Media Bill

Lord Mendoza Excerpts

2nd reading
Wednesday 28th February 2024 Lords Chamber

[Lord Mendoza (Con)]

My Lords, it is a pleasure to follow the right reverend Prelate the Bishop of Newcastle. I draw attention to my registered interests, in particular having recently stood down as commissioner for culture at DCMS, where I had the great joy of working closely with my noble friend the Minister. I remain there as an expert adviser to the film and TV production restart scheme and chairman of the department’s culture and heritage capital initiative.

I might take a slightly different approach. I welcome the Bill hugely, but I hope that in Committee we achieve a careful balance to avoid overregulation and complexity—we do love regulation. It is quite frightening standing in front of my noble friend, the chairman of Ofcom, while I talk about this, but I hope he will poke me in the back if I say something wrong.

This creative industry is dominated by successful businesses that are international and mobile. The change in technology over the last two decades has been massive, as has been pointed out many times. This is largely down to an immense amount of research and development, and huge capital investment. One of my favourite examples is when I lived in New York in 2000, I used the Netflix postal DVD delivery service. At that point, when it ran out of money, it proposed selling itself for $50 million to Blockbuster, a video-rental store chain. When I looked yesterday, Netflix is capitalised at $250 billion—which, for scale, is three times the value of BP—and Blockbuster is now one nostalgia shop in Bend, Oregon.

Technology will probably continue to move at an even faster pace, as the noble Lord, Lord Russell, mentioned, and keeping up with the regulation from our side will be a non-trivial task. I imagine, in the next year or so, noble Lords will be standing in their drawing rooms and they will say, “Show me some thrillers in German”, or “Bring me some cricket”, and up it will come, totally bypassing any EPG. Even though we can mandate for prominence, it is going to be very hard to achieve any effect with prominence in the future.

Viewer habits are changing. Generation Z, for example, spend 50% of their viewing time on short films on Instagram, X or TikTok. The other day I asked YouTube how many people in the UK can make a living with a YouTube channel. It is an extraordinary number: this may not be completely accurate, but from memory it was 75,000 people—that is a lot of channels.

Of course, there are some fantastic parts of the Bill, and I commend DCMS, the Ministers and the officials who have seen the Bill through multiple iterations over that period. I thank particularly one official, Victoria MacCallum, whom I know very well, who led the team which did this work. The other place had a good debate, and the work of the Culture, Media and Sport Committee has secured great improvement to the Bill. I also, oddly, in the context of the business side, support the Clause 28 amendment, proposed by my right honourable friend the Member for Maldon, to protect smaller businesses by bringing local TV and any future public service channels within the prominence framework, and that is something we might consider in Committee.

I welcome the revision of Channel 4’s remit; it is essential if Channel 4 is to survive, thrive and be sustainable. The idea that it can get involved in its own production and own IP, and begin to build a library of value, is a good thing, but it will not be easy for it, as we are seeing in today’s advertising market.

When considering the regulatory clauses in Committee, I would like us to think about trying to balance regulation with maintaining this thriving economic sector. We should be proud that the Amazons, Netflixes and Apples of this world invest so much in this country. We have all had the notes and, in a way, I have some sympathy with the streamers when they point out tricky features, such as trying to maintain impartiality when you have a giant catalogue of thousands of titles that have been around for a number of years. Something that was impartial 10 years ago may be partial today, and that will be hard for them to maintain. They also make the point, and it is something we should discuss, that the tiering system may not be ideal and we may want to regulate all providers, not just have poor Ofcom decide who is in tier 1 and who is not, at any point.

This is a very significant sector. We are debating broadcast regulation but there is a correlation between local production spend and, for example, the reported Netflix production spend of $1.5 billion a year here. All these companies, including Amazon and Apple, make stuff here. The size of the creative industries in this country is £126 billion of GVA, as we saw in the McKinsey report of late 2023. To give that some context, that is three-quarters of the size of the financial services sector. This is an important and rapidly growing sector, with 2.5 million jobs in it; hence the Treasury saying that this sector is one of the great five economic sectors for growth for this country. We protected it well during Covid, and I should namecheck the outstanding Film and TV Production Restart Scheme, which made sure that production could happen all the way through Covid.

These companies move their investment very quickly; many other countries would also like to host those businesses and their production. In my view, we have to have three conditions in this country for them to stay here. We need a highly skilled and experienced workforce—which we have; that is necessary but not sufficient. We need a good exchange rate; we have very little control over that, but it drives business—particularly this business. We have a very sophisticated tax relief system which has been developed over many years; £1.7 billion of tax relief went to the creative industries in 2021-22, and that is an essential component of this business.

I am trying to get across that we are lucky to host this huge sector. I hope my noble friend the Minister agrees that we have to make sure that this finely balanced environment does not become less attractive through onerous and costly regulation.