Media Bill

Lord McNally Excerpts

Committee stage
Wednesday 8th May 2024 Lords Chamber

[Viscount Colville of Culross (CB)]

My Lords, I declare an interest as a freelance television producer who works for small independent production companies making content for public service broadcasters. I am also an officer of the Channel 4 APPG, so I speak as a critical friend to the channel. I thank the noble Lord, Lord McNally, for putting his name to this amendment. I also thank the many small independent companies to whom I have spoken, as well as Tom Chivers from the Media Reform Coalition, and Channel 4 itself.

I put down Amendments 14 and 15 to Clause 8 because I want to ensure that Channel 4 focuses its commissioning on future support for the SMEs. I hope the amendments will encourage the channel to expand its present commissioning process, which too often rewards large suppliers with large commissions. There will be much argument about the level of the cap below which companies qualify as SMEs. However, subsections (1B) and (1C) of this amendment give the Secretary of State the power to be flexible and alter the threshold figure if it proves to be too low for small drama producers, for instance, but only after she has consulted Ofcom, Channel 4 and independent companies.

Amendment 15 requires the criteria to be extended to an annual revenue of £25 million a year over five years. This would mean that a single large drama commission would not adversely affect a company’s status as an SME by pushing its annual revenue in a single year over the £25 million mark. The information on the company’s revenue will not be hard to find; it will be readily accessible in Companies House.

Channel 4 was set up in 1982 by Mrs Thatcher’s Government in order to break the duopoly of BBC and ITV. Its purpose was to disrupt the television ecosystem, which it did wonderfully well. Its aim was not just to have content different from the existing public service broadcasters and to reach new audiences, but to allow a thousand flowers to bloom. As Mrs Thatcher’s deputy, Willie Whitelaw, said:

“We must aim for a channel that says something new in new ways”.


He added:

“We must seek to provide an outlet for the talent of independent producers”.


Channel 4 has been very successful in encouraging thousands of people across the television industry to leave their comfortable staff jobs in the other public service broadcasters and take the risk of setting up small, independent television production companies. It created a culture in the media where independent producers became risk takers and small business owners, supplying a channel which aimed to reach minorities and poorly served audiences.

For much of the last few decades, Channel 4 has been at the centre of nurturing Britain’s independent television sector, which is the engine of our world-beating creative economy, the seed corn of the industry. But the media environment has changed dramatically in the last few years, both in content commissioning and in the supply side of the industry. Hundreds of small companies, which make up the lifeblood of the industry, have been bought up by mega television production companies such as Banijay and All3Media, which is owned by the American company Warner Brothers.

It is not surprising that these big companies have been so successful. In 2022, over three-quarters of Channel 4’s UK commissioning spend went to production companies with turnovers in excess of £25 million per year, while just 21% went to producers with annual revenues of under £25 million per year, despite these smaller companies making up more than half of all independent production companies in the UK.

Unfortunately, the latest figures, from 2022, show the percentage of Channel 4’s spend on commissioning from those bigger companies to have increased from 64% in 2020 to over three-quarters two years later, while the figures for the under £25 million companies have gone down from 36% in 2020 to 26% in 2022. This has happened at a time when Channel 5—which is privately owned—commissioned an amazing 81% of those smaller companies, a figure which has gone up even further in 2022.

This is contributing to the crisis in the industry, with commissions to smaller indies, and regions, collapsing. The latest BECTU survey of its members estimates that nearly three-quarters of its members are not working. Some 30% have not worked in the past three months, while 34% have had less than a month’s work since November 2023. As a result, there is a dramatic exodus from the industry, which has been one of the beacons of our economy. In February 2024, 37% of the respondents to the BECTU survey said that they were planning to leave the industry, with 40% of women and half of black respondents saying that they were going to look for work outside the sector within five years.

The money to build these small companies comes from the terms of trade, set up to ensure that they get the majority share of the back-end revenue from further sales of these programmes. This comes only from commissions by British broadcasters. US companies pay a straight production fee and keep all the back-end profit, so the Bill needs to focus on ensuring that British broadcasters support the future of up-and-coming content suppliers across the UK. The BBC is carrying much of the burden, but I and many other colleagues have fought hard to ensure that Channel 4 remains in public ownership. That mission having succeeded, the emphasis must be to encourage the broadcaster to support the next generation—the seed corn of television production.

