Posted on 8th November 2023
Category: News

The UK TV production industry will benefit from new safeguards as the government proceeds with reforms to support Channel 4’s long-term sustainability.

  • New freedoms for Channel 4 to make and own content included in the Media Bill, introduced today 
  • New safeguards for UK’s world-leading TV programme makers, including requirement on Channel 4 to commission more shows from independent producers
  • Part of government plans to grow the creative industries by £50bn and expand Britain’s pipeline of TV talent 

The UK’s world-renowned TV production industry will benefit from a package of new safeguards as the government proceeds with reforms – including via the Media Bill introduced in Parliament today – to support Channel 4’s long-term sustainability.

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, new safeguards for production companies set out today would protect millions of pounds of investment in programmes made by independent TV producers across the UK, as the proportion of programmes the broadcaster is required to commission from these companies will increase from 25 per cent to 35 per cent. 

Ofcom will also be given new duties to review how Channel 4 uses new freedoms to make and own its content, should it choose to do so, as part of plans to ensure the wider sector is not unduly impacted.

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 said:

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.

That is why we are exploring this right offered by the government, but we will also raise our formal qualifying indie commitment to the sector by 40% should we take up this opportunity – the largest commitment of any UK broadcaster. So, if we do choose to build an in-house production unit, it will be only after careful consideration of the effects of our approach. Most of all, 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. 

In addition, Channel 4 remains entirely committed to representing the whole of UK and to growing our impact across the country, including reaching our commissioning and spending targets in the Nations and Regions, achieving 600 roles outside of London by the end of 2025 and doubling our 4Skills budget to £10 million in 2025.

Sir Ian Cheshire, Chair of Channel 4 said:

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, following engagement with TV producers of all sizes from across the UK. 

Channel 4 has been working with the Department for Culture, Media and 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.  

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.

Channel 4 remains entirely committed to its presence, programme-making and impact across the Nations and Regions. This includes its commitment to regional producers, voluntary investing 50% of its commissioning budget outside of London and growing its 4Skills training which promotes social mobility and economic growth across the UK.  

Our Board of Directors will supervise all these developments as part of their new duty to ensure the corporation’s financial sustainability. 

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.” 

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. 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 an ambitious 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 – which will allow Channel 4 to make and own some of its content should it choose to do so, expanding opportunities for it to generate revenue to reinvest in programmes and talent.

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

The measures 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. 

In addition, 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. Ofcom will consider whether any changes to Channel 4’s regional programme making quotas are required as part of its upcoming consultation on the terms of the next Channel 4 licence. 

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. The revised MoU has also been published 

From Department for Culture, Media and Sport and The Rt Hon Sir John Whittingdale OBE MP