Memorandum submitted by S4C (GLOB 71)

1. Executive Summary

1.1 The way people in Wales, as in the rest of the world, consume entertainment and information is changing. Technologies are converging and people demand and are being supplied with content whenever and wherever they choose to use it.

1.2 S4C has and is meeting the challenges and opportunities thrown up by the digital revolution. It has engaged with new platforms as they have come on stream and is continually reviewing the nature of its provision.

1.3 S4C’s Creative Excellence Strategy and the rebranding of services have turned it into a distinctive brand which stands out among the several hundred television channels available. These changes have been well received by the audience.

1.4 The changes in global communications have implications for the creative industries in Wales. We are seeing content producers consolidating with increased investment in this key growth area for the Welsh economy. S4C has played a major part in promoting this economic agenda.

1.5 S4C and the independent production sector have together had great success in international markets. Through our partnership with the independent sector in Wales we are making the most of S4C’s public capital in priming further investment in the burgeoning creative industries sector.

1.6 Public service broadcasting is likely to come under pressure in the digital-only age and children’s services particularly so. S4C is taking steps to address this issue with the proposed launch of a new children’s and young people’s service.

1.7 S4C offers its services on all digital platforms in Wales and on satellite across the UK. This is a significant benefit to viewers, Welsh speaking or otherwise. S4C on digital terrestrial television (DTT) and cable is limited to Wales and we have asked the BBC and DCMS to consider post switchover, carriage of our public services throughout the UK on DTT.

2. Introduction

2.1 S4C is a public service broadcaster (PSB) that provides a range of high quality Welsh language programmes on many platforms, including broadband.1

2.2 We view our responsibilities as a PSB in the context of a global broadcasting and communications ecology. Whilst operating primarily at a Wales level we are facing competition which respects no geographical boundaries in terms of content and delivery technologies.

2.3 S4C’s core language of communication is Welsh, while the language of global competition is English. Our output, irrespective of language, will quite rightly be judged by viewers against global standards of broadcasting.

2.4 S4C is but one of several hundred television channels potentially available to viewers. It is not simply a PSB service in Welsh about Wales. Rather, we are a broadcaster that responds to tastes and expectations which are influenced by global agendas and technologies.

2.5 Welsh speakers have every right to expect their public service television and content to be as contemporary in terms of image and presentation as the next

1 Details of S4C’s Remit, Funding and Regulation can be found at Appendix 1

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channel. S4C is a key determinant of the image of the Welsh language in the 21st century. Ours is a forward looking image in an ever changing age.

3. S4C meeting the challenge

3.1 Twenty five years since it first went on air S4C is as susceptible to global broadcasting influences as any other channel. We have adapted and responded to the changes and challenges in the industry as they have arisen.

• S4C joined the digital revolution in 1998 when S4C digidol, a twelve hours a day Welsh language channel, went on air.

• When the National Assembly was created in 1999 S4C2 went on air offering full coverage of the plenary sessions and committees.

• As take up of the internet gathered pace we responded with a wealth of websites and additional services. We now have a large catalogue of programmes available on-demand through broadband and are available through analogue and digital terrestrial television, satellite, cable, live streaming as well as through internet protocol television (IPTV).

A full list of our present services can be found at Appendix 2.

4. The changing nature of public service broadcasting

4.1 We are seeing the convergence of technologies and the transition of people’s viewing habits and entertainment consumption patterns. This means a significant change in the way education, entertainment and information is now created and consumed in the digital world. S4C views these changes as an opportunity rather than a threat and is committed to ensuring Wales, its people and businesses, are not left behind.

4.2 85% of homes in the UK now receive digital television.2 (The corresponding figure for Wales is not yet available but previous reports have consistently shown Wales as having a higher percentage of homes receiving digital television.) Among individuals the figure for Wales is 91%, and 87% for the UK.3 Internet and broadband take-up among individuals in Wales is on a par with the UK. 59% have an internet connection at home in Wales and 42% have broadband.4

4.3 It is against this background that S4C is seeking to evolve the way it operates in our globalised, converging, multi-channel and multi-platform future.

