S4C—written evidence (PSB0054)

 

Response to Lords Communications Committee inquiry:

Public service broadcasting in the age of video on demand

 

About S4C

 

S4C is an independent public service broadcaster (PSB) with a unique public purpose which is to provide a television service in the Welsh language. By doing so, S4C plays a crucial role in maintaining and promoting the Welsh language, reflecting the various cultures that use the Welsh language by providing high-quality content that is accessible to all.

 

S4C commissions most of its Welsh-language content from a wide range of independent production companies (around 50 each year over recent years), based throughout Wales. It also receives a minimum of 10 hours a week of content from the BBC. S4C broadcasts more than 115 hours of programming every week, including a children’s service, drama, news, entertainment, sport, factual programming, music and events. Its content reflects the diversity of life in modern Wales and of the Welsh speaking audience and, is available on most TV platforms across the UK.

 

Responsibility for deciding S4C’s funding lies with the Secretary of State for Digital, Culture, Media and Sport. S4C is currently majority funded through the TV licence fee (£74.5m in 2018/19) with some DCMS grant-in-aid funding (ca £6.7m in 18/19) until 2022, when all funding will come from the TV licence fee.

S4C is evolving from being the broadcaster of a television channel to a provider of digital content across an array of platforms throughout the UK. It has its own online catch-up player S4C Clic, and most of its content can also be seen on the BBC iPlayer, a result of a wider strategic partnership with the BBC.

 

DCMS published an independent review of S4C, undertaken by Euryn Ogwen Williams, in March 2018 and the department generally welcomed the recommendations therein. The review recommended a number of changes including updating the remit of S4C to enable it to develop and build its digital capacity, removing the current geographic restriction to Wales, a change to a unitary board model, enabling it to work with Welsh Government on the aim of increasing the number of Welsh speakers to a million by 2050 and giving it greater commercial freedom. S4C is currently implementing the recommendations, which can be found here and are also referred to below where relevant.

 

In September 2018, S4C moved its headquarters to Carmarthen where it is the anchor tenant at a new building developed by University of Wales Trinity St David. The move is already having a significant effect on the area not least on local employment. S4C retains a presence in Cardiff, where it will co-locate its broadcast and technical functions with BBC Cymru Wales at the new Central Square development once it is completed. S4C also has an office in Caernarfon, north Wales.

 

Questions

 

1)              What is the value of public service broadcasting? Is the concept becoming outdated? Does public service broadcasting do enough to reflect and serve the demographics of the UK? In answering respondents may wish to consider characteristics such as: a) age, b) gender, c) ethnic background, d) the nations and regions of the UK, e) mental and physical ability, f) ability to pay for services.

 

  1. Well-funded and strong public service media are the cornerstones of democratic societies. The broadcasting landscape is changing