This year was a significant moment in Channel 4’s history. The enactment of the Digital Economy Act at the end of the last Parliament, amended the Communications Act 2003 to give Channel 4 a new and expanded remit and duties. A new management team also began work - Lord Burns having replaced Luke Johnson as Chairman in January 2010 and David Abraham having replaced Andy Duncan as Chief Executive in May 2010.
Accountability and Transparency
The Report concludes that the Digital Economy Act sets out sensible primary functions for Channel 4 to work towards and that Channel 4 has identified the correct method—self-reliance—to deliver them.
Aligning all its portfolio of channels in support of these primary functions will not be easy, and it is essential that there is adequate external scrutiny of Channel 4’s progress.
The Committee welcomes recent draft guidance from Ofcom to establish a regime for establishing, monitoring, reviewing and enforcing public service-related obligations for Channel 4 across its network.
However, Ofcom’s ability to police Channel 4’s new remit is limited, and the Committee is not convinced that Channel 4 is sufficiently accountable for its output outside its core channel.
The Report recommends, therefore, that the Government review Channel 4’s governance arrangements to determine whether they are fit for purpose for a public service network.
It also recommends that Ofcom clarify its understanding of its role and its plans for oversight arrangements under the new framework.
The Committee questioned the new management team on its remuneration policy, and the size of the final remuneration that outgoing Chief Executive Mr Duncan received The Report concludes that Mr Duncan’s remuneration package was unacceptably high.
The award of a loyalty bonus for only two years service was wrong and should not be repeated. While the Committee deplores a decision process that previously inflated the remuneration packages of top Channel 4 management to indefensible levels, it welcomes signs that Channel 4 is now taking steps to adjust senior remuneration downwards. The Committee will continue to keep a close eye on senior remuneration.
The Committee is encouraged by Channel 4’s intent to replace Big Brother with a more balanced and diverse schedule, but does not underestimate the size of the challenge facing Channel 4 to achieve this while holding on to ratings. The Committee will be paying close interest to Channel 4’s assessment next year as to how successful these efforts have been.
Nations and regions
The Report urges Channel 4 to redouble its efforts to increase the proportion of UK-originated commissioning from the nations and regions. It proposes that Channel 4 set a medium term target of 15% of network spend on originated programming coming from the nations.
John Whittingdale, Chair of the Committee said:
“Channel 4 faces a series of challenges—both financial and creative—if it is successfully to deliver on its new vision and remit. Given what is at stake in terms of plurality and diversity of public service content in the UK, and its role as a publicly owned, public service broadcaster, Channel 4’s progress towards meeting these challenges needs to be transparent so that it can be held to account.
Our Report notes some ways in which transparency can be improved, including around the cost and benefits of the channel’s individual digital channels. We will continue to monitor progress on this front, as well as the direction of senior management pay.”