5. Creative Excellence

5.1 We set out to address the challenge of globalisation with the publication of our 2004 Creative Excellence Strategy,5 which has positioned our services as leading providers of high quality content - including live events, children’s, drama, culture, news, entertainment, rural and lifestyle programmes.

2 Ofcom Digital Progress Report 19 December 2007 3 BARB figures 4 Ibid 5 See Hwww.s4c.co.uk/production/downloads/guidelines/strat-rhag.pdfH

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5.2 Quality and distinctiveness will be the gold standards of the multi-channel, multi- platform future. In January 2007 we relaunched our services with a new brand. The re-brand presents a contemporary image and attitude. It aims to intrigue and entertain, creating a distinctive and memorable look for S4C to ensure that we stand out in the digital age.

5.3 The quality of S4C programmes has been recognised on the international stage. The drama ‘Con Passionate’ won one of the world’s most prestigious television awards, the Rose d’Or, beating off competition from the likes of ‘The Bill’. S4C also won the top design award for its rebranding package at last year’s European Broadcasting Union Connect conference in Lucerne.

5.4 S4C has won BAFTA, Celtic Film and Television and Promax awards and has been nominated for Royal Television Society awards as well as having received four Oscar nominations. Such international recognition is important to S4C and to producers in Wales as testament to their ability to compete and succeed in global, creative markets.

5.5 Plurality of provision, particularly in the field of news and current affairs in Wales, especially when regional programming across the UK is under threat, is also a key consideration. S4C sources its current affairs programmes from both the BBC and ITV Wales. The coverage of the National Assembly on S4C2 means that S4C plays an important part in maintaining access to and understanding of the democratic process.

5.6 Concern has been expressed as to the possible threat to editorial independence to a broadcaster in receipt of direct public funding. S4C does not share this concern and told the House of Commons Culture, Media and Sport Select committee inquiry into Public Service Content that it is optimistic about the prospects for public service content in Wales. The committee report concluded: “We are encouraged by S4C’s optimism about its ability to provide public service content in the future. S4C demonstrates that a broadcaster with direct public funding and a tightly defined remit can deliver public service content without having its editorial independence compromised.”6

6. New platforms, new audiences

6.1 The way we consume entertainment, information and other content are all changing profoundly. We are moving from a multi-channel to a multi-platform and soon to an on-demand world. Language is no barrier to the consumer- citizens’ expectations and S4C’s audience has every right to have its expectations met. For if they are not met then the audience will simply go elsewhere.

6.2 To meet the challenge S4C has a multi-platform strategy which aims to build our presence on every major digital platform across the UK. Last year S4C started live streaming of its digital service, S4C digidol, on broadband. The move means that viewers across the UK can tune in to the Channel, free-to-view, on their PCs. Our websites are increasingly popular and we have an extensive library of recorded programmes available.7

6.3 There are an estimated 158,000 Welsh speakers living outside Wales in the rest of the UK8 and it is important that S4C content is freely available to those people, as well as others with an interest in high quality original content. Similarly,

6 CMS Committee Report ‘Public service content’ 15 November 2007 7 See s4c.co.uk/watch 8 RSMB 2006

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dependent on international rights, S4C is now available worldwide through the web.

6.4 S4C has an agreement with Inuk Networks, a supplier of triple-play services to consumers, to include S4C digidol within its IPTV Freewire TV service. S4C digidol is available to students living in some university residences around the UK directly from their own campus accommodation using PC equipment via the high speed JANET network.

6.5 Our aim is not limited to sustaining the Welsh language and culture exclusively in Wales. S4C services should be available everywhere to those with an interest in high quality original content. There is inevitably a tension between the delivery of a service which is broad in terms of range, but must also be high quality within a finite budget. The key to S4C’s success will always lie in getting the balance right.

6.6 Many of our programmes have very wide appeal like live rugby and the nightly soap opera, ‘Pobol y Cwm’. However, there is space for programmes which reach out to new audiences. We have an agreement with Welsh National Opera to screen four of their productions and have also shown contemporary dance on S4C. We continue to show our flagship arts magazine ‘Sioe Gelf’ during peak hours and have a track record of showing serious documentaries.

