh speakers in Wales, as both English and Welsh speakers may wish their children to learn the Welsh language.

10. The inability of the BBC to commit to a dedicated level of expenditure on S4C after 2014/15 is a matter of great concern. There is a fear in Wales that S4C will be bled dry by the BBC after this date. There is also concern regarding the loss of S4C’s independence: recent statements by the BBC that licence fee money is ultimately the responsibility of BBC governors have deepened these fears.

11. There is no guarantee that the BBC will prioritise 8 hours a day of Welsh- language television for children after 2014/15. There will be contesting calls on BBC finance, and Welsh-language broadcasting for small children may lose out. The effect on the Welsh language of withdrawing or reducing the Welsh-medium television provision for children will be highly damaging. It will hit hardest non- Welsh-speaking families who wish their children to learn Welsh. It is the settled will of the people of Wales that those who wish their children to learn Welsh should have this opportunity, and that this should happen regardless of the language of the home. Threatening current levels of provision of Welsh-language television programming for children will make it less likely that children in Wales grow up bilingually.

12. S4C appears to understand that broadcasting has a role to play in community regeneration. Community sustainability is crucial for the long term future of the Welsh language. The emphasis of the channel on broadcasting from various community events in north and west Wales is to be welcomed. The long term sustainability of the Welsh language is not a strategic priority for the BBC.

13. With important production companies based in towns like Llanelli and Caernarfon, commissioning from S4C has had an important role in boosting the economy in areas of relative economic and social deprivation where Welsh maintains a role as a community language. Although Caernarfon has lost some of its television production capacity during the past few years, the presence of S4C means that television production is more devolved and dispersed (within Wales itself) than it otherwise would be. The BBC on the other hand is a centralised beast which produces most of its Welsh programming in Cardiff. A gradual takeover of S4C by the BBC will suck yet more money, talent and facilities out of

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relatively deprived parts of Wales into an already wealthy capital city. This will weaken Welsh as a community language.

14. Language planners agree that it is best if institutions which are provided for a minority language community are as accountable as possible to members of that community, or its stakeholders. The loss of S4C’s independence to the BBC in London would mean that the line of accountability would be very stretched indeed.

15. I accept that the S4C Authority has lost the confidence of the Welsh establishment and many of the S4C audience. However this is no reason for S4C to be subsumed by the BBC. When the Hutton Report showed that the BBC had failed, the Corporation was not taken over by another public broadcaster. Rather there were resignations, and a change of policy. This is what should happen at S4C: S4C should remain as an independent body, but the current membership and Chair of the S4C Authority should be replaced.

16. As minority language institutions should be accountable to those who are stakeholders in the minority language (not necessarily fluent Welsh-speakers alone), I believe that S4C should be devolved.

11 November 2010

17 Written evidence submitted by the Writers Guild of Great Britain

The Writers' Guild of Great Britain is a trade union affiliated to the TUC. It represents more than 2,000 professional writers in the UK and negotiates minimum terms agreements with broadcasters, theatres and independent producers. It has an active Wales branch made up largely of writers writing in the Welsh language.

HEADLINES:

• S4C is an extremely important cultural institution vital to the survival and growth of the Welsh language • S4C should decrease its output to concentrate resources on fewer programmes of quality • S4C is extremely good value for money making programmes far more economically than other broadcasters • S4C's subsidy is responsible for a vibrant broadcasting industry in Wales in BOTH languages • S4C's failure to reach audiences is a myth when considered in the context of other UK Digital platform channels • Further collaboration between S4C and the BBC is a danger to plurality • S4C should be accountable to the National Assembly for Wales

1. THE EXTENT TO WHICH S4C IS FULFILLING ITS REMIT

The Writers' Guild of Great Britain strongly believes that S4C is an extremely important cultural institution vital to the surivial and growth of the Welsh language.

It provides programming for all ages and audiences with a wide range of interests. A number of its programmes are of a very high standard, especially in the fields of drama and documentary.

The television landscape has changed dramatically since S4C's inception and the channel has striven to keep up with this rate of change.

It is our belief that many of the problems S4C has encountered during the past 18 months are a result of this digital evolution.

S4C is a public service broadcaster making programmes in a minority language. The odds were stacked against it in an age where hundreds of diverse channels ‐ often catering for specific demographics and interest groups ‐ were introduced into people's homes for the very first time following digital switchover. It would have been incredible if S4C HADN'T struggled as viewers discovered the other channels on offer.

Vastly increased choice has led to a drop in viewing figures. (This is the experience of ALL ex‐terrestrial channels, not just S4C.)

18 An increase in broadcast hours has led to a drop in budgets and an increase in the number of repeated programmes.

The challenge for S4C is now to reconnect with its audience. It is our belief that a reduction in the number of hours it broadcasts ‐ a return to a figure closer to the minimum hours it is required to broadcast by statue ‐ would be sensible. This would allow budgets to be concentrated on fewer projects and scrutiny on quality to be more rigorous.

The channel could reinvent itself as a service ‐ like BBC 3 or BBC 4 ‐ which broadcasts a limited service between certain hours.

S4C's children's services could be broadcast within their brands 'Cyw' and 'Stwnsh' during the day and the core service could then begin at 6pm or 7pm and end at 11pm.

S4C needs to address more aggressively the changes in the way viewers are watching television and look again at its on‐line catch‐up 'Clic' service. This service needs to be at the forefront of developments as viewing on‐line increases dramatically and platforms such as 'You View' and 'See‐Saw' find their feet.

2. THE IMPACT RECENT AND POTENTIAL SPENDING CUTS WILL HAVE ON S4C AND WHAT LEVEL OF PUBLIC SUBSIDY FOR S4C IS APPROPRIATE OVER THE LONGER TERM

The cuts will undoubtedly lead to a cut in the number of hours of television S4C can make which reinforces our view that the channel should contract its activities as described in Paragraph 1.

It is our concern however that the scale of the cuts ‐ 25% ‐ are so large they will damage the quality of S4C's programming. The channel already makes programmes far cheaper than other UK broadcasters. An hour of quality drama costs around £210,000. This compares to the average BBC spend of more than £500,000 an hour. It might make the production of important drama series such as 'Pen Talar' ‐ which was already difficult on the budget it received ‐ impossible.

Cuts will reduce development funding for projects as more money is directed towards plugging production gaps and will therefore stifle creativity.

We are concerned bilingual writers will start to look for opportunities in English language television where fees will be comparatively higher as a result of cost‐ cutting and that drama output will suffer its very own brain drain.

It is our position that S4C ‐ as a unique broadcaster with an important cultural and linguistic role ‐ should not receive any cuts to its budget. We believe a special case should be made of the channel and it should continue to receive the level of funding as set out in statue.

19 3. THE CULTURAL AND ECONOMIC BENEFIT TO WALES FROM THE INVESTMENT OF OVER £100 MILLION PER ANNUM OF PUBLIC FUNDS INTO S4C

Widely publicised figures from the University of Wales, Cardiff, have recently put a price of £90‐million on S4C's worth to the Welsh economy.

The sustained investment has been largely responsible for the growth of the television industry in Wales. This growth ‐ and the skills base that grew with it ‐ has also made possible the boom in English language production in Wales.

Our union believes the BBC wouldn't have been able to move productions such as 'Doctor Who', 'Torchwood' and 'Casualty' to Cardiff without the skills and talent base that has been nurtured by S4C ‐ with public subsidy ‐ over 28 years.

The majority of our members in Wales make their living from the Welsh language media ‐ whether it be through S4C or the BBC. The development of this sector would not have been possible without subsidy and continued subsidy is essential if these employment opportunities are to be maintained.

Writers, actors and directors who have been nurtured by S4C have gone on to work successfully for other broadcasters and film companies. These careers and projects that have brought money back to Wales are in large part due therefore to the original employment opportunities given to these individuals by S4C.

4. IS S4C MAXIMISING THE USE OF ITS FINANCIAL AND OTHER RESOURCES TO ACHIEVE VALUE FOR MONEY, TO OPTIMISE THE QUALITY OF ITS OUTPUT, AND TO REACH AS WIDE AN AUDIENCE AS POSSIBLE

Value for money

S4C makes its programmes at a much lower price than other UK broadcasters. As stated in Paragraph 1, budgets are lower and it is the experience of our members that there is very little waste compared to observations made after working with other broadcasters. It is our belief therefore that S4C is a prudent broadcaster when investing its resources in production.

Quality

We believe the quality of programming in areas such as drama and documentary are extremely high. Recent dramas such as "Pen Talar", "Con Passionate" and "Caerdydd" are excellent. The latter have won awards and are considered by many to be better than some of the drama produced in English.

Documentary strands are also excellent and display a unique relevance to the social and historical context of Wales unfound on any other broadcaster.

The number of award nominations the channel's children output has garnered this year speaks to the quality of this output.

20

We question however the amount of lifestyle and entertainment programming which apes programmes in English and find these hard to defend in terms of a public service broadcasting remit.

Audience reach

S4C's figures are unfairly compared to the figures of major national broadcasters such as BBC1. 75,000 viewers for an episode of "Pen Talar" therefore may not seem high, but when put into the context of an audience of 500,000+ Welsh speakers, those who are learning Welsh and non‐speakers choosing to watch using subtitles, we believe this figure to be a respectable one.

Much capital has been made of the channel's viewing figures by the channel's detractors and we believe many of the headlines to be misleading.

S4C's figures need to be looked at in the context of a digital landscape where a widely publicised English language series such as "The Wire" with a much wider appeal attracts 38,000 viewers for the first episode of its final series on digital channel FX:

http://www.guardian.co.uk/media/2010/may/05/tv‐ratings‐luther‐idris‐elba

This is a major drama series with a huge advertising budget and critical acclaim. Suddenly, S4C's figure of 75,000 viewers for "Pen Talar" seems very impressive.

It would be naive however not to recognise that the channel could reach more people, and would once again advocate a scaling back of output in order to focus resources on must‐see event television that could only be made in Welsh because of its subject matter.

5. THE POTENTIAL FOR FURTHER COLLABORATION BETWEEN S4C, THE BBC AND INDEPENDENT BROADCASTERS IN WALES IN ORDER TO REDUCE DUPLICATION AND TO ACHIEVE ECONOMIES OF SCALE

The Writers' Guild is extremely nervous about further collaboration between S4C and the BBC. The BBC provides S4C with many of its core programmes, but we are worried closer collaboration will lead to the BBC consuming S4C in the long term.

A successful and healthy broadcasting industry requires plurality. The loss of S4C's independence would be a threat to plurality in a Welsh context as ITV Wales has already lost its influence. While we appreciate closer collaboration could lead to savings in terms of personnel and overheads, we feel that a collaboration in terms of editorial policy would be a threat to plurality and S4C's independence.

6. SHOULD THE FINANCE AND ACCOUNTABILITY OF S4C REMAIN IN WHITEHALL OR BECOME A DEVLOVED MATTER

21

We do not believe S4C's subsidy should be found in the BBC's budget and are campaigning for responsibility for funding the channel to be returned solely to the DCMS, or better still, monies and responsibility for the grant given to the National Assembly for Wales.

It makes little sense that the issue of accountability following the establishment of the National Assembly for Wales should rest with Whitehall and considered by individuals who in general have little or no knowledge of Wales, the Welsh language and the output of S4C.

November 2010

22 Written evidence submitted by Mabon ap Gwynfor

I have no expertise in the field of Broadcasting nor specifically regarding S4C other than being an audience member and a father to a 3 year old son who uses the service regularly.

In my submission I will state my belief that:

o S4C succeeds to fulfil its remit fully o The impact of the recent announcements will have a detrimental effect on S4C, the Welsh Language and culture o Funding should not be looked at through the prism of the open market o The agreement as written by Sir Michael Lyons threatens the very existence of S4C o A minority language and culture should not be expected to justify its existence and made to fight for its continued survival o The cultural impact of S4C is its greatest success, but its economic impact should not be ignored o That no other Broadcasting body could or would commission valuable programmes that are shown on S4C o S4C has historically provided a valuable platform for developing world famous programming (not necessarily associated with S4C) o S4C’s recent governance has been questionable and questions regarding some key decisions should have been raised earlier o With recent cuts in programme funding by BBC Wales and ITV it is questionable what collaboration could be achieved between larger bodies and S4C without diluting S4C’s remit o S4C should be devolved to the National Assembly for Wales with sufficient funding o Breaking up the BBC to reflect the constituent nations of the UK should be considered o Placing S4C under the control of the BBC will lead to the loss of S4C’s independence and threatens its future o Television continues to be a revolutionary communication tool allowing cultures and languages to evolve and thrive, and that Wales and the Welsh language should not be denied this opportunity.

1. S4C is fulfilling its remit of providing Welsh Television Programmes to viewers admirably. The programmes range from pre-school age through to programmes for the elderly. In fact I would argue that S4C achieves a far better result than any of the other channels considering that there is only one (1) Welsh Language TV broadcaster providing programmes for every age group and every interested party while the BBC, for instance, can split its TV programming between four (4) TV channels, with specialist programmes geared for specific tastes or age groups featuring on specific channels e.g. BBC3 providing Comedy programmes and programmes for the 18-25 age range.

2. The need to achieve this balance hasn’t always been successful, with some programmes less successful than others, but this is true of every

23 broadcaster, and is not a problem exclusive to S4C. The fact that it has to achieve this balance on one Channel means that the success or failure of any given programme is magnified.

3. I fear the proposed spending cuts and the proposal to bring S4C under the control of the BBC will have a severely detrimental impact on S4C and its ability to broadcast high quality output. Prior to the Comprehensive Spending Review BBC Wales had already announced its intention to cut spending on producing programmes for S4C by approximately 17%. This alone would affect the quality of the programming produced by the BBC to S4C, but I understand that the BBC’s internal decisions are not within the remit of this inquiry.

4. Since this inquiry was launched on the 15th of October, nearly a week before the Comprehensive Spending Review with the announcement by Chancellor George Osborne, MP, that S4C would be placed under the control of the BBC with no knowledge at the time of the launch of this inquiry regarding such an announcement, I presume that the reference to “…potential future spending cuts…” might allow me to comment on the latest proposals.

5. The agreement as written by Sir Michael Lyons to the Chairman of the BBC Trust states: In the event that a new partnership model does not prove viable for any reason, the Government will not take licence fee money itself for this purpose. But in this situation the Trust will propose a one-off reduction in the level of the licence fee which would be equivalent to the contribution that the BBC would otherwise have made to S4C. This is not acceptable. The Government has washed its hands clean of S4C and given the BBC an opportunity to do so as well. The above quote does not given any qualifications or caveats to protect S4C (though it does suggest cash-back to UK license fee payers!), but simply allows the BBC to wash its hands of S4C “for any reason”. In the event of this happening Sir Michael Lyons states clearly that the Government will not fund the difference, therefore S4C would be expected to continue its service with the £7m provided by Government and any revenues it can generate for itself. This is simply not acceptable.

6. A minority language and culture should not be expected to fight for its very existence in a global village where only a hand-full of languages dominate Global Broadcasting. The UK Government has a duty to protect and promote its various cultures and languages, without which the UK would not be what it is today. Therefore the question of what level of subsidy should be provided should not be considered as a purely economic equation, but instead what value beyond economic ones does the UK Government place on its indigenous cultures in order to allow them to continue and flourish. The Welsh language poses no threat to the English language, and those of us who live our lives through the medium of Welsh

24 pose no threat to any English speaking individual, organisation, or establishment. However, conversely our existence as Welsh speakers is threatened.

7. A small independent English language Broadcaster has a greater chance of surviving on income generated from its own broadcasting, simply because of the dominance of the English language, the market value of which would make it worthwhile for advertisers to promote in. Maintaining a small niche market English Language Broadcaster who exists to provide entertainment in an open market might be a simple economic equation, e.g. number of viewers = £X, but maintaining a Welsh Language broadcast service, which has to cater for all tastes and entertain and educate in equal measures is economically more difficult. It is nonetheless vitally important.

8. You cannot underestimate the benefits of S4C to Wales, culturally and economically. From its earliest days through until today it has provided first class children’s TV, from SuperTed to the current Cyw service. No other broadcaster would broadcast such unique programmes as Fferm Ffactor, Cefn Gwlad, Bro, or would commission the production of dramas based on the Welsh experience such as Teulu, Tair Chwaer, Con Passionate, or indeed the longest running soap on the BBC Pobol y Cwm which portrays life in the Valleys of west Wales. No other broadcaster would commission a dramatisation of the works of Saunders Lewis, Daniel Owen or Caradog Evans. These and much-much more are uniquely Welsh, and without S4C would either be consigned to the Libraries or would never have been developed in the first place. Wales and our culture would be much the poorer without them.

9. Economically a recent report has found that the channel is responsible for sustaining over 2000 jobs in Wales. These jobs are scattered across Wales, and not concentrated solely in the south east corner of Wales. But S4C has also enabled the development of a vibrant independent TV industry in Wales, resulting in first class facilities being available for use for other companies, allowing even more money to be pumped into the Welsh economy.

10. Without S4C it is questionable whether world famous personalities (on air and off air) such as Mike Young, Ioan Gruffydd, Rhys Ifans, Alex Jones, Ceri Sherlock, Marc Evans, Karl Francis, and a host of others would have achieved their successes if it wasn’t for the opportunity that was given to them by S4C. These in turn have created networks and brought in investment through their networks to Wales.

11. To highlight one example. Mike Young Productions started after Mike Young was approached by S4C to produce SuperTed. Mike Young Productions is now based in Los Angeles with the production studio in Merthyr Mawr. Today they produce worldwide hits such as Bratz, Horrible Histories, Voltron, He-Man and other recognisable cartoons.

25

12. It is questionable whether S4C was giving the best value for money, and according to some it was top heavy. I am not in a position to comment on its staffing structures, unfortunately.

13. I believe that S4C should have made better use of multi-platform services to deliver its output, which would have resulted in it being a class leader in new broadcasting technology. As a small broadcaster it should have researched other avenues instead of being content to compete on the same level as much larger broadcasters such as the BBC and ITV.

14. The question of reaching a wider audience is difficult. Its remit is to broadcast in Welsh. This should not be diluted. As mentioned earlier one must be sympathetic to the difficulty of having to provide programmes suitable for such an array of tastes. It could not be content on broadcasting for a niche market within the Welsh speaking audience as this would have alienated other equally important viewers. Welsh speakers after all are subject to the same whims and fashions as our English speaking brothers and sisters.

15. S4C’s decision to limit the amount of companies that it used to commission programmes from was a bad decision which should have been questioned much earlier.

16. The BBC already produces a large amount of the programming broadcast on S4C, including the News and Pobl y Cwm. ITV have slashed the hours of programming that they do for S4C to four (4) hours a week already. If collaborating with either of these two producers is a serious option, then it can only be done by providing extra funding for them ring-fenced for producing programmes for S4C.

17. The natural home for S4C would be within the National Assembly for Wales. It would however be grossly unfair to devolve S4C without also providing the funding, as the Assembly has no means to raise its own funds. The logical answer would be for the license fee to be split between various broadcasters with a percentage sliced off to fund an independent S4C. Alternatively the BBC could be broken up entirely and follow the devolved nature of the UK, with a Wales Broadcasting Corporation coming under the control of the National Assembly, and the same with a Scottish, Northern Irish and English. These in turn could opt to contribute a percentage of their funding to fund a central BBC. Therefore the funding structure would be the converse of what it is now – rather than money collected centrally and distributed to ‘the regions’ as we are called, it could be allocated initially to the constituent nations within the UK and then decisions being made locally as to how that money is to be spent.

18. Placing S4C under the control of the BBC is not the answer. If the BBC chooses to continue with the proposed set-up then they will have ultimate control and answerability over S4C, effectively having a veto over S4C

26 decision making. After all he who pays the piper chooses the tune. The BBC have no qualms in paying in excess of £16m to eight (8) of its biggest stars (who’s contribution to culture and education is questionable), but have no reservations in getting rid of the Asian Network, and threatening the existence of 6 Music, both of which contribute greatly to the cultural fabric of the UK.

19. I have grave concerns as to the security of S4C’s budget and its independence as a broadcasting body if it was to be controlled by the BBC. The BBC will in no way allow an independent body to be run completely separate of its influence but with £100m of its money. This would also add another tier of bureaucracy on top of the existing S4C governing structure, which will in time lead to calls to eradicate bureaucracy within S4C, tying the broadcaster even closer to the BBC (if the partnership gets that far).

20. The question is if the partnership between the BBC and S4C proposed by Chancellor George Osborne MP existed in 1982, would Mike Young have been able to develop SuperTed and go on to become one of the world’s greatest animators? Would Ioan Gruffydd have graced the studios of Hollywood? But more importantly would we have thousands of hours of documented evidence of an unique and ancient culture at the end of the twentieth and the turning of the twenty first century? Would Wales, its languages and its colourful culture be what it is today? The answer on all counts, in my opinion, is No.

21. The channel gives us a platform to express ourselves, to allow our culture to evolve and learn from other cultures, in a way which is not stunted or isolated. To deny us a fully funded Welsh language TV Channel is to deny the language its chance to flourish and find its way in the modern world through the broadest mass communicating tool used in the developed world. Television’s ability to spread trends, fashion, news, and ideas to groups of people (rather than the individualist Computer or Mobile Phone) has revolutionised the way we see ourselves and the pace of our cultural evolution. To deny Wales and the Welsh language this is to stunt our language and culture and ultimately to kill it.

November 2010

27 Written evidence submitted by the Welsh Language Board

Summary ¾ Our overriding view is that the recent changes proposed in administering the future funding of S4C could have a detrimental effect on both the use and the status of the Welsh language. ¾ Welsh speakers need a comprehensive, high quality television service in their own language. ¾ S4C forms a central part of the efforts being made to revive the Welsh language. ¾ The existence of S4C as an independent Welsh language channel is a highly significant factor in increasing and maintaining the status of Welsh. ¾ Welsh language culture needs to extend beyond the school gates if young people are to use the Welsh language naturally and confidently with each other. ¾ S4C as a unique public service broadcaster serving a minority language community provides a service that no business could provide. ¾ The setting of the budget of an institution of such value to the future vitality of the Welsh language community, should, in our view, be an informed decision. ¾ To maintain plurality in the media in Wales, to minimise the risk of losing that which has been built since 1982, and to ensure that the Welsh language continues to grow, S4C’s financial and editorial independence should be preserved.

1. Background

1.1 The Welsh Language Board welcomes this opportunity to give evidence to the Welsh Affairs Committee inquiry on S4C. The Board was established as a statutory body to promote and facilitate the use of Welsh under the Welsh Language Act 1993. As such, the Board has a legitimate interest in any matter relating to the Welsh language. Our overriding view is that the recent changes proposed in administering the future funding of S4C could have a detrimental effect, on both the use and the status of Welsh in Wales. Some pertinent observations on the current position of the Welsh language follow; the importance of an independent Welsh-language television service is considered in this context.

1.2 Welsh is now believed to be among the more resilient minority languages in Europe. Professor Colin Baker of Bangor University has called it "one of the very few minority languages that is expected to buck the universal trend of minority language decline and extinction"*. That optimism about the future of the Welsh language is shared by the Board. Its status has grown considerably over the past 30 years. It is a more

* Baker, Bilingualism: beyond basic principles (2003)

28 visible language, in all domains, and is once more spoken in all parts of Wales. Welsh speakers can now feel, more than at any point in the twentieth century, that their identities are recognised. However, optimism must not lead to complacency; much more needs to be done. In saving, restoring and retaining Welsh as a vibrant, living language, governments and the people of Wales face a huge task. Even with the positive measures taken thus far, there are crucial issues that must be addressed: in particular, the levels of language transmission in bilingual families is still low, and some speakers experience a considerable lack of confidence and/or lack of opportunity to use the language.

1.3 Government policy objectives in terms of supporting a Welsh language revival depend to a large extent on enhancing the language’s status and increasing its use in all spheres. Paramount in all this is the Welsh-medium education system, which is primarily responsible for the recent increases in the number and percentages of people who speak Welsh. This parent-led development has seen much success, with a significant proportion of non-Welsh speaking parents now sending their children to Welsh-medium schools to be immersed in the Welsh language and to emerge as bilingual citizens. However, education alone will not be enough; those who acquire the language in school need to have every opportunity to use their bilingual skills outside the classroom, and also in later life. For all children and young people, Welsh language culture needs to extend beyond the school gates, so that young people's confidence and eagerness to use the Welsh language with each other is boosted. Suitable television provision of a high quality can make an invaluable contribution in this regard.

1.4 The importance to a minority language community of media in its own language has long been recognised. Ned Thomas has explained that "a language is a group of people speaking to each other, and...in modern conditions much of that communication occurs through the media, so that a language denied access to media is discriminated against, accorded inferior status, and is unlikely to survive"*. And Elin Haf Gruffydd Jones of the Mercator Media Centre has helpfully identified five primary functions of television – communicative, cultural, economic, status and linguistic – which, she says, "form the basis of the arguments why this medium is essential for the well-being of any minority language community"†. The five functions identified are of course very much interrelated, and this is especially true in the case of S4C and the Welsh language.

1.5 Many initiatives have contributed to the substantially increased official status which

* Hor Yezh & Klask, Breizh ha Pobloù Europa / Bretagne et Peuples d’Europe / Brittany and Peoples of Europe (1999)

† Cormack & Hourigan (ed.), Minority Language Media (2007)

29 the Welsh language now enjoys, and which the Welsh Assembly Government is seeking to confirm in the proposed Welsh Language Measure currently being considered in the National Assembly for Wales. Most regard the establishment of S4C in 1982 as a highly significant factor in increasing the status of Welsh. We say more about this in 2.2 below.

1.6 We now turn to the specific issues on which the Welsh Affairs Committee has asked us to comment.

2. The extent to which S4C is fulfilling its remit

2.1 S4C's remit, as noted in the Communications Act 2003, is that of "providing television programme services of high quality [for] members of the public in Wales". There can be no doubt that S4C has been successful in fulfilling this objective, often overwhelmingly so. As the only television channel that broadcasts any content in Welsh, S4C has of course a near-impossible task of pleasing everyone who wishes to watch television in Welsh, whatever their age or language skill, whether their interest lies in comedy, drama, sport, children's programming, reality television, and so on. It also has to meet the challenge of retaining an audience that now has hundreds of English-medium channels from which to choose.

2.2 S4C could be said to be achieving more than would be expected, especially in terms of provision for children, with important services such as Cyw for pre-school children and Stwnsh for school-age children. As a proportion of its whole provision, S4C provides much more programming for children than the BBC, ITV or Channel 4. That is in recognition of the importance of Welsh language programming for young children in terms of language acquisition, and is supported by the Board as an integral contribution to increasing the number of young Welsh speakers.

2.3 S4C is more than a television channel that provides high quality programming. Professor Colin Williams of Cardiff University described its inauguration as "the greatest boost to the popular... use of Welsh"*. The Channel's inception had a dramatic effect on the status of the Welsh language, and contributed greatly to a positive evolving of attitudes towards the language amongst Welsh speakers and non-Welsh speakers alike. More than anything, it gave to Welsh speakers a service in their own language that was as accessible and natural as any other, as one of the then four terrestrial television channels, available to all television viewers in Wales. This has given to Welsh speakers confidence in their own existence as a living community, a confidence which is recognised as essential to the survival of any

* Extra & Gorter (ed.), The other languages of Europe (2001)

30 minority language. There is no doubt that those minority language communities which are properly supported by a television service are faring much better than those which are not.

3. The impact recent and potential future spending cuts will have on S4C and the level of public subsidy for S4C is appropriate and sustainable over the longer term

3.1 As already mentioned, S4C, in being the only Welsh language television channel, has a colossal task in aiming to provide programming in Welsh of the same quality as that which is offered on other channels, and of the same variety. Welsh speakers are not one category of people; they have among them as much variation as any other language community. S4C is in competition with the combined wealth of all the English-medium channels and indeed all the new media that are available to viewers and consumers in Wales. It cannot, of course, fully compete, but providing a service that is in any way comparable requires a substantial level of public subsidy, and a talent of people with the creative freedom to produce the best possible programmes with the funding available to them.

3.2 S4C has stated that any substantial cut to its budget will have a detrimental effect on its programming. The setting of the budget of an institution of such value to the future vitality of a language community, should, in our view, be an informed decision. The Board does not believe that the cuts currently proposed for S4C have been made on such a basis.

3.3 The UK has a tradition of public service broadcasting that is admired throughout the world. S4C is particularly important within that group of public service broadcasters in providing television to a language community that needs the service in order to continue to exist. Dr Mike Cormack of Stirling University explains that "for expensive media, such as television, film and daily newspapers, there simply is no commercial basis within small language communities"*. The importance of S4C as a public service broadcaster is therefore compounded by the language issue; it is truly unique since it provides a service that no business could or would provide.

4. The cultural and economic benefit to Wales from the investment of over £100m per annum of public funds into S4C

4.1 As already discussed, the cultural contribution made by the funding invested in S4C is immense; it forms a fundamental part of the efforts being made to revive the Welsh

* Developing Minority Language Media Studies, http://www.aber.ac.uk/mercator/images/CormackText.pdf

31 language. There is a general and political consensus in Wales about the importance of supporting the Welsh language as an intrinsic part of our cultural heritage.

4.2 It is known that the private sector in Wales needs to grow. By commissioning programmes by independent producers, S4C creates jobs in the private sector. Importantly, this has a positive effect in enabling Welsh speakers to work in their own language. The type of creativity fostered by S4C also enables businesses to grow; some have started in Wales and grown to work in other parts of the world. Programmes too can be sold to other companies throughout the world creating additional revenue. S4C announced recently that its contribution to the economy of Wales is £90m*. We see no reason to dissent from the view that this estimate is of the right order.

5. Whether S4C is maximising the use of its financial and other resources to achieve value for money, to optimise the quality of its output, and to reach as wide an audience as possible;

5.1 The way in which S4C uses its resources is not a matter on which the Board can usefully comment.

6. Collaboration and independence

6.1 The overriding issue, in our view, is to preserve S4C’s financial and editorial independence. S4C’s most important function, we would argue, is the invaluable contribution it is making to the future of the Welsh language. That is not a crucial function for the BBC, and the promotion of the Welsh language is quite understandably not a primary consideration for its work. In order to safeguard the future of Welsh language media and the Welsh language itself, we believe S4C should remain separate from the BBC.

