Channel 4 response to the BBC strategy review Introduction 1. Channel 4 welcomes the opportunity to respond to the BBC Trust’s consultation on the BBC’s future strategy. 2. Channel 4 is a publicly-owned, commercially-funded public service broadcaster. Its core public service channel, Channel 4, is a free-to-air service funded predominantly by advertising. Unlike the other commercially-funded public service broadcasters, Channel 4 is not shareholder owned—commercial revenue is a means to delivering Channel 4’s public purpose end, and any surplus revenues are reinvested in the delivery of Channel 4’s public service remit.1 3. In recent years, Channel 4 has broadened its portfolio to offer a range of digital services, including the free-to-air, commercially-funded digital television channels Channel 4+1, E4, E4+1, Film4, More4 and 4Music, as well as HD services on a number of platforms. Channel 4 also offers a video on-demand service—4oD—and is expanding its range of digital media services at channel4.com, including games, programme material and additional content. These innovations have enabled Channel 4 to stay in touch with audiences— especially younger viewers—who are rapidly migrating to digital media. 4. Channel 4 therefore plays a key role alongside the BBC as the main source of UK-wide competition in the provision of public service content. Channel 4 provides a distinctive offering to the BBC by covering different subjects, airing alternative perspectives, and innovating and taking risks across a range of genres, including current affairs, drama, documentaries and the arts. As a result, Channel 4 has a direct interest in how the BBC prioritises its resources, in terms of the BBC’s relationship with the wider public service system as a whole and its impact on commercial providers. 5. The BBC Trust has asked the BBC Executive searching questions about the future of the BBC. In Channel 4‘s view, the BBC Executive has responded with an incremental strategy for the next licence fee period with a sound focus on UK-produced content, increased distinctiveness and greater quality under the theme of “doing fewer things better”. Channel 4 welcomes this, but believes that the BBC, like all broadcasters, has the opportunity to think more radically about its future role and scope following the completion of digital switchover. 6. In this context, Channel 4 would like to offer its views on the BBC Executive’s proposals for the next licence fee period. Channel 4’s comments focus on the following broad areas: • investment in UK-produced content; • the importance of distinctiveness; and • opportunities to benefit the wider creative industries. 1 Set out in the Communications Act 2003 and recently updated in the Digital Economy Act 2010 - 1 - UK-produced content is key to delivering public service objectives 7. Channel 4 believes that investment in UK-produced content is crucial to the delivery of public service broadcasting (PSB). UK-produced content is highly valued by audiences and drives significant cultural and economic benefits in its own right. High-quality UK-produced content consistently wins awards on the international stage, and provides a showcase and launch pad for writing, directing and acting talent, as well as supporting the UK’s independent production sector. In addition, the provision of compelling content for digital platforms is a key enabler of growth in broadband take-up and next generation access. 8. Channel 4 is committed to commissioning and funding the best content ideas from producers across the UK. Channel 4 is a major investor in the creative economy, spending hundreds of millions of pounds each year on UK-produced content across the Channel 4 network, including digital channels and online. Channel 4 continues to invest in innovative content in partnership with other bodies and has the ambition to grow its investment in content in future, and will seek to generate additional commercial revenues to meet this objective. The BBC’s commitment to content 9. Given the importance of UK-produced content, Channel 4 welcomes the BBC Executive’s objective of focusing on “delivering better quality content to the British public”. The BBC has identified five content priorities: journalism; knowledge, music and culture; UK drama and comedy; children’s programming; and events that bring communities and the nation together. In Channel 4’s view, these priorities are broadly the right areas for the BBC’s content delivery in future. 10. In particular, Channel 4 welcomes the BBC’s prioritisation of UK-produced content in its future plans. The BBC has set out an objective of spending, from 2013, at least 80% of its “net public service expenditure” on content creation, defined as “investment which directly enables the creation of content and audience-facing propositions or which enhances the quality of content/audience experience”. This represents a small increase on the BBC’s current 79% level of investment in content, which Channel 4 believes is a step in the right direction— albeit only 1% point. However, following the completion of digital switchover Channel 4 wonders whether there is an opportunity for the BBC to re-assess its future cost base in order to make its content targets more stretching. 