6.7 Statutory provision exists for the carriage of S4C on all platforms in Wales. The continuation and extension of these obligations coupled with a requirement for due prominence for our services are crucial to the future success of S4C. With a 25 year history as the fourth channel in Wales it is vital that we retain that position post switchover.

7. Employment and the Creative Industries

7.1 A healthy broadcasting industry is beneficial to the Welsh economy. Broadcasting contributes to the employment of creative and technical people, the viability of services which support the industry and to the communication of ideas and issues. Inter-related 'creative industries' can spark economic success and the work of broadcasters, government, independent producers and other agencies are all significant factors in nurturing such success.

7.2 S4C believes that sustained and sustainable growth is vital for production companies to achieve prosperity. That in turn stimulates creativity and innovation. We believe that a production sector which serves Wales alone is not feasible and we are seeing the sector itself changing from one which has traditionally served only local markets to a stronger and more confident sector which can and does compete across the UK and internationally.

7.3 S4C has changed its development funding policy. Rather than offer small amounts of money on a piecemeal basis, production companies were invited through open tender to apply for significant funding to cover development costs over a longer time period. This has leveraged further investment and has allowed for longer term business and talent planning by the companies themselves.

7.4 The animation industry in Wales has similarly benefited. In 2005 three companies, as part of a competitive tendering process, were awarded a total of £500,000 from an S4C animation development and production fund. The companies will develop and deliver a number of multi-platform animation projects, from short films to promotional material.

7.5 These measures, coupled with the reassignment of programme rights on current and future work, have boosted the value of the independent sector and have allowed companies to put into place more sustainable business frameworks. This means that they will be better placed to exploit global markets for audio visual

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content while retaining their base here in Wales. S4C and viewers reap the benefits of higher quality programmes and on screen excellence.

7.6 Independent production companies and S4C have had considerable success in exploiting international markets. S4C programmes have been sold to more than 100 different territories. Recent successes include ‘China Rises,’ made by Tinopolis and co-produced with a number of companies including New York Times Television; the pre-school animation ‘Hana's Helpline’, a co-production between S4C, Calon, Five and ZDF, with funding from the EU’s Media+ Programme and the Wales Creative IP Fund; and children’s favourites ‘Mees’ and ‘Sali Mali’ which have been sold to Al Jazeera.

7.7 The S4C International catalogue was established in 1982 with SuperTed, the first British animation series to be broadcast by Disney in the USA. The catalogue has grown to over 50 hours, winning two Oscar nominations (‘Famous Fred’ and ‘The Canterbury Tales’) and a collection of Emmy awards.

7.8 Through our partnership with the independent sector in Wales we are making the most of S4C’s public capital in priming further investment in the burgeoning creative industries sector. However, we are not complacent and are currently conducting a full review of our supply chain.

8. S4C’s Economic Impact

8.1 An independent report published in October 20079 showed that S4C’s activities generate more than 2,250 full time jobs in Wales and the equivalent of £87 million of value-added in 2006. Directly employing 177 staff, S4C, as a commissioning broadcaster, also supports a significant number of jobs across Wales. The majority of these are in the high-skill, technology-intensive independent production sector - a key growth area for the National Assembly.

8.2 The report, undertaken by DTZ with the assistance of Cardiff University’s Welsh Economy Research Unit describes S4C as "an extremely lean organisation” and shows how S4C’s policies and purchasing decisions impact on the Welsh creative industries, helping reduce the performance gap between the Welsh and UK economies.

8.3 It states that,“S4C’s role in Wales is not primarily driven by its need to positively impact the economy of Wales but to fulfil its public service remit of providing Welsh language audio visual services. Notwithstanding this, S4C, through its activity, does impact the economy. Over 80% of its total spending in Wales is in the independent production sector.”

8.4 Indeed, what is good for S4C is good for the creative industries and the Welsh economy. We have seen consolidation in the industry with bigger independent producers emerging. Consolidation gives the sector economies of scale, enhanced market experience and a greater portfolio of work. This assists growth and we have seen Welsh independent production companies expand either organically or through merger or acquisition.

