C4 – a victim of its own success

The Government has chosen not to act on C4’s controversial funding formula.

Channel 4 chief executive Michael Grade must have realised that the chances of swift Government action on the channel’s controversial funding formula were faint after the obvious opportunity to amend it was passed over last year.

To C4’s disappointment, the Department of National Heritage’s (DNH) bid for space in the November Queen’s speech lost out to the Department of Trade and Industry’s Post Office bill. National heritage secretary Stephen Dorrell now concedes that the closure of the legislative window is one of the main reasons for rejecting the channel’s argument.

The immediate reaction to the decision from the independent sector was predictably negative. John Woodward, chief executive of Pact, the independent producers’ body, says: “It seems a real shame that money that could have gone to create UK productions is instead going into ITV shareholder’s pockets”.

If this money were directed into ITV programming instead, then everyone would be happy. Adrian Birchall, chairman and chief executive of The Media Centre and Institute of Practitioners in Advertising media policy group spokesman, says: “Advertisers and agencies need to be reassured that if there is an element of a windfall in this for ITV, then the money goes into improving programming.” At present, this looks unlikely.

It is Grade who has vowed to spend the cash on higher quality programmes and films Рgiven the estimated ̼55m surplus Рwhile ITV companies reaffirm their contractual rights under the Broadcasting Act. For C4, a delay until the 1997 review of the Act only perpetuates an obvious injustice.

It is a straightforward argument which has attracted widespread support – including that of former DNH secretary David Mellor. Of course, the ITV companies are entitled to make the point that at least some of the profit goes towards their own programme budget. ITV Council chairman Leslie Hill says: “This decision will help maintain the stability and strength of British broadcasting by enabling ITV companies to continue investing heavily in original regional and networked programmes.”

Without the C4 contribution, ITV companies’ existing payments to the network programming budget could be threatened, says an ITV spokeswoman. At least three ITV companies – HTV, Meridian and GMTV – have already claimed that their original business plans for the franchise auction contained higher estimates for C4 revenue than have been achieved.

Besides which, the government has a “moral and legal obligation” to uphold the contractual agreements. “ITV is bearing the risk; if you are undertaking a risk, you should get a decent return for it,” says a Granada TV source.

ITV firms agreed to provide a safety net should C4 fall below a threshold of 14 per cent of terrestrial TV advertising revenue. It was by no means certain that C4 would perform as well as it has. In fact, the majority of advertising opinion was distinctly dubious about its chances.

Channel 4 has been a victim both of its own success and the inability of the broadcasting establishment to predict the future accurately.