Origins
The advent of Channel 4 in 1982 encouraged the growth of the independent production sector through its policy of acquiring or commissioning programmes from a wide range of sources, including independent producers. In 1986, their impact on broadcasting was further strengthened when the Peacock Committee on Financing the BBC recommended that the BBC and ITV should be required to increase their proportion of programmes supplied by independent producers.
Voluntary Agreement
In 1987, the IBA (the ITC’s predecessor) announced its plans for increased access of programmes made by independent producers to ITV in line with the government’s aim to achieve 25% of qualifying production from independent sources. The terms of trade agreement for independent productions on ITV was published by the IBA in 1988. By the end of 1992 independent transmissions on ITV had reached 22% on a voluntary basis.
Statutory Basis
The Broadcasting Act 1990 (Sections 16(2)(h) and 25(2)(f)) requires all Channel 3 licensees, Channel 4 and Channel 5 to ensure that in each year not less than 25% of the total amount of time allocated to the broadcasting of qualifying programmes is allocated to a range and diversity of independent productions. “Range” is defined in the Act in terms of cost of acquisition as well as in terms of types of programme. The Act does not distinguish between regional and non-regional programmes within the 25% independent quota but applies to total transmissions. However a number of Channel 3 licensees, in their applications for a licence, made clear commitments to commissioning regional programmes from independents as part of their core proposals.
The interpretation of ‘qualifying programmes’ (basically everything except acquired programmes, repeats news and items shorter than two minutes) and ‘independent productions’ (basically programmes made by producers not employed or controlled by broadcasters) was issued in the Statutory Instrument The Broadcasting (Independent Productions) Order 1991. To qualify as an ‘independent producer’ a producer may not have a shareholding greater than 25% in a broadcaster or be a body corporate in which a broadcaster has a shareholding of more than 25% (this increased from 15% following a proposal contained within Media ownership: the Government’s proposals which came into force with The Broadcasting (Independent Productions) (Amendment) Order in July 1995), or in which any two or more broadcasters together have an aggregate shareholding greater than 50%. The contract between the independent producer and the broadcasting company must not include, as a condition, a requirement to use the production facilities of the broadcaster.
Section 39 of the Act requires the Channel 3 licensees to enter into networking arrangements which must be approved by the ITC and referred to the Director General of Fair Trading (DGFT) who applies a competition test to see that competition is not being distorted or prevented. In 1992 the DGFT concluded that the arrangements did not satisfy the competition test and the matter was referred to the Monopolies and Mergers Commission (MMC) who concluded that the arrangements provided scope for distortions of competition because instead of contracting directly with the Network Centre, an independent producer had to contract with one of the Channel 3 companies which would be an actual or potential competitor in producing programmes.
The MMC recommended that in future, an independent producer should be able to go direct to the ITV Network Centre, which draws up the schedules and commissions programmes. After agreeing a deal with the Centre, the producer would then enter a three-way contract with the Centre and a Channel 3 company. The role of the Channel 3 company would be to ensure that the programme complied with ITC codes and licence conditions.
The Broadcasting Act 1996 (Section 19(2)(b)) requires that in each year not less than 10 per cent of the total amount of time allocated to the broadcasting of qualifying programmes on a digital terrestrial programme service is allocated to a range and diversity of independent productions.
Licence Conditions
The statutory obligations for Channel 3, Channel 4 and Channel 5 in relation to the 25% quota are incorporated in their ITC licences. Progress is monitored and regulated by the ITC. The legislation, which imposes similar obligations on the BBC, empowers the Office of Fair Trading to monitor the BBC’s progress and report to the Secretary of State on the extent to which the BBC has performed its duty in regard to independent access. (Responsibility for monitoring the BBC’s performance will transfer to Ofcom under the proposals in the Communications Bill).
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Achievement of 25%
Since procedures for commissioning independent productions were well established throughout the commercial television system before the statutory requirement and because the new Channel 3 licensees included Carlton Television and Meridian Broadcasting, both publisher licensees, the 25% statutory quota has been exceeded each year since the Channel 3 service began in 1993.
Significant changes in the independent production sector have resulted in lower percentages being achieved than previously. Large suppliers such as Pearson, Endemol and Planet 24 lost their independent status because they exceeded the cross-shareholding limits between independents and broadcasters. Programmes commissioned from them cannot now be counted towards the 25% quota as they no longer qualify as “independent”. The Department for Culture, Media and Sport is proposing to amend the definition of an independent producer to allow a producer which is owned by a non-UK broadcaster to continue to qualify as “independent.
Transmissions
Qualifying hours commissioned from independent producers in 2002 were:
%
Regional Channel 3 30
GMTV 82
Channel 4 66
Channel 5 86
Independent production companies are the major source for programmes commissioned by Channel 4. The revised Channel 4 licence specifies 30% of production spend outside London by 2002 and this was achieved. ITV has committed to a target of 50% of production spend out of London. In 2002 it achieved 56%.
Channel 5 made a significant contribution to the UK production industry with a total programme budget in 2003 of £158 million. 11.1% of production spend in 2002 related to programme productions in the UK outside London.
2002 ITC Review of the UK Programme Supply Market
In August 2002, the Secretary of State for Culture, Media and Sport asked the Independent Television Commission to review the overall economic health of the UK programme supply market. The ITC concluded that five main points should be addressed: all public service broadcasters should develop Codes of Practice to provide a framework for their dealings with independent producers; the ITC and then Ofcom should take forward and complete the market investigation started by this review and determine remedies to address competition concerns; measures should b taken to safeguard original UK production against the background of the Government’s proposed changes to the media ownership rules; support for the nations and regions; and a strengthened commitment to training across the sector.
Further References
* ITC Library bibliography: Independent productions
ITC Notes 2-38 cover all aspects of the ITC’s functions and activities
Channel 3 Networking Arrangements 1998. ITC, December 1999.
Channel Four Television Corporation. Report and Financial Statements.
Channel Four Licence 1998.
ITC Annual Report 2001, 2002
The Broadcasting (Independent Productions) Order 1991. (S.I. 1991/1408) London: HMSO, 1991
DEPARTMENT OF NATIONAL HERITAGE. Media ownership: the Government’s proposals. (Cm 2872) London: HMSO, 1995
The Broadcasting (Independent Productions) (Amendment) Order 1995. (S.I. 1995/1925) London: HMSO, 1995
June 2003
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