6.2 In recent years, there have been warnings that a lack of plurality in the media in Wales, with the risk of leading to a democratic deficit in a devolved Wales. This lack of plurality has been highlighted as a concern in English language media provision most acutely, with Welsh language audiences benefiting from the existence of a potentially more independent voice in S4C. There will of course be room for collaboration between broadcasters in Wales, but an S4C placed within the BBC would mean the loss of the little plurality that currently exists in the media in Wales.

* S4C brings £90m to Welsh economy, finds new Research, http://www.bbc.co.uk/news/uk‐wales‐11696905

32 6.3 When questioned recently about the government announcement on S4C, Huw Jones, a member of the Welsh Language Board and Chief Executive of S4C between 1994 and 2005, told a current affairs programme: "The operational independence of S4C has been important. I will give you one example. When there were talks of changing the airwaves, when ‘digital’ originally came in, there were various ways the bandwidth could have been distributed, there was a choice in terms of what capacity to give S4C. It was S4C itself, fighting its own cause, who debated that issue on an equal basis with the BBC, with Sky, with Channel 4, and with Government. I have serious concerns that this operational independence would be lost, and that the service will suffer as a result"*.

7. Whether the finance and accountability of S4C, currently the responsibility of the Department of Culture Media and Sport, should remain in Whitehall or become a devolved matter.

7.1 Without doubt, the services which S4C provide are primarily targeted at the people of Wales. The Authority itself is unique, and unique, moreover, in a Welsh context. The body of expertise relating to Welsh language broadcasting rests in Wales. It follows therefore that there is a strong case that S4C should be democratically accountable in the first place to the people of Wales.

12 November 2010

* Transcribed [and translated] from a broadcast on BBC Radio Cymru, 25/10/2010

33 Written evidence submitted by Ofcom

Introduction and executive summary

1.1 Ofcom is the independent regulator and competition authority for the UK communications industries, with responsibilities across television, radio, telecommunications and wireless communications services. We welcome this opportunity to submit evidence to the Welsh Affairs Committee’s inquiry into S4C and its governing body, the Welsh Authority.

1.2 S4C’s services are provided under statute by the Welsh Authority. However, the Communications Act 2003 requires us to independently regulate certain aspects of the Authority’s public services.1 The most significant as far as the Committee’s inquiry is concerned are those where the Authority has to comply with requirements and quotas to be agreed with us (or, in the absence of agreement, to be set by us). Our evidence therefore focuses on the extent to which S4C is fulfilling its remit in these respects.

1.3 S4C (analogue) and S4C Digidol (digital) are public service channels provided by the Welsh Authority, with individual remits set out in the Communications Act,2 although the S4C analogue service was closed down at the end of March 2010 when the digital switchover (DSO) process was completed in Wales.3 The Authority also provides S4C-2, a commercial service that we license.

1.4 The Communications Act requires the Welsh Authority (along with the other public service broadcasters) to produce an annual statement of programme policy and to consider any guidance that we issue. The Authority must ensure its services comply with the Ofcom Broadcasting Code and other codes that we issue. From 2004, when we started to regulate S4C, significant issues of Code compliance for the service have been very rare. In 2009, we did not adjudicate on any programmes that S4C broadcast.

1.5 As required by the Communications Act, we have agreed quotas with the Welsh Authority in the following areas:

• television access services – subtitling, signing and audio description;

• independent productions – programmes supplied by independent producers;

• news and current affairs programmes; and

• original productions – commissioned in-house or from independent producers.

1 www.opsi.gov.uk/acts/acts2003/pdf/ukpga_20030021_en.pdf. 2 See Schedule 12, paragraph 3(2) and (3). 3 The S4C analogue service ceased transmission at midnight on 30 March 2010, and DSO was completed in Wales the following day. S4C Digital is now the Welsh Authority’s main public television service.

34 1.6 In the period from 2004, the Welsh Authority’s services have successfully complied with and have generally exceeded these quotas.

1.7 The Communications Act also places a duty on us to assess the designated public service broadcasters, taken together, in terms of the delivery of the public service purposes set out in the Act. Against a series of purposes and characteristics that we developed as part of our first Public Service Broadcasting (PSB) Review, we have developed an evidence base to assess the delivery of PSB. From 2006, we have also measured audience impact.

1.8 In 2009, S4C’s share of all viewing (i.e. not just of Welsh-language programming) was 2.2%, with a share of peak-time viewing at just over 3%. This compares to shares of 6.1% for BBC2, 4.4% for Channel 4 and 4.5% for Five. BBC1 and ITV1 each has a share in excess of 15%.

1.9 Regular viewers of S4C Welsh associate its programming most strongly with the PSB purposes of informing understanding of the world and reflecting UK cultural identity. Regular viewers also tend to say that they trust the channel and see it as providing high quality programmes.

1.10 Total spending per head on broadcast-based output in Wales totalled £59.87 in 2009, up from £57.49 12 months earlier. This was the highest spend per head across the four UK nations, driven particularly by the programming budget of S4C, which accounted for £26.20 of the total. The year-on-year increase was brought about in part by higher spending on Welsh-language programming and by output produced for UK-wide audiences.

1.11 Our first PSB Review, completed in June 2005, set out the view that the BBC and S4C should develop a new relationship driven by three core principles of transparency, financial commitment and editorial control. The Review recommended a new partnership to meet developing audience needs and look to the future (three years and more) The Review concluded that the incorporation of S4C within the BBC would involve “a significant negative impact on plurality in Wales and hamper S4C’s ability to meet its audience’s needs in the most effective way.”

1.12 Subsequently, during autumn 2006, S4C and the BBC concluded a “Strategic Partnership” aimed at addressing these issues, and that included a funding commitment from the BBC for its statutory supply to S4C.

1.13 By the time of our second PSB Review in spring 2008, we took the view that the relationship between the BBC and S4C was working far more effectively. The main focus of the second Review was therefore the future provision of English-language programming in Wales rather than Welsh-language programming.

1.14 On 14 October 2010, the government stated that it regarded S4C’s present funding arrangements to be unsustainable.4 The recently introduced Public Bodies Bill is therefore intended to give effect to an amendment of the current provision by which S4C is funded at the level of its grant from the Department for Culture, Media and Sport (DCMS) in 1997, increased annually in line with the retail price index. Subsequently, as part of its Spending Review, the government intends to fund much of the service via the television licence fee from 2013/14.

4 www.culture.gov.uk/news/media_releases/7485.aspx.

35 1.15 Changes to S4C’s future governance are likely to have significant implications for us and our regulatory role in relation to the Welsh Authority and the broadcaster, although these are not clear at this stage. We will continue to provide data and other information relating to the future delivery of PSB including the services provided by the Authority and S4C.

2 Regulating S4C: our role

2.1 S4C’s services are provided by the S4C Authority, known as the Welsh Fourth Channel Authority or the Welsh Authority in legislation. We have some specific regulatory functions relating to the Authority as set out in the Communications Act.5

2.2 Both S4C (analogue) and S4C Digidol are public service channels provided by the Welsh Authority, with individual remits set out in the Communications Act. In addition, the Authority also provides S4C-2, which used to broadcast coverage of National Assembly plenary and committee hearings when in session from its creation in 1999. However, this service, which was provided through agreement with the Authority by the BBC, was discontinued in summer 2009. S4C-2 is still also used to provide coverage of festivals and events in Wales during the summer months but as a commercial channel that we license rather than a public service channel. The Authority took the decision to launch the channel in 1999 to make use of digital capacity gifted to it by order under the Broadcasting Act 1996.6

Statements of programme policy

2.3 Section 266 of the Communications Act requires the commercial public service broadcasters to produce annual statements of programme policy having regard to guidance that we give. Similarly, the July 2006 Agreement between the BBC and the Secretary of State for Culture, Media and Sport requires the BBC Trust and the BBC Executive Board to produce an annual statement of programme policy.

2.4 The Welsh Authority must also produce an annual statement of programme policy, and the Authority must consider any guidance that we issue. However, there is no provision for us to review any “significant changes” to the Authority’s statements as has been the case with the Channel 3 services including ITV Wales.7

2.5 The government has indicated that it intends to use the Public Bodies Bill, when enacted, to abolish the requirement for the commercial public service broadcasters to produce statements of programme policy. The government is still considering whether the requirement will be retained in the case of the Welsh Authority’s public services.

The Broadcasting Code

2.6 The Broadcasting Act and the Communications Act require us to draw up a code for television and radio covering standards in programmes, sponsorship, fairness and privacy. Known as the Broadcasting Code, it applies to all television and radio services broadcast in the UK with certain exceptions in the case of the BBC and S4C. The BBC’s public services are exempted from sections five (impartiality and accuracy), six, (elections and referenda), nine (sponsorship) and 10 (commercial

5 See, for example, section 203 and Schedule 12. 6 www.legislation.gov.uk/ukpga/1996/55/introduction/enacted. 7 See Schedule 12, paragraph 4 of the Communications Act.

36 references) of the Code. S4C is not exempt from these sections. Observance of the Code is a licence requirement in the case of those we license (including S4C-2), a statutory requirement in the case of the Welsh Authority’s public services and a condition of the BBC Agreement for its services.) The requirement for impartiality and accuracy in news therefore applies to the BBC’s Welsh-language programmes broadcast on S4C, including the 7.30 p.m. weekday news programme Newyddion and current affairs series such as Taro Naw. We have in the past adjudicated (although not upheld) cases of impartiality relating to current affairs programmes produced by the BBC that were broadcast on S4C. Since 2004, when we started to regulate S4C, significant issues of Code compliance for the service have been very rare. In 2009, we did not adjudicate on any programmes broadcast by S4C.

Compliance with other codes

2.7 The S4C service has to comply with a number of other codes that we produce:

• the code on the scheduling of television advertising (COSTA), which came into effect on 1 September 2008 and contains rules on how much advertising and teleshopping may be scheduled in programmes;8

• the code on television access services, which sets out how much subtitling, signing and audio description relevant licensees must provide;9

• the code of practice on electronic programme guides, which requires EPGs to provide features and information enabling them to be used by people with disabilities affecting their sight or hearing, or both, so far as practicable;10

• the code on sports and other listed and designated events, which gives guidance on certain matters relating to the televising of sports and other events of UK national interest that have been listed by the Secretary of State for Culture, Media and Sport.11 In the case of the BBC and S4C, we must report Code breaches to the Secretary of State; and

• the cross-promotion code.12

2.8 The Communications Act requires the Welsh Authority to draw up a code of practice relating to the terms for commissioning content from independent producers.13 It must take account of guidance that we issue in this area and comply with any directions that we give.14

2.9 S4C must also comply with the Broadcasting Committee of Advertising Practice’s (BCAP) UK Code of Broadcast Advertising, for areas of which we retain regulatory responsibility.15

8 http://stakeholders.ofcom.org.uk/binaries/broadcast/other-codes/tacode.pdf. 9 http://stakeholders.ofcom.org.uk/binaries/broadcast/other-codes/ctas.pdf. 10 http://stakeholders.ofcom.org.uk/binaries/broadcast/other-codes/epgcode.pdf. 11 http://stakeholders.ofcom.org.uk/binaries/broadcast/other- codes/ofcom_code_on_sport.pdf. 12 http://stakeholders.ofcom.org.uk/binaries/549196/pdf/545159/545162/xpromo.pdf. 13 www.s4c.co.uk/production/downloads/guidelines/COD_YMARFER_S4C_EBRILL_260410_ENG.pdf. 14 See Schedule 12 paragraph 10. 15 www.bcap.org.uk/The-Codes/BCAP-Code.aspx.

37 Compliance with regulatory obligations

2.10 We must secure the availability throughout the UK of a wide range of television and radio services that, taken as a whole, are both of high quality and calculated to appeal to a variety of tastes and interests.16 Television broadcasters have to comply with a number of regulations originating from UK or European Union (EU) legislation and, with the exception of the BBC and S4C’s public services, must also comply with the terms of their licences to broadcast, which we issue. The degree of regulatory intervention that we are required to make depends on the type of broadcaster. The commercial public service broadcasters – ITV1, Channel 4 and Five – operate under much tighter regulations than cable, satellite and other commercial terrestrial broadcasters. The BBC is regulated by both us and the BBC Trust and S4C by both us and the Welsh Authority.

2.11 The Audiovisual Media Services (AVMS) Directive sets an overarching regulatory framework for broadcasters based within the EU as well as targets for broadcasting programmes produced in the EU (including the UK) and for independent EU programmes.17 The Directive applies to all qualifying television services in the UK and extends to video on demand (VOD) services. In the UK, regulation of VOD is undertaken by a new regulator, ATVOD, although we retain a backstop role. However, other forms of on-line audio-visual material such as user-generated content and games remain outside the Directive’s scope.

2.12 The Welsh Authority has consulted on and agreed a number of quotas with us and set additional targets for the S4C Digidol service (and formerly the analogue S4C service). We have agreed quotas with the Authority in the following areas:

• television access services – subtitling, signing and audio description;

• independent productions – programmes supplied by independent producers;

• news and current affairs programmes; and

• original productions – commissioned in house or from independent producers

Television access services

2.13 Quotas for television access services (relating to services for viewers with hearing or visual impairments) apply to all PSB channels and to all other television services that achieve an average share over a 12 month period of 0.05% or more (subject to passing an affordability threshold and not facing insurmountable technical difficulties, such as the audio description of music and news programmes, where there is little space within the sound track or dialogue to provide the facility). In 2009, the S4C services all exceeded our quotas, as shown in table 1.18

Table 1: S4C quotas for television access services Target Achieved Subtitling 75% 90.60%

16 See section 3(2)(c) of the Communications Act. 17 http://eur- lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2007:332:0027:0045:EN:PDF. 18 See page 39 at www.s4c.co.uk/abouts4c/annualreport/acrobats/adroddiad-blynyddol-s4c- annual-report-2009.pdf.

38 Signing 4% 4.19% Audio description 10% 11.96%

Independent productions

2.14 All public service broadcasters must commission at least 25% of qualifying programmes (essentially first-run original productions excluding news) from independent producers. However, as S4C is a commissioner broadcaster (i.e. it does not produce its own programmes), it easily exceeds this quota, and in 2009 89% of S4C’s output consisted of broadcasting time allocated to independent productions.

News and current affairs

2.15 Quotas are agreed at different levels for the volume of UK and international news programmes to be broadcast across the whole day and in peak. S4C’s all day quota is 200 hours p.a., and in 2009 it broadcast 265 hours. Its peak time quota is 150 hours p.a., and in 2009 it achieved 181 hours. The quota for current affairs in peak is 30 hours p.a., and in 2009 S4C broadcast 76 hours and 32 minutes, while the all hours quota is 60 hours p.a., with S4C broadcasting 82 hours and 30 minutes.

Original productions

2.16 Original productions can be produced in-house or commissioned from independent producers. The quotas are set at different levels for each public service broadcaster and designed to ensure that the majority of broadcasting time on PSB channels comprises programmes primarily from UK production sources rather than bought in from elsewhere. In 2009, 100% of S4C’s peak time output consisted of original programmes (quota: 90%), and the all hours figure was 99% (quota: 80%)19. The volume of first run originated Welsh-language programmes on S4C reached 2,095 hours in 2009. Of this, 25% were general factual programmes, 19% children’s programmes and 15% news and current affairs. Sport comprised 14%, music and arts 11% and drama programmes 8%. Figure 1 shows the annual hours of first run originated Welsh-language output on S4C over the period 2005-09.

Figure 1: Annual hours of first run originated Welsh-language output on S4C

19 See page 49 at www.s4c.co.uk/abouts4c/annualreport/acrobats/adroddiad-blynyddol-s4c- annual-report-2009.pdf.

39 Hours 1,981 1,878 1,882 1,984 2,095 Hours of originated Welsh language output (including BBC statutory hours)

2,000 General Factual 523 Drama 560 487 495 497 177 Entertainment 190 201 187 186 127 Sport 129 121 113 115 291 Religion 1,000 276 283 295 28 328 32 26 Education 20 26 400 186 380 208 225 Children 244 225 217 199 232 Music and Arts 129 113 109 120 125 Current Affairs 203 199 174 171 191 0 News 2005 2006 2007 2008 2009 Source: S4C (2009) Note: Includes BBC statutory hours – these hours are not broken down into acquisitions, commissions or repeats, therefore a nominal number of the hours in this chart may consist of repeated material.

Repeats

2.17 There are no quotas to restrain the volume of repeats on any UK television channel (although the quota of programmes screened by ITV in the nations and regions has to be made up of first run originations and not repeats). Repeats made up the majority (62%) of Welsh-language programming in 2009. In the case of S4C, the repeat level reflects the broadcaster’s policy of ensuring multiple opportunities to view peak time Welsh-language programming, maximising the investment made in these programmes.

2.18 The 2004 Independent Review of S4C by Roger Laughton noted the incidence of repeats in the S4C programme service:20

During 1999, the first full year of the digital service, S4C transmitted on average 81 hours of Welsh language programmes a week, including BBC hours. By 2003, the hours transmitted had risen to 85, but the proportion of repeats increased, from 32% in 1998 to 49% in 2003. Nothing intrinsically wrong with this. Giving viewers more chances to see programmes as channels multiply is the right strategy as long as you have the capacity to keep on making new programmes.

2.19 Figure 2 shows the type of Welsh-language output on S4C over the period 2005-09.

20 www.s4c.co.uk/abouts4c/authority/pdf/e_adolygiad_laughton.pdf.

40 Figure 2: Type of Welsh-language output on S4C

Hours 4,472 4,512 4,643 5,326 5,696 Hours of output per year

6,000 13 21 5,000 1,432 First run 153 102 71 1,355 Commissioned - 58 BBC 4,000 1,236 83 1,288 1,189 First run Commissioned – 125 126 3,000 115 indie First run 3,237 3,521 2,000 2,585 Acquisitions 2,372 2,509 Repeats 1,000 544 587 625 630 672 0 2005 2006 2007 2008 2009

Source: S4C (2009) Notes: The BBC statutory hours are not broken down into acquisitions, commissions or repeats

41 Section 3 3 The 2009 annual report on public service broadcasting: S4C

Monitoring the delivery of public service broadcasting

3.1 We have a duty to assess the designated public service broadcasters, taken together, in terms of the delivery of the public service purposes set out in the Communications Act. The designated public service broadcasters are the BBC, ITV1, Channel 4, Five, S4C and, formerly, Teletext. The Act requires us to monitor the effectiveness of public service broadcasters in delivering the range of PSB purposes set out in section 264:

• the provision of relevant television services which secure that programmes dealing with a wide range of subject-matters are made available for viewing;

• the provision of relevant television services in a manner which (having regard to the days on which they are shown and the times of day at which they are shown) is likely to meet the needs and satisfy the interests of as many different audiences as practicable;

• the provision of relevant television services which (taken together and having regard to the same matters) are properly balanced, so far as their nature and subject-matters are concerned, for meeting the needs and satisfying the interests of the available audiences; and

• the provision of relevant television services which (taken together) maintain high general standards with respect to the programmes included in them, and, in particular with respect to –

o the contents of the programmes;

o the quality of the programme making; and

o the professional skill and editorial integrity applied in the making of the programmes

3.2 Based on this, we developed a range of purposes and characteristics to provide a detailed description of PSB in our first Review. The first PSB Review also stated that, in delivering our duties, we should develop a new approach to assessing the effectiveness of the public service broadcasters, taken together, in delivering PSB. This assessment would include an audience tracking survey to evaluate audience opinions as well as broadcaster spend, output and viewing data. The aim was to provide a common basis for understanding the delivery of PSB and resulted in the publication of the PSB annual reports.

3.3 Since then, new legislation in the form of the Digital Economy Act 2010 has been passed.21 As a result, and in addition to the requirements outlined above, our PSB reporting duties have been extended to include public service content online and on

21 www.legislation.gov.uk/ukpga/2010/24/pdfs/ukpga_20100024_en.pdf.

42 VOD. We also have new powers to monitor and enforce Channel 4’s media content duties, to report on whether the public teletext service licence remains commercially sustainable and to assess the public value of continuing the service. However, as our 2009 annual report on PSB preceded the Act, it focused largely on PSB delivery through television services rather than public service content more broadly.

3.4 The four PSB purposes developed in our first Review are:

• 1 – informing our understanding of the world;

• 2 – stimulating knowledge and learning;

• 3 – reflecting UK cultural identity; and

• 4 – representing diversity and alternative viewpoints.

3.5 The PSB characteristics are:

• high quality, well-funded and well-produced programmes;

• original, new UK content rather than repeats or acquisitions;

• innovative, breaking new ideas or reinventing existing approaches rather than copying old ones;

• challenging, making viewers think;

• engaging, remaining accessible and attractive to viewers; and

• widely available, where a large majority of citizens are given the chance to view content that is publicly funded.

3.6 Although the PSB channels are expected together to fulfil the purposes and characteristics within the PSB system, it is also acknowledged that each PSB channel has a different remit, access to different funding sources and a different institutional approach. In this context, S4C has an acknowledged role in relation to broadcasting in the Welsh language.

3.7 We have developed an evidence base for assessing PSB delivery based on output hours, viewing figures and audience impact. Output data is provided to us by the broadcasters each year as part of their PSB returns. Viewing figure data are provided by the Broadcasters’ Audience Research Board (BARB), a UK-wide panel of 5,100 homes providing television viewing measurement data for the industry. From 2006, we have measured audience impact through our PSB Tracker Survey, based on data collected during January, April, July and October (to examine whether particular programming or times of the year have an impact on perceptions) from telephone interviews carried out by GfK NOP. The survey asks regular viewers of each PSB channel their opinions on the delivery of the PSB purposes and characteristics. We are also provided with data from the BBC-GfK Pulse Survey, based on an on-line UK representative panel of 15,000 viewers. In 2006, 1,874 interviews were conducted per quarter (1,070 in England and 268 in each of Northern Ireland, Scotland and Wales. In 2007, 2008 and 2009, 1,750 interviews were conducted per quarter (990 in England and 250 in each of Northern Ireland, Scotland and Wales). The average interview length in 2009 was 23.25 minutes.

43 3.8 The Welsh sample was boosted each quarter with an additional 50 interviews among viewers of Welsh-language programming on S4C to enable reporting on the channel. Respondents were offered the option of a Welsh-language interview if preferred.

S4C: viewing data

3.9 In 2009, S4C Welsh-language programmes were watched for an average of 21.1 hours per year by all individuals in Wales. This was an increase on the average hours watched in 2005 (19.8 hours) but lower than the average hours watched in 2008 (21.4 hours). The weekly reach of Welsh-language programming on S4C was 17% in 2009, the lowest share achieved in the last 5 years. Figure 3 shows viewing of Welsh-language output on S4C over the period 2005-09.

Figure 3: Viewing of Welsh-language output on S4C

Hours viewed of Welsh language programming Weekly reach of Welsh language programming

Average hours a year Weekly reach (%) 35

30

25

20

15 23% 24% 21.1 10 19.8 20.4 19.3 21.4 20% 20% 17%

5

0 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009

Source: S4C/BARB. S4C Region. All Individuals

3.10 In 2009, S4C’s share of all viewing (i.e. not just of Welsh-language programming) was 2.2% (down from 3.7% in 2005), although its share of peak-time viewing (which, by definition, is focused on Welsh-language programming) has held up over the same period at just over 3%. These figures should also be considered in the context of DSO, which began in Wales during August 2009. By this point, penetration of digital television in Wales had already reached 89%, and while the S4C analogue service carried rescheduled Channel 4 English-language programmes outside peak hours, the S4C Digidol service was broadcasting exclusively in Welsh, with the digital service simulcasting the analogue peak time Welsh-language programmes. Annex 1 contains more information about DSO in Wales.

3.11 Table 2 shows S4C all hours and peak time share over the period 2005-09.

Table 2: S4C all hours and peak time share Share All hours Peak time (1830-2130)

44 2005 3.7% 3.1% 2006 3.6% 3.4% 2007 3.0% 3.2% 2008 2.7% 3.3% 2009 2.2% 3.1%

3.12 Figure 4 shows the all hours, all viewers share of S4C against the other public service broadcasters and commercial channels available in Wales over the period from July 2006 to August 2010. It should be noted that only BBC One and ITV1 have shares greater than 15% in Wales, and even those have been gradually falling in recent years. Share for each of the other public service broadcasters is below 10%, with BBC 2 at 6.1%, Channel 4 at 4.4% and Five at 4.5%. Figure 4 also shows the aggregated share for the commercial channels viewed in multichannel homes, which has been increasing significantly over the last few years to around 50%. However, it should be noted that the shares for individual channels during 2009/10 has remained low: BBC News 1.1%, Sky Sports 1 1%, G.O.L.D. 0.9%, Discovery 0.1%, and Eurosport 0.1%. S4C’s overall share at 2.2% and peak time share 3.1% should therefore be considered in this context.

Figure 4: S4C viewing share: all viewers (4+), all hours, Wales

55%

50% BBC1

45%

40% BBC2

35% ITV1 30%

25% CH4

20% S4C 15%

10% Five 5%

0% Other Multichannels

45 Figure 5: Proportion of viewing of genres on S4C

Proportion of viewing (%) 100% 7% 8% 7% 9% 7% Children's Sport 17% 20% 16% 20% 80% 20% Entertainment

8% 7% Films 9% 8% 11% Drama:Soaps 60% 15% 14% 15% 14% 11% Drama:Series/Single 8% 6% Hobbies/Leisure 5% 3% 4% 6% 3% 3% 40% 5% 4% 8% Documentaries 8% 7% 3% 2% 10% 9% 2% Education 3% 2% 11% 10% 10% Religious 20% 11% 11% 13% 14% 15% Arts/music 8% 9% Current Affairs 7% 7% 8% 9% 8% 0% News/Weather 2005 2006 2007 2008 2009

Source: S4C/BARB/Infosys (BARB). S4C Region, All Individuals.

3.13 Figure 5 shows the proportion of viewing of genres on S4C over the period 2005-09. The most-watched were drama (including soaps, series and single dramas) at 22%, sport at 20% and current affairs at 15%.

Audience impact

3.14 In order to provide relevant information about audience views relating to S4C programming in Welsh, the PSB Tracker was boosted in Wales from January 2006. Opinions have been based on regular viewers of Welsh-language programming on either the analogue or the digital channel rather than regular viewers of S4C as a whole. The PSB Tracker results reported below are therefore based on the Welsh boost rather than the UK-wide research.

3.15 The PSB Tracker has asked viewers of Welsh-language programming on S4C how they rate S4C on achieving the PSB purposes and characteristics and how they rate the PSB channels together on the same measures. It should be remembered that the PSB channels together – rather than any one channel one – are required to deliver the range of purposes and characteristics. However, the remit of S4C and its role in a devolved nation mean that opinions relating to purpose 1 (informing our understanding of the world) and purpose 3 (reflecting UK cultural identity) are particularly relevant.

Key themes

3.16 For regular viewers of S4C Welsh-language programming in 2009, the strongest PSB associations with the channel continued to be connected to purposes 1 and 3. For example:

• purpose 1 – its news programmes for people in Wales provide a wide range of good quality news about Wales (68%);

46 • purpose 1 – its news programmes are trustworthy (68%);

• purpose 3 – aside from news, it provides a range of good-quality programmes about my nation, made for people in my nation (78%);

• purpose 3 – it portrays Wales well to the rest of the UK (68%);22 and

• purpose 3 – it covers big national events well, like sports, music events or major news stories (67%).

3.17 Regular viewers of Welsh-language programmes on S4C also tended to say that they trusted the channel (77%) and that they saw the channel as providing high quality programmes (71%).

3.18 Figure 6 shows Welsh-language viewer opinions of S4C’s delivery of PSB purposes 1 and 2 in 2009.

Figure 6: Welsh-language viewer opinions of S4C’s delivery of PSB purposes 1 and 2, 2009

Purpose 1 PSB channels: 10/9/8/7 S4C: 10/9/8/7

Its programmes help me understand what’s going on in the world today 83% 54%

80% Its news prograrmmes are trustworthy 68%

60% Its news programmes for people in Wales provide a wide range of (not asked f or Q3-4 2007) good quality news about Wales 68%

Purpose 2 66% It shows interesting programmes about history, sciences or the arts 46%

As a result of watching its programmes I’ve become more interested in 70% particular subjects 56% (42% 2007)

2007 2008 Shows direction of significant differences year-on-year (‘10/9/8/7’ compared 2007/2008 to 2009, 99% level)

Extent to which the characteristic applies to the channel(s) , where 10 means ‘applies completely’ and 1 means ‘does not apply at all’ Base = Self-reported regular viewers of S4C (203); All channels combined (203) (amalgamated data: January 09, April 09, July 09, October 09) Source: PSB Tracker, GfK NOP

3.19 Figure 7 shows Welsh-language viewer opinions of S4C’s delivery of PSB purposes 3 and 4 in 2009.

22 S4C Digital is available across the UK on digital satellite systems, so while this statement may not seem particularly applicable to the S4C channel, responses nonetheless show that viewers of its Welsh-language programmes feel this is achieved by the channel. It may also be the case that respondents simply focused their response on the first part of the statement.

