On 22 September 2023, the DCMS Select Committee (the “Committee”) published its final report on the draft Media Bill (the “draft Bill”). In this article, we explore the Committee’s findings in respect of the Government’s key plans for Channel 4 (set out in Part 3 of the draft Bill), which are: (i) to enable Channel 4 to produce and monetise its own content, and (ii) to require the directors of Channel 4 to consider the long-term sustainability of the channel when making decisions.
The Committee’s recommendations regarding the Government’s reforms to Channel 4 are as follows:
1. On introduction of the Bill, the Government should publish a policy statement setting out its intended monitoring and mitigations for any harm to the wider production sector from the changes to Channel 4’s model
The removal of Channel 4’s publisher-broadcaster model has generated concern about its potential impact on the production sector. The Committee received a number of submissions from interested bodies, including from:
- Directors UK, who are concerned that the reform will “distort or negatively impact the market in which [its] members are employed, or negatively impact the commercial value and return on the [intellectual property] in the works they create”; and
- Pact, who argue that Ofcom should be able to specify Channel 4’s licence requirements to secure “fair and effective competition” in the commissioning of programmes.
In its report, the Committee acknowledged that it is hard to quantify the full impact of the removal of the publisher-broadcaster model; whilst it will help diversify Channel 4’s revenue streams, it could also have significant implications for the independent production sector and the “wider production ecology”.
In light of this, the Committee has recommended that, once the Bill is introduced, the Government publish a policy statement setting out its intended monitoring and mitigations for any harm to the wider production sector from the changes to Channel 4’s publisher-broadcaster model.
2. The Government should review the wording of the sustainability duty to ensure that it is compatible with Channel 4’s existing obligations
As a publicly owned, not-for-profit corporation with no shareholders, the directors of Channel 4 are not bound by the provisions of the Companies Act 2006 that impose a “duty to promote the success of the company” on company directors; however, Channel 4’s directors voluntary choose to comply with these statutory duties in any event. Accordingly, the Government considers that the introduction of a duty on Channel 4’s directors to consider the long-term sustainability of Channel 4 when making decisions isn’t a new concept, but rather enshrines what is already happening in practice.
Channel 4 told the Committee that that they were “comfortable” with the sustainability duty in principle, but expressed some concerns over the exact wording - in particular, that the duty to “sustain the level of [Channel Four’s] activities” could potentially limit the ways in which Channel 4 evolves and grows as a business. Rather than linking the sustainability duty to Channel 4’s level of “activities” (which isn’t clearly defined), Channel 4 would prefer that this duty be linked to its “primary functions” (which is more clearly set out in existing legislation).
Since the sustainability duty reinforces what Channel 4 is already doing, the Committee recognised that the wording of the draft Bill should reflect Channel 4’s primary functions and existing statutory duties to avoid any unintended consequences. The Committee has therefore recommended that the Government review the wording of the sustainability duty to ensure that it is compatible with Channel 4’s existing obligations.
The CMS view – surprise score 0 / 10
Given the level of public concern to date around the removal of Channel 4’s publisher-broadcaster model, the Committee’s recommendations in this regard aren’t particularly surprising. Speaking recently at the RTS Cambridge Convention, culture secretary Lucy Frazer said that CMS is close to revealing its plans for Channel 4, and is confident that CMS can “come to a reasonable solution” in terms of setting a quota for how much content Channel 4 will be allowed to produce.
As far as Channel 4’s sustainability duty is concerned, given that the draft Bill has largely avoided being too prescriptive in other areas (e.g., around appropriate levels of prominence for PSBs), it is not surprising that the Committee has recommended that the Government review the wording of this duty to ensure that there are no unintended (or unintendedly prescriptive…) consequences that may hamper the ability of Channel 4 to evolve its business.
We are watching the Media Bill closely as it passes through Parliament, so keep an eye out for our updates on our dedicated CMS Media Bill webpage. If you would like to discuss any aspect of the Media Bill or how it may affect you, please get in touch.