11. The BBC has also demonstrated its increased focus on UK-produced content by committing to reduce expenditure on acquisitions from £100 million currently to £80 million in 2013, and capping it at 2.5p in every licence fee pound thereafter. Channel 4 welcomes this direction of travel, and comments further on acquisition expenditure later in this response. The importance of distinctiveness 12. The BBC Trust asked, as part of its challenge to the BBC Executive, how the BBC can best maintain quality and distinctiveness. In particular, the BBC Trust asked: what should be provided by a publicly-funded service and what should not, and whether more should be done to define what the BBC means by “distinctiveness” and how that can be applied as a lens to judge the output of BBC services. - 2 - 13. Channel 4 recognises the importance of public service providers playing distinctive, complementary roles in catering for audiences. Different broadcasters have different strengths and appeal to different audiences. Channel 4 therefore agrees that the BBC should focus on providing distinctive content and services. In particular, Channel 4 agrees that the BBC should seek to increase its distinctiveness, both in relation to others in the public space—such as Channel 4—and those in the commercial marketplace. 14. While the BBC and Channel 4 both sit at the heart of the UK’s public service system, the two institutions have distinctive roles and strengths in how they deliver their respective remits. In addition, the other commercially-funded public service broadcasters—ITV and Five—each play a distinctive role, as do operators in the wider market. 15. Looking at the BBC and Channel 4, the provision of distinctive services has ensured that UK audiences have access to a wide range of high-quality content. In key public service areas—such as news, current affairs, international and factual programming—the BBC and Channel 4 each play an important, distinct role. For example in news, compared to the BBC’s service the award-winning Channel 4 News—the UK’s only hour long peak-time news programme—appeals to harder to reach audiences such as ethnic minorities and younger viewers. 16. Channel 4 agrees that the BBC should apply a test of distinctiveness to all of its output, and in particular not seek to replicate other organisations’ distinctive tone and approach. Instead, the BBC should work to its own strengths and heritage in defining the type of role it plays for audiences in future including by, as proposed, “doing fewer things better”. In this context, Channel 4 would like to offer the following comments on some of the priorities for younger audiences, acquired content and digital media set out in the BBC Executive’s proposals. Younger audiences 17. Channel 4 has previously set out its views in this area as part of the BBC Trust’s 2008 review of BBC services for younger audiences. As part of that review, Channel 4 outlined the importance of different organisations maintaining distinctive services, and the need for the BBC to ensure its activities do not have a negative impact on commercial competitors or inhibit innovation. 18. Channel 4 notes the BBC Executive’s view that the BBC “should accept that its role in addressing the gap in public service television for [younger teenage audiences] will be secondary to that of Channel 4 and other broadcasters” and that the BBC Executive has recommended BBC Switch and Blast! for closure. Channel 4 welcomes the BBC’s acknowledgement of Channel 4’s success and relative strength in reaching younger audiences. Channel 4 will continue to innovate in this area and provide exciting cross-platform content for older children and younger teenagers, in line with Channel 4’s new remit to serve this audience. 19. However, Channel 4 does not believe that public service provision for younger teenage audiences should simply be left to Channel 4 and others. The BBC still has a role to play in providing high-quality content for teenagers, and this is evident in the BBC Executive’s decision to continue to target teenage audiences - 3 - through services such as BBC3. However, Channel 4 believes that the BBC should strive to serve this audience with distinctive public service content rather than content that is already being delivered by other players. In this way, younger audiences can have access to a range of complementary content tailored to their needs. Acquisitions 20. As part of its ambition to set new boundaries around its activities, the BBC has committed to reduce expenditure on acquisitions from £100 million currently to £80 million in 2013, and to cap it at 2.5p in every licence fee pound thereafter.