47 Figure 7: Welsh-language viewer opinions of S4C’s delivery of PSB purposes 3 and 4, 2009

Purpose 3 PSB channels: 10/9/8/7 S4C: 10/9/8/7 Aside from news, provides range of good quality progs about region/nation, 56% (not asked f or Q1-2 2007) made for people in region/nation 78%

It covers big national events well, like sports, music events or major news stories 83% 67%

71% Its entertainment and factual programmes show people from different parts of the UK 45%

It portrays Wales well to the rest of the UK 44% 68%

61% It shows high quality soaps or dramas made in the UK 53%

Purpose 4 70% Its programmes show different kinds of cultures within the UK Different wording 35% In 2007. Not sig Its programmes offer a range of opinions on subjects and issues 76% tested 55% 2007 2008 Shows direction of significant differences year-on-year (‘10/9/8/7’ compared 2007/2008 to 2009, 99% level)

3.20 Figure 8 shows Welsh-language viewer opinions of S4C’s delivery of the PSB characteristics in 2009.

Figure 8: Welsh-language viewer opinions of S4C’s delivery of the PSB characteristics, 2009

PSB channels: 10/9/8/7 S4C: 10/9/8/7

Characteristics 70% TRUST - I trust this channel* 77%

79% QUALITY - It shows well-made, high quality programmes 71% (58% 2007)

68% ENGAGING - It shows programmes I want to watch 57%

56% ORIGINAL - It shows enough new programmes, made in the UK 44%

ENGAGING - Its programmes reflect the interests and concerns of people like me 66% 56%

INNOVATIVE - It shows programmes with new ideas and different approaches 58% 41%

CHALLENGING - It shows programmes that make me stop and think 65% 45% 2007 2008 Shows direction of significant differences year-on-year (‘10/9/8/7’ compared 2007/2008 to 2009, 99% level)

Extent to which the characteristic applies to the channel(s) , where 10 means ‘applies completely’ and 1 means ‘does not apply at all’ Base = Self-reported regular viewers of S4C (203); All channels combined (203) (amalgamated data: January 09, April 09, July 09, October 09). Source: PSB Tracker, GfK NOP

3.21 Figure 9 shows spend per head on UK-originated content by public service broadcasters on television and radio in 2010.

48 3.22 Figure 9 shows the pattern of expenditure in Wales on broadcasting output in 2010. It adjusts for population size by expressing spend on a per-head basis. The chart sets out four types of expenditure:

• the value of networked television spending in Wales – programmes that are produced in Wales (e.g. Doctor Who) and broadcast to all UK viewers;

• BBC spending on radio services for listeners in Wales (e.g. Radio Wales);

• spend by the BBC and ITV1 Wales on television programmes specifically for viewers in Wales (e.g. Wales Tonight); and

• Welsh-language television programmes commissioned by S4C.

3.23 Spending per head on broadcast-based output in Wales totalled £59.87 in 2009, up from £57.49 a year earlier. This represented the highest spend per head across the four UK nations, driven particularly by the programming budget of S4C, which accounted for £26.20 of the total. The year-on-year increase was brought about in part by higher spending on Welsh-language programming and in part by output that was produced for UK-wide audiences.

Figure 9: Spend per head on UK-originated content broadcast by public service broadcasters on television and radio, 2010

Spend per head (£)

70 BBC Nations/Local radio £59.87 60 £11.21 50 Welsh, Irish and Gaelic television programming £38.74 40 £38.34 £3.85 £2.82 £33.20 £26.20 £32.49 £1.60 £2.96 £4.14 30 £7.82 £11.12 BBC/ITV1/STV/UTV £3.31 spend on TV content for 20 £1.67 the nations £32.56 £9.57 £9.16 £29.15 £14.12 10 BBC/ITV1/STV/UTV £12.50 £13.30 £5.58 network TV spend 0 UK England Scotland Wales N Ireland

Source: Operators, Annual Reports and Ofcom calculations

49 Section 4 4 Our reviews of public service broadcasting

4.1 Section 264 of the Communications Act requires us to review at least every five years the extent to which the public service broadcasters have fulfilled PSB purposes in the UK with a view to maintaining and strengthening the quality of its provision.

4.2 We conducted our first PSB Review in three phases during 2004/05. The third phase was published on 8 February 2005,23 followed by a final statement on programming for the nations and regions, published on 9 June 2005.24 Our second PSB Review began two years earlier than required by statute with the first phase published on 10 April 2008,25 followed by the second phase on 25 September the same year.26 A final statement was published on 21 January 2009.27

4.3 Our first Review concluded that there was continued demand for PSB but that the existing model of ensuring it was provided by commercially funded channels would not survive the transition to a wholly multichannel world unchanged. The Review concluded that there was a continued requirement for programming that reflected the distinct identities, cultures, histories and interests of Northern Ireland, Scotland and Wales. It was noted that this requirement was not likely to be met by UK-wide programming alone, nor by reducing minimum requirements on ITV1 in the nations in line with our decisions for the English regions.

4.4 Following the first Review, the UK’s media landscape evolved rapidly and continues to do so:

• viewer adoption of digital technology grew significantly;

• multichannel television reduced audience sizes for all broadcasters;

• share for children’s programmes continued to fall significantly, with children turning to other platforms such as the internet; and

• there was a corresponding fall in television advertising expenditure as advertisers looked elsewhere to make an impact with their target consumers. The commercial analogue channels saw net advertising revenue fall from £2,559m in 2002 to £2,427m in 2006.

4.5 We announced in May 2007 that we would bring forward our second PSB Review based on this and other evidence, including our Channel 4 financial review, which

23 http://stakeholders.ofcom.org.uk/binaries/consultations/psb3/psb3.pdf. 24 http://stakeholders.ofcom.org.uk/consultations/psb3/statement/. 25 http://stakeholders.ofcom.org.uk/binaries/consultations/psb2_1/summary/consultation.pdf. 26 http://stakeholders.ofcom.org.uk/binaries/consultations/psb2_phase2/summary/psb2_phase 2.pdf. 27 http://stakeholders.ofcom.org.uk/binaries/consultations/psb2_phase2/statement/psb2statem ent.pdf.

50 highlighted the considerable uncertainties for that channel and, indeed, for commercial public service broadcasters more generally.28

4.6 We conducted other work during 2007 in the run up to the second Review, including a study on the future of news, with a report published on 4 July 2007,29 and a report, published on 3 October 2007, on children’s television that noted the significant increase of children’s output on S4C and its commitment to broadcast a minimum of 140 hours of original programming for children per year.30

The first PSB Review: S4C and the BBC

4.7 During 2004/05, we set out the view that the BBC and S4C should develop a new relationship driven by three core principles: transparency, financial commitment and editorial control. The Independent Review of S4C had also previously recommended that the arrangements between the two broadcasters should be revised.

4.8 The Broadcasting Act 1980 required the BBC to provide Welsh-language programmes, free of charge, to meet “the reasonable requirements” of the Welsh Authority. This was modified by the Broadcasting Act 1990 to not less than 10 hours of programmes per week.31 This provision has always been the subject of intrinsic tensions. S4C argued that the real value of the BBC’s statutory 10 hour/week programme contribution had fallen over recent years and that it was hampered by the lack of strategic or editorial control over the programmes provided by BBC Wales.

4.9 Our statement concluding the first PSB Review summarised the views of respondents to the consultation, who all agreed that the short term priority at that time was the review and modernisation of S4C’s relationship with the BBC and the BBC Trust. We also set out our recommendations for a new partnership between the two broadcasters to meet developing audience needs. Beyond this short term issue (over two to three years) and looking to the future, we proposed two other organisational options: incorporation of S4C into BBC Wales and the creation of a Welsh Public Service Publisher (PSP) for Wales with S4C at its heart.

4.10 No consultation responses favoured the incorporation of S4C within the BBC at that time, and we concluded that this option would involve a significant negative impact on plurality in Wales that would hamper S4C’s ability to meet its audience’s needs in the most effective way. However, we suggested that greater consideration should be given to a funding model for S4C based on contestability. In response, the Welsh Authority suggested ways in which further elements of contestability could be built into its own model, including a tendering process for development funding and consideration of five-year licensing agreements for S4C services. We suggested that this could develop into a fully contested PSP model in the longer term.

4.11 During autumn 2006, S4C and the BBC reached an agreement, described as a “Strategic Partnership,” that addressed these issues. The new agreement included a funding commitment from the BBC for its statutory supply to S4C: £22.9m in 2007,

28 http://stakeholders.ofcom.org.uk/binaries/broadcast/reviews-investigations/psb- review/statement.pdf. 29 http://stakeholders.ofcom.org.uk/binaries/research/tv-research/newnews.pdf. 30 http://stakeholders.ofcom.org.uk/binaries/consultations/kidstv/summary/kidstv.pdf. Although not expressly stated in the report, data collected from the broadcasters showed that S4C was the second largest producer of original children’s programmes across the UK, after the BBC. 31 See section 58(1) at www.legislation.gov.uk/ukpga/1990/42/introduction/enacted, subsequently amended by section 28 of the Broadcasting Act 1996.

51 £24m in 2008 and £25.1m in 2009. The partnership also included provision for the BBC Trust and the Welsh Authority to agree programme commitments and core obligations in line with the BBC’s public purposes and Charter obligations. At the outset of the annual planning cycle, the BBC agreed to consult S4C management about S4C’s likely requirements in relation to S4C’s published programme strategy.

The second PSB Review: securing plurality

4.12 By the time of the second PSB Review, which began in spring 2008, we took the view that the relationship between the BBC and S4C was working far more effectively and the main focus of the second Review should be the future provision of English- rather than Welsh-language programming in Wales. Changes in the UK communications landscape and the consequential commercial pressures raised fundamental questions about the scale, nature and viability of the PSB obligations carried by ITV, Channel 4 and Five. The longstanding principle of competition between the BBC and the commercial public service broadcasters in the provision of PSB was being questioned, and the debate about plurality had a particularly intense focus in Wales, where there were concerns about maintaining ITV’s English- language news service and its other programmes for Wales.

4.13 Our statement concluding the second Review reported that the transition to the digital era was undermining the model for PSB provision that had existed historically outside the BBC. We argued that, unless the pressures on the commercially funded public service broadcasters were addressed, audiences would come to rely exclusively on the BBC for many areas of public service content, including, for example, news provision for Wales. Our research showed that audiences continued to value highly a choice of provision in such key areas. We proposed that direct public funding would be needed to support non-BBC PSB programming in the future, and many respondents to the second Review’s consultations supported this view. The Welsh Assembly Government’s Broadcasting Advisory Group proposed the creation of a Wales Media Commission to be supported by around £50m of annual public funding, and the National Assembly Broadcasting Sub-Committee in its response also recommended the creation of a fund for the creation of public service content for Wales. In addition, our Advisory Committee for Wales recommended the creation of a similar body to that proposed by the Welsh Assembly Government based on competitive funding of around £40m.

4.14 As part of this debate, the Welsh Authority submitted a proposal in which S4C might appoint both a provider for its Welsh-language news (which was and still is currently provided by the BBC) and a provider for an English-language news service for Wales. Subsequently, DCMS announced three areas – in Scotland, the northeast of England and Wales – where pilot schemes for independently funded news consortia (IFNCs) would be established. However, following the May 2010 general election, the new government decided not to pursue the IFNC model, instead setting out a commitment to secure the creation of new local TV stations across the UK, with a current target of between 10 and 20 such stations licensed by 2015.

52 Public Bodies Bill and future legislation

4.15 The recently introduced Public Bodies Bill is intended to effect a number of changes to our duties and powers, to be introduced by Order following Royal Assent.32 The relevant changes relating to the regulation of the Authority and S4C are:

• to amend the duty for us to review public service broadcasting every five years so that a review will only be conducted at the discretion of the Secretary of State. The Secretary of State will also determine the scope of the review; and

• to remove the requirement for public service broadcasters to provide annual statements of programme policy.

4.16 The government has also stated its intention to use the Public Bodies Bill to make changes to the future funding of S4C, which amounted to £101.369m in 2009:

The Broadcasting Act 1990 (as amended) includes a provision that S4C will be funded at the level it was in 1997, then increased annually by the amount of the Retail Price Index. The government considers that this is unsustainable in the current financial climate and intends to change it so that the Secretary of State will determine the level of funding.33

4.17 In the longer term, the government intends to “change the media regulatory regime by reforming Ofcom and deregulating the broadcasting sector” through a new Communications Bill that would complete the legislative process by April 2015.34

Spending Review 2010

4.18 On 20 October 2010, the same day that the government announced the outcome of its Spending Review, the Secretary of State for Culture, Media and Sport, Jeremy Hunt, wrote to Sir Michael Lyons, Chairman of the BBC Trust, confirming the government's decision that the level of the television licence fee would remain frozen at £145.50 until the end of March 2017. He also set out a “new partnership and funding model for S4C.”

• The government remained committed to a strong and independent Welsh- language TV service but had concluded that the S4C model was not sustainable in its present form.

• The S4C service must retain its brand identity and editorial distinctiveness as well as its special relationship with the independent production sector in Wales.

• Public funding for the service must be maintained at agreed levels over the period covered by the Spending Review.

• Having decided to reduce its own funding for S4C as part of the Spending Review, the government held that a new partnership model with the BBC was the best way of securing the long-term future of the service.

32 See note 5 at www.culture.gov.uk/news/media_releases/7485.aspx.

33 See note 4 at www.culture.gov.uk/news/media_releases/7485.aspx. 34 See www.culture.gov.uk/images/publications/DCMS-Business-Plan_2010-15.pdf.

53 • Under the partnership, funding for S4C in future would come from three sources – the licence fee, a continued but reduced subvention from the government and commercial income.

• There would be a BBC and S4C partnership along similar principles to BBC Alba to begin by 2013/14, with S4C coming under a BBC Trust service licence or other operating agreement that would be jointly agreed with the Welsh Authority and set out the strategic goals and broad editorial requirements of the service.

• A combined board of the Authority and the Trust would oversee delivery of the service licence or operating agreement.

• The S4C service would be operated by a joint management board with a majority of independent directors, appointed by the Trust and the Authority. The management board would operate its own commissioning structure.

• Further discussion would be required about the exact form of the partnership, and the government would play its part in those discussions.

• The service would not be a BBC branded service.

• The total content commissioning budget would be for independent producers (outside of the BBC's ongoing statutory commitments).

• In 2011/12 and 2012/13, the government would continue to fund the service.

• In 2013/14 and 2014/15, the BBC would contribute £76.3m and £76m respectively in cash in addition to its statutory commitments, while the government would fund at £6.7m in 2013/14 and £7m in 2014/15.

• There would be a further review of S4C's strategy and finances, to conclude in good time before the end of the period covered by the Spending Review.

• The exact level of BBC funding was not set beyond 2014/15. While future funding would reflect continuing synergies and efficiencies, it would remain consistent with the commitment to a strong and independent Welsh-language television service, with future services informed by the outcome of the proposed review.

• In the event that a new partnership model did not prove viable for any reason, the government would not take licence fee money itself for this purpose. But in this situation, the Trust would propose a one-off reduction in the level of the licence fee that would be equivalent to the contribution that the BBC would otherwise have made to S4C.

4.19 In response the Welsh Authority announced its intention to launch a judicial review of the government’s decision. Its Chairman, John Walter Jones, claimed that:

The effect of the financial cuts agreed between Jeremy Hunt and the BBC will have a disastrous effect for viewers across Wales, and this at a time when the BBC has already cut spending on both English and Welsh language programming in Wales.35

35 www.bbc.co.uk/news/uk-wales-11581346.

54 4.20 In the meantime, S4C has announced that 40 posts will be cut over the next two years. The channel has also notified more than 30 Welsh independent production companies that funding for programmes up to 2012 will be reduced. S4C provides about 60% of the Welsh production sector’s revenue, and independent producers have been asked by S4C to find 10% cuts in the first year from April 2011.

4.21 The Welsh Authority had already commissioned a review of its governance arrangements, which is being conducted by Sir Jon Shortridge, former Permanent Secretary at the Welsh Office

4.22 If there were to be changes to S4C’s future governance, there will be implications for us and our regulatory role in relation to the broadcaster. These are not currently clear. However, we will continue to provide statistical data and other information relating to the future delivery of PSB across the UK and in Wales, including the services provided by the Welsh Authority and S4C.

55 Annex 1 1 S4C: background information

Digital switchover in Wales

A1.1 On 31 March 2010, Wales became the first nation in the UK to switch completely to digital terrestrial television (DTT). Along with the 10 sites already transmitting DTT, the remaining 204 relays were converted to digital transmission, with Tonyrefail in the South Wales valleys being the last transmitter to switch. DTT coverage in Wales increased at DSO from 63% to 98% of households for the three public service multiplexes, carried by all the transmitters in Wales and providing around 20 television channels, including the BBC and ITV services, Channel 4, S4C and Five. The three commercial multiplexes continue to be broadcast from 10 sites, with full six-multiplex coverage, affording reception of up to 40 television channels (including S4C-2, which will remain on the SDN commercial multiplex), available to around 73% of households in Wales.

A1.2 Figure A1 shows the six-multiplex reception areas in red and the three-multiplex reception areas in purple.

Figure A1. DTT coverage in Wales

56 A1.3 Although the population of Wales is around 5% of the UK’s total population, it is served by 20% of the UK’s transmitters in a complex network of 214 main transmitters and relays. This network was developed by engineers to provide analogue terrestrial television services for viewers in areas such as deep valleys and remote locations where it was difficult to receive signals. Wales also has a number of self-help schemes operating privately-funded relays serving very small communities. We are responsible for licensing these systems, and a number were upgraded to digital transmission when DSO occurred in Wales.

A1.4 Managing DSO in Wales was complex, in terms of both technology/engineering issues and ensuring that viewers in Wales were fully informed and supported. Figure A2 shows the stages of the process in Wales.

Figure A2: Cumulative households switched in Wales by transmitter group

1.40

2009 switchovers 2010 switch 1.20

1.00

0.80

0.60

0.40

0.20

‐ Kilvey Hill Preseli Carmel Llanddona Moel y Parc Long Blaenplwyf Wenvoe (Aug/Sept (Aug/Sept (Aug/Sept (Oct/Nov (Oct/Nov Mountain (Feb/Mar (Mar 2010) 2009) 2009) 2009) 2009) 2009) (Nov/Dec 2010) 2009

Cummulative Households switched in Wales by transmitter group

A1.5 First, the BBC 2 analogue signal was switched off and replaced with the BBC A multiplex, providing the main BBC channels in digital form. A month later, the three remaining analogue channels were switched off and replaced with the other two PSB multiplexes: D3&4 and the BBC’s second multiplex.

A1.6 DSO, coordinated by Digital UK, was completed without any significant technical problems. During the switchover period, 83,000 applicants received support via the Switchover Help Scheme. In addition, Digital UK estimates that advice and support was provided to around 54,000 people through its road shows, advice points around Wales and the Digital Outreach scheme.

High-definition television

A1.7 During 2008/09, a reorganisation of the DTT platform took place to create a dedicated high-definition (HD) multiplex on which capacity could be reserved for public service broadcasters. In October 2008, we awarded HD capacity to Channel 4 and S4C in Wales (in a joint bid) and to the Channel 3 licensees (ITV, Channel TV, STV and UTV).

57 A1.8 Freeview HD is now available to 98% of viewers in Wales as the HD multiplex was one of the three PSB multiplexes that broadcast from all 214 transmitters and relays. S4C’s HD service, named Clirlun, was launched on 30 April 2010. The new service provides an HD simulcast of the S4C Digidol service.

A1.9 In addition, viewers in Wales, along with around 50% of viewers in the UK, were able to view the BBC HD channel and ITV1 HD, enabling them to watch the FIFA 2010 World Cup in HD on terrestrial television for the first time. Viewers in Wales are not able to receive the Channel 4 HD service on Freeview, although the service is available via Sky’s satellite service and Virgin Media’s cable service.

A1.10 HD services have been available for four years from Sky and Virgin Media. In late January 2010, Sky announced that over two million households across the UK now paid for its HD service, with HD-enabled set-top boxes being issued as standard to all new subscribers. Freesat and Virgin Media also provide HD services, although Clirlun will not initially be available on these platforms.

A1.11 On 3 November 2010, the BBC launched BBC One HD, a simulcast version of BBC One. Due to technical and financial constraints, BBC One HD does carry BBC Wales’ programmes or the other opt-out services for the other nations and regions broadcast on BBC One. Equally, ITV1 HD, which has simulcast the main ITV1 channel since 2 April 2010, also does not carry ITV Wales’ programmes, and in place of Wales Tonight, the service in Wales currently carries news from the ITV Central region. However, this situation is likely to be rectified in 2012/13, when DSO has been completed across the UK.

58

Annex 2 2 Abbreviations

AVMS Audio Visual Media Services

BARB Broadcasters’ Audience Research Board

BCAP Broadcasting Committee of Advertising Practice

COSTA Code on the Scheduling of Television Advertising

DCMS Department for Culture, Media and Sport

DSO Digital switchover

DTT Digital terrestrial television

EU European Union

HD High definition

IFNC Independently funded news consortium

PSB Public service broadcasting

PSP Public Service Publisher

VOD Video on demand

November 2010

59 Written evidence submitted by Professor Thomas P. O’Malley, Aberystwyth University.

Abstract.

• This submission questions the propriety of the decision to place S4C under the BBC.

• It points to the haste, lack of consultation and opacity of the process.

• It argues that the decision reflects a lack of proper consideration for the autonomy of Welsh culture under devolution.

• The consequences of the decision include:

• removing S4C status as an autonomous cultural organisation based in Wales;

• threatening the continuance of a Welsh language general service;

• undermining the ideas that the BBC should remain independent from government, and that the licence fee should not be used as an arm of fiscal policy, nor be top sliced or supplemented by advertising.

• It recommends that:

• S4C’s autonomy be restored pending the development of policy in relation to a new Communications Act;

• the National Assembly For Wales and the Welsh Assembly Government establish bodies to monitor media policy in Wales;

• the Welsh Assembly Government should also establish a public inquiry into communications policy in Wales, one purpose of which would be to determine the conditions under which policy could be devolved to the National Assembly and the Welsh Assembly Government.

1. The decision to place S4C under the BBC came at the end of three interlinked processes. The first was the need for the DCMS to present savings to the Treasury – hence the offloading of financial responsibility for S4C. The second was the issue of the BBC’s future funding. This has to be seen in the context of ongoing assaults on the licence fee from a range of organisations and the willingness of the government, and it would appear the BBC, to respond positively to them. The constitutional propriety of arriving at such a major decision in so short a time without consulting Parliament or the licence fee payer is open to question. Thirdly, there were the tense,

60 negotiations during the summer over the amount of money the DCMS wished to cut from its annual allocation to S4C. It now appears as if the DCMS simply wanted to ‘get rid’ of the problem by dumping the channel on the BBC.

2. In sum the decision making process in relation to all three areas was opaque, to put it politely. It was also top down, lacking even the semblance of consultation. Not only does the haste and lack of thought associated with the process reflect badly on the judgement of those who took the decisions, but it illustrates quite clearly how, in spite of devolution, the government seems less than willing to consult properly the Welsh Assembly Government and the people of Wales on matters relating to the future of key national cultural institutions such as S4C and BBC Wales. In addition the lack of consultation and the centralisation of power and resources consequent on this decision contrast starkly with the government’s avowed aim of devolving power and control over other areas of the operations of the state to the local level.

3. S4C was established as a result of concerted campaigning by the people of Wales over a long period. It is a rare example of broadcasting policy makers responding to bottom up pressure. In addition the fact that S4C broadcasts in the Welsh language is a matter of immense cultural significance, not least of all because the language is one of the key ideas underpinning contemporary conceptions of what it is to live and participate in Welsh culture.

4. The effects of the decision to place S4C under the BBC have been widely discussed. They include:

i. Removing the autonomy of S4C and placing its governance under the BBC. The legality of this is questionable and is being challenged by the S4C authority.

ii. Raising fundamental questions about how the Welsh language programming of S4C will be protected from the inevitable financial pressures that will be exerted on the BBC over the next 6 years. The speed and lack of consultation over the changes has left this situation very unclear.

iii. Providing evidence to the BBC’s opponents that the BBC’s licence fee can be top sliced to service the needs of spending departments, when in fact the licence fee is a levy which, in principle at least, should remain devoted to BBC services. It establishes the licence fee as just one more form of taxation which the Treasury can use to fund services formally funded out of taxation, thereby removing essential elements of the BBC’s financial autonomy.

iv. Breaching the principle that BBC domestic services should not take advertising. The BBC’s freedom from the pressures generated by dependence on advertising finance has been one of the most important

61 reasons why it has been able to achieve so much since 1922. By tacking on an organisation which generates revenue from advertising the government has provided an opening for those who want to see the licence fee replaced, ultimately, by advertising or subscription in the context of a BBC operating on the margins of the domestic communications environment.

What can be done?

5. S4C should be allowed to retain its autonomy outside of the BBC and should be funded by the DCMS; a decision about the governance and future funding of S4C should emerge, after proper consultation, during the discussions surrounding the development of the next Communications Act.

6. The DCMS should continue to fund S4C in the interim at a level which ensures that it can fulfil its remit.

7. The National Assembly For Wales and the Welsh Assembly Government need to establish immediately mechanisms to allow high profile, public consultation and intervention on the future of S4C and of English language broadcasting in Wales. As the report of the Broadcasting Committee of the NAFW (2008) recommended the Assembly ‘should establish a standing committee on communications which should be responsible for scrutinising the work of Welsh ministers in relation to broadcasting and related cultural and creative industries’.i Had this been in place then there would have been a forum in which these issues could have been aired in a systematic manner.

8. There should be a publicly funded independent advisory body, a kind of Standing Commission on Communications. It should be funded by WAG, but established so that it can act independently. It could consist of representatives, appointed by as democratic a method as possible, of people with interests and specialisms in the area, as well as people from organisations in civil society. Its job would be to analyse policy, consult widely on it and act as an independent source of advice to the politicians, a kind of counterweight to the industry lobby and the regulator, Ofcom. The Commission could also fund organisations in civil society that need money to enable them to intervene effectively in the policy process. These measures could be taken without recourse to legislative change at Westminster.

9. Finally, there is now an urgent need for a full public inquiry, or commission into the future of communications in Wales, prior to the drafting of the next Communications Act. Its remit should be to examine the current structures of finance, organisation and accountability of communications in Wales, taking in all forms of mass media, but, in particular, broadcasting, the internet, and the press, as well as cinema. This should be established by WAG, and should also work on determining the best method for devolving selected powers over communications policy to Wales It should have representatives on it from the media industries, trade unions and civil society

62 organisations, and be chaired by someone independent of political parties and of the media industries.

i Report of the Broadcasting Committee (NAFW, 2008) p. 69.

November 2010

63

Written evidence submitted by Angharad Mair, Chair, Tinoplis Wales

Introduction

Tinopolis is one of the main independent media companies in the UK, producing around 2,500 hours of drama, factual programmes, sport and children’s programmes every year for more than 200 broadcasters worldwide. Our headquarters are in Llanelli but we also have production bases in London, Oxford, Glasgow and Cardiff. Our brands include Mentorn, Sunset+Vine, Folio, Fiction Factory, POP1, DEEM, Video Arts and Daybreak Pictures. In Wales a high percentage of our work is for S4C, and we employ around 200 full time staff to work on these programmes. This has a huge economic value to a town and area such as Llanelli, where there are very few well paid jobs.

I welcome this inquiry into S4C by the Welsh Affairs Committee. The value of S4C as a guardian of the Welsh language and its culture is immense as is its economic value throughout Wales, and especially in poorer areas such as Llanelli, Caernarfon and Porth in the Rhondda Valley. In these areas the broadcasting industry – directly because of S4C – has been able to make a huge contribution to the local economy, and has enabled young people to have worthwhile jobs and careers in their own locality.

1. Summary

1.1 There is a need to correct some of the damaging misconceptions and myths about S4C and in particular its viewing figures. The reports in the press and even on various news and political television programmes during the last few months have suggested a channel in decline, a channel that is somehow less relevant now than when it was set up in 1982, and yet all of this negativity is based on the flimsiest of evidence.

1.2 Misinformation about the viewing figures of S4C is due to genuine misunderstanding, lazy journalism and even arguably driven by other agendas. Regrettably, this misinformation seems to have contributed to set the current Government policy for S4C. S4C is still popular and relevant to the people of Wales and I shall be referring to:

1.3 The YouGov poll on S4C October 2010

Research by Broken TV October 2010

The BARB figures

The truth behind the myth of ‘zero viewers’ and ‘viewing figures halved’

The inequitable comparisons with BBC Alba

Personal evidence as Editor of S4Cs daily programmes

64 2. YouGov poll October 2010

2.1 A recent poll by YouGov questioned a Welsh panel on S4C. These are some of its findings:

2.2 ‘How often do you watch S4C?’ All panel - Welsh and non Welsh speakers: 10% said at least once a week 4% said everyday. Welsh speakers: 19% said every day 14% at least three times a week 16% at least once a week

2.3 ‘Would you say that you watch more or less of S4C than you did 5 years ago?’ All panel - Welsh and non Welsh speakers: 8% said more 44% about the same Welsh speakers: 9% said much more14% a little more 47% about the same

2.4 ‘There is no need for a Welsh language television channel’ All panel - Welsh and non Welsh speakers: 55% disagreed Welsh speakers: 84% disagreed

2.5 ‘S4C is important in safeguarding the future of the Welsh language’ All panel - Welsh and non Welsh speakers: 55% agreed Welsh speakers: 79% agreed

3. Research by ‘Broken TV’ S4C compared to other digital channels

3.1 In October Broken TV website conducted an independent survey into viewing figures. In a list of 229 channels in the UK from the most watched to the least watched, S4C was 69th. Below S4C were a range of channels that are considered to be popular such as the History Channel – 78th, National Geographic – 91st, The Biography Channel – 94th, Eurosport – 101st, MTV – 105th, and even ESPN – 77th - which has exclusive live Premier League Football. Sky Arts was 204th on the list with Men & Movies languishing at the bottom at 229.

3.2 Since S4C’s core audience is 1% of the UK population and those able to speak Welsh fluently, this review suggests that S4C does remarkably well.

4. The BARB figures and anomalies

4.1 BARB figures have been the source of much criticism but these has

65 significant anomalies.In Wales the BARB panel is accepted as statistically insufficient as the base panel is designed only to give UK statistics. This panel is therefore boosted by an additional 600 people. In my view, the enhanced BARB panel is likely to provide misleading data. In Wales our audience is derived from a number of pockets where the language and social patterns are wide and varied. There is such a high level of variation in language use across districts and families. This, combined with the panel being dependent on only 309 homes across Wales, is likely to produce results that are statistically inaccurate.