I fear that Channel 4’s attitude can be summed up in its submission to Ofcom when renewing its 2024 licence, in which it said that

“the UK production sector continues to be significantly smaller outside London”,

with

“fewer production companies, often smaller in scale, and therefore with less capacity to develop creative ideas and produce them”.

This statement also relates to Amendments 16 and 17 in the next group, in the name of the noble Baroness, Lady Fraser of Craigmaddie, which will support quotas for commissioning in the regions and nations.

I have been talking to small indies across the country and have been told horrendous stories of the Channel 4 commissioning process—or lack of it. One told me of a series being cancelled just three weeks before filming was due to start. Others had the extreme difficulty of getting programme ideas through the channel’s commissioning process.

I want to balance my statements by pointing out that Channel 4 is capable of commissioning astonishing programmes from small production companies, such as “The Push”, from a small Leeds-based company, Candour, which had good ratings, and told an important story from a diverse community, but there are not nearly enough of these. The channel did point out to me that its emerging indie fund has invested £17 million over the last four years, to identify and nurture emerging talent and to help them grow their businesses. The fund also provides guidance to selected indies about the Channel 4 commissioning process, to provide them with the skill set to pitch for further work. This help must, of course, be welcome, but it is not revenue from commissions.

This great channel, which is still one of the jewels of public service broadcasting, is battling against the headwinds of a fiercely competitive television economy. As it is a publicly owned company, I call on the Government to push it further in supporting SMEs and to help to bolster the future of our creative industries. Channel 4’s slogan is “4 All the UK”, and I ask the Minister at least to look at Amendments 14 and 15, to ensure that this publicly owned channel does just that.

[Lord McNally (LD)]

My Lords, I point out that I did not speak at Second Reading. I was here until 6 pm and then went off to speak at a long-standing engagement at Queen Mary University of London.

It is a great pleasure to follow the noble Viscount, Lord Colville. I put my name to Amendment 14 because I strongly support his campaign, as he has explained it, to make sure that we do not get stampeded or bamboozled into policies because the world is changing, globalising and internationalising and we therefore think that certain things are inevitable. One of the things that we enjoy in the British broadcasting environment is that, for 100 years, we have been bucking the market. It was a Conservative Government that created the BBC as a public corporation safeguarded by a royal charter. It was a Conservative Government that introduced ITV as a confederation of regional television companies. Even today, ITV retains some of the DNA of that regional network; I still consider myself as coming from “Granada land”, and you can still find some of that company’s ethos in ITV today. As was pointed out, it was a Conservative Government, under Mrs Thatcher, that created Channel 4. Let us not be bullied; we have a good record of making television that is national—in the broadest sense—and distinctly British and that sets standards for others around the world.

Unfortunately, I cannot stay for the debate on the next group, but I crept into the meeting that was held on it. I felt like a Sassenach in the gathering of Scots and Welsh and Northern Irish people, putting the point, which has been proved time and again with a little nudging by government, that there is talent out there in the regions. But if you leave it just to the market, you have to make some effort to get results, because London is such a massive black hole of energy.

I am sometimes teased by my colleagues when I refer to the fact that I was on the Puttnam committee that gave pre-legislative scrutiny to the 2003 Act. One of the great advantages of the House of Lords is having that kind of perspective. When I look at that, I see that it was amazing that we got so many things right when we were not just looking through a glass darkly at what was happening. There was no internet and none of the technologies that have been developed in the last 20 years. In that Act, there were still various safeguards for making sure that our broadcasting ecology retained a British stamp to it—a British DNA—and that is why I support this amendment now.

I do not think that the idea for Channel 4 was to create a whole new industry of successful British indies, but that is what it did. It was perhaps too successful, in that many of those indies, as was referred to, were then swallowed up by other companies or themselves became big—not little—minnows.

However, that is the great effort: if we can keep this diversification of commissioning in Channel 4, and in the other countries and the regions, we are distorting the market to a certain extent but beneficially, by forcing it to find the talent in the regions and in the smaller companies. The noble Lord, Lord Vaizey, in his intervention earlier referred to the crude market forces “squeezing out” those opportunities. I therefore hope that Channel 4 will think again.