9. Viewing and Listening Patterns

9.1 Our Creative Excellence Strategy is bearing fruit. In contrast to the trend for most other terrestrial broadcasters we have seen increases in our viewing during the all important Peak Hours (i.e. the hours in which the substantial proportion of programmes is in Welsh). During 2006 S4C succeeded in increasing viewers

9 The full report can be fund at s4c.co.uk/abouts4c/corporate/e_econrep.shtml

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watching during Peak, with an increase of 3% year on year. This is the second successive year that we have seen an increase in the Peak Hours. Over a two year period there has been an increase of 15% in the ΄000’s viewing.

9.2 S4C’s regular image tracking service shows a high appreciation of the channel among both Welsh speakers and non-Welsh speakers. It is regarded as becoming more modern with a particular strength seen in ‘representing Wales’ in many programme genres.

9.3 We have an increasing audience outside of Wales. In 2007 121,000 people outside of Wales tuned in to S4C in an average week, with some 100,000 of those tuning in to Welsh language hours.10 This compares with the figures for 2006 which show S4C’s all hours weekly reach within Wales was 865,000 with an additional 107,000 viewers from outside Wales.

9.4 Our services are certainly not exclusive to Welsh speakers. S4C believes that making our services accessible to as many people as possible is central to our public service remit. We currently provide English subtitles on at least 80% of all Welsh hours on analogue television. On S4C digidol we provide English subtitles on more than 70% of the service. During weeks 1-49 of 2007, 33% of S4C’s audience in peak hours were Non-Welsh speakers.

9.5 S4C is committed to helping people to learn and improve their Welsh. Our partnership with the language teaching agency ACEN is based around a learners’ website. learnons4c.co.uk gives background information on some of the Channel’s programmes and provides language exercises via quizzes and programme clips. Many of our programmes, live rugby for example, offer a gateway for non-Welsh speakers into S4C and Welsh language content.

9.6 As globalisation continues apace we have seen an increasing emphasis on the local. S4C has to try to cater for a range of tastes and demands, all on one channel. As a result of the already competing demands for finite resources, S4C does not believe that regionalising or localising Welsh language services would be a prudent path.

10. Children’s Services

10.1 There is one genre in which we believe we can and must respond directly to specific changes in consumption patterns. Children’s programmes and services are particularly vulnerable in a multi channel world. Ofcom has stated that, “With an increasing range of media available to many children and a growing number of dedicated children’s channels, children are changing the ways in which they consume media. As a result, traditional commercial public service broadcasters are facing significant pressures on their ability to fund original programming for children.”11

10.2 S4C is already a major investor in children’s programming. We budgeted to spend a total of £10.9 million on original programming for Children during 2007 and have continued with our extended programming provision during school holidays. It is estimated that our spend on programming for Children during 2007 makes us the second biggest purchaser of original programming for children in the United Kingdom.

10.3 Research conducted on behalf of S4C, and by Ofcom and other organisations, has indicated that the way in which children and young people consume audio visual media has dramatically changed. Most viewing is migrating to dedicated channels for children and young people.

10 BARB figures: Weeks 1-50, 2007 11 Ofcom – The future of children’s television programming. 3 October 2007. (Discussion paper.)

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10.4 In order to compete with other channels and media aimed at this audience S4C has concluded that a dedicated Welsh language service for children and young people is required. Such a service will ultimately be available for 15 hours a day between 0600 and 2100 hours when fully developed. It is intended that the new service will be transmitted free to view on all appropriate platforms. No additional, initial funding will be required. S4C will fund the channel through existing funding methods.

10.5 S4C published a consultation paper on its proposals in May 200712 and received some 500 responses, the vast majority of which were highly supportive. Children and young people saw the proposals as reinforcing their pride in the Welsh language. Parents expressed a desire for their children to hear more Welsh in the home, especially so in the case of pre-school children. Many organisations said that S4C should be commended for its commitment to providing this service at a time when many UK broadcasters seem to be backing away from provision for children and young people.

10.6 The S4C Authority is committed to resolving any issues relating to coverage of the proceedings of the National Assembly as part of its planning for the establishment of a dedicated children’s service.