4.2 It is understood that the viewing habits and preferences of the Welsh speaking population are affected greatly in mixed households where one or both adults cannot speak Welsh. It is highly unlikely that S4C will be the channel of choice on a main television where one or more of the adults does not speak Welsh. The BARB figures purport to take into account homes of various degrees of fluency but given the small number of households sampled and the difficulties of identifying accurately household language use, the mathematical algorithms are being applied to already questionable data.

4.3 Whilst the Census gives a level of c 21% who note the ability to speak Welsh, in fact if we look at Welsh households, the proportions are significantly lower. Couple households, where both parents speak Welsh 8.2% Lone parent households where the adult speaks Welsh 12.3% Other households, where both adults speak Welsh 15.4% Overall % of Welsh speaking households 11.9%

4.4 It is therefore probable that the number of Welsh speaking households amongst the panel could be as low as 36, i.e.11.9% of 309, representing 71 panel members.

4.5 There is no greater evidence of the fragility of these viewing figures used by S4C than a comparison with the previous BARB panel. Both of the last two panels have purported to be accurate representations of viewers in Wales but the latest panel showed an immediate drop of up to 50% in S4C viewers. BARB figures are not designed for this purpose and S4C is now paying the price for accepting them in the past just because they found them acceptable. The truth is that we do not have accurate data about the viewing patterns of Welsh-speakers and certainly we do not have data solid enough upon which to base public broadcasting policy.

4.6 We have looked in detail at various anomalies and the report would be available should the Committee wish to see the study in full.

5. The myth of ‘zero’ viewers and ‘viewers halved’

5.1 Possibly the greatest damage to S4C, and how it’s perceived by others, especially those who have limited knowledge of the channel and its programmes – has been the myth that S4C has zero viewers, or indeed that viewing numbers have dropped considerably in the last few years.

5.2 Even the original story in the Western Mail in March this year supplied by an ‘anonymous TV industry insider’ conceded that ‘most of the

66 programmes with a zero viewer rating are children’s programmes’ but the significance of that fact - lost in the sensationalist zero viewers headline –was that as an audience these programmes aren’t measured in viewing terms by BARB.

5.3 This constant untruth about zero figures has also been prevalent on BBC news and political programmes. Even on The Politics Show on November 7th Aled ap Dafydd the presenter who was interviewing Wales’ Deputy First Minister Ieuan Wyn Jones suggested three times that S4C had no viewers. He made a reference to the March article in The Western Mail showing that S4C had ‘zero viewing figures’, he added that ‘1 in 5 S4C programmes attracted zero ratings’ and again maintained that ‘the people of Wales were not watching S4C’.

5.4 This is an example of damaging journalism prevalent especially on the BBC in the last few months, with allegations made without challenge and arguments made without any balance but given added weight by being repeated often by highly respected BBC journalists. This too has not helped a growing mistrust, on an anecdotal level, towards the BBC in Wales.

5.5 Viewing figures ‘halved’ In answer to a question from Newport East MP Jessica Morden in the Commons on October 25, Jeremy Hunt said ‘that over the past five years the weekly reach of S4C had halved’. This is a simplistic and disingenuous view of the reality of the viewing figures. With the completion of digital switchover in Wales in March this year, S4C became an all-Welsh language channel and no longer carried any Channel 4 programmes. They included hugely popular programmes such as Countdown, Big Brother and Friends. One obvious consequence was that S4C’s viewing figures during all hours would reduce. It is inappropriate to compare S4Cs present viewing figures during all hours with those of earlier years when Channel 4 programmes were shown in a very different analogue environment.

6. Inequitable comparisons with BBC Alba

6.1 On ITV 1 Wales’ political Sharp End programme – November 6 – the presenter Keith Raffan posed a question about S4C to Jonathan Edwards MP: ‘Jonathan, BBC Alba for Gaelic speakers in Scotland has fewer speakers of the language, smaller budget and bigger audience. Doesn’t this show just how pathetic S4C has become; it’s become a very bad advertisement for the Welsh language’.

6.2 The truth is that it’s impossible to compare S4C viewing figures with those for BBC Alba. BBC Alba viewing figures are not monitored in the conventional manner but by polling conducted through TNS System Three. The viewing figures are calculated from a market research survey of 1,000 general viewers. There’s no way of knowing just how many people actually watch Alba, and more specifically what they watch because there’s no breakdown of various programmes.

67

6.3 Once again the presenter here, on a highly regarded political show, attacked S4C with a statement that is completely untrue.

7. Personal evidence

7.1 As a presenter on S4C since it began in 1982 and therefore one of the channel’s ‘faces’ I am very aware of the importance of S4C throughout Wales in various communities because people tell me so. This anecdotal evidence was backed up recently when I presented a programme on October 25th asking viewers what they thought of S4C. Many people responded to say how important S4C is to them and their families, ranging from the elderly who see S4C as a hugely important part of their lives – as a ‘friend’ as much as a channel, to parents – who might not speak Welsh - of young children who love Cyw. Should the Committee wish to see them, they are all available.

7.2 As the editor of S4Cs daytime programmes – Wedi 3 broadcast live between 3-4pm Monday to Friday with a highlights show on Sunday and Wedi 7 broadcast live between 7-7.30pm Monday to Friday, I can also testify that we have many e-mails weekly from viewers. These range from requests asking us to publicise a concert or an event in their area, to ideas for items on the programmes. We have a strong relationship with our viewers, and the amount of correspondence doesn’t seem to have any correlation with our supposed viewing figures. Again I could present you with all this varied correspondence as testament to the popularity and relevance of these programmes to the people of Wales.

7.3 Our on-air competitions attract a large number of entries. If we accept the BARB numbers 1 in 4 of the households watching the programmes choose to compete. Experience in television across the UK suggests that television competition entries account for under 1% of viewers. There are too many examples of anomalies such as this for it to be accepted without serious challenge that the published viewer numbers are accurate.

November 2010

68 Written evidence submitted by the Institute of Welsh Affairs

The IWA has been concerned with issues surrounding public service broadcasting for some years. We have given oral evidence to the BBC Trust’s Impartiality Report on network news and current affairs undertaken by Professor Anthony King. We made submissions to the different phases of Ofcom’s second review of public service broadcasting and during that process were commissioned by the Welsh Government to carry out an audit of media in Wales. Our chairman was also a member of the Welsh Government’s broadcasting advisory group, which published its report in November 2008.

We conducted public consultations on the issues in different parts of Wales, in collaboration with Ofcom, and also held a seminar on the future of PSB in Wales, publishing an edited transcript of the proceedings. Last year we also published a book on what we see as a crisis for English language television broadcasting in Wales. This was a selection of essays that dealt both with the general situation and the factors surrounding different programme genres. We have also supported the previous UK Government’s proposals for independently financed news consortia to deliver news for Wales on ITV.

In recent months we have been in correspondence with the Chairman of the BBC, Sir Michael Lyons, on the failure of the BBC Strategy Review to deal with the issue of services in Wales.

Geraint Talfan Davies Chairman

Executive Summary

1. Whether the 24.4% cut in S4C’s budget announced by the DCMS was inevitable or not - given the UK Government’s approach to public expenditure – the cut still represents the largest single reduction in cultural expenditure ever experienced in Wales.

2. The cut to S4C has also to be placed in the context of other cuts to television programming for audiences in Wales - within ITV Wales and BBC Wales (across both languages). According to Ofcom between 2004 and 2009 the spend on English language television services in Wales fell by 44 per cent, with further reductions in 2010.

3. In totality these reductions represent a significant diminution in Wales’s capacity to reflect fully its own society and perspectives back to all members of that society, whatever their preferred language. Every effort must be made to ensure that this level of service attrition does not continue, as currently seems likely. In this context the BBC’s failure to address the services for Wales, Scotland Northern Ireland and its March 2010 Strategy Review should be of particular concern to the committee.

4. The scale of the cut to S4C cannot but affect the available options for shaping its service in the years ahead, as well as the viability of parts of the independent production sector. The range of its programming will be significantly constrained,

69 even if a more creative commissioning process improves the quality of that which remains.

5. The budget reduction should, however, force a thorough and valuable review of the organisation’s strategies and operations – a review that is long overdue. S4C itself set out a possible approach to such a review in its submission to the DCMS. Such a review remains necessary, notwithstanding the proposals of the Secretary of State for a BBC-S4C partnership.

6. S4C will retain a capacity to deliver very substantial public value to viewing audiences and to wider Welsh society. Its effectiveness in optimising that public value has declined and needs to be revived, through a reconsideration of a range of strategies, better programming, more active engagement with stakeholders and improved governance.

7. The potential for collaboration between S4C and the BBC is substantial, regardless of the more fundamental partnership agreed between the Secretary of State and the BBC. Any proposals for collaboration will need to be justified on grounds of cost-effectiveness for both parties. This stipulation will need to be rigorously applied, especially given the asymmetry of the new S4C-BBC partnership.

8. The new partnership governance arrangements proposed by the Secretary of State need substantial reconsideration if they are to fulfil his stated commitment to the continued independence of S4C as well as avoiding the creation of an unnecessarily heavy administrative overhead. The BBC Alba model is not suitable for current circumstances in Wales.

9. Necessary effective negotiation between S4C and the BBC will not be easy to achieve given the S4C Authority’s palpable loss of authority and influence in recent months. This is damaging its relationship with the UK Government, with Welsh Ministers, the production sector and its own staff, at the very moment when it needs to be at its most effective. The issue should be addressed urgently.

10. Accountability for S4C must become a formal responsibility of the National Assembly and the Welsh Assembly Government, although the future budgetary link with the BBC will mean that some locus for the DCMS, which sets the licence fee, will remain both necessary and desirable. This reflects the reality that within the UK devolution of responsibility for broadcasting will always involve a sharing of responsibilities between Cardiff and London. In this instance more detailed work is needed to define a set of relationships between four parties parties - S4C, BBC, WAG, DCMS – and a crucial fifth, the regulator, Ofcom. The DCMS and WAG should establish a working group to carry out this task.

A context for the cuts

11. For decades past Wales has prided itself on the strength of its public service broadcasting institutions. We have witnessed decades of growth in television programming for the Welsh audience, from the inception of BBC Wales in 1964, through the gradual growth of hours of production on ITV and the BBC, the creation in 1982 of the Welsh language service S4C and, following the migration of all Welsh language programmes to S4C, the growth of English language services on the BBC and ITV channels.

70 12. In the last decade, following the introduction of digital bandwidth, S4C, a service that had begun by broadcasting only about 22 hours a week of Welsh language programmes and sharing its channel with English language programmes from Channel 4, developed into a single language service broadcasting for more than 12 hours a day. At the same time BBC Wales experimented with a solid block of programmes for Wales in a nightly BBC2W service.

13. The first signs of a turning of the tide came with the gradual reduction in the volume of programmes for Wales on ITV from its peak of 12 hours a week at the end of the 1990s. ITV pressured the regulators consistently to reduce its regional programming obligations, and this has seen the service for Wales diminish to little more than a news service. At the same time the BBC abandoned its BBC2W experiment, and imposed budgetary cuts that has seen the scale of its service for Wales shrink. Reductions in the BBC Wales spend were already set to continue until 2012-13, and will no doubt intensify now that the latest licence fee settlement will reduce the BBC’s income by another 16 per cent.

14. In its latest Report on the Communications Market in Wales Ofcom reported that between 2004 and 2009 the spend on English language television programming for Wales declined by 44 per cent. It will have declined further in 2010. This is a necessary context against which to view the planned reduction of the S4C grant- in-aid from just under £102m in 2010 to £90m in 2011 and to £83m a year between 2012 and 2014. Gloomy estimates by the Welsh Assembly Government Advisory Group in 2008, that television spend on programmes for Wales would decrease by £25-30m by 2013 compared with its peak in 2006, have actually proved wildly optimistic. The reduction, in less than a decade, will now be nearer £45m. This must exacerbate the concerns expressed by the Welsh Affairs Committee in its report on English language television in 2009.

15. For some years S4C escaped this attrition, buoyed by a funding formula that guaranteed increases in line with the retail price index, and a generous settlement from the BBC that saw the BBC spend on output for S4C increase from just under £22m in 2006-7 to more than £25m in 2008-9 (an increase now to be sharply reversed, a reduction of £5.7m) Arguably, these two bulwarks distanced S4C from the realities facing the rest of the broadcasting industry, and the English language services in Wales in particular.

16. Now S4C is faced with similar challenges of retrenchment. S4C has scope for efficiency savings both within its own organisation and through seeking greater synergies with the BBC in Wales. But no public service broadcaster can lose 24.4 per cent of its grant without it affecting the broadcast output, without some constraint on the range and value of programming, even if a more creative approach to commissioning improves the quality of that which remains.

17. This has cultural and economic consequences. Taken together, these reductions across English and Welsh language services represent a significant diminution in Wales’s capacity to reflect fully its own society and perspectives back to all members of that society, whatever their preferred language. It will now be more difficult to meet the aim set out by the Welsh Assembly Government’s Advisory Group, that “the totality of media provision in Wales must contribute to and fully reflect:

i) a properly informed democracy, able to access high quality reportage, analysis and investigation from a variety of professional sources.

71 ii) a culturally rounded society, for which the media provide adequate room for full and varied expression.

iii) a visibly creative economy in which the media pioneer innovation and are a driver of the creative industries.”

18. On the economic front, these reductions are a blow to a key part of the creative industries sector, a sector has been singled out for development in Wales. Many in the independent production sector have found in S4C a valuable outlet for their talents, sometimes when the paucity of output in English language services has provided no outlet at all. It is the volume and regularity of output on S4C that has allowed some people to build significant production businesses that go beyond a cottage industry.

19. Worryingly, there is no sign that the process of attrition is at an end. Although, S4C has some certainty about its admittedly diminished income, coming eventually in a combination from the licence fee (92 per cent) and the DCMS (8 per cent), the BBC is facing a 16 per cent reduction in its licence which will almost certainly impose further budget reductions on its programme services for Wales on top of those that are already in train. Welsh civil society and politicians will need to develop very urgently a much sharper and more robust challenge to the BBC’s centrally-driven priorities if we are to avoid services for Wales sliding further down an increasingly slippery slope.

Change at S4C

20. No-one should underestimate the extent of the challenge posed for S4C by the onset of digital transmission, and the creation of the multi-channel environment with its concomitant fragmentation of audiences. It has been especially difficult for S4C, because these changes have run side by side with massive changes in the nature of the Welsh-speaking audience, its demographics, self-perceptions of fluency and even the nature of the spoken language itself. That is the rationale behind the joint study being undertaken by S4C, BBC Wales and the Welsh Language Board to arrive at a shared understanding of the audience to Welsh language services – television, radio and online. The study is an essential foundation for any decisions on the future shape of the S4C service, and the balance of linear television and online investment.

21. Even so it is arguable that S4C underestimated the scale of the change in recent years, and the one benefit that may emerge from the harsh reduction in its budget is a much more radical re-evaluation of every part of its service and organization. In its submission to the DCMS the S4C Authority described this as “a process of renewal”, and admitted that “it may not have made the correct judgments on all occasion or taken sufficient care to carry everyone with us.”

22. Such a process is urgently needed, notwithstanding the proposals of the Secretary of State for an S4C-BBC partnership. But some traps must be avoided. S4C has called this process a ‘root and branch examination’, but it is important that the current atmosphere of protest surrounding the channel does not constrain it from examining radical options. There has always been a danger that the weight of emotional capital invested by the some part of the Welsh-speaking community in a solution that was right for the 1980s might deter S4C from taking the right decisions to shape the channel from the next decades. It must resist such pressures.

72 23. It has said that it wishes to engage with key stakeholders “to become an even more effective partner in assisting the Welsh speaking community to achieve a wide range of social, cultural, educational and economic goals”. S4C needs to turn this into reality. Despite the budget cut, S4C will retain a capacity to deliver very substantial public value to viewing audiences and to wider Welsh society. Its effectiveness in optimising that public value has declined and needs to be revived, through a reconsideration of a range of strategies, better programming, more active engagement with stakeholders and improved governance.

24. This will entail a considerable cultural change in the organization that must reach right up the S4C Authority itself. In recent years the organisation lost the ability to reach out, squandering a previously wide coalition of support. It ceased to be self-critical within or to communicate without. Some of these faults may be laid at the door of senior management, but it has also been a failure of governance, and the Authority to date has been singularly unwilling to shoulder any part of the blame. This is now a central problem for S4C itself, since the Authority lacks credibility at the very moment when it most needs it - in negotiation with the BBC, an organisation that never lacks self-confidence even when on the back foot.

25. The S4C Authority’s palpable loss of authority and influence has been a key factor in its current plight. It has damaged the organization’s standing with Ministers in London and Cardiff, and with the production sector. It also weakens the position of its own staff. The issue should be addressed urgently.

S4C and the BBC

26. In the current climate it is only right that we should seek to maximise the synergies between two public service broadcasters in Wales. There are plenty of ways in which savings could be achieved, even if those that require capital investment may take a few years to materialise. But if this is to be achieved it will be essential for both parties to surmount a degree of mutual distrust. The prize could be considerable. Some will see a danger of an asymmetric relationship. That is incontrovertible when one considers S4C up against the wider BBC. Within Wales the two organisations are much nearer in turnover, but in people terms the BBC is still much the bigger organisation simply because it is a programme producer as well as a broadcaster. However one measures these disparities, it will be essential to abvoid a one-way asymmetric relationship.

27. The Secretary of State’s letter to the BBC outlining his view of the partnership shows signs of the speed with which the plan was cobbled. He was right to stress the need to retain S4C’s independence, including its commercial freedom. But this must entail more than simply a freedom to commission programmes crucially important though that is.

28. Implemented in the form set out in the Secretary of State’s letter to the BBC, it would produce a cumbersome governance system, in which S4C’s independence would be only partial. In reaching for models officials alighted on Scotland’s BBC Alba. This is not an appropriate model for Welsh circumstances. BBC Alba is a BBC branded channel. S4C is not. The BBC partner in the Scottish venture is the Gaelic Media Service, which is not a brand in its own right, and does not have the history and track record of S4C. The bulk of Alba’s budget comes from the Scottish Parliament. In future the bulk of S4C’s money will come from the licence fee. The management arrangements for BBC Alba lack clarity, and few pretend that the relationship between the BBC and the GMS is one of equals.

73 29. Among the top line issues that need to be resolved in the next weeks we would list the following:

i) The lack of financial commitment to S4C beyond 2014-15, despite the fact that the licence fee extends to 2016-17, albeit that the level for the last two years is not yet fixed.

ii) Who decides on the S4C budget beyond 2014-15, or beyond 2016-17, the BBC or Government - and if it is government, what role, if any will the Assembly Government have?

iii) How to simplify the draft proposals in the Secretary of State letter. The proposals imply several tiers of governance: first, a joint management board with a majority of independent directors; second, a combined board of the S4C Authority and BBC Trust to oversee delivery of a service licence or operating agreement; and third, but not mentioned in the letter, there would be the S4C Authority and BBC Trust as independent entities. This is a wedding cake of governance that needs flattening. One possible way of simplifying this would be to revert to the original practice of BBC representation on the S4C Authority.

iv) The routeing of the money. There will be no independence for S4C if the money goes anywhere near central BBC management. In order to have funding stability for S4C the money will have to be passed direct from the BBC Trust to the governing body of the channel.

v) The form of the service licence. In order to distinguish the S4C service from the BBC’s services, it might be best to avoid the normal form of service licence and opt for a looser operating agreement.

vi) Who appoints the Chair of the key governing body? In our view this must be someone independent of the BBC Trust?

vii) What level of oversight is accorded to the BBC Trust? The letter of 10 November 2010 from the Chairman of the BBC Trust to the Chairman of S4C, states that the Trust as “the guardian of the licence fee…will need to have oversight of how this money is spent”. This should be defined in a broad way that does not impinge of the managerial autonomy of the channel.

30. This is far from being an exhaustive list of issues that need to be resolved. There will be some pressure to reach an answer quickly, but it is more important to get it right. As we have noted above, the circumstances are less than ideal for S4C, currently under an interim Chief Executive and an unhappy governing Authority.

Devolution and broadcasting

31. It is surprising that it has taken so long for the issue of devolution for some element of broadcasting in Wales to come to the fore. That it has not done so before now is the result of fear – fear of having to pick up the bill but, more than that, fear of having to decide on the funding of S4C against competing priorities. That has not only been a less than mature approach, it has also been counter- productive. It has shielded S4C from proper scrutiny and it may be one reason why Wales not been listened to when it comes to other broadcasting issues.

74 32. The deficiencies of the broadcasting infrastructure in Wales – notwithstanding the existence of S4C – have been known for a long time: the collapse in spend on English language services, the weakness of commercial radio and the lack of Welsh involvement in allocating radio licences, the fact that BBC Radio Wales does not have full FM coverage, the fact that Radio Wales and Radio Cymru and Radio Cymru do not have full DAB coverage.

33. Equally obvious, has been our failure to influence decisions. Devolved administrations have so far failed dismally to achieve their objectives in the broadcast field, while at the centre of UK policy-making business and technological considerations have easily trumped cultural considerations.

34. In his report on the creative industries in Wales, Ian Hargreaves, commented on the fact that the level of public debate about S4C within Wales was not in line with its importance both culturally and economically, and asked whether this state of affairs was ‘a consequence of the fact that S4C is funded and largely regulated from London’. In his own words: “The UK authorities involved (Ofcom and DCMS) lack the instinct and self-confidence to animate this uniquely Welsh debate and the Assembly Government lacks the formal mandate.” The debate has now been animated by the DCMS purely on financial grounds.

35. Without a willingness to contemplate the devolution of responsibility for some elements of broadcasting, such as S4C, we will leave the whole of media and communications policy for Scotland, Wales and Northern Ireland to be decided at the margins of a British debate - dominated by centralised institutions and centralised considerations - that will exhibit neither the will, nor the knowledge nor the empathy to generate solutions adequate to our needs and potential. We have to seek to change the nature of those institutions and to change our own approach.

36. We need urgently to address the issue of responsibility for S4C. Accountability for S4C must become a formal responsibility of the National Assembly and the Welsh Assembly Government, although the future budgetary link with the BBC will mean that some locus for the DCMS, which sets the licence fee, will remain both necessary and desirable. This reflects the reality that devolution of responsibility for broadcasting will always involve a sharing of responsibilities between Cardiff and London, not to mention Brussels. In this instance more detailed work is needed to define a set of relationships between the four key parties - S4C, BBC, WAG, DCMS – and an important fifth party, the regulator Ofcom. The DCMS and WAG should establish a working group to carry out this task.

37. While this should be the prime task, we must also begin to look beyond the issue of S4C at possible new governance structures within Wales as well as for organisations such as the BBC, that better reflect the new constitutional shape of Britain as well as changing technologies and consumer behaviour.

November 2010

75 Written evidence submitted by NUJ Parliamentary Group

The NUJ Parliamentary Group has been established since 2005 and consists of 32 MP’s and Peers on a cross-party basis, and is one of the most respected trade union groups in Parliament with regular meetings with Government Ministers.

The Parliamentary Group is seriously concerned by the government’s plans to cut funding to S4C which we believe could put in jeopardy the future of the channel or at the very least lead to a greatly reduced service. The Group opposes the cuts to the funding of S4C as we believe S4C is a major element in Welsh broadcasting and cultural life.

We understand that the formal scrapping of the funding mechanism for S4C has already led to the loss of 25% of jobs and hundreds of jobs are likely to be lost in the production sector in Wales if significant cuts are imposed on S4C. In addition to this we believe that the current plans have the potential to lead to greater alienation, particularly of more rural communities, deepening an already worrying democratic deficit.

The Group is of the opinion that if public service broadcasting is to remain relevant, it must closely address the needs of the communities, regions and nations it serves, providing an autonomous cultural voice. As such the NUJ Parliamentary Group is opposed to the cuts to S4C.

We would be grateful if you would agree to meet with a delegation of MPs and trade union representatives from the NUJ to discuss the issues involved. Please liaise with our parliamentary co-ordinator, Simeon Andrews (details below) who will make whatever arrangements are necessary for such a meeting.

November 2010

76 Written evidence submitted by Plaid Cymru

1. Summary of response:

a. The question of S4C fulfilling its remit is a wider one. Plaid Cymru believes that DCMS has not shown the ability or willingness to effectively scrutinize the channel’s obligations or develop its remit or potential in line with developments in the field of Broadcasting and the Welsh Government’s Economic Renewal Programme. b. The cultural and economic benefit of the £100m per annum has a positive impact on the Welsh economy. It is arguably the base from which the Welsh creative industry grows and competes globally. The cuts to that money jeopardize not only the jobs in the industry but also the competitiveness and excellence of those companies. c. The funding of S4C is still based on an 1980s approach to broadcasting with no consideration of the wider demands of a broadcaster such as developing digital, on-line and HD content. d. Plaid Cymru is very concerned with the proposals regarding bringing S4C under the BBC. Although there is scope for cooperation, there is little sign that the BBC has an interest or willingness to develop quality or quantity or Welsh content. Plaid Cymru is very concerned that the merger will compromise the editorial independence of S4C and jeopardize the already fragile plurality available to the people of Wales. e. We believe that it is time to devolve powers over the field of Broadcasting to the Welsh Government. We have no faith that DCMS has the interests of the people of Wales or stakeholders at heart in relation to S4C and believe that S4C, its remit and budget should be devolved as soon as possible in order to address the crisis facing the channel.

2. This paper sets out Plaid Cymru’s response to request for submissions and observations by the Welsh Affairs Select Committee regarding its inquiry looking at the Welsh-language broadcaster S4C. The paper will present Plaid Cymru’s views on the points referred to in the call for submissions as well as making several other points. It is important to note however that Plaid Cymru, together with the leaders of all other major parties in the National Assembly, have written a joint letter calling for an independent review of S4C. We believe that many of the points raised and explored by the Welsh Affairs Select Committee in this inquiry could be explored more thoroughly by such a comprehensive review.

3. Before addressing the points raised by the Committee’s inquiry, it is important so set S4C in its context and to make a general statement of its value to the people of Wales.

A popular movement in Wales campaigned for years for the establishment of S4C until Thatcher’s Government finally delivered its manifesto pledge to set up an independent Welsh-medium television channel. It has, since its

77 creation, been the vehicle through which high-quality broadcasting has been commissioned on behalf of and delivered to Welsh speaking audiences. This has been the settled will of the people of Wales regardless of the language they speak. It is of incalculable importance to the further strengthening of the Welsh language as well as to the successes of Wales’ creative industrial sector, and it has an important role to play in ensuring much-needed plurality within Wales’ media.

4. S4C belongs to everyone in Wales whether they speak the Welsh language or not. Its programmes – the sport, the entertainment and its provision for children – play an important role in our shared aspiration to create a truly bilingual Wales where people can hear, listen and speak the language. If we are serious about protecting Welsh as a living language in Wales, then it is our duty – our responsibility – to safeguard an independent, properly funded S4C for future generations.

5. Plaid Cymru does not believe that S4C should be included in the Public Bodies Bill currently going through Parliament.

6. The Public Bodies Bill places too much power and influence at the hands of a single Minister in Westminster. His or her political whim should not decide the fate of an entire channel, essential to the survival and development of a language.

7. S4C is a Public Service Broadcaster and should not be treated in the same manner as a Public Body. S4C should be subject to Parliamentary debate and proper consultation when changes are proposed.

8. The extent to which S4C is fulfilling its remit: We believe this to be an interesting matter that raises wider concerns over the running and management of S4C. The responsibility for setting and reviewing S4C’s remit has been with the Department for Culture Media and Sport (DCMS) since the channel’s genesis. Many have claimed recently that the channel does not fulfil this remit, however any failure of S4C to fulfil its remit must in part reflect the failure of DCMS to scrutinize and adapt the remit effectively over time. It is disappointing that DCMS has not undertaken a comprehensive review of S4C since 2002/3, during which time there have been many developments in the broadcasting world; not least the rapid and massive expanse of the smaller, digital channels that now compete against the traditional channels (BBC1, BBC2, ITV and Channel 4) and indeed claim a 41% annual share of television viewers. Surely, while the BBC is reviewed comprehensively and regularly in order to ensure that the license fee offers value for money, S4C should be subject to similar levels of regular constructive scrutiny.

9. DCMS has however shown a lack of interest in, and scrutiny of S4C and has failed to prove that it has any interest in ensuring that the channel continues to develop in line with its remit and wider developments in the field. Neither has DCMS shown any willingness to explore or develop the wider cultural or economic benefits of S4C.

78

10. Conversely, the Welsh Assembly Government (WAG) has great interest in developing S4C due to its centrality to the creative industry. The WAG’s Economic Renewal Programme (ERP) has identified the creative industries as a key field which it hopes to develop as part of a wider economic development programme. For WAG, regular review of the remit and potential of S4C is crucial in developing the economic benefit of S4C. If the WAG had the capability to review and set the remit of S4C, it could ask S4C to apply performance conditions requiring a certain percentage of programmes to be sold in translation outside Wales or require S4C to foster international collaboration. This could be done by restricting the extent to which S4C acts as sole commissioner and encouraging international co-commissioning. There are exciting opportunities to develop the role of S4C as economic catalyst but with debate polarized and stifled and constructive review of the institution unlikely while the remit remains dormant at DCMS, Wales is not getting the most from S4C. The devolution of S4C’s budget, remit and powers to review the institution and appoint its Authority could go a long way to getting much more from S4C.

(The cultural and economic benefit to Wales of the investment of over £100m per annum of public subsidy for S4C is appropriate and sustainable over the long term.

What impact recent and potential future spending cuts will have on S4C and what level of public subsidy for S4C is appropriate and substantial over the longer term?)

11. The potential impact of the spending cuts is of great concern for Plaid Cymru. The cuts not only put the future of Welsh-language broadcasting, the quality of programming and the future of independent creative industries under threat, but are also a direct threat to the Welsh Government’s Economic Renewal Strategy.

