Lords undecided on C4 future - but want Terms of Trade overhaul

The House of Lords Communication Committee is sitting on the fence about whether Channel 4 should be privatised - but it has recommended an overhaul of the Terms of Trade in any case.

In a 40-page report, the committee chastised both the DCMS and Channel 4.

The government was criticised for taking the “wrong approach”, by stating that privatisation was its preferred option for C4 without first setting out a wider vision for public service broadcasting, or considering possible reforms which might make C4 more sustainable without a change of ownership.

Meanwhile C4’s board was rebuked for failing to acknowledge any potential benefits to privatisation. The committee said it would have been “more reassured to see C4, as a publicly owned corporation, openly demonstrate that the potential benefits of privatisation had been considered by its board, and judged to be outweighed by the risks”.

The committee’s report argues that the privatisation debate has lacked nuance: “The debate on C4’s ownership has been a binary one: between privatisation and the status quo. It should instead start by establishing our ambitions for C4C, before considering how best they can be realised.”

In several cases, the report suggest that C4 should be reformed irrespective of its future ownership. It suggests that the broadcaster should be “required periodically to publish analysis of the sustainability of its business mode” and expected to notify the government of potentially significant threats to its sustainability.

The committee’s most striking recommendation is that “changes be made to the Terms of Trade for all PSBs, and the publisher–broadcaster model relaxed for C4.”

It argues that enabling C4 to invest in IP ownership would substantially enhance its financial resilience and that the Terms of Trade should be revised to apply to producers with a turnover under a certain cap.

The committee believes that large established production companies are benefiting from the terms at the cost of C4’s long-term sustainability, and suggests that the broadcaster’s indie production quota should be refocused on smaller indies in order to strengthen its role in stimulating start-ups.

Pact hits back

Pact chief executive John McVay issued a strong response to the recommendation, suggesting that a drastic change to terms could “revert a hugely successful indie sector to the work-for-hire cottage industry it was before their introduction, losing the creativity and diversity of ideas that it is known for.”

The producers’ alliance said it was disappointed with the Lords report, suggesting that the proposals “will go against the delicately balanced ecosystem that currently exists within the UK broadcasting system”.