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Media Bill: Channel 4 indie commission quota to rise to 35% if it takes some production in-house

The government pledged to support the UK’s independent TV production industry with a package of new safeguards as the Media Bill was introduced in parliament today.

Earlier this year the government committed to giving Channel 4 the ability, via the Media Bill, to make and own some of its content. In the event Channel 4 takes advantage of these new freedoms, the government said new safeguards for production companies, which it has set out today, would protect millions of pounds of investment in programmes made by independent TV producers across the UK.

Following engagement with TV producers of all sizes from across the country, the government has now announced new measures to safeguard Channel 4’s role driving investment into the TV production sector should it choose to start a production business.

Key safeguards announced today include:

  • Increasing Channel 4’s independent production quota from 25 per cent of qualifying programmes to 35 per cent;
  • Providing a new statutory role for Ofcom to oversee the measures Channel 4 puts in place to ensure open and fair access to its commissions;
  • Requiring Ofcom to review the impact of Channel 4 developing its own production capability, should they choose to do so, as part of one of their upcoming public service broadcasting reviews. 

The government said in its official statement: “Independent production companies are a key part of our thriving creative industries and the government are keen to maximise their potential through these changes. The government’s Creative Industries Sector Vision details our plan to grow the creative industries by £50 billion and create one million extra jobs by 2030, whilst supporting a talent pipeline that will continue to support one of the best TV industries in the world.”

Minister for Media, Tourism and Creative Industries Sir John Whittingdale added: “Channel 4 has earned a reputation for distinctive TV which reflects and shapes our culture. As viewing habits continue to shift dramatically, we want the corporation not only to survive these changes but to thrive long into the future.

“The corporation’s duty to support independent producers has helped build one of the most successful TV industries in the world. That’s why it’s so important that any reforms work for the wider industry, and minimise any market shocks.

“This package, the product of months of close collaboration with the sector, strikes a fair balance between empowering Channel 4 for a more sustainable future while preserving the fantastic work of TV companies all over the UK.”

Alex Mahon, chief executive of Channel 4, said: “We have been working with the Department for Culture, Media and Sport to ensure any in-house production at Channel 4 would harness the benefits of Channel 4’s vital public-service role and mitigate the risks to the UK’s world-beating independent film and TV 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 Channel 4’s fundamental belief in the importance of independent producers in the UK. 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.”

Sir Ian Cheshire, chair of Channel 4 predicted that any change would be gradual, and that he anticipated external commissions will still substantially exceed in-house production spending five years after any move towards in-house production.

“The Channel 4 Board welcomes the Minister of State’s remarks outlining the ability for Channel 4 to produce and own the IP of some of its content,” he said. “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.”

Under current legislation Channel 4 – a publicly-owned, commercially funded public service broadcaster (PSB) – is more limited than other PSBs in its ability to make and own its own content. It currently operates as a ‘publisher-broadcaster’, meaning all its shows are commissioned or acquired from third parties, such as independent producers or other broadcasters, who typically retain the rights to those programmes, and consequently any profits from future sales and distribution. This has been central to Channel 4’s role over the last 40 years in developing the UK’s independent production sector, which is now worth nearly £4 billion.

Like all UK broadcasters, Channel 4 is currently facing unprecedented competition for viewers, programmes and talent in an era of global streaming platforms. Following the decision made in January 2023 not to pursue a sale of Channel 4, the government confirmed a package of measures to drive growth at the broadcaster and support its long-term sustainability.

This includes reforms via the Media Bill, which had its first reading in the Commons today and will allow Channel 4 to make and own some of its content, expanding opportunities for it to generate revenue to reinvest in programmes and talent.

Channel 4 has committed to set up any new in-house studio as a separate company, with its own board and financial reporting, as part of plans to ensure it cannot favour commissions from its own studio over external production companies.

The corporation will report regularly on how it is ensuring fair and open access to commissions in its annual report, set up a new complaints process to settle disputes between producers and Channel 4, and minimise the risk of market shocks by taking a gradual approach to setting up any new production company.

The broadcaster has also said it will maintain its existing commitment to spend 50 per cent of its budget for main channel commissions on programmes made outside of London, achieve 600 roles outside of London by the end of 2025 and doubling its 4Skills budget to £10 million in 2025.

Other elements of the sustainability package include a new, statutory duty on the Channel 4 board to consider the corporation’s long-term sustainability alongside fulfilment of the Channel 4 remit, and a revised Memorandum of Understanding (MoU) with updated financial reporting information and processes to allow Channel 4 to access debt finance within their statutory borrowing limit.

John McVay, CEO of UK indie production trade body Pact, said: “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.”

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