12. “Without S4C, Wales may well not have any independent television production companies at all. Almost all the Welsh indies have their roots in making programmes for S4C and they are spread across Wales in a way that has helped to broaden the geographic base of the Welsh creative industries sector. The decision, following the 2003 Communications Act, to allow independent production houses to retain intellectual property rights in their own productions, was designed to encourage indies to develop the kind of muscle that would enable them to trade beyond Wales into the UK television networks and beyond. In recent years, S4C has sought efficiencies of scale by commissioning a smaller number of indies, a move which has also had the desirable effect of encouraging the emergence of larger, stronger companies able to compete on a wider front, as well as to make its own procurement practices more efficient. S4C, through its 2004 Creative Excellence programme, has played a strong leadership role in the development of quality training and skills

79 provision for the television sector in Wales, as well as collaborating with the IP Fund on joint investments in films and television programmes.”1

13. An assessment of the full economic impact of S4C on the Welsh Economy commissioned by S4C from the Welsh Economy Research Unit of Cardiff University Business School in 2007 estimated that it was responsible for supporting 2,254 jobs (full-time equivalents) through spending in that year of £96.7m, not counting the jobs impact within BBC Wales resulting from the creation of 524 hours of Welsh-language programming at a value of £20.6m. Most of the jobs S4C sustains are in the independent production sector and like most jobs in the public service broadcasting industry, they are characterised by relatively high levels of skill and pay.

14. The numbers reflect much more than the relatively small numbers working for the independent television companies themselves and take into account the employment down the supply chain.

15.

2

16. Translating employment effect into value added effect shows that over the five-year period, S4C activity has supported well over £77 million in the Welsh economy per annum.

17. “The independent production sector represents S4C’s largest expenditure category, accounting for over 80 percent of S4C’s total

1 Hargreaves I.The Heart of Digital Wales Review on behalf of WAG (2010) p.32

2 DTZ/Welsh Economy Research Unit ‘Economic Impact of S4C 2002-2006’, July 2007

80 spending in Wales in any one year. Therefore, there is a clear need to understand that S4C’s economic impact extends beyond its direct employment which is relatively small. For example, S4C pays an independent production company to produce an agreed amount of hours of original programming. In order to produce that output the company will then purchase goods and services (e.g. camera operators, lighting equipment etc). All of these factors need to be considered when estimating the economic impact of S4C and a full understanding of the supply chain linkages is needed.” 3

18. S4C is clearly crucial to the broadcasting companies and the creative industry in Wales, not only as a commissioner that supplies them with the stable base from which they can expand and develop but as a developer of skills. The remit, management and budget of S4C are therefore vital components of the Welsh creative industries’ fortunes. It is essential therefore that the budget is adequate to ensure the base income to the Welsh independent sector. A management and authority that seeks to expand the skill-base and provide assistance in raising standards is of great value to the wider industry. Finally, it is crucial that the remit ensures not only that the money is passed on to the independent sector but that best use of it is made. The cutting of funding will clearly impact upon every independent Welsh TV company with their roots in Welsh programming, not only when the cut is passed on to the commissioning of programmes but a cut in the S4C’s development fund, aimed at developing and improving structural competitiveness of the industries – this is arguably a more serious threat than the loss of a few programmes as this impedes the ability of the independent companies to develop and compete in a global market. 19. S4C’s cultural value is enormous. If the Welsh language is to thrive and prosper, it is vital that Welsh can be seen and heard in all areas of Welsh life, especially on television. S4C is the only means of receiving Welsh television programming.

20. S4C is of particular importance to children in this regard and its support for and work with the Urdd provides Welsh children with an unique experience. The Urdd plays a vital role in the cultural, social and educational development of children in Wales as well as the Welsh language and much of its recent success is owed to the support and publicity it receives from S4C. The loss of any of this support will deprive children in Wales of the incredible experience the Urdd gives them.

21. Whether S4C is maximising the use of its financial and other resources to achieve value for money, to optimise the quality of its output, and to reach as wide an audience as possible. It must be noted that the funding arrangement of S4C dates back to analogue days when there were but four channels on UK television and broadcasting was restricted to analogue

3 DTZ/Welsh Economy Research Unit ‘Economic Impact of S4C 2002-2006’, July 2007

81 television. S4C has, using the funding based on an 1980s model of television broadcaster, been able to develop a digital channel, a development fund to improve the skills of the industry, web-based content and broadcasting as well as its high-definition capabilities. We see this as an impressive achievement on a budget aimed solely at delivering programming for television.

22. The quality of programming is largely a subjective issue, however recent leaks and reports of zero viewing figures have distorted the debate. Again, it is unfortunate that such debate takes place in a largely disinterested and ill- informed London-based media. Such a debate would be far more fruitful within democratic institutions with an interest in improving the channel’s service rather than running it down. A National Assembly committee for example is in an ideal position to bring the opinions of stakeholders, S4C itself and viewers together in order to map a constructive path for the channel; DCMS, whose responsibility this is, has failed miserably to do so in recent years.

23. Plaid Cymru believes that it is the responsibility of DCMS to develop the funding formula in line with developments in the industry as well as the founding principles of S4C. DCMS, through inaction and lack of interest has created a situation where a 1980s budget must stretch to cover the demands of 21st Century, multi-platform broadcasting.

24. The potential for further collaboration between S4C, the BBC and independent broadcasters in Wales in order to reduce duplication and to achieve economies of scale. We agree that there may be potential for increased efficiency and effectiveness in delivering Welsh-language media services through improved partnership between the BBC and S4C. This partnership has been a feature of S4C’s many successes in the last 30 years. Cooperation over the possible ‘Media Village’ project in Cardiff for example could prove fruitful for both broadcasters as well as the wider creative industry in Wales.

25. We believe however that the influence of Wales (indeed Scotland and NI as well), upon the strategic decisions in the field of Public Service broadcasting has declined in the devolution years. This is reflected in the failure to devolve more of the BBC's programming outside of England. BBC’s commissioning is still woefully un-balanced with only 413 hours (2.5%) out of 16,585 hours of its programming being produced outside of England – the vast majority is produced within the M25. Regional broadcasting has declined in quantity and arguably quality, certainly in its diversity with the vast majority now news related. Also, the 2006 BBC Charter diminished the influence of the nations further.

26. Regional Broadcasting decline between 2005 and 2009

BBC Wales (at a time when the license fee increased)

Regional Output fell from 824 hours to 696 News & current affairs from 500 to 420 (16% fall)

82 Other programming from 324 to 276

27. Looking at these trends, as well as the recent cut in BBC funding of Welsh- language programming, it is hard to see any immediate benefits to the Government’s plans for bringing S4C under the BBC. The BBC has not shown much commitment to improving and diversifying its Wales-orientated output in any language in recent years.

28. With the funding coming from the BBC’s budget there will be pressure to bring much of the production and editing in-house, thus further jeopardising the futures of the independent companies.

29. Crucially, the editorial independence of S4C will be compromised. We see the current government plans as a direct threat to the editorial independence of S4C and will damage the already fragile measure of plurality that is on offer to Welsh television viewers.

30. Whether the finance and accountability of S4C, currently the responsibility of the Department of Culture Media and Sport, should remain in Whitehall or become a devolved matter.

Plaid Cymru strongly believes that it is time to devolve the responsibility, powers over the remit, and budget of S4C to the Welsh Assembly Government.

31. We believe that there is a lack of interest or willingness to develop the role of the channel by DCMS. There is a lack of understanding of the channel’s cultural and economic importance to Wales within DCMS. These have been exemplified by the unwillingness to constructively develop the role of S4C and the shockingly flippant attitude shown towards laws intended to protect the channel as well as the arbitrary nature of these very deep cuts.

32. We believe also that the ‘behind closed doors’ decision, with no consultation, to move S4C under the BBC shows a disturbing lack of transparency, a disregard to the democratic process as well as a complete lack of respect by the Minister and his department toward Wales and its democratically-elected Government.

33. This recent ‘track record’ shows that the DCMS is incapable of responsibly overseeing S4C.

34. The National Assembly for Wales on the other hand has shown an interest in developing the role of S4C as well as addressing the wider concerns within the field of Broadcasting in Wales. It has commissioned major reviews into the creative industry and the role of public service broadcasting as well as holding cross-party committees on broadcasting, consulting widely with stakeholders. It is the settled opinion of all parties in the National Assembly for Wales that there is much work to be done in the field of Welsh broadcasting to ensure plurality, quality, competition and excellence in the field in Wales. DCMS has

83 however shown no such commitment or willingness, however the key powers still remain at Westminster.

35. Plaid Cymru would also argue that much more than the powers, budget and remit of S4C should be devolved. We believe that it is time that the whole field of Broadcasting in Wales is fully devolved to the democratically elected Government of Wales.

36. We believe that the National Assembly for Wales should have the power to;

a. Set the budget of S4C. We suggest that this should be set in an Assembly Measure similar to Westminster before the Minister began changing law without consultation or democratic legitimacy. b. Set the remit of S4C. c. Secure a BBC trust for Wales and make appointments to it as well as the S4C Authority and Ofcom boards. d. Establish formal procedures to ensure that the opinion of the NAW can be expressed effectively in the field of Broadcasting e. Allocate FM frequencies in Wales and ensure that Welsh DAB stations are available to all f. Influence the way in which the ITV license is determined in Wales. Currently, as an ad-on to the England license, it is of little value to ITV that has resulted in a deterioration in quality and quantity of public service programming over recent years. Allocating a license for Wales alone could attract companies with a vested interest in improving the quality of programming in Wales.

37. Plaid Cymru would like to see the field of Broadcasting completely devolved to Wales at once. Devolving S4C alone will place all the focus on the Welsh language broadcaster and take attention away from the responsibilities and potential of the BBC and ITV license. There is a great risk of over-scrutinizing S4C, and neglecting English-language broadcasting in Wales which is in serious decline in both quality and quantity. This would be a missed opportunity to address the difficulties facing the Broadcasting industry with stakeholders, reflecting the will of the people of Wales and in line with the wider economic aspirations of the ERP

38. Plaid Cymru however believes that the situation facing S4C is extraordinary and the channel is faced with a crisis. We do not believe that the DCMS has either the will or understanding to remedy the crisis they have created for the channel. We strongly believe that the NAW is far more suitably placed to address this crisis in an open, democratic and effective way that has the long term interests of the people of Wales, stakeholders and Welsh economy at heart.

15 November 2010

84 Written evidence submitted by the Welsh Language Society

1. Introduction

1.1 S4C was established as a result of a long and popular campaign, and through political consensus. The fight to establish the Channel was long and costly: Cymdeithas yr Iaith and its supporters made the case in the first instance for a separate channel for Welsh language programmes, and then created a general consensus in Wales in support of its establishment. A number of our members were jailed for varying lengths of time, from a few days to 2 or 3 years; it was a costly campaign for many. The funding formula for S4C was placed in statute with that historical context in mind; it was done in order to ensure as far as possible that the way in which it is funded would not become subject to political interference.

1.2 Cymdeithas yr Iaith has published a booklet, S4C: Pwy dalodd amdani? ["Who paid for S4C?"] that traces the history of the popular campaign to establish the Channel in the first place. It can be read online: http://cymdeithas.org/pdf/s4c-pwy-dalodd-amdani.pdf

1.3 S4C is a unique investment in the Welsh language, and is a cornerstone of Welsh language culture, playing a crucial role in the promotion of the Welsh language. According to the United Nations, the Welsh language continues to be a vulnerable language (UNESCO Atlas of the World's Languages in Danger 2009). Special steps are therefore needed to protect it for the future. The United Kingdom has also signed up to the European Charter for Regional or Minority Languages which notes under Article 11 that media provision should be made available in regional languages and that the independence and autonomy of the media should be respected.

1.4 There are now thousands of channels on our screens, and we need the security of seeing and hearing the Welsh language on S4C. One of the main reasons for the campaign in the 1970s was to ensure that the Welsh language extended to new media and so that it was not seen as an old-fashioned language. S4C has played a large part in the change of mindset that has been seen in Wales, and has given people a new confidence in the future of the Welsh language. Welsh-medium education is on the increase in Wales, and this needs the support of S4C with its programming for children from day one, starting with Cyw for the younger children and most recently replacing

85 Planed Plant for older children with an enhanced service, Stwnsh.

1.5 We are concerned that the reduction in S4C's budget will affect programme quality. A fair amount of funding is required in order to maintain and develop the variety of programming that is available: drama such as Pen Talar and Teulu, live events such as the Eisteddfod and the Royal Welsh Show, and sport. Without adequate funding, the channel cannot compete with other mainstream channels in terms of quality and creativity. In cutting S4C's funding, the Government is not only affecting the service; but also striking a blow against the Welsh language, that will be in a more fragile state without a properly funded television service.

1.6 In a number of ways, the current UK Government's plans undermine the cross-party efforts made to give the Welsh language its proper place in the media. In the media in general, the Welsh language faces challenges, with the dramatic deterioration in Welsh language provision on commercial radio stations such as Heart FM and Radio Ceredigion.

1.7 We consider the cuts being made to S4C as a discrimination against a minority language group. We condemn the cuts in general, but the London Government must understand that the cuts to S4C will have a direct effect on the Welsh language. S4C is a rare example of an economic investment made through the Welsh language. This has promoted the Welsh language in the areas where S4C invested. We believe the cuts will affect the Welsh language and have a knock-on damaging effect in Welsh language communities.

1.8 The other plans of the UK Government will affect the Welsh language, since the survival of the language depends on the communities where the language is spoken; the policy of encouraging people to move away from their communities to look for work will increase the migration of young people out of their communities, and will mean the Welsh language in those areas will suffer. It is vitally important therefore to protect this Welsh- language economic investment.

1.9 The presence of the Welsh language in the media is of vital importance to everyone in Wales. Cymdeithas yr Iaith believes that everyone in Wales, whether they speak Welsh or not, should have rights to the language. Not only rights to use it and to learn it, but also to hear it and see it. The presence of the Welsh language on

86 television, radio, the web and every other possible medium, is therefore fundamental to our vision as an organisation. This vision is not limited to Cymdeithas yr Iaith. One of the main aims of the Welsh Language Commissioner, being established by the Government of Wales, will include the principle that people living in Wales should be able to live their lives through the medium of Welsh if they wish to do so. This aim reflects the ambition in Iaith Pawb [A National Action Plan for a Bilingual Wales, 2003] that everyone throughout Wales should be able to use the Welsh language in their social lives, in their leisure time and in their business activities.

2. No to cuts

2.1 Cymdeithas yr Iaith is against the Government cuts in general: it is unjust that minorities, the poor, and people on the edge of society should pay for the mistakes of the financial sector and the governments that assisted them. Although it wass a lack of regulation of the free market that caused the recession, the UK Government is, contrary to common sense, responding to the crisis by cutting back on protection for the weakest in society in the face of capitalist forces.

2.2 As the Culture Minister of the Catalan Government said whilst giving evidence to the National Assembly for Wales recently:

“…linguistic liberalism, like economic liberalism, is not neutral…when two languages coexist in one land, protective public action is required with respect to the weaker one. Otherwise, it will be fated, first of all, to marginalisation and, in the long term, to extinction.”

2.2. One of the reasons for the establishment of S4C in the first places was market failure. Before our only Welsh language channel came into being, Welsh language programming had to compete with English language programming for funding and for airtime. One of the many problems with the UK Government-BBC’s join plan is that it will recreate that old competition between Welsh language programming and English language programming. This will create a tension between the two languages, going against the message of bilingualism on an equal footing which has developed over recent years. It would, therefore, be a big step backwards.

2.3 The Government's plan to cut the Channel's budget by 24.4%, or 42.5% in real terms (source: BECTU) is a cut that could, according to S4C, endanger the existence of

87 the channel. In addition to those cuts, however, the Government intends to give the BBC partial responsibility for funding and managing the Channel.

2.4 Some argue that S4C's independence could be guaranteed within a jointly managed system within the BBC. We disagree. It is clear to us that the UK Government-BBC plan has several weaknesses, not least due to the position of English-medium broadcasting in Wales. For years, the Welsh output of the BBC has been cut, with fewer programmes reflecting life in Wales on television. If we cannot depend on the BBC to protect Wales-related programmes in English, why would they protect Welsh language programmes? Broadcasting in Wales is already in crisis; the proposed plans will kill any hope of plurality in the media in Wales.

2.5 The channel was established after the 1979 election, a commitment having been made in the manifestos of all four main parties in Wales. There was no mention in the manifesto of any party, before the 2010 election, of any plans to drastically cut the budget of the channel, to establish joint management under the BBC Trust, or an act of parliament that would allow the Secretary of State to abolish the Channel completely.

3. A New S4C

3.1 We recognise that there are weaknesses in the current model and management of S4C. We are therefore calling for a new S4C to be established, a devolved, multi-media broadcaster/publisher for Wales.

3.2 We are calling for a new S4C based on the following principles:

¾ FINANCIAL SECURITY - A television channel cannot be run without having the certainty of adequate funding. The current agreement gives S4C certainty about its funding up until 2015. We believe that a funding formula is needed for S4C that will give it long term stability to do its work confidently.

¾ INDEPENDENCE - The independence of Welsh language public media services is essential in order to ensure democratic and media plurality. The S4C Authority and S4C must be independent of the BBC and others, editorially, operationally and creatively.

¾ DEVOLUTION - It is paramount, in order to ensure that the expertise and ability to make the right

88 decisions about the future of broadcasting is in Wales, that media functions are devolved to the National Assembly for Wales.

¾ A FEDERAL BBC - It is essential that devolution also happens within the BBC. A federalised BBC would be the best choice, in order to ensure fairness and balance.

¾ QUALITY - Welsh language media of the same quality as English language media is essential to the continued existence of the Welsh language.

¾ DIGITAL - The creation of a varied media ecosystem in Welsh is essential to the future of the Welsh language. A substantial investment in digital media is crucial in order to ensure that the Welsh language is used in all spheres.

¾ COLLABORATION - Collaboration between media institutions and beyond is important in order to enable our media to be as strong as possible. However, this should be collaboration that does not endanger the independence of the Welsh language provider.

¾ DEVOLUTION OF THE CHANNEL THROUGHOUT WALES - We believe that S4C's current headquarters in Llanisien in Cardiff is unsuitable for the media in Wales and that different parts of the process of running a Welsh language public media service should be devolved to different areas.

3.3 We are of the view that a thorough review of the commissioning structure, the strategy and role of the S4C Authority is needed, including alternative models for the S4C Authority and the administration of expenditure on Welsh language media. We recognise that there has been a lack of accountability between S4C and its audience during the last few years, but this will not be rectified through a partnership with the BBC.

3.4 We are eager to see S4C extending its remit to include digital media, so that is becomes a media publisher rather than being limited to being a television channel only. We believe that the Welsh language needs to be promoted as a medium in these areas, as noted in the last report by the Council of Europe's Committee of Experts on the European Charter for Regional or Minority Languages when it considered Welsh language media provision. Consideration should be given to changing the

89 relationship of the Authority / Channel to one that could give the S4C Authority the flexibility to extend its remit to include digital media.

3.5 A significant percentage of the S4C Authority's funding formula should be earmarked for investment in digital media in order to build the audience of the future, ensuring that linear television remains strong. A director of digital content should be appointed to develop this.

3.6 We believe that consideration should be given to sharing S4C's responsibilities between three bases across Wales, administering departments in various locations rather than spreading jobs too thinly. It would be useful if the central administration of S4C was closer to the independent companies that are commissioned to create programmes for them.

The UK Government's latest plans

4. The Public Bodies Bill

4.1 We agree with a number of comments made recently in the House of Lords regarding the Public Bodies Bill, and we agree with the amendments put forward by Roger Roberts, that would exclude S4C from the Measure.

4.2 The Measure attempts to treat S4C in the same way as any another Government department. Treating Welsh language broadcasting in that way is a major legal, financial and historical error.

4.3 It is inappropriate to attempt to push plans to reform S4C through the Public Bodies Bill; it ignores the way the channel was established.

4.4. Firstly, a Secretary of State should not be able to decide, via secondary legislation, on the structure, the budget and the whole existence of a channel established through statute for extremely important social and cultural reasons.

4.5 We agree with the conclusions of the House of Lords Constitutional Committee, that strongly criticised the concept of abolishing organisations through secondary legislation.

4.6 Secondly, we believe the idea that Government on its own can decide the budget of a public television channel on an annual basis sets a very dangerous precedent. Such

90 a decision would raise serious questions about the broadcaster's political independence.

4.7 Thirdly, we fail to understand why the Government has decided to amend the budget of the channel, create a partnership between S4C and the BBC, and at the same time, include the channel in Schedule 7 of the Public Bodies Bill. This would allow the Secretary of State to charge a fee for S4C's services, privatise the service, or even abolish it completely.

4.8 Would it not be better to consider the future and independence of S4C in the next broadcasting act within the next few years? Since so many matters need to be considered, such as the independence of the channel as well as wider considerations such as the effect on the Welsh language and plurality in the media in Wales, it would be wiser to consider the future of S4C within a timetable that allows people in Wales to give input into the future of the channel, rather than its future being steered by rash decisions by Government Ministers and BBC Chiefs.

5. Joint Management by the BBC

5.1 The decision to move S4C's budget and part of its management to the BBC also undermines the Channel's independence, and is ultimately a further threat to the funding levels for Welsh language programming and content. We are concerned that we would return to the position before the establishment of S4C, where Welsh language programmes would have to compete for funding with English language programming. We are also concerned that S4C would not have the independence to make the best decisions for the Welsh language channel. There would also be clashes of interest, especially where S4C is producing Welsh language content that could be similar to English language content. S4C is competing with the BBC for audiences and talent in some cases - who would have the last word in such cases if S4C did not have the independence to make decisions without the approval of the BBC? It would be wholly unacceptable for S4C's executive board to be a combination of the S4C Authority and the BBC. The BBC would not on any account accept Government representatives on the BBC Trust, so it is unfair to ask S4C to be controlled in such a way by the BBC.

5.2 The lack of independence guaranteed by the Government's plans is clear from Michael Lyons' letter to the S4C Authority. The letter says "The BBC Trust is the

91 guardian of the licence fee and as a result will need to have oversight of how this money is being spent". In other words, the BBC at a British level would decide how much money would be spent, how it would be spent, and who would spend money on Welsh language programming.

5.3 We agree with the comments made by Elystan Morgan (9 November 2010 : Column 140-1, Hansard):

“A legislative framework was set up that guaranteed funds for [S4C] that would be adequate for it to carry out its commission. Indeed, its independence was guaranteed by statute. The viability of that channel is now challenged and jeopardised by the fact that that financial guarantee disappears. The independence is jeopardised by the fact that it is contemplated that it should be merged with the BBC as a very junior, meagre partner. Its independence cannot possibly be real in those circumstances; indeed, the major decisions may well be taken by the broadcasting trust in London. I do not believe that I overstate for a moment the anxieties that are felt in Wales concerning that loss of independence. ... The continued viability and independence of S4C is crucial to the very existence of the Welsh language. The Welsh language is spoken by some 580,000 persons, including three or four of us in this House. It is one of the oldest living languages in Europe-it stems back to its Indo-European origins about 1,500 years ago. It was a living language 1,000 years ago, when French was only a patois of Latin. In those circumstances, I ask the House to consider that it is part of its trust in relation to the Welsh language to regard the situation of S4C as being wholly unique. Parliament has the sovereignty to amend all the legislative structures but, in so doing, it would be reneging on the solemn compact that was made between a very honourable gentleman and the people of Wales 28 years ago.”

5.4 To ensure the best possible future, and the fairest future, for the Welsh language channel, we call upon the Government to ensure the following:

- Complete management independence and editorial independence for S4C without any interference by the BBC or the Government;

- An independent funding formula for the Welsh language Channel, based on inflation.

92 6. Closing remarks

6.1 The Welsh language channel is treasured by people in Wales, because it is a medium that brings the Welsh language alive to those who speak Welsh, to those who do not, to Welsh learners, to babies, children, young people and older people in all parts of Wales. The Welsh language belongs to everyone in Wales, whether they speak the language or not. S4C's purpose is to provide Welsh language programming. That is why it was established after years of protest and campaigning, the only channel to be created as a result of such a mass campaign.

6.2 In Wales, we live our lives through the medium of two languages. A television service in Welsh and in English is needed to reflect that. Securing English language television based in Wales for Wales does not depend on sacrificing the Welsh language channel, as some have argued. It is the duty of Members of Parliament representing Wales to ensure a fair broadcasting settlement for everyone living in Wales.

6.3 It is essential that S4C has an adequate funding formula, and that it can remain separate from the BBC. The Conservative and Liberal Democrat Government are demonstrating a lack of respect towards the people of Wales, in the field of broadcasting specifically, and has undermined devolution. Plurality in the media is necessary, and Wales deserves a proper English language and a proper Welsh language media speaking to the whole of Wales.

Cymdeithas yr Iaith Gymraeg

November 2010

Appendix:

Cymdeithas yr Iaith Gymraeg, S4C: Pwy Dalodd Amdani? [Who paid for S4C?] (First impression: 1985, Second impression: 2010): http://cymdeithas.org/pdf/s4c-pwy-dalodd-amdani.pdf

93 Written evidence submitted by NUJ and BECTU

Summary

• The NUJ and Bectu are both seriously concerned by the government’s plans to cut funding to S4C which we believe could put in jeopardy the future of the channel or at the very least lead to a greatly reduced service.

• The NUJ and Bectu oppose the cuts to the funding of S4C. We believe S4C is a major element in Welsh broadcasting and cultural life. Welsh speakers need a TV service not just one channel.

• The formal scrapping of the funding mechanism for S4C has already led to the loss of posts and more jobs are likely to be lost in the production sector in Wales if significant cuts are imposed on S4C.

• The current plans have the potential to lead to greater alienation and may deepen an already worrying democratic deficit.

• If public service broadcasting is to remain relevant, it must closely address the needs of the communities, regions and nations it serves, providing an autonomous cultural voice.

• Adequate funding should be maintained at least at the current level, with the direct government grant element continuing to be index linked to RPI.

• The NUJ and Bectu are urging the committee to oppose the cuts to S4C.

Introduction

1. The National Union of Journalists (NUJ) represents 38,000 members working in all sectors of the media. Our membership includes staff and freelancers ‐ writers, reporters, editors, sub‐editors, illustrators and photographers.

2. Bectu is the trade union for creative, technical and administrative workers in the audiovisual and live entertainment sectors. In Wales it has 1,400 workers in membership including those employed as staff at S4C.

3. The NUJ and Bectu are pleased to be able to contribute to the Welsh Affairs Committee inquiry into the Welsh language broadcaster S4C. We are happy to provide oral evidence or further information to the committee.

4. The NUJ and Bectu are seriously concerned by the government’s plans to cut funding to S4C which we believe could put in jeopardy the future of the channel or at the very least lead to a greatly reduced service.

94 5. The latest proposals resulting from the Comprehensive Spending Review seem ready to disregard various inquiries initiated by Westminster, Cardiff Bay and OFCOM ‐ with their innumerable pages and sessions of evidence‐ that supported S4C. What is now proposed threatens to overturn the Welsh broadcasting landscape as a whole without consultation or deliberation.

6. The NUJ and Bectu oppose the cuts to the funding of S4C. We believe S4C is a key element in Welsh broadcasting and cultural life.

7. The formal scrapping of the funding mechanism for S4C has already led to the loss of jobs and more jobs are likely to be lost in the production sector in Wales if significant cuts are imposed.

8. S4C as an independent public body has significantly contributed towards raising the profile of Wales and the Welsh language nationally and internationally.

9. S4C ‘s programming has often received international praise.

10. S4C generates self‐confidence and pride for Welsh speakers and is an inestimable benefit for school children and Welsh language learners.

11. Economically S4C has helped develop a skilled modern workforce at a time when traditional Welsh industries were in serious decline. The services have allowed several generations of Welsh people to remain in their own country and contribute to their society through the medium of their own language.

12. A recent Consumer Focus Wales survey reveals that that 80% of people surveyed agreed or strongly agreed that services should be available in Welsh, the current proposal to cut funding to S4C by 17% goes against the public view.

13. The new Welsh Language Act, which will strengthen the Welsh cultural identity through the adoption of Welsh as an official language of the nation, enjoys All‐Party support.

14. The proposal to cut funding to S4C will undermine these objectives. The plans have the potential to lead to greater alienation of Welsh communities deepening an already worrying democratic deficit.

15. If public service broadcasting is to remain relevant, it must closely address the needs of the communities, regions and nations it serves, providing an autonomous cultural voice where either: • government recognises that doing so would be of benefit • where consumers demonstrate a desire for such services

95 16. Both are clearly the case. Moreover, there is significant evidence to suggest that residents of the Welsh nation are demanding more, not less Welsh language programming.

17. We believe the arguments against the proposed cuts are overwhelming and there is a clear case for an expansion in Welsh language provision.

18. Adequate funding should be maintained at least at the current level, with the direct government grant element continuing to be index linked to RPI.

19. The cuts could put in jeopardy the future of the channel and lead to a greatly reduced service including limited hours of transmission and moving to more online content with accompanying job losses: S4C has already pledged to cut 40 posts, a 25.6% reduction from the current 156 full‐time staff, over the next two years

20. The creation of S4C solved the conflicts between Welsh and English programming on Welsh airwaves.

21. In terms of provision, recent years have seen a decline in English language broadcasting in Wales. ITV Wales is a very pale incarnation of its former self. BBC Wales has also seen a similar retreat from its role as a Welsh broadcaster and has become transfixed by network programming.

22. The historic relationship between S4C and the BBC has not been a happy one – and on occasions their behaviour towards each other when faced with cooperation to produce Welsh language television has been lamentable.

23. Recent declines in viewers were anticipated with digital switchover and responsive strategies were developed to deal with these issues.

24. The NUJ and Bectu believe the current S4C spending allocation would massively undermine and disrupt the Welsh media landscape. The three broadcaster structure would effectively be replaced by the BBC as the sole provider. The corporation’s position would be unassailable across television, radio and online services resulting in a weakening of pluralism.

