Channel 4, Pact respond to C4 in-house production, potential for ‘market shock’

Channel 4 and UK trade body Pact have responded to the government’s recent statement on the commercially funded public service broadcaster being given the freedom to make and own its own content.

Alex Mahon

The Media Bill, announced as part of the King’s Speech to parliament earlier this week, no longer bars C4 from producing its own content if it chooses to do so, which has raised serious concerns from the UK’s independent production sector.

C4 has said it has been working with the Department for Culture, Media & Sport to ensure that any form of in-house production would enhance the value of its public-service role and mitigate negative impacts on the independent production sector.

Sir Ian Cheshire, chair of C4, said in a statement: “I especially wish to stress any move Channel 4 may make into in-house TV production will be gradual, build on the existing diversity in the market and with the intention to avoid any market shock. By way of illustration, we would expect five years after launch, the total of external commissions will still substantially exceed in-house production spending.

“This would be further strengthened by an increase of Channel 4’s existing qualifying independent production quota from 25% to 35%, to bolster its enduring commitment to the sector, particularly with small- and medium-sized independent producers.

John McVay

“The introduction and passage of the Media Bill remains a priority for all public service media organisations. We will wait to see how those elements that affect Channel 4 and the independent production sector are expressed in law before we can be certain of the best way of proceeding on in-house production. In the meantime, we will continue to prepare for the exciting future ahead.”

The final report on the draft Media Bill, published in September, included more details on these proposals, designed to help C4 expand its revenues beyond purely advertising.

Alex Mahon, chief executive of C4, said the broadcaster has been working with the Department for Culture, Media & Sport to ensure any in-house production would mitigate the risks to the UK’s production sector.

“In the complex and highly competitive future we foresee, in-house production may well offer good long-term support for Channel 4’s financial sustainability, but it would never alter C4’s fundamental belief in the importance of independent producers in the UK,” Mahon said.

“Throughout our history, they have had the opportunity to build their companies by launching shows with us and owning their own IP. That partnership has been, and I am sure will remain, the lifeblood of our creative sector. Indeed, in a world where fewer rights are owned by indies, it must remain so.”

Mahon says C4 will raise its formal qualifying indie commitment to the sector by 40% if it takes up the opportunity to produce in house.

“We are only too aware how hard times are across the sector with the impact of the advertising downturn and will always have that at the forefront of our minds in our commissioning strategy,” Mahon continued.

Producers’ association Pact has previously come out strongly against the proposal, especially after the campaigning its members did against the privatisation of the channel, but has given a cautious welcome to plans announced this week for the production arm to be independently regulated.

On the latest developments Pact said: “We are pleased that the government has backed Pact’s calls for the new Channel 4 arms-length commercial subsidiary to be properly regulated independently by Ofcom and UKGI.

“Since the beginning of the year, Pact has worked to convince the government to consider a regulatory system – similar to that of BBC Studios – to ensure more transparency around how a new production arm will operate in the market.

“We welcome the government’s proposal that Ofcom will in future be required to report on how Channel 4’s production arm is operating in the market in its regular review of UK public service broadcasting.

“Pact is pleased that the current 50% out of London quota will be committed to by Channel 4 Corporation ensuring that any changes to this voluntary quota would have a higher threshold to satisfy, and we also welcome the increased indie quota from 25% to 35%.

“We are, however, disappointed that government has decided not to cap how much in-house production the new subsidiary could win as we originally proposed.

“Finally we are pleased that that government will no longer pursue plans to change the definition of an indie producer, which would have potentially damaged investment in the sector and created an additional burden on both independent producers and commissioning broadcasters.”

Pact chief executive John McVay OBE added: “Pact welcomes the fact that government has listened to many of our proposals to ensure the regulation of Channel 4’s commercial production arm. However, we would call on Channel 4 to carefully consider any move into in-house production given the current difficult market conditions.”