Broadcasting (Independent Productions) (Amendment) Order 2014

Lord Clement-Jones Excerpts

Monday 17th November 2014 Grand Committee

[Lord Gardiner of Kimble (Con)]

My Lords, the order aims to ensure that the definition of independent producer for the purposes of commissioning television programmes excludes only those production companies that are UK-broadcaster owned from being considered “independent”. The order does not extend the definition of qualified independent producers to producers owned by UK broadcasters that do not qualify at present. The order merely seeks to reaffirm what has been the agreed policy over the last 10 years, which is that a producer which is owned by a non-UK broadcaster, or is part of the same group of companies as a non-UK broadcaster, should not be prevented from being classified as an independent producer if they meet the qualifying criteria.

The Communications Act 2003 requires the public service broadcasters—the BBC, the Channel 3 companies, Channel 4, Channel 5 and S4C—to ensure that in each year not less than 25% of the total amount of time they allocate to the broadcasting of qualifying programmes is allocated to the broadcasting of a range and diversity of independent productions. The Communications Act 2003 also applies a similar “10% independent productions” requirement to all digital service broadcasters that are not public service broadcasters. The aim of the independent productions quota is threefold: to promote cultural diversity and to open up the production system to new energies and voices; to stimulate the growth of small and medium-sized enterprises, promoting creativity and fostering new talent; and to tackle vertical integration within the UK programme supply market. It is widely considered that the independent productions quota has been working well over a number of years, providing competition and a stimulus to originality that has benefited programme supply in the UK.

However, a few issues with the legislation as currently drafted have been identified and the amendments made through this order are designed to deal with them. Perhaps I may explain a little more. The Communications Act requires that the terms “independent productions” and “qualifying programmes” are defined by order. Article 3(4) of the Broadcasting (Independent Productions) Order 1991 defines an independent producer as a producer who is not employed by a broadcaster, who does not have a shareholding greater than 25% in a broadcaster, and in which any one UK broadcaster has a shareholding greater than 25% or any two or more UK broadcasters have an aggregate shareholding greater than 50%. This definition must also be read in accordance with Article 3(5) of the order, which stipulates that “any person connected” to a producer—that is, in the same ownership chain—must also not be employed by a broadcaster, own more than 25% of a broadcaster, or be more than 25%-owned by one UK broadcaster for the producer to be considered as independent. The meaning of the terms was first specified in the 1991 order, which was subsequently amended in 1995 and in 2003. It is the last of those amendments, to the 2003 order, which failed to reflect fully the policy in relation to ownership of a UK production company that Parliament agreed to. That policy was, in essence, to allow a producer to be treated as an independent producer even if it was owned by a foreign broadcaster so long as the foreign broadcaster’s services did not target the UK.

So, while the 2003 amendment amended certain elements of the definition of independent producers, including introducing the qualification that ownership of the producer by a UK broadcaster was a disqualification, it did not amend Article 3(5) in relation to “any person connected” to that broadcaster or producer. This means that if a person connected to the producer fails any of the tests in Article 3(4) which define “independent producers”, the producer cannot be considered “independent”. That connected person could be, for example, part of a group of companies which include not only a UK broadcaster but any broadcaster anywhere in the world. The net result is that the current definition still excludes some producers that the Government and, crucially, the industry itself believed were within the definition. Ofcom has told us that these production companies include such high-profile ones as Zodiak Media, the maker of programmes such as “Wallander” and “Being Human” for the BBC, and FremantleMedia, which produces the likes of “Take Me Out” and “Through the Keyhole” for ITV. Both companies are owned by broadcasters that predominately operate in other parts of the world. So although a public service broadcaster could commission programmes from these producers according to the strict letter of the legislation as it currently stands, that public service broadcaster could not count those programmes towards its 25% independent productions quota.

It is essential that we clarify this anomaly for broadcasters and producers, as well as for Ofcom, whose regulatory role is to ensure that broadcasters comply with the independent production quota set out in their licences. This order rectifies the situation by redefining the term “broadcaster” to ensure that it refers only to UK broadcasters or broadcasters whose transmissions are primarily aimed at the UK consistently in Article 3. The amendments preserve independent status for producers who are connected to a person who owns or is owned by a broadcaster that does not aim its services primarily at the UK. The order does this by removing the references to “producer” in Article 3(5) so that only the producer has to meet the tests—not the producer and any person connected with the producer. Any producer owned by a UK broadcaster will still be excluded from the definition of an independent producer, continuing to prevent vertical integration in the UK supply market. Whoever holds the licence for a public service broadcaster, whether it is a British or foreign company, has to comply with the public service obligation set out in the broadcasting licence. These obligations are enshrined in legislation and include quotas for UK-originated content and content made in the regions and nations of the UK.

These changes are being made with the support of the industry. The DCMS wrote to all broadcasters last summer to notify them of our intention to correct the legislation. We received no comments opposing the move and, just prior to laying the order before your Lordships’ House, we gave broadcasters the opportunity to comment on the draft. I can confirm that all were supportive of the changes being made. We also worked with Ofcom and PACT, the member body for the UK independent production sector, on this order to ensure that it is fit for purpose. To date, the industry has been applying the definition set out in the policy rather than what is contained in the legislation. These amendments will ensure the policy intent and the legislation are fully aligned.

This is an important clarification for the industry—the public service broadcasters and all other commercial digital channel operators in the UK that rely on the definition to identify whom they commission from to fulfil their quotas for independent production—and will enable Ofcom to undertake its regulatory duties more effectively. This legislation is therefore needed and proportionate, and I commend the order to the Committee.

[Lord Clement-Jones (LD)]

My Lords, I thank the Minister for a very clear exposition. I very much agree that the connected person issue needed to be addressed, and has been very adequately addressed in the order.

However, this is an opportunity to make a slight diversion in terms of independent production. I noticed that the Minister went back to the original 1990 Broadcasting Act and talked about the three limbs and the reasons for the independent production quotas that were set out in that Act: promoting cultural diversity; stimulating the growth of small and medium-sized enterprises; and tackling vertical integration. It is worth while reminding ourselves of those. I noticed that when the committee met in the Commons, everybody vied to talk about their favourite programme and which independent production companies made “The Great British Bake Off”, “Sherlock”, “Rev.” and the like.

However, the fact is that independent does not necessarily mean small—some of these independent companies are very large and it is a very contestable market out there between some of the independent production companies. In that context, it is very interesting that the noble Lord, Lord Hall, in a speech in July, talked about opening up the BBC further to independent production. That then leads on to the BBC charter review and the review by Ofcom of PSB, which I think will be complete next year. PACT has some very interesting ideas about how the BBC might, in its words, become much more of a “publisher broadcaster” over time. All these are very interesting ideas that do not flow directly from this order but certainly form part of a general thinking—a rethinking, if you like—about the role of independent producers.

Since 1990, we have had a particular regime. Is it time, now we have such a robust independent production sector, to move further? Should we be encouraging the BBC—not only with the actions of the noble Lord, Lord Hall, but through the charter review—to engage more in independent commissioning? I notice that the noble Lord, Lord Hall, has plans effectively to make the BBC’s in-house production part of a market in which it will be competing, in a sense, against the independent producers. Again, that is a very interesting idea, and it is very forward-thinking of him. I assume it is to make sure that that production is seen as being as efficient as it can be and is not characterised as bloated or whatever, as it has been in the past by certain commentators. That sounds a very defensible action. It will be interesting to hear the Minister’s comments on whether DCMS was thinking in that direction and on what thoughts it had on the subject generally. I support the order.