25. BBC Alba cannot be compared to S4C in terms of the service it offers.

26. The NUJ and Bectu would like to propose the following recommendations: • Challenge the Comprehensive Spending Review settlement for S4C • Ask the government to support S4C as a welsh language broadcaster and maintain content pluralism in Welsh language news and current affairs • Support investment in services and staff – and not through new building programmes

96 • Call for continued government investment, in co‐operation with the trade unions and industry to maintain and support a skilled workforce in the Welsh media • Support S4C ‘s independence in relation to financial and editorial strategies • Support devolved media production in Wales and oppose budget cuts in television, radio and online Welsh language production at S4C and BBC Wales • Help to strengthen the independence, effectiveness and transparency of the S4C authority and BBC Trust • Help foster improved relations between the two Welsh public broadcasters • Review the English language media in Wales and support the development of mechanisms to enable scrutiny of the Welsh media (print and broadcasting) by elected Welsh representatives, other stakeholders and the public • Provide an assurance that the voice of the broadcasting unions and trade unions as a whole will be recognised as the representatives of the industry’s workforce and wider society.

November 2010

97

Written evidence submitted by the Department for Culture, Media and Sport

Background

1. S4C is a public service broadcaster, established under the Broadcasting Act 1980, following pressure from Welsh language supporters for a Welsh TV service. Until then, the only programmes broadcast in Welsh were regional opt-outs on the mainstream channels in off-peak hours. S4C launched as a bilingual service in November 1982, with most of the English–language content being Channel 4 programmes.

2. The channel broadcasts a variety of programmes, including live national events, sport, music, news, drama, entertainment, children’s programmes, culture, rural and lifestyle. S4C has a statutory obligation to provide television programme services of high quality for reception wholly or mainly by members of the public in Wales; and to ensure that a substantial proportion of the programmes broadcast on S4C are in Welsh. It is a commissioning broadcaster, rather than a programme producer, and the majority of S4C’s programmes are produced by independent television companies. The BBC has a statutory duty to provide not less than 10 hours a week of programming in Welsh, free of charge.

3. The Welsh Authority (which is also known as Sianel Pedwar Cymru, or S4C) is accountable as an independent broadcasting authority responsible for the S4C channel's strategic policy and overseeing the management of the channel. It also acts as a regulator on certain matters in broadly the same way that the BBC Trust regulates some aspects of the BBC’s services. The Authority's Chair and members are appointed by the Secretary of State. The Authority is not involved in the channel’s day-to-day decision making and is not involved in commissioning or editorial decisions. These functions are undertaken by the S4C Executive, which is led by its Chief Executive Officer who is appointed by the Authority.

S4C funding

4. At present, under the terms of the Broadcasting Act 1990, annual increases in S4C’s grant-in-aid funding from Government are linked to annual increases in the Retail Prices Index (RPI). The annual increase in S4C’s grant is set at the level of the annual increase in RPI in the November prior to the relevant calendar year. In addition to Government funding, and the provision of programming by the BBC, S4C also generates commercial revenues.

5. In the calendar year 2010, S4C was entitled to grant-in-aid of £101.647m. In May 2010, the Secretary of State agreed with S4C that there should be an in-year reduction in funding in 2010-11 of £2m.

6. The Government intends to reform the funding mechanism for S4C through the Public Bodies Bill by removing the automatic link with the Retail Prices Index. Provisions to achieve this are included in the Public Bodies Bill, which is currently before Parliament.

7. On 20 October 2010, the Government announced in the Comprehensive Spending Review that S4C’s funding is to be cut by 24.4% over the four years to 2014-15, subject to the passage of the Public Bodies Bill. In a related development, it was agreed as part of the Television Licence Fee settlement covering the period from 2013-14 to 2016-17 that S4C and the BBC should enter into a partnership for the provision of S4C. S4C will be an

98 independent Welsh language television service and will not be BBC branded. Although the Government will continue to provide some funding, from 2013-14 the majority of the funding to S4C will be provided by the BBC. This means that from 2013-14, the cost of S4C will be met from a combination of continued Exchequer funding, advertising revenue and the licence fee.

8. The levels of funding set under the spending review are as follows.

Year Total funding (£m) From DCMS (£m) From BBC(£m) 2011/12 90 90 0 2012/13 83 83 0 2013/14 83 6.7 76.3 2014/15 83 7 76

9. The funding settlement ensures that S4C's funding is secure for the next four years and will enable S4C to structure itself for the modern broadcasting environment. It also allows S4C to retain its commercial freedom.

10. The partnership with the BBC Trust will be based on a joint management board with a majority of independent directors appointed by the Welsh Authority and the BBC Trust. This should ensure that S4C remains a unique service and retains its editorial distinctiveness.

11. There is to be a review of S4C’s strategy and finances to conclude in good time before the end of the spending review period.

12. Further details can be found in the Secretary of State’s spending review allocation letter of 20 October to the Welsh Authority: (http://www.culture.gov.uk/images/publications/Jones_S4C.pdf) and the Secretary of State’s letter of 21 October to the Chair of the BBC Trust setting out the details of the Television Licence Fee settlement beginning in March 2013: (http://www.culture.gov.uk/images/publications/Lyons_BBC.pdf)

13. The evidence is set out by reference to the specific matters which the Committee is proposing to examine.

The extent to which S4C is fulfilling its remit

14. Given S4C’s independent status, the Government does not undertake any formal routine monitoring of whether S4C is fulfilling its statutory remit. There is no statutory provision for Government monitoring and it is a long established principle within the public service broadcasting framework that broadcasters are editorially and operationally independent of Government. Responsibility for monitoring S4C’s performance and ensuring it meets its remit falls to the Welsh Authority.

15. The Secretary of State has, however, expressed concern about the value-for- money of the current level of Government funding, when compared against the viewing figures for the channel. At a funding level of almost £100m per annum, S4C’s viewing figures are disappointingly low. The Government considers that the benefits to the Welsh language and culture expected from this level of funding are not being achieved. It is on this basis that Government concluded in the Spending Review that the S4C model is not

99 sustainable in its present form and that the future of the channel lies in the partnership with the BBC proposed in the Television Licence Fee settlement recently agreed.

What impact recent and potential future spending cuts will have on S4C and what level of public subsidy for S4C is appropriate and sustainable over the longer term

16. Future funding levels for S4C, subject to the passage of the Public Bodies Bill, are set out in the Secretary of State’s letter of 20 October to the Chair of the Welsh Authority (link in paragraph 12 above).

17. As well as the funding S4C will receive from the Government and the BBC over the next four years, the channel will receive around £20m per year worth of programming from the BBC, will be in receipt of commercial income and has reserves upon which to draw. These are significant sums of money and the Government is confident S4C can use them wisely to deliver high quality programming.

18. No decisions have yet been made on funding levels after 2014-15. Whilst future funding will reflect synergies and efficiencies arising from the partnership with the BBC Trust, it will remain consistent with the Government’s commitment to a strong and independent Welsh language TV service, with future services informed by the outcome of the proposed review of S4C’s strategy and finances.

The cultural and economic benefit to Wales from the investment of over £100 m per annum of public funds into S4C

19. Although no recent quantitative study has been undertaken, the Government has received strong representations from a wide range of interested parties highlighting the benefits of the channel. The Secretary of State for Wales has provided a valuable contribution to the debate from her unique perspective, following discussions with S4C.

20. The Government carefully considered all comments received in assessing the future of Welsh language broadcasting and S4C and in making its decisions on the future funding of the service in the Comprehensive Spending Review. The Government is aware of the keen interest shown in the ongoing debate about the future of the service and has noted the points made by the leaders of the four main political parties in the Welsh Assembly Government in their letter of 29 October to the Prime Minister.

21. The Government fully recognises the contribution S4C makes to the cultural and economic life of Wales. As well as sustaining and promoting the Welsh language, the channel provides a focal point for the celebration of Welsh national events. It is for these reasons that the Government has secured the future of S4C.

22. The Government was interested to note the findings of the report on the economic impact of the channel, commissioned by the Welsh Authority and published on 4 November. The report concluded that:

• S4C’s effect on the Welsh economy is worth almost £90 million this year;

• S4C is vitally important to independent television production in Wales with the Channel being responsible for sustaining over 2,100 jobs in the independent production sector and other fields;

100 • over the last two years S4C and the independent production companies have invested almost £900,000 in training schemes in partnership with Skillset and the Welsh Assembly Government.

23. The report also concluded that, in addition to these quantifiable economic impact effects, the broadcaster has a significant impact on the vitality of the independent production sector in Wales. S4C’s operational policies and its decisions determine the extent to which the Welsh sector is able to respond to wider market opportunities. This is of particular interest, as the Government is very keen that S4C should preserve its relationship with the independent production sector in Wales. This is reflected in the principles for the partnership between S4C and the BBC set out in the Secretary of State’s letter to the Chair of the BBC Trust setting out the details of the settlement.

24. The report found that by investing in improved, more efficient networks, S4C suppliers benefit from enhanced market access as the network enables them to supply S4C, other production companies and other broadcasters with higher quality output in HD. This acts to remove barriers to trade and wider market access.

25. The report considered that S4C is directly driving a skills improvement in the sector. Keeping abreast of technological developments and raising the standards of output means that S4C suppliers develop skills and invest in areas demanded by the market, with the outcome that the Welsh creative industry has access to wider markets.

Whether S4C is maximising the use of its financial and other resources to achieve value for money, to optimise the quality of its output, and to reach as wide an audience as possible

26. The Government does not undertake any formal routine monitoring of these matters. To ensure that S4C maintains its editorial and operational independence from Government, the Welsh Authority is responsible for these issues.

27. The Government has noted the recognition awarded to the quality of S4C’s programming, for example, the 14 awards won by S4C at the Bafta Cymru ceremony in May. The Secretary of State has, however, expressed concern about the value-for-money of the current level of Government funding, when compared against the viewing figures for the channel.

The potential for further collaboration between S4C, the BBC and independent broadcasters in Wales in order to reduce duplication and to achieve economies of scale

28. The Government wants to ensure that S4C offers the best possible Welsh language service to its audience but has concluded that the S4C model is not sustainable in its present form. As set out above, the best way to secure S4C’s long-term future while delivering a better service is through partnership with the BBC. Such a partnership will, over time, bring considerable benefits for S4C and its audience. The partnership arrangements will enable S4C to draw upon the benefits of shared expertise and experience in order to provide a service which demonstrates value for money in return for its public funding.

29. The Government has begun separate preliminary discussions with S4C and the BBC Trust on developing the detail of the partnership. We are aware that the BBC Trust and Welsh Authority have also had an initial meeting. Tripartite meetings are being arranged to consider such matters as how S4C’s independence will be safeguarded in

101 practical terms, the potential impact on independent producers, the governance structure model, accountability, stewardship of licence fee revenue within the partnership framework, the future role of the Welsh Authority and how the BBC Agreement needs to be amended. Given the level of interest in the partnership and the benefits to interested parties in having these points resolved at an early stage, the Department is seeking to develop the arrangements as soon as practicably possible. In practice, this means the Department is seeking to have the main points agreed, in principle at least, by the middle of 2011. It is recognised that full implementation may be dependent on external factors such as the Parliamentary timetable.

30. The expectation is that future funding of S4C will reflect synergies and efficiencies and support the Government commitment to a strong and independent Welsh language TV series.

31. The Department is pleased to note the BBC Trust’s commitment, in a published letter of 10 November from the Chair of the BBC Trust to the Chair of the Welsh Authority, to a creatively independent S4C that retains its strong relationship with the independent production sector in Wales.

32. Furthermore, it is helpful that the Chair of the BBC Trust has made it clear the BBC has no intentions to take over S4C; and that the Trust is committed to working together with S4C to make the policy work.

Whether the finance and accountability of S4C, currently the responsibility of the Department of Culture Media and Sport, should remain in Whitehall or become a devolved matter

33. The Government has no plans to devolve responsibility for S4C as the benefits of sponsorship by the UK Government would be lost. Having broadcasting as a reserved matter, and retaining S4C within that framework, is the most effective way of maintaining national standards and securing broadcasters’ independence.

November 2010

102 Written evidence submitted by PACT

Executive summary

1) We welcome this inquiry and ask the Committee to make two recommendations: firstly, that legislation guarantees S4C’s funding and independence; secondly, that S4C acts itself and develops an exports-led strategy to help the Welsh production sector grow.

S4C’s importance 2) S4C has been a cornerstone of public service broadcasting, providing audiences with an independent editorial voice and championing the Welsh language.

3) S4C underpins Wales’ production sector by spending £73m1 pa on Welsh-language programming, dwarfing BBC and ITV investment in English-language programmes for Welsh audiences.2

Ensuring continued funding and independence

4) The announcement by the Government and the BBC only commits to a level of funding for S4C until 2014/2015. Beyond this, we expect the BBC to consider further cuts.

5) We also have serious concerns that the announced joint BBC Trust/S4C Authority governance structure cannot guarantee genuine independence for S4C.

6) We ask the Committee to recommend the strongest possible safeguards for S4C within the legislative and regulatory framework available, particularly the new Communications Act and the Royal Charter and Charter Agreement, including:

• A requirement to allocate a fixed level of funding to the service.

• An undertaking that the S4C service will be independently managed and regulated.

• A requirement that programmes made for S4C come from external suppliers.

Increase S4C’s positive impact on the Welsh economy

7) We welcome the Welsh Assembly Government’s recent report, The Heart of Digital Wales by Ian Hargreaves, which stated that public funding was failing to maximise the growth of Welsh creative companies and proposed a greater focus on exports.

8) We ask the Committee to recommend that S4C develop a strategy to help producers develop businesses on a global level, with a greater focus on exportable genres. This could be underpinned by introducing a stronger economic element to S4C’s remit.

9) This will help Welsh companies replicate the growth of the UK’s independent production sector as a whole, which has grown by 40% since 20033 and helped increase exports of UK television content by 40% (independent and in-house).4

1 Communications Market Report: Wales, Ofcom, page 53 2 Ibid, page 50, shows that spending on English-language programmes specifically for Welsh viewers by BBC and ITV was £33m in 2008. 3 Oliver & Ohlbaum Associates for Pact

103

Introduction

1) Pact is the trade association that represents the commercial interests of the independent production sector. The sector produces and distributes half of all new UK television programmes,5 as well as much of the UK’s content in digital media and feature film.

2) The independent television sector contributes £4.3 billion per year to the UK economy (GVA),6 and employs 20,950 people – more than the television divisions of the BBC, ITV, Channel 4 and Five combined.7 The sector has helped increase exports of UK television content by 39% since 2003,8 and uses the resulting revenue to invest £200m per year in the development and production UK content.

Response to questions raised in Terms of Reference

Question 1: The extent to which S4C is fulfilling its remit

1) We propose in this paper several ways in which, in our view, S4C could significantly increase its positive impact on the Welsh creative economy, as well as offer audiences a more engaging range of Welsh-language content across all platforms not just traditional television. However, there is no doubt that S4C is a cornerstone of public service broadcasting in Wales, underpinning the Welsh television production sector as a substantial source of investment in programming, and providing audiences with a distinct editorial voice as well as championing the Welsh language.

2) We think that historically S4C has broadly fulfilled its public service remit, which is defined under the Communications Act 2003 (Schedule 12) as: “the provision of a broad range of high quality and diverse programming” that is primarily in Welsh.9 However, we believe the challenges involved in continuing to deliver this remit will

4 Annual Television Exports Survey, TRP for Pact/UKTI 5 Ofcom, Communications Market Report, 2008 6 The Economic Impact of the BBC 2009, Deloitte for the BBC 7 Employment Census 2006, Skillset 8 Annual export figures, TRP for Pact/UKTI 9 2003 Communications Act, Schedule 12, 3 (2)

104 require a root and branch review of the type of content commissioned by S4C, the way in which it is commissioned and the way in which it is financed.

3) We believe that S4C’s independence has enabled it to achieve significant successes over its 30-year history and believe this continued independence will be essential if it is to grasp the opportunities presented in a digital world in a challenging funding environment.

Question 2: What impact recent and potential future spending cuts will have on S4C and what level of public subsidy for S4C is appropriate and sustainable over the longer term

1) The Welsh production sector is facing a sustained decline in funding from broadcasters for English-language programming specifically for Welsh viewers. Spending on such programming by the BBC and ITV – the only public service broadcasters other than S4C that provide programming specifically for Wales - has fallen by a third since 2003, according to Ofcom.10 Although Ofcom does not break down spend by broadcaster, the regulator states that delivery by hours of programming has declined at both broadcasters in recent years, the BBC falling 15% since 2004 and ITV 11%.11

2) The recently announced cuts to S4C’s budget going forward will greatly exacerbate the pressure now facing the Welsh production sector. While the above noted declines represent a drop of around £17m in funding since 2003, the reductions in S4C’s funding amount to a further fall of £25m over four years.

3) S4C should therefore minimise any reduction in its programme budget resulting from cuts to its overall funding, thereby limiting any drop in the quality of what is on screen for the viewer and the negative impact on the Welsh production sector. S4C should also create a commissioning environment which encourages independent producers to be even more entrepreneurial in the way in which they fund content, ensuring that

10 Nations and Regions Communications Market report 2009: Wales, Ofcom, indicates that spending on English-language programmes for Welsh viewers by the BBC and ITV fell from £50m in 2003 to £33m in 2008, the latest available year (page 50). 11 Nations and Regions Communications Market report 2009: Wales, page 59

105 the decline in S4C’s funding is mitigated by third-party funding from co-production, international sales, digital exploitation and other commercial opportunities.

4) In the medium to long term, we are very concerned that the recent announcement by the Government and the BBC only includes a commitment to the level of funding for S4C until 2014/2015. Beyond this, we expect the BBC to consider further cuts to S4C’s funding, based on the BBC’s recent history of reductions in spending on programmes for Welsh viewers, as mentioned above, and the fact that, prior to the Government’s announcement, the BBC had already announced that it would be cutting the amount it spends on S4C programming by 17%, to £19.5m, next year.12

5) We therefore ask the Committee to recommend that the BBC’s Charter Agreement include an undertaking to fund a Welsh-language service as S4C and that this undertaking includes in the Agreement a requirement to allocate a fixed level of funding to the service.

6) We ask the Committee to also recommend that, if appropriate, this should also be reflected in the new Communications Act (Schedule 12 of the 2003 Act covers the public service remit of the Welsh Authority services).

Question 3: The cultural and economic benefit to Wales from the investment of over £100m per annum of public funds into S4C

1) We note the findings of the 2010 report, The Economic Impact of S4C 2007-2010, which indicated that the broadcaster contributed a GVA of £85m to the Welsh economy in 2009. The report goes on to state that S4C supports 1,950 external jobs, the majority of which are in the independent production sector. As the report notes, the broadcaster thereby contributes to the Welsh Assembly’s aim of developing a highly skilled, knowledge economy.13

2) We would particularly like to highlight S4C’s role as a publisher broadcaster, commissioning from external, Welsh companies. Investing in content from such independent suppliers, rather than a broadcaster’s own in-house production division,

12 Broadcast online, “S4C programme budget facing £4m cut”, 11 October 2010 13 The Economic Impact of S4C on the Welsh Economy 2007-2010, DTZ for S4C

106 enables these companies to develop the skills and experience to win commissions from other broadcasters, allowing them to further develop their businesses, and therefore has an indirect benefit in terms of nurturing a sustainable production sector that keeping production in-house within a broadcaster cannot.

3) We therefore welcome the Secretary of State for Culture’s recent statement that, as part of the funding arrangements with the BBC going forward, S4C’s “total content commissioning budget will be for independent producers (outside of the BBC’s ongoing statutory commitments).”14 To reflect this, and to provide the Welsh production sector with clarity going forward, we ask the Committee to recommend that the new Communications Act and the Charter Agreement include a requirement that 100% of programmes made for S4C come from qualifying independents or other external suppliers.

Question 4: Whether S4C is maximising the use of its financial and other resources to achieve value for money, to optimise the quality of its output, and to reach as wide an audience as possible

1) We welcome the findings of the Welsh Assembly Government’s recent report, The Heart of Digital Wales by Ian Hargreaves,15 which stated that current public funding was failing to take advantage of opportunities to maximise the growth of Welsh creative companies. The Hargreaves report stated that:

“The disappointment has been that so few companies in the Welsh independent television production sector have matured into units capable of operating throughout the UK and beyond.

2) Hargreaves went on to highlight the need for a greater focus on exports and working with companies in the wider UK and abroad, stating: “The challenge today is for the

14 Letter from Secretary of State to Sir Michael Lyons, Chairman, BBC Trust, re: BBC Funding Settlement 15 The Heart of Digital Wales: A review of creative industries for the Welsh Assembly Government, Ian Hargreaves

107 Welsh indies to become still more adept at bidding for UK network commissions, as well as pursuing international co-productions and sales.”

3) In order to help deliver this, S4C should in our view help Welsh companies take advantage of global opportunities. Even with reduced funding, its annual budget represents a substantial level of investment in Welsh content – far higher than the combined spending by the BBC and ITV on English-language programmes specifically for Welsh viewers, which was £33m in 2008.16 However, in our view, S4C often tends to interpret its remit in a way that looks inward at the Welsh production sector, at the expense of encouraging Welsh producers to embrace wider opportunities, both in the UK and the global market. This has meant that many companies are indeed reliant on public funding through S4C, as the Hargreaves report suggested.

4) Such an inward-looking approach is at odds with developments over the last decade in the wider independent production sector across the UK. Since 2003, the UK independent production sector has grown by 40%,17 with the emergence of substantial companies with a global presence, and a surge of 40% in export revenues from UK TV content (independent and in-house).18

5) As a result, independent producers are increasingly raising funding for programme costs outside the amount paid by the commissioning broadcaster – this is known as deficit funding. Last year, the UK independent sector invested more than £200m in UK production in this way, and co-production with other broadcasters is an important part of this, representing around £40m per year.19 Investment raised by independent producers in this way has enabled them to fill the gap left by declining spending from UK broadcasters. We see this as particularly relevant for S4C in light of the recent announcement by the Government that its funding will be reduced. This will inevitably mean S4C will have to seek to reduce its total programme budget, in turn placing increased pressure on producers to cover the resulting gap through deficit funding. An increased global focus will therefore not only encourage the growth of

16 Nations and Regions Communications Market report 2009: Wales, page 50 17 Oliver & Ohlbaum Associates for Pact 18 Annual Television Exports Survey, TRP for Pact/UKTI 19 Pact annual census 2010

108 the Welsh production sector, it will also enable producers to raise more funding for Welsh content, driving quality for the viewer.

6) Does such a focus on UK and global markets necessarily entail a loss of Welsh culture? In our view, no. S4C’s specific statutory duty is to promote the Welsh language, which is clearly not in question as the majority of its programmes will be broadcast in Welsh.20 In terms of S4C’s broader representation of Welsh culture, independent producers across the UK successfully work in global markets without necessarily watering down the public service or UK cultural elements in their work. ITV’s successful Downton Abbey, for example, is an original British period drama that, through the producer, Carnival, was part funded from overseas sources.

7) An increased focus on exportable, popular genres would in our view refresh S4C’s schedule, not diminish it, potentially helping S4C engage with a broader range of audiences.

8) In our view S4C therefore needs to develop a comprehensive strategy to encourage the Welsh production sector to develop businesses on a UK and global level. This should be underpinned by then inclusion of an economic element in the remit of the S4C Authority and developed in close consultation with industry to ensure it genuinely reflects the needs and aspirations of Welsh creative businesses. As part of this strategy, S4C should through consultation with the industry identify the genres and types of programmes that best lend themselves to generating exports – many core public service genres will need to be fully funded by S4C, but others are able to attract substantial levels of funding from wider UK or global markets. Similarly, the UK has excelled at exporting “formats” – i.e. the right to remake a show for overseas audiences – and is the global leader in this area with a market share of over of 50%.21 S4C’s strategy to encourage the growth of creative companies in Wales should include a focus on developing formats.

9) In terms of whether the Welsh production sector can deliver such an ambitious plan for growth, independent producers across the UK respond to the needs of

20 2003 Communications Act, Schedule 12, 3 (2)

21 Rights of Passage, TRP for UKTI/Pact

109 broadcasters in order to win commissions from them. To date, there has been little incentive from S4C for Welsh producers to develop exportable programmes. S4C should develop and make public a clear, long-term strategy for developing exportable programmes that would provide the production sector with the clarity and security it needs to invest in the longer term in such programmes, e.g. recruiting the appropriate production talent or investing in project development.

10) We would also welcome a specific commitment in terms of spend and/or hours to home-grown feature films, as is the case for the BBC and Channel 4 under the Charter Agreement and Communications Act respectively. A commitment to film should be aligned to recommendation of the Hargreaves Review for a re- organisation of Wales’ support for the film industry to eliminate duplication and maximise economic impact and efficiency.22

11) Additionally, we ask the new management at S4C to review the broadcaster’s digital/new media strategy to ensure that S4C takes full advantage of opportunities to engage with audiences across different platforms. While we note that S4C outlines its digital strategy in its programme policy statement, the widespread anecdotal experience of our members is that the broadcaster is often not as interested in cross- platform proposals as other broadcasters.

Question 5: The potential for further collaboration between S4C, the BBC and independent broadcasters in Wales in order to reduce duplication and to achieve economies of scale

1) The opportunities for further collaboration in order to reduce duplication and to achieve economies of scale should be explored with a wide range of partners, not just the BBC. We believe there is a risk that too close a relationship with the BBC would shut off opportunities to collaborate with other partners in the UK and internationally.

2) There is a particular threat to plurality in children’s content by tying S4C too closely to the BBC. S4C is currently the second largest investor in original UK production for

22 http://wales.gov.uk/topics/businessandeconomy/publications/heartofdigitalwales/?lang=en

110 children behind the BBC. For many producers it is the only alternative to the BBC as a commissioner of children’s programmes in the UK. S4C’s independence is vital in ensuring plurality and competition in this important genre of programmes.

3) We deal further with S4C’s relationship with the BBC in response to Question 6, as this falls under regulatory control and finance following the Government’s recent announcement about a link up with the BBC.

Question 6: Whether the finance and accountability of S4C, currently the responsibility of the Department for Culture Media and Sport, should remain in Whitehall or become a devolved matter

1) We have serious concerns over the Government’s proposal that the BBC Trust should take over joint responsibility for S4C along with the S4C Authority from 2013/2014. We see this as a potential risk to S4C’s independence, as well as a move that may lead to further erosion of funding for S4C and cut off opportunities for S4C to collaborate with other commercial partners.

2) As noted above, funding for programming specifically for Welsh viewers from the BBC and ITV – the only other public service broadcasters providing programming specifically for Wales – has fallen by a third in recent years. In terms of network programming - i.e. programming not specifically for Welsh viewers – only the BBC is genuinely active in Wales in our view. Ofcom figures indicate that Welsh-made network programming accounted for less than 1.4% of the output of ITV1, Channel 4 and Five by both hours and value. The BBC was substantially higher, recording 3.7% by value and 3.4% by volume, but it is important to bear in mind that a large share of this will be made in-house and therefore not benefit the independent production sector.23

3) We are therefore concerned that S4C should continue to represent an alternative source of funding for programming to the BBC, as well as have a distinct editorial voice. This is not a criticism of the BBC; rather, we are concerned that it should not

23 Nations and Regions Communications Market report 2009: Wales, Ofcom, pp 57 and 58

111 be the only home of Welsh programmes, either for Welsh audiences or for the UK in general.

4) The Government has outlined a similar structure for S4C post 2013 to that of BBC Alba, i.e. a distinct service licence overseen by the BBC Trust and the S4C Authority. We do not think the BBC Alba model provides genuine independence: we note that the BBC Alba’s joint management board of four includes the BBC Scotland head of operations and BBC Scotland head of programmes, while the BBC Alba head of service is a BBC employee.

5) We therefore ask the Committee to recommend the strongest possible safeguards for S4C’s independence and funding within the legislative and regulatory framework available, particularly the forthcoming Communications Act and the Charter Agreement. These should include:

• A requirement that 100% of programmes made for S4C come from qualifying independents or other external suppliers. • A requirement to allocate an appropriate level of funding to the service. • An undertaking the S4C service will be independently managed and regulated.

November 2010

112 Written evidence submitted by TAC

Summary

o Since its inception S4C has been a cornerstone of the Welsh language and economy

o Its position as a publisher-broadcaster has given rise to a thriving Welsh independent production sector, which has matured into a creative industry able to create high quality content which is successful both domestically and internationally

o This is an important moment to review the structure of S4C, following both the Government’s Comprehensive Spending Review and also some concerns over S4C’s overall effectiveness

o S4C must look to work in greater co-operation with independent producers to ensure long term stability and sustainability and also play a more central role in facilitating co-productions and partnerships

o Although the Government has offered a funding formula which has the potential to provide a sustainable future for S4C, statutory safeguards are essential to:

o Preserve the level of S4C’s funding going forward beyond 2015 o Protect S4C’s editorial and managerial independence from the Government and the BBC o Ensure that S4C continues to spend 100% of its content budget solely with independent creative producers o Ensure the BBC is not able to access any funding earmarked for S4C from the Licence Fee

113 About TAC

1. Formed in 1984, Teledwyr Annibynnol Cymru / Welsh Independent Producers (TAC), represents around 30 active independent TV production companies primarily involved in the production of programmes and content for the Welsh based broadcasters and other providers of audio visual services, either as production companies, or in a support capacity. Their combined turnover is in excess of £100m.

The Welsh Independent Creative Sector

2. The importance of the creative sector to the overall Welsh economy is high – as stated in Ian Hargreaves’ Report for the Welsh Assembly in 2009 “the importance of the creative industries sector at a time when Wales’ economic performance continues to suffer from relative over-dependence on sectors that deliver relatively low levels of added value”1.

3. The sector is an increasingly mature one, with a lively mix of new and established companies. Welsh independents have increasingly taken it upon themselves to develop co-productions and relationships with broadcasters and distributors outside Wales. These currently include:

o Cwmni Da has secured deals with two major UK distribution companies ‘The Photo’, a programme format developed for S4C as ‘Lle Aeth Pawb’, has a worldwide distribution deal and is currently being marketed in the United States.

o Calon’s award-winning animation series ‘Hana's Helpline/Holi Hana’, commissioned by S4C and Five, has now run for several series and has been sold to 25 countries as well as being widely licensed to produce children’s toys and clothing; books; DVDs; and a comic.

1 Hargreaves, Ian. The Heart of Digital Wales: a review of creative industries for the Welsh Assembly Government. 2009, p1

114 o 'The Saints and Sinners', a series on the history of the papacy produced by Opus, has been distributed in over 60 territories.

o ‘Rivers of Life’, produced by Cardiff company Green Bay, is a successful S4C/France 5 co-produced six-part series documenting the lives of those who live by some of the World’s largest rivers.

4. As well as being responsible for channeling S4C’s investment into the local economy, crucially the independent sector is present across a geographically wide area of Wales, including the sector’s major players:

o Tinopolis: ‘Wedi 3 a Wedi’ 7 daily strands produced in Llanelli

o Telesgop: Agricultural and rural affairs programmes produced in Swansea

o Cwmni Da: ‘Pethe’, cultural and arts programme strands produced in Caernarfon

o Rondo Media: ‘Rownd a Rownd’, youth drama series produced in Angelsey.

o Boomerang: 'Stwnsh' and 'Cyw' children’s strands produced primarily in Cardiff

5. The Committee will be aware of the need for the retention of entrepreneurial talent in all areas of Wales, as this represents those areas’ best opportunity of being able to revitalise themselves and offer local people gainful employment and support the wider local economy.

6. These producers are close to their communities and therefore their local audience - this enables them to reflect accurately and tellingly the lives, issues, concerns and humour of those communities, thus fulfilling well S4C’s purpose of commissioning a range and diversity of programming to reflect and portray Welsh culture.

7. The existence of creative entrepreneurs across Wales also brings other benefits to the community. Those working in the creative sector are disproportionately involved in community projects, everything from being school governors to running film-making

115 workshops for young people. This is very much the ‘Big Society’ in action, and represents an important additional benefit of having a thriving production sector across Wales.

Training

8. TAC has a memorandum of understanding, alongside S4C, Ofcom, Skillset and Pact which outlines a co-regulatory framework for delivering training. TAC contributes financially to the training framework but individual companies have also invested in significant in-house training, and the mix of companies in Wales enables this training to take place in a dynamic supportive environment.

S4C – The Story So Far

9. Established in 1982, S4C has been a cornerstone of the Welsh language and economy. It has given rise to a Welsh independent production industry that has gone on to produce a significant amount of content for UK-wide broadcasters and internationally. It has long been accepted that plurality is important to the public service broadcasting ecology. S4C contributes greatly to this plurality, both in terms of itself being an editorially and managerially independent organisation, separate from other broadcasters, and also through the many different voices, ideas and perspectives it brings to audiences by commissioning from a range of independent suppliers.

10. Talent: As well as developing a significant base of professional and popular Welsh language on-screen talent, S4C has also given rise to a swathe of talent that has achieved fame throughout the UK and beyond. Presenters such as the One Show’s Alex Jones and Blue Peter’s Gethin Jones, through to Hollywood stars Matthew Rhys, Rhys Ifans and Ioan Gruffudd - all started their careers on S4C. Off-screen, production talent trained and nurtured by Welsh independent companies, mainly commissioned by S4C, has created the environment for new opportunities for Wales to be a centre of TV production.

116 11. Events: Key sporting events are broadcast and achieve very strong audience figures along with other prominent cultural and agricultural events such as the Urdd Eisteddfod, the National Eisteddfod, the Royal Welsh Agricultural Show and the Llangollen International Eisteddfod.

12. Music: S4C plays a strong part in giving airtime to all aspects of Welsh music, from folk to classical, from traditional to contemporary and to new Welsh music, with the result that for the best part of two decades Welsh acts have become a regular fixture of the overall UK and international music scene.

13. Children’s: S4C also has a strong track record in children’s programming, winning and being nominated for several BAFTA UK awards. At a time when some other broadcasters are withdrawing either partly or wholly from children’s content, the role played by S4C is becoming increasingly important. In 2009 S4C commissioned a full 331 hours of children’s programming 2.

S4C and the Welsh Language

14. S4C was primarily established for cultural reasons, and Welsh viewers continue to back the existence of a Welsh language channel, with the majority of respondents to a recent poll saying there was a need for it 3. Given the proliferation of English language channels available through both analogue and particularly digital platforms, TAC supports the continuation of S4C as a purely Welsh language channel. This viewpoint was echoed by the Welsh Assembly Government’s Broadcasting sub-committee, which concluded that: “We would underline the argument that the S4C service is in effect a Welsh language counter-balance to all the television on offer to viewers in Wales, from all sources, noting that the number of English language channels now available has increased from four in 1982, when S4C was established, to more than five hundred now available on Sky. No one outside Wales produces programmes in

2 S4C Annual report 2009, p93 3 You Gov Survey, November 2010

117 Welsh, whereas there are very many sources, in the UK and across the world, of English language programmes.” 4

S4C’s Performance – Audiences and Reach

15. Criticism of S4C’s viewing figures is well-publicised but often misinformed. The recent switch to being digital-only, meaning S4C is now Welsh-only and doesn’t carry some Channel 4 programmes, has inevitably had an impact. Despite this, recent S4C research shows that “performance of the peak hours – (S4C’s) Welsh language service in the main – has been remarkably stable over a period of eight years, despite the huge changes in the broadcasting environment (and) more people are tuning in to S4C’s Welsh language hours this year than during the same period in 2009” 5. Even then the Barb figures do not tell the whole story, for example pre-school audiences, well-served by S4C’s children’s services, are not counted. The online service Clic is also growing in popularity, with an impact on the core channel’s audience figures.

16. It is also important to take into account the reach of S4C’s commissioning across Wales, and the fact that a series can build an audience not recognised in statistical terms, for example ‘Y Porthmon’, (The Drover), produced by Telesgop, which documented a drover’s journey across Wales. Central to the series strategy was a series of live events staged and organised by communities along the route.

17. Nevertheless, there is always more work to be done to retain and increase audiences, and we will discuss below how, working in partnership with the independent sector, S4C can take steps to ensure the best and most innovative ideas and talent are being utilised. The aim will be to provide a platform to boost figures both among Welsh and non-Welsh language speakers.

S4C’s Investment in the Economy

4 Broadcasting Sub-Committee. Communication and Content - The Media Challenge for Wales: Report for the Minister for Heritage. BSC(3)-02-08 : Paper 2 : 10 December 2008, p44 5 Carys Evans Head of Research, S4C. These are the facts about S4C, but why let them spoil a good headline? Western Mail 4 Nov , 2010

118 18. Taking steps to ensure a thriving Welsh language production sector is entirely in keeping with the cultural goals of S4C – its function necessarily combines cultural and business objectives. S4C, mainly through working with the independent production sector, is able to “provide important high paid and high skilled employment 6 opportunities in Wales”, according to a recent report on S4C and the Welsh economy . The report states that: “the impact of S4C on the Welsh economy is estimated as £85 million in 2009, rising to over £88 million in 2010. In addition to these quantifiable economic impact effects, as S4C spends most of its income on the Independent Sector in Wales, the broadcaster has a significant impact on the vitality of this sector”7. S4C’s ambition should be to achieve a greater impact on the Welsh economy by utilising the total of the funds available to it to attract further inward investment. This will of course be a necessity if we are not to see a dramatic fall in such impact as the cuts announced in the Comprehensive Spending Review take effect.

S4C Budget

19. Overall, S4C has the audience base, and the production talent available, to be successful for the foreseeable future. Since the General Election, TAC has consistently argued that S4C, whilst playing a vital role, is in urgent need of review, with the aim of restructuring the organisation to ensure it is best placed to maximise the funds available to it. The reduced funding for S4C as announced in the Comprehensive Spending Review makes this review even more pressing. The aim must be to make S4C more efficient whilst minimising the effects of any cuts on the ‘front line’ of creative content production in Wales.

20. In terms of efficiency, Welsh producers have consistently sought to offer maximum value for money, and the cost-per hour of independent production for S4C actually fell between 2008 and 2009 8. Welsh indies are currently discussing savings of 10% in 2011 and are engaged in talks with S4C regards level of work, but S4C is not as far as we aware looking beyond 2011 and how savings can be driven over a longer term. We

6 Butler, A; Bryan, Dr J; Roberts, Dr A. Economic Impact of S4C 2007-2010 Final Report. DTZ, Cardiff, Sep 2010, p3 7 ibid, p4 8 S4C Annual report 2009, p91

119 see the need to work in close partnership with S4C to devise a workable strategy that will give S4C and the independent sector much needed stability.

21. TAC notes the case made by the Minister for Culture, Communications and Creative Industries, when he stated in a debate in the House on October 20th that S4C has a settlement which can provide a sustainable future.

22. Ensuring this sustainable future is not just an aspiration but a set commitment depends on assurances being put in place to guarantee the future of Welsh language broadcasting in the long term. The current timetable laid out by DCMS only runs to 2014-15, beyond which the Minister has conceded that “no decisions have been made about the funding levels for S4C” 9. It is obviously of concern to have S4C writing, (as it has recently to independent producers) warning of future cuts to programme budgets and the amount of hours commissioned in future schedules.

23. Only a guarantee of continued long-term investment will allow S4C to effectively plan a strategy for maintaining and strengthening Welsh language broadcasting going forward. It is also crucial that the Welsh independent production industry is able to plan and invest appropriately, in order to be in a position to contribute the best ideas and talent over the years ahead.

24. A commitment to guaranteed investment should include a clear stipulation that the funds from the License Fee are in addition to the BBC’s contribution to Welsh language programming, recently reduced from £24.5m to £19.5m.

A Formal Review of S4C

25. TAC believes that the lack of regular formal review has led S4C to become unnecessarily insular, and has been subject to insufficient scrutiny to ensure that it continues to operate at the maximum of efficiency and effectiveness.

9 Hon Ed Vaizey MP, in answer to Written Question from Guto Bebb MP. Hansard, 4 Nov 2010: Column 911W

120 26. A TAC Task Force, incorporating a range of the industry’s leading players, has been established to draw up TAC’s own vision of how the broadcaster should be restructured, in anticipation of what we hope will be a formal, independent and transparent review of S4C in the coming months.

27. Specific issues in need of review include:

a. Restructuring within S4C: The Welsh language media industry needs informed and experienced decision makers in key posts. A broader commissioning structure is needed, with less micro-management of production. This would enable broadcasters and producers/content providers to work together equally to create a better long term "joined up" media strategy for the Welsh language and culture, while also insuring far better value for money for the audience.

b. Fair and open competition. In an increasingly fractured media environment, the broadcaster needs to trust creative and entrepreneurial talent to develop the market. S4C’s commissioning model needs to encourage sufficient competition whilst at the same time encouraging successful companies to invest in the future and use their scale to develop their business further across the UK and internationally.

Enabling new companies to break through can partly be achieved through mechanisms such as partnering new companies with established ones, ensuring that this is done on equitable terms. S4C could also look to targeted commissioning opportunities with funding aimed at encouraging new programme makers. A fresh look needs to be taken at the uses of tenders versus proposal- based commissioning, to ensure that the balance is right.

c. Ambition. S4C’s role in promoting the Welsh language and culture has previously extended to working with independent producers to help them export programmes and formats. In recent years this role has not been carried out with enough clarity and sense of purpose, and any review needs to put in place a renewed commitment and clear strategy, devised and delivered in close partnership with the

121 producers themselves. The S4C brand, still of significant value in the international market, must be fully utilised in gaining access to co-production deals. S4C should also give consideration to setting up an IP fund. In the past commissioners were brokers - pairing up broadcasters and producers, this is now the domain of the indies. A more strategic approach, funded perhaps in partnership with the sector, would be welcome.

d. Relationship with the independent sector. TAC, as the representative of the Welsh independent creative production sector, has regular discussions with S4C, and was instrumental in establishing the detail of the Terms of Trade, following the establishment of the Code of Practice within the 2003 Communications Act. However there needs to be a greater sense of partnership by S4C going forward, for example in terms of how it approaches its commissioning strategy in a way that is sympathetic with the dynamic and shape of the independent sector which produces its content. S4C needs to show at all levels a clear understanding and commitment that it must move forward in full partnership with the creative sector.

S4C Independence and the Licence Fee

28. The Government has set out a funding formula for S4C that will see the large majority of S4C’s funding changing from being a direct grant from Government to being supplied from the Licence Fee.

29. S4C has a current partnership with the BBC in the sense that it receives some £24m worth of programmes from BBC Wales, but it should be noted that S4C has little control over the content of these programmes. This is a situation that in itself needs rectifying, but it also highlights the concerns that independent producers have regarding any future involvement of the BBC in the use of Licence Fee funds earmarked for S4C.

30. Provided concrete safeguards are put in place to guarantee S4C’s independence, status as a publisher-broadcaster and level of budget, TAC accepts the principle of

122 using the Licence Fee to part-fund S4C. But such funding must be provided in a way that ensures there is no possibility of those funds being appropriated by the BBC for any purpose, whether or not it relates to S4C or Welsh language broadcasting.

31. Logically this would be best be ensured by ‘top-slicing’ the Licence Fee upstream, prior to the point at which those funds pass to the BBC, with S4C receiving its share directly.

32. TAC’s understanding is that this would preclude the need for any involvement from the BBC Trust, and therefore presents the simplest, clearest solution to ensuring S4C’s independence from outside influence.

BBC Trust

33. In the event that ‘top-slicing’ and/or separation from the BBC Trust were to prove impossible for practical reasons, careful thought needs to be applied to any role played by the BBC Trust, to ensure that S4C’s independence is not compromised. The Secretary of State for Culture, Olympics, Media & Sport has said that he will ensure editorial and commercial independence, but has not so far committed to S4C’s independence as an organisation. In theory therefore S4C could end up being in full control of only the £7m that comes directly from the DCMS.

34. TAC recognises the move by BBC Trust Chairman Sir Michael Lyons to allay concerns over the new funding arrangements, but these assurances have stopped short of providing the kinds of clear cast-iron commitments that will ensure S4C’s integrity is maintained. For example Sir Michael has stated that “S4C should retain its strong relationship with the independent production sector in Wales” 10, but TAC is adamant that a clear statement must be made ensuring that 100% of the content funded under the new arrangement will be for commissioning content from the independent sector.

35. The same principle applies to Sir Michael’s assurances, given in the same letter, that the Trust wishes to see the continued editorial independence of S4C.

10 Letter from Sir Michael Lyons, BBC Trust, to John Walter Jones, S4C, 10 November 2010, p2

123

36. If the money is channeled via the BBC, TAC rejects the BBC Alba comparison as an example of how the arrangement might work. The BBC Alba model would not work for S4C.

37. It should also be stated clearly within the BBC Charter that the BBC management has no jurisdiction over any aspect of the licence fee funding diverted to S4C.

Guaranteeing a Future for S4C

38. TAC asks the Welsh Affairs Committee to consider the case for the introduction of concrete safeguards to ensure that beyond the CSR settlement, there is a long-term, future for an independent and sustainable S4C:

o A guaranteed minimum level of funding from the Government and BBC Licence Fee, the latter of which funding should be made available to S4C via ‘top-slicing’ and being supplied direct to S4C..

o An ironbound commitment that 100% of the planned Licence Fee contribution is spent with independent producers in Wales.

o A guarantee of continued editorial and managerial independence for S4C.

o S4C must going forward be subject to regular, transparent, formal strategic review, to allow continuing clarity of purpose and the stability needed to encourage investment.

39. To ensure genuine and long-lasting stability for Welsh language broadcasting and the Welsh creative economy, all of the above should be written into the current Public Bodies Bill and/or forthcoming Communications Act.

40. To this end, TAC asks that consideration is given by the Committee that a way to achieve the above would be to introduce a binding agreement, akin to the BBC Charter, for S4C, outlining its structure and purposes, which would be subject to regular systematic review, according to a pre-agreed process and timetable. This would allow regular periods of review between which would be time for both S4C and

124 its independent production partners to plan effectively and deliver the best content services to the people of Wales and beyond.

Relationship with the Welsh Assembly

41. The Committee asked respondents to give consideration to whether the finance and accountability of S4C should become a devolved matter. This has historically given rise to the question of whether that level of funding could be maintained by the Assembly in the face of other pressure on public funds. The landscape has to some extent shifted with the move over the next few years to transfer most of the source of funding of S4C to the Licence Fee. TAC would at this point simply reinforce the point that at present the key issue is for this funding transition to be handled in a way that preserves in statute the future of S4C’s independence, funding, and status as a publisher-broadcaster. It may subsequently be the case that the debate can be had about the respective merits of Welsh Assembly and DCMS oversight. One immediate thought would be that any future involvement of the Welsh Assembly Government should be in a way that joins up broadcasting and creative industries in Wales, and at the appropriate time TAC would willingly play a part in any discussions on how this might work.

November 2010

125

Written evidence submitted on behalf of the BBC Trust and the BBC Executive Board

This evidence to the Welsh Affairs Select Committee is provided jointly by the BBC Trust and the BBC Executive Board.

The BBC Trust is the governing body of the Corporation with responsibility for setting the strategy for the BBC and representing the interests of licence fee payers. The evidence from the Trust deals with the strategic relationship between the two broadcasters.

The BBC’s Executive Board is responsible for the operational management of the Corporation. The evidence from the Executive, provided by BBC Wales, outlines the programming provided by the BBC to S4C.

BBC Trust evidence

1. BBC and S4C Strategic Partnership

1.1 Under the 1990 Broadcasting Act, the BBC is required to supply at least 10 hours of television programming each week (equivalent to 520 hours per year), funded by the licence fee, to the Welsh language channel S4C. In 2006 this statutory supply was codified – in financial terms as well as hours – in a three-year Strategic Partnership between the BBC Trust and S4C Authority.

1.2 The first strategic partnership is currently being renewed, and the BBC hopes to complete this process by the end of 2010. The renewed partnership would be for two financial years, until March 2013.

1.3 Renewing this partnership is important to the BBC as the two broadcasters begin a journey towards greater collaboration.

1.4 In addition to the formal partnership the Trust has encouraged the BBC Executive to explore additional collaboration between the two

126 broadcasters, particularly in sharing ‘back office’ and support functions. The S4C Authority outlined their own support for shared functions in their recent submission to DCMS (6 October 2010) and management teams from both broadcasters continue to explore the possibilities in this area.

2. Spending Review announcement

2.1 The Secretary of State for Culture, Olympics, Media and Sport, Jeremy Hunt, has made clear that, having decided to reduce the UK Government’s funding for S4C as part of the Comprehensive Spending Review, a new partnership model with the BBC was the best way of securing the long term future of the service. This proposition was put to the BBC in the context of discussions on a new licence fee settlement. The BBC is now committed to taking forward this policy.

2.2 A new arrangement will see the BBC build upon our existing commitment to the provision of a broad range of Welsh language services. It will provide the BBC with a new, additional, responsibility for funding a large part of a high quality S4C service.

2.3 The BBC has no ambitions to take over S4C. The Corporation is committed to a creatively independent S4C, which attracts revenue from a range of sources, including the licence fee. This income will be alongside a reduced grant from DCMS, of £6.7m in 2013/14 and £7m in 2014/15. The BBC Trust shares the determination of S4C, and the independent production sector in Wales, that S4C should retain its strong relationship with that sector.

2.4 The settlement between the UK Government and the BBC stipulates that in 2013/14 and 2014/15 the BBC will contribute £76.3m and £76m respectively in cash to S4C. This will be in addition to the continuation of the statutory supply of programming to the organisation.

2.5 The settlement also stipulates that there will be a further review of S4C’s strategy and finances, which will conclude before the end of

127 2014/15. The BBC does not yet have a position on how that review should be undertaken.

2.6 The BBC Trust is the guardian of the licence fee and as a result will need to have oversight of how the licence fee that is allocated to S4C is being spent. New governance arrangements for S4C will be required in order for the Trust to have appropriate oversight of this. The licence fee settlement between the UK Government and the BBC sets out in broad terms how this might be achieved.

2.7 The BBC would like to move quickly to agree the form that these governance arrangements will take. The BBC Trust is committed to working with the S4C Authority and DCMS to find appropriate governance models and to work through the issues that will arise from this change.

BBC Executive evidence

3. Context

3.1 The BBC has been producing Welsh language television programming for over 50 years, and this output has played a key role in supporting the S4C service since the channel’s launch in 1982. It is a central component of the BBC’s mission in Wales, and makes a strategic contribution to the fulfilment of the BBC’s public purposes in Wales.

3.2 In 2009/10, BBC Wales supplied over 600 hours of programming to the channel. This content forms a key part of our commitment to Welsh language licence fee payers, which encompasses services across television, radio and interactive platforms.

3.3 The BBC’s services for Welsh language speakers include BBC Radio Cymru, Wales’s only Welsh language radio station. This comprehensive speech and music service broadcasts for 20 hours each day and remains the most popular radio station amongst Welsh speakers, ahead of BBC Radio 1 and 2. The BBC’s online offering in the Welsh

128 language has also developed considerably over the course of the last decade, reflecting the growing importance of interactive platforms.

4. Current BBC programme supply for S4C

4.1 The BBC’s programming contribution to S4C is highly valued by S4C’s audiences. It accounts for about a fifth of S4C’s total output yet attracts almost 40% of the channel's viewing.

4.2 The BBC’s programme supply to S4C is built around three core pillars – journalism, daily drama and sport.

4.3 News has been at the heart of the BBC’s offering to S4C audiences from the outset. In 2009, this news provision was further extended to create a comprehensive Newyddion service broadcasting 6 times each weekday. It is a highly valued and distinctive service - blending Welsh, UK and world news for Welsh language speakers. In addition, the Ffeil news programme delivers a bulletin which is aimed at children every day of the week.

4.4 Beyond daily news, the politics programme CF99 offers analysis of Welsh politics and a forum for political debate. Pawb a’i Farn travels the length and breadth of Wales to give people the opportunity to quiz Wales’s politicians about the burning issues of the day. The current affairs strand Taro Naw adds considerable depth to Welsh language journalism.

4.5 The daily popular drama Pobol y Cwm is the mainstay of S4C’s evening schedule and remains one of S4C’s most popular programmes. Production of the programme will move in 2011 to BBC Wales’s new drama production centre in Cardiff Bay, and this will enable the programme to migrate to a full-scale HD operation.

4.6 The BBC also provides comprehensive coverage of the National Eisteddfod for S4C viewers. In 2010, more than 100 hours of output were broadcast from Ebbw Vale.

129 4.7 In addition, the BBC provides expert coverage of live rugby on S4C, including the Six Nations and Autumn internationals, weekly Magners League matches and the Welsh Principality Premiership. Live rugby attracts a wide audience - Welsh and non-Welsh speakers alike - to the channel. Since 2008, English language red-button commentary has been available for domestic matches.

4.8 Looking to the future, BBC Wales will, of course, continue to provide a range of programmes that deliver outstanding public value to S4C. In doing so, however, we will face challenging efficiency savings - in common with the rest of the BBC - and we expect the overall number of hours produced by BBC Wales for S4C to fall closer to the statutory level by 2012/13.

5. Collaboration

5.1 The BBC and S4C management teams announced in September that both broadcasters would undertake a major joint research project to assess long term trends in the usage of Welsh language media. The research will play a major role in helping to ensure that the services of both broadcasters remain relevant with Welsh language audiences for years to come.

5.2 In parallel with this work, and in light of the financial pressures faced by both S4C and BBC Wales, both organisations have recently engaged in discussions to explore new ways of working that might assist in confronting the challenges ahead. This initiative predates the recent Spending Review and Licence Fee announcements.

5.3 The BBC and S4C management teams intend to work together to explore the scope for collaboration across a wide range of areas including marketing, research, distribution and technology under the renewed strategic partnership to March 2013. They will also undertake an assessment of longer term options that should help to inform the new partnership proposed by the Government in the Licence Fee settlement, including the strategic benefits of co-locating both organisations at a single media centre. Co-location could help deliver

130 significant operational savings for both broadcasters as it would allow technology and transmission systems to be shared.

Conclusion

In these challenging times the BBC Trust and Executive hope to work positively with the S4C Authority and its management team to ensure distinctive quality programming in the Welsh language that is valued by its audience.

November 2010

131

Written evidence submitted by Mercator Institute for Media, Languages and Culture, Department of Theatre, Film and Television Studies, Aberystwyth University

Summary

• An appropriately funded broadcaster is essential to the future sustainability of the Welsh language. • Media institutions are vital to language maintenance. Television makes a significant contribution in five main areas: economy, status, linguistic, democratic communication, culture. Language communities with strong media provision are more viable in the long term. • For three decades S4C has been regarded as a world leader in minority language media as well as an example of progressive policy-making on the part of the UK government towards the Welsh language. • Any substantial reduction in budget should be evidence-based and should not undermine S4C’s core mission of providing high quality and a diverse range of programming in the Welsh language. • An independent S4C should explore further collaboration with other broadcasters and production companies as well as with other organizations within the Creative Industries Sector. • There is a growing case for the financing and accountability of S4C to be devolved, though this is not without its complications.

Introduction

1. The establishment of S4C in the Broadcasting Act 1980/81 is widely regarded as an historic and significant milestone in revitalising minority languages in Europe and indeed across the world. Its creation as the first substantial television channel operating in a minority language marked the beginning of a new epoch for minority language media, with a number of other public service broadcasters following suit such as Basque, Catalan, Galician (1980s), Frisian (Netherlands) and Irish (1990s) and Swedish (in Finland), Scottish Gaelic, Maori (2000s).

2. The public campaign that led to the creation of S4C has also served as a source of inspiration and empowerment for communities concerned with the future of their languages. In addition, the S4C model is often cited as an example of a successful broadcasting policy for planners at all levels of government.

3. S4C’s contribution to the development of the Welsh language over the past three decades has been acknowledged by media specialists and sociolinguists. It is widely recognised that media provision in a minority language is one of the key indicators of linguistic vitality and that language communities that have a substantial media presence consistently score higher across a range of different studies than those without. a. Television, in particular, has an effect on the status of a language both within its community of speakers and beyond, which in turn has a trickle-down effect on attitudes towards the language, including language use and linguistic behaviour.

132 b. Moreover, it has a significant economic impact in the media sector itself (through institutions, companies and the freelance economy) in diverse satellite industries and it plays a role in strengthening and supporting other creative industries. c. At a ‘linguistic’ level, television can maintain and develop the linguistic repertoires within a language, stimulating and disseminating new words as well as increasing the levels of inter-comprehension between different dialect forms within the population. It is also accessible – through subtitling and ancillary services – to a wider audience beyond fluent speakers in a way that traditional radio and print media cannot access as easily. d. Television is part of a wider forum for democratic communication, and in the Welsh context, it is even more important due to the weak position of print and electronic media. e. Finally, television is an integral part of a community’s cultural expression. It reflects the community’s image of itself: it is a vehicle to tell stories, to explore who we are, to reflect on our history, our present and our future. It shapes our understanding of our society and presents us with a ‘window on the world’. It is part of creating shared identities. Television increases the visibility of a community and can have an impact on the confidence and self- esteem of its speakers and those who identify with it. It can also help to nurture positive attitudes towards the language, and make it more ‘relevant’ in particular in the case of children and young people.

4. Over the years, S4C has been time and again selected as an example of good practice: (a) an example of successful media policy in the context of language revitalization and (b) the example of innovative, effective and progressive policy making in any sector in the case of the Welsh language.

• The extent to which S4C is fulfilling its remit;

5. The remit of S4C is to provide a high quality television service in the Welsh language. This is stated in the Broadcasting Act 1980/81 and reaffirmed in subsequent legislation (Broadcasting Acts 1990 and 1996; Communications Act 2003). This clear and consistent emphasis on delivery of high quality and a diverse range of programming in the Welsh language is evidence that S4C operates as a Welsh language broadcaster within the traditions of British public service broadcasting with high production values and high percentages of original programming.

6. The Welsh audience’s expectations of S4C’s output are equal – though not identical – to its expectations of major television broadcasters. S4C’s current budget of course in terms of cost per hour is significantly lower. S4C’s Audience Appreciation Index figures (available in S4C’s Annual Reports) show that viewers rate its output in this comparable context, with Welsh language programmes and genre scoring higher, equivalent or lower than their English language counterparts. The quality of S4C’s output can also be judged by the sustained record of awards that its programmes have won in several parts of the world.

133 7. The diverse range of programming has been sustained and developed over three decades and has embraced many of the universal changes that have taken place in the television environment over this period, in particular the development of new genres, scheduling tendencies, ancillary services (such as subtitling and audio description) and on-line access. However, developments across the television sector have resulted in the creation of niche channels (the BBC’s suite of 8 channels compared to two in 1982; Channel 4’s suite of 4 & the +1s etc) as well as a more candid approach to the ways in which the diversity of our society is reflected more directly in programmes.

8. Minority language television audiences are by no means homogenous – just smaller numerically – yet, one single television channel must cater for all needs. When first established, S4C was one of four television channels. Nowadays it competes with hundreds of television channels and their online editions, and television itself sits alongside the wider internet and computer games in the converged digital landscape. Some minority language broadcasters have established separate channels and an advanced on-line presence in order to address these audiences in a multi-channel environment. The strategies deployed by the Catalan and Basque public service broadcasters1 have led to niche television services, in particular aimed at children and young people.

9. Likewise, S4C has strengthened its children’s programming through Cyw (for young children) and Stwnsh (for older children). These services have increased the provision of Welsh language television for children at a time where specific children’s channels (CBeebies, CBBC, Nickelodeon, CITV, etc) dominate children’s viewing patterns. The availability of early morning children’s programmes increases children’s access to Welsh language television. However, the absence of S4C on some web-based distribution platforms – such as through Wii, ipod touch – makes Welsh language children’s programmes less accessible than BBC’s English language children’s programmes. These constitute unnecessary ‘barriers to consumption’ when in fact equality of access should be facilitated.

• What impact recent and potential future spending cuts will have on S4C and what level of public subsidy for S4C is appropriate and sustainable over the longer term;

10. The continued operation of S4C as a high quality public broadcaster cannot be achieved without sustained and continued public investment. Decisions to reduce funding to the detriment of range and/or quality of programming will seriously undermine the fundamental purpose of S4C. The S4C Authority itself has stated that the cuts proposed will affect programming. For reasons already noted, compromising on quality or on range of programmes is not the way ahead for a minority language broadcaster at this juncture in the media environment. In addition, at a time where sustained public investment in the Welsh language is beginning to show a longer term positive impact (e.g. Census 2001’s reversal of the decline of percentage of speakers for the first time etc) it would be rash to jeopardise the progress that is being made in revitalising the Welsh language across the board by weakening S4C. Media, and

1 Catalan Audiovisual Media Corporation (www.ccma.cat) and the Basque Public Service Broadcaster (www.eitb.com)

134 television in particular, are cornerstones of language maintenance in any community, not only minority language communities.

11. The appropriate level of public subsidy must be an evidence-based decision, taken with a full knowledge and understanding of the requirements of a successful Welsh language public service broadcaster.

12. The Council of Europe’s European Charter for Regional and/or Minority Languages was ratified by the UK Government in 2001. In its Third Periodical Report submitted in 2009, the UK government states the following in relation to S4C:

‘The UK Government is committed to a sustainable future for Welsh language broadcasting. The Welsh Fourth Channel Authority, S4C, receives a statutory government grant - £92,817million in 2007/08- updated each year in line with inflation for the provision of Welsh language television services.

In addition, S4C has a statutory entitlement to receive a minimum of ten hours a week of Welsh language programmes from the BBC, free of charge; the Value of these programmes in 2006/07 was approximately £20.6million’ 2

• The cultural and economic benefit to Wales from the investment of over £100 m per annum of public funds into S4C;

13. The cultural and economic benefit of S4C has already been mentioned in this submission. The most recent research shows that 2,000 jobs are derived from this investment, and previous research points to similar figures. In addition, television work plays a pivotal role in many freelancers’ repertoire of economic activity, in an ‘eco-system’ of inter-connection between the various creative industries. Reductions in this budget may well have a domino effect on other creative industries (such as theatre, literature, film, journalism etc) which in turn enrich the talent base required to produce good television.

14. Furthermore, it is important to recognise that this specific investment has benefited several geographical areas in Wales, with strong production centres outside Cardiff as well as in the capital area. There is a case to argue that the awareness of a wider geographical impact on local economies and work opportunities beyond the capital has informed S4C’s strategic decisions to a greater degree than the other broadcasters in Wales over this period of time. Further reductions in S4C’s production budget will have a detrimental impact across Wales.

2 Third Periodical Report by the UK Government presented to the Secretary General of the Council of Europe in accordance with Article 15 of the European Charter for Regional and/or Minority Languages. Page 73.

135 • Whether S4C is maximising the use of its financial and other resources to achieve value for money, to optimise the quality of its output, and to reach as wide an audience as possible;

15. As the recipient of a substantial sum of public investment, S4C’s use of its financial and other resources should be the subject of a comprehensive review undertaken with regularity as the law allows. However, it is important view its performance in the full context of the digital environment, not merely in the role of the traditional broadcaster.

16. Public criticisms of S4C’s strategies also include the public’s concern with excessive use of repeats within the schedule (as voiced in Radio phone-ins etc) and the Unions’ concerns that budgets are being stretched too far. The extension of children’s hours - Cyw provision - was established up without requesting additional resources, a move that was welcomed by some but criticised by others.

17. Reaching a wide audience in the digital world means being able to distribute on a myriad of different platforms. To date, S4C material is not available on all the platforms that carry BBC, ITV, Channel 4 etc. As stated earlier, it is important that minority language media are high quality, visible and easily accessible in order for citizens to be able to make meaningful choices.

• The potential for further collaboration between S4C, the BBC and independent broadcasters in Wales in order to reduce duplication and to achieve economies of scale;

18. Historically, there has been considerable collaboration between S4C, the BBC and the independent broadcaster (ITV) in Wales in the provision of Welsh language programming. However, the role of ITV in Wales has diminished considerably over the past decade to the degree that this has provoked deep concerns about the plurality of the (English language) media in Wales. The relationship between S4C and the BBC has continued over the years, with the BBC providing important programming (News, Current Affairs, Soap, Sport, Children’s etc). Yet it must be noted that the statutory requirement on the BBC to provide at least 10 hours per week of programming has remained static, despite the fact that the BBC’s overall output has increased.

19. The independent production sector is also an important element of the Welsh media landscape. There is an important dialogue to be sustained between S4C and the independent sector. Located in different parts of Wales, there could be strategic advantages of shared facilities.

20. Further collaboration with the BBC, ITV and the independent production sector should be sought in order to identify areas of duplication and potential economies of scale. However it is important that S4C maintains its independence as the Welsh language television broadcaster in order to ensure that this specific mission is sustained at the heart of discussions with other organizations whose missions are broader.

136 • Whether the finance and accountability of S4C, currently the responsibility of the Department of Culture Media and Sport, should remain in Whitehall or become a devolved matter.

21. In terms of language policy alone, it makes sense for S4C to become the responsibility of the National Assembly for Wales. However, there are many other cases where providers of Welsh language services are accountable to Whitehall. While broadcasting itself remains an undevolved matter, there is an argument that the Welsh language broadcaster should be able to make its case directly to that level of governance alongside other public service broadcasters in the UK.

22. However, given the cultural and economic importance of S4C to Wales, and its pivotal role as the Welsh language television broadcaster, its moral accountability lies to the people of Wales. In addition, it is a rare example of media policy based on a bottom-up approach rather than the usual top- down model. It is indeed time to review its accountability.

23. The relationship between the proposed new financial arrangements (major contribution through the licence fee) must of course be aligned to the accountability of S4C. In this context it is useful to remember that that from the very beginning, the creation of S4C (its funding, its remit and its relationship with the BBC and the production sector) was an innovative and unique formula in the UK broadcasting landscape. All avenues should be explored to find the best settlement.

November 2010

137 Written evidence submitted by Mr S G Jones

I write to impress upon all of you how important Welsh Language Television is for the future of the language and the identity of Wales. This channel was set up after much suffering and after a long and expensive campaign, and simply must not be allowed to wither and eventually disappear at the whim and ignorance of one or two Government Ministers in London. Complete independence and an adequate budget is essential for the survival of S4C.

12 November 2010

138

Written evidence submitted by Alun Ffred Jones AM, Minister for Heritage, Welsh Assembly Government

The purpose of this letter is to respond on behalf of the Welsh Government to the Welsh Affairs Committee’s call for written evidence regarding your enquiry into the position of S4C.

Introduction

The Welsh Government takes a very close interest in broadcasting matters. We believe that Welsh citizens should be able to enjoy a comprehensive television service in both English and Welsh. We have expressed our very serious concerns about recent announcements regarding S4C’s funding and governance. We therefore welcome your Committee’s decision to conduct an enquiry into this matter and we are pleased to be able to take this opportunity to present written evidence for the Committee’s consideration. Although broadcasting is a non-devolved matter we have emphasised the importance of involving us fully in the development of revised proposals for S4C moving forward.

Importance of S4C to the Welsh language

S4C’s television programmes are at the heart of our public life. From their very earliest days they have demonstrated that the public broadcasting mission to inform, educate and entertain is as relevant and important for Welsh speaking viewers as it is to those viewing in English.

In approaching 30 years of operation, S4C has played a leading role in promoting and safeguarding the Welsh language by bringing it into people's homes every day. This model has been followed in Scotland and Ireland as a way of promoting their own Celtic languages.

S4C has a key role to play in ensuring that the Welsh language continues to thrive. In this regard, its role is more than just a broadcaster. S4C helps to establish Welsh as a modern language - and as part of everyday life in Wales. It enlivens the language - and its services for children and young people make an important contribution to the task of increasing their use of Welsh. Through its factual, historical and cultural programmes, S4C enriches Welsh society. It has - and will continue to have - an important part to play in delivering the vision set out in the Welsh Assembly Government's strategy for the language.

S4C Contribution to the Welsh economy

S4C’s commissioning policy has greatly contributed to the growth in the independent media sector in Wales, in both English and Welsh. Wales now has a number of highly successful independent production companies that are creating content for many channels and networks, but S4C has been central to their initial development.

Our creative industries are a Welsh success story and make a vital contribution to our economy. That is why we have recognised the sector as one that will continue to receive our support in our new plan to lead Wales to economic recovery – ‘Economic Renewal: a new direction’.

139 The importance of S4C to our creative economy is supported by evidence. An independent report published in November 2010 indicate that S4C's effect on the Welsh economy is worth almost £90m this year.The research by DTZ and the Wales Economic Research Unit at Cardiff University was commissioned by the S4C Authority. The report also notes that S4C is vitally important to independent television production in Wales with S4C being responsible for sustaining over 2,100 jobs in the independent sector and other fields. In addition, in relation to training over the last two years S4C and the independent production companies have invested almost £900,000 in training schemes in partnership with Skillset and the Welsh Assembly Government

In 2009 Professor Ian Hargreaves was appointed by the Welsh Assembly Government to carry out an independent review of the creative industries in Wales and make recommendations on how government could more effectively support the sector. The review was published in March 2010. The Welsh Assembly Government has been implementing the recommendations of this report which aims to make sure public funds can be best used to generate jobs and wealth from the creative sector. S4C is central to this vision and we want to continue to work closely with S4C to make sure the sector keeps on growing. http://wales.gov.uk/docs/det/publications/100324creativeindustriesrpten.pdf

On 5 July the Deputy First Minister launched 'Economic Renewal: a new direction' which sets out the Assembly Government's policy direction to tackle the current economic challenges and meet future opportunities. This policy direction sets out a new role for Government, one which is clearer about the rationale for action and ensures that our resources are focused on priorities with the widest impact.

Economic Renewal: a new direction identified Creative Industries as one of six key sectors where Wales has opportunities for growth. To maximise the opportunities offered by the sector, the Assembly Government has established an expert panel of industry professionals and, as part of the realignment of the department's structure to deliver Economic Renewal: a new direction, appointed a dedicated Creative Industries team.

Funding and Governance Arrangements

As part of the Comprehensive Spending Review announcement on 20 October 2010, the UK Government announced that S4C funding will in the future become partly the responsibility of the BBC. In addition, they announced a 24.4 % cut to S4C’s funding over the four years of the Spending Review period. Since that announcement the Welsh Assembly Government has expressed its serious concerns to the UK Government about the scale of the financial cuts being proposed by the UK Government and their impact on services across Wales. The Welsh Assembly Government recognises that S4C cannot be insulated from the pressures facing all parts of the public sector but we are very concerned about the scale of the financial cuts being proposed by the UK Government and their very real impact on services across Wales and on the wider creative economy. It is hard to see how this level of cut can be implemented without seriously affecting the scale and range of the programme service.

The Welsh Assembly Government will continue to argue the principle that Welsh language broadcasting should not be treated any less favourably than the other aspects of public service broadcasting. We will also continue to emphasise that the principles upon which S4C was established under successive Broadcasting Acts should not be abandoned – that this contract with the people of Wales should not be broken. 140

Despite the importance of S4C to the Welsh economy and to safeguarding the Welsh language, the Welsh Assembly Government was not consulted in any way before the UK Government’s announcement on 20 October in relation to the wide ranging changes to the future funding and governance of S4C. In light of the Secretary of State’s announcement we believe that there should now be a much wider debate about how best to safeguard S4C moving forward. We are encouraged by the Secretary of State’s declaration regarding the independence of S4C. In our view S4C’s editorial independence is absolutely vital.

The proposals from the DCMS that S4C funding should in future become the responsibility of the BBC are of far reaching importance for Wales, the Welsh language and the creative industries sector. The Welsh Assembly Government has consistently offered strong support for the BBC and its crucial role in Wales. However, there are real dangers involved in a single organisation with only very limited accountability machinery within Wales being asked to take on responsibility for such an enormous slice of our cultural life. As a Government we have consistently emphasised the need for plurality in the broadcasting sector in Wales. The future of ITV Wales remains uncertain and loading additional responsibility on the BBC in Wales as a consequence of funding S4C would not be healthy for democracy. It would in our view be a retrograde step to place the BBC in a still more dominant position in relation to commissioning programmes in a small country such as Wales.

The Welsh Assembly Government has regularly referred to the importance of plurality in English language television in Wales as a key aspect of meeting the needs of viewers in Wales. In recognition of the key role played by public service broadcasting in Wales, the Welsh Assembly Government established an expert broadcasting advisory group during 2008. The group was established to develop a response to the recommendations made in phase 2 of Ofcom’s review on Public Service Broadcasting and following on from the announcement of job losses at ITV Wales.The group published its conclusions in the report The Media Challenge for Wales (2009). http://wales.gov.uk/docs/drah/publications/20090730communicationandcontent.pdf

We believe that the Advisory Group’s report provided a compelling rationale for maintaining and strengthening public service broadcasting in Wales.

The View from Wales

One indication of the concern generated by the Secretary of State’s agreement with the BBC was the decision by the leaders of the four political parties in the Assembly to write to the Prime Minister on 29 October 2010 calling for an independent review to be commissioned jointly by the UK Government and the Welsh Assembly Government (at Document 1).1 The call to the party leaders echoed a very similar suggestion made in the review of the Creative Industries undertaken by Professor Ian Hargreaves (http://wales.gov.uk/docs/det/publications/100324creativeindustriesrpten.pdf). The issue of devolving powers over S4C to the Welsh Assembly Government has been raised by many during the last few months. However, we can confirm that there has not been any offer to devolve S4C from the UK Government. When the Welsh Assembly Government raised this issue with DCMS as something which could be discussed there was no further offer from DCMS. The review would be an opportunity to explore all aspects of the Welsh language television service and to inform future governance arrangements.

1 Not published on the Committee’s website. 141 The Welsh Government hosted a broadcasting forum in Cardiff on 3 November with a view to ensuring that as many stakeholders as possible should have an opportunity to feed into the discussion surrounding S4C’s future. Therefore, we arranged a Broadcasting Forum in the Assembly in Cardiff on 3 November. The forum featured representatives of the broadcasters, the independent television sector, union leaders as well as a range of Welsh language cultural organisations. The messages emerging from the Forum reflected the points made in the party leaders’ letter. There was an appreciation that the UK Government announcement leaves some important questions to be addressed and resolved if we are to achieve a solution for S4C which is sustainable in the longer term and which also ensures its continued independence.

The main concern expressed at the forum was to stress the overwhelming importance of maintaining S4C’s independence. This reflects similar concerns expressed by Welsh Ministers. S4C’s editorial and operational independence have been at the heart of its creative success ever since the channel was established. Whilst the benefits of a closer partnership with the BBC are appreciated it was stressed that this should not require the channel to be primarily accountable to the BBC Trust. Whilst S4C will need to be accountable for any funding received from the licence fee the primary responsibility should continue to be via an independent S4C Authority.

There was also a very strong desire to provide long term clarity on funding beyond the period of this current settlement. A publisher broadcaster like S4C needs this continuity if it is to respond to the creative challenge associated with broadcasting in the Welsh language. There was also an encouraging willingness on the part of the independent production community to contribute towards this creative challenge in partnership with the channel.

The clear view was also expressed that there should be an appropriate level of Welsh stakeholder representation in any discussions which now take place regarding structures and governance arrangements. In addition to S4C and other parties, it was felt that the Welsh independent sector should be represented in the ongoing discussions about S4C’s future. The party leaders’ letter also emphasised the importance of Welsh involvement in this process as it unfolds. As a Government we are anxious to contribute to all of the discussions now underway which relate to S4C. We believe that this close involvement would go a long way towards reassuring the concerns that have been expressed about the Secretary of State’s announcement.

The Welsh Government strongly supports the views which emerged at the forum and has communicated these to DCMS Ministers. We also believe that it is important to avoid a situation where the future of S4C is decided without a full public airing of the issues surrounding the current television service and the possible means of addressing these. The future of S4C and its budget should be debated openly and transparent among the people of Wales.

Next Steps

Recent developments in relation the S4C Authority has underlined the need for an urgent independent review of the future governance and funding of S4C, and that this should take place now and not after the crucial talks between S4C, DCMS and the BBC. Such a review would need to consider the scale and nature of the S4C television service and the way that that service will need to evolve in order to keep up with audience demand and expectations. We also believe that it would be crucial for the review to consider the sort of governance arrangements that will be required in future. It will be essential that this includes an appropriate level of direct accountability to the people of Wales and the National Assembly for Wales. The Welsh Government is anxious to play an active role to support the development of any new structures. We believe that this is a crucial component in ensuring 142 that the interests of Welsh citizens are reflected fully in the process of mapping a new future for S4C. The channel has plaid a crucial role in support of the Welsh language and the Welsh economy for nearly thirty years. We are anxious to ensure that it can continue to play an equally important role in future.

29 November 2010

143 Written evidence submitted by Celebrating our Welsh Language

S4C's Future

We write to express our concerns regarding the announcements made about the future of S4C. We therefore call upon you to support taking S4C out of the Public Bodies Bill. This would ensure that its future could be discussed and considered following a comprehensive review as the leaders of the parties in Wales have asked for, and done so in consultation with the people of Wales.

S4C is a unique investment in the Welsh language and a cornerstone for Welsh culture. There are hundreds of channels available on our screens today and it is crucial that we can have the assurance of being able to see and hear the Welsh language on our screens. One of the main reasons for campaigning for a Welsh language channel in the 1970s was to see the Welsh language as the medium of new media and not old fashioned, and S4C has played a huge part in this transformation of attitude towards the Welsh language giving confidence for the people of Wales in the future of the language. The demand for Welsh medium education is on the rise throughout Wales, and this is supported by S4C who provide a wide range of programming for children with Cyw, Planed Plant, and recently, Stwnsh for older children.

We are worried that the cuts to S4C's budget will affect the standard of programmes they will be able to produce. Fair funding must be ensured to maintain and develop the channel's provision: dramas such as Pen Talar and Teulu, events such as the National Eisteddfod and the Royal Welsh, current affairs and sports. Without money, the channel won't be able to compete with other mainstream channels in terms of quality and creativeness. By cutting S4C's funding, you are not only going to see the service deteriorate, but it will also have a directly negative effect on the Welsh language.

The decision to move the responsibility for S4C to the BBC will undermine the independence of the channel, and in the end it will be a further threat to the level of funding for Welsh language programmes and services. We fear we will return to the situation before S4C was established by an act, where Welsh language programming has to compete with English language programming for money. We are concerned S4C will not have the editorial independence because of the partnership with the BBC to make the best decisions for the Welsh language channel.

Taking S4C out of the Public Bodies Bill would ensure that its future could be considered following a comprehensive, open and transparent review which would ensure:

- managerial and editorial independence for S4C from the BBC and Government - a funding formula for S4C which is based on inflation.

S4C is a treasure too important for our language and culture to make decisions on a whim.

BECTU EQUITY Merched y Wawr Mentrau laith Cymru Menter laith Caerdydd Cymdeithas yr laith Gymraeg (The Welsh Language Society) Cymdeithas Alawon Gwerin Cymru (Welsh Folk Song Society) RhAG (Parents for Welsh Medium Education) Cymuned Yr Eisteddfod Genedlaethol (The National Eisteddfod of Wales) Urdd Gobaith Cymru Cymdeithas Cyfieithwyr Cymru (The Association of Welsh Translators and Interpreters) UCAC (Welsh National Teachers Union) UMCA

144 UMCB Cymdeithas y Cymod (The Fellowship of Reconciliation in Wales) CYDAG (Welsh Society of Schools for Welsh Medium Education) Cronfa Glyndwr Friends of the Earth - Cyfeillion y Ddaear Eglwys Bresbyteraidd Cymru (The Presbyterian Church of Wales) Cwlwm Cyhoeddwyr Cymru (Welsh Publishers League) Writers Guild of Great Britain - Undeb yr Ysgrifenwyr National Union of Journalists - Undeb y Newyddiadurwyr

19 November 2010

145 Written evidence submitted by Peter Edwards and Huw Walters

The Future of Welsh Language Broadcasting

In the midst of the ongoing crisis facing Welsh language broadcasting we believe it’s important to maintain a clear focus on how S4C can (once again) become a confident, ambitious, popular, appreciated and respected broadcaster in the minds of its viewers, industry peers, government and other stakeholders.

We believe there is a risk that the current situation is simply put down to organisational, structural and regulatory failings and personality differences. In fact, the issues and challenges are much wider and were apparent before the meltdown began during the summer.

With regard to the channel’s future direction, there has been an alarming reluctance amongst many of S4C’s stakeholders to recognise the scale of the challenge and the radical extent to which Welsh language broadcasting needs to change, but also the huge opportunities which exist for those prepared for the challenge.

Schools of thought seem to fall into one of two camps :

Either : • A significant cut to S4C’s funding is potentially fatal and a direct attack on the Welsh language. The solution lies in campaigning and protesting with the passion which helped set up the channel thirty years ago. This view often romanticises S4C’s past history in order to gloss over some of its current weaknesses. Or : • Those who regard the challenge as a largely financial one which can be faced by improved systems of commissioning, providing more stability for the production sector and by making efficiency savings. The concentrations of talent and resources which currently exist in the production sector can be squeezed further to make up for the funding gap. More of the same but cheaper, with some services cut completely.

We believe that a far more radical overhaul is required. The current S4C model is not delivering viewers in sufficient numbers. It is not delivering enough for the Welsh economy. It is not delivering public value in return for the significant investment which is currently being made by DCMS and which has been committed for future years via the Licence Fee. If the model doesn’t work on a £100m budget how will the same model work with an £83m budget ?

We believe there is a golden opportunity to reinvent Welsh language broadcasting in a way which can increase viewer engagement across existing and new delivery platforms, can reinvigorate the creative industries in Wales and can demonstrate clear public value to the government and other stakeholders. This will require a major rethink of the type of content which is commissioned, the way in which it is commissioned and the way in which it is financed.

What would it look like ?

146 As media entrepreneurs we are concerned that any new organisation that replaces S4C should be transparent in its operation, that it engages with the new technologies and that competition drives transparency, cultural and economic vitality.

We are not particularly concerned with the past failures, preferring to change the mindset of Welsh language broadcasting, to reinvigorate the audience and to engage with Welsh learners and the younger audience who have turned their backs on S4C.

The S4C Authority could be replaced by a small board not dissimilar to the new Creative Advisory Board set up by WAG with a representation of business, media, music and the digital technologies and content, not necessarily all Welsh speaking.

The relationship with the BBC would require one representative from the BBC on the Board. The Board would regulate the executive management of S4C which would remain responsible for the operation of the service. Having industry experience at Board level would make scrutiny of the Executive more effective. There must be a clear process of engagement by the Board with the audience and the production sector who should know who they are and what responsibilities they have.

The commissioning model

In any small country with limited resources there are inevitably difficulties in ensuring plurality of opinion and variety and vitality of entertainment, artistic endeavour and talent development.

Essentially in the past we have had one person making the programme decisions in the Welsh language and one in the English language. This is patently dangerous. We have to introduce an element of competition other than at commissioning level.

We are suggesting two competitive funds. The major fund would deal with output where a high degree of local content and origination is desirable – eg news, sport, current affairs, events and soap. The second fund (ideally co-funded from S4C’s commercial fund) would deal with content which has universal appeal – eg children’s content, landmark series, high- end drama and documentary, film and digital media. The responsibility for commissioning from each fund would be separated. This would open up opportunities for internal and healthy competition. Both funds should be driven by the mindset in which co-funding is the norm. This would be a major psychological change for the independent sector in Wales which has become obsessed with "regional" 100% funded output. Not everything can be co-funded, but this requirement would certainly sharpen the commercial nous of our companies and drive them to put the world market at the forefront of their thinking. As these funds would be competitive and subject to deficit funding and our concern being to develop an audio-visual sector which is competitive and genuinely commercial, the entrepreneurs must have an opportunity to profit from their business. The issue of both Welsh language and English language rights becomes important. In the way that companies elsewhere in the UK have gained complete control of their commercial rights then the same must happen in Wales.

Particular genres present specific opportunities :

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Film

The announcement that the UK government is willing to increase investment in film is extremely encouraging and we see an opportunity in Wales for the Film Agency for Wales to play its part in partnership with S4C. The work of FAW is built upon backing the talent, and this has led to considerable success with films like Separado, Sleep Furiously, Submarine and I am Slave. Development of talent is the gold dust of any branch of the creative industries and this is where S4C have failed for the last 10 years, limiting the creative imagination of a generation. Outside Wales, the Film sector is 100% co-funded,and there is no reason why Welsh language film shouldn't be as successful as it has been in the past. FAW has the expertise to develop and co-fund a number of films annually. As a means of rebuilding the audience, exhibition of films in the village halls and cinemas of Wales has an important role to play. The allocation of a sum of money ring-fenced for film co-production and development could be managed by FAW, answerable to a joint board of S4C and FAW.

On-line

This area has been consistently ignored by S4C. It is however the crucial area for talent development, new programme ideas and rebuilding the audience. It is the low -cost entry point for new talent and new businesses. As a sector it has grasped the opportunities of the new technologies and the zeitgeist of the audience. Limited amounts of public funding could make an enormous difference to build the sector. However, the current frontier-type freedom that exists on-line is an essential part of its appeal therefore. Whatever funding comes to the sector must therefore be at arms length from any corporate style S4C or equivalent. A small fund with a very light touch administration and answerability could make a real impact.

Children’s services

There will be a need to gain maximum content provision for minimum cost without sacrificing quality. We believe there are 3 ways to achieve this :

1. International co-production, if set up properly, will deliver high production value original content at relatively low cost. In some cases, it will also generate income through overseas licensing of originated programming. Superted, Fireman Sam and others were all shown first on S4C and generated significant revenues for the channel and its commercial partners.

2. The consumers of content – in this case children and their families - will represent a well defined and valuable niche market for appropriate goods and services. Managing the advertising, sponsorship and merchandising functions will require specialist expertise. Managing a balance between generating income and maintaining the ethos of the service will be key.

3. The traditional broadcast industry is an insufficiently broad source for content. Games and comics will be equally engaging. Patterns of audience involvement are

148 likely to be very different from traditional tv channels. Content will therefore have to be developed and acquired by cost effective means from a multitude of sources.

We firmly believe the focus should be on seeking innovative ways to add value to the existing investment in children’s public service content as outlined above. A franchised children’s service broadcast on S4C in Welsh, but including an English language partner and commercial partners willing to invest in return for a share of exploitation rights would be a highly saleable proposition as well as providing a better quality of service for children in the Welsh language. Such a service would also provide a useful counterbalance to the near monopoly which the BBC currently has in public service content for young children.

Partnerships

The relationship between S4C and the BBC will become even more important under the new funding arrangements, however it should not become an exclusive relationship. One of S4C’s historical strengths has been its ability to work alongside a wide range of partners in the UK and internationally – particulary in the co-production of programmes. Why limit these opportunities by getting too close to the BBC ? Why not Sky Sports or Sky Arts in their respective fields ? As a general strategic principle, S4C should be giving priority to engaging with a wide range of industry stakeholder / partners. This would : (i) provide added financial value; (ii) build relationships with partners who might be supporters of Welsh language broadcasting during difficult times; (iii) would encourage S4C and its suppliers to raise their game and prove its value by measurable successes.

We think the proposal to fund S4C from the Licence Fee is a neat solution at a time when there is very little room to manouevre in the public finances. Assurances from DCMS of editorial and operational independence are welcome, although we are puzzled by the lack of explicit guarantees regarding financial independence from the BBC. Why is DCMS stopping short of confirming that ? Is it nervous of opening a can of worms by asserting that the Licence Fee is an investment in public service broadcasting rather than the BBC’s money ?

Guiding principles for a new S4C :

• A national rather than a local or regional service. It’s content should reflect the broad range of subject matter which a national service would cover.

• A cross platform service where digital content is as important as linear television content – particularly for demographics which aren’t currently being reached by tv.

• A service which uses its public funding as a base not a ceiling for its activities and which will pro-actively seek out opportunities to co-finance content with a wide range of partners in Wales, the rest of the UK and in the international market.

• It must make a genuine economic impact for the people of Wales and the economic benefits of S4C should do much more than merely translate programme spend into jobs.

147 • A service which encourages the production sector to innovate – creatively as well as technically.

• A service which encourages the production sector to be entrepreunerial and to find new ways of funding Welsh language content.

Remember, this is a broadcaster which has garnered three Oscar nominations, two US Emmy Awards and whose programmes have sold to over 100 countries around the world. Ambition will be crucial to the future success of the service.

November 2010

Peter Edwards is currently Chair of the Film Agency for Wales and a former Head of ITV Wales drama department. Peter has produced and directed hundreds of hours of television as an independent producer, for ITV and BBC including being a director on the first team of Eastenders. He has produced feature films including the BAFTA Carl Foreman award winning A Way of Life. He has produced 14 x 2 hour tv movies in the A Mind to Kill series – made in Wales which have sold to over 90 countries world wide. He has worked in Spain, South Africa, Netherlands and Poland

Huw Walters is a director of Calon and has 20 years experience of media business affairs, programme finance, co-production and sales. Uniquely amongst producers in Wales, Calon’s recent track record includes working with S4C, ITV, BBC 1 and 2, Channel 4, BBC Alba, Five and Nickelodeon in the UK. Calon programmes are currently licensed to broadcasters in the UK, Ireland, France, Germany, Italy, Scandinavia, Australia, South America and the Far East. Prior to joining Calon, Huw worked as Director of International Business at S4C where he brokered co-production deals in every major territory with partners including HBO, Discovery Networks US, ZDF Germany, France Television and ABC Australia. He also led a team exporting programmes made in Wales to over 100 countries around the World. During his time at S4C he sat on the board of the commercial subsidiaries which generated additional revenues for the channel.

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