11. Coverage

11.1 In just over two years the analogue TV services in Wales will have been switched off. This will place S4C in the totally multi-platform multimedia world. S4C digidol will be the main service and will be wholly in the Welsh language.

11.2 As a PSB we need to make our content available to as many viewers as possible. In the old analogue world the broadcasters systems in Wales were predominantly about regional services delivered on limited capacity. For S4C this meant coverage in Wales, and also that "external" content was not competing for our viewers’ time.

11.3 Digital systems are the exact opposite; many platforms are available and they respect no geographic boundaries. As a result, the decision was made to offer our services on digital satellite across the UK. This is a significant benefit to viewers, Welsh speaking or otherwise, all over the UK.

11.4 The availability and uptake of broadband has created further opportunities for our content to be seen UK and potentially world-wide. It is also a medium that appeals to a predominantly younger demographic than traditional broadcasting platforms. This is a very important audience strategically for S4C to engage with.

11.5 However, there is still a significant number of viewers in Wales that will continue to receive the majority of its services via the DTT platform after digital switchover. There is a limited number of channels on this platform (approximately 40 or so) and S4C is able to collect a significantly better share of the audience among these homes.

11.6 At present availability of S4C on DTT and cable is limited to Wales. We believe that we should be available to the public across all the major platforms throughout the UK and have requested the BBC and DCMS to consider post switchover, carriage of our public services on DTT throughout the UK.

12 Our proposals and a summary of the responses to the consultation can be found at: s4c.co.uk/plant

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Appendix 1

S4C Remit, Funding and Regulation

The public service remit for S4C on analogue is: a broad range of high quality and diverse programming, in which a substantial proportion of the programmes consist of programmes in Welsh; and, programmes broadcast for viewing between 18.30 and 22:00 every day of the week consist mainly of programmes in Welsh; and, the programmes that are not in Welsh are normally programmes which are being have been or are to be broadcast on Channel 4 [CA03 sch12 p2].

The public service remit for S4C digidol is: a broad range of high quality and diverse programming in a service in which a substantial proportion of programmes consist of programmes in Welsh.[CA03 sch12. p 2].

Following switchover we understand that the remit for S4C digidol will be our main public service remit. This means that the main public service channel will, like S4C digidol, remain a mainly Welsh language Channel.

S4C is funded by the Department for Culture, Media and Sport on the basis of a statutory formula. Additional commercial revenue is raised through programme sales and advertising. S4C commissions the independent production sector to produce most of its programmes. Over 10 hours a week are provided by the BBC. ITV Wales is also commissioned to produce programmes for S4C.

S4C is regulated by the S4C Authority, an independent broadcasting authority. The Chair and the Members of the S4C Authority are appointed by the Secretary of State for Culture, Media and Sport.

Appendix 2 - Services currently provided by S4C

Name of service Nature of Service Platform Access and Footprint S4C At least 37 hours of Analogue 4 in Wales Welsh-language programming per week. Mostly Welsh programmes during peak hours. Channel 4 programmes at other times.

S4C digidol At least 80 hours of Digital terrestrial 4 in Wales Welsh language (Freeview) programming per week. Up to 12 hours Digital Satellite 104 in Wales and 134 of broadcasting per (including red in the remainder of day. button and the UK interactive services)

Digital Cable 194 in Wales www.s4c.co.uk/watch Welsh language Broadband UK (apart from where programming has restricted by rights). been available to watch since January 2006.

Live streaming of Worldwide (apart

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major Welsh events. from where restricted During 2007 we by rights). increased the number of hours of live streaming of S4C digidol. www.learnons4c.co.uk Dedicated service for Broadband Available worldwide Welsh learners using S4C programmes as a learning tool.

Freewire Streaming of S4C IPTV Available on the digidol through Freewire portfolio for agreement with University campuses. INUK.

S4C2 Welsh Assembly DSat 507 throughout UK Coverage 09:00- 18:00 Tuesday- DTT 86 in Wales Thursday. Additional coverage D Cable 195 in Wales of national events.

S4C2 is funded from S4C Commercial revenues and is a partnership with the BBC.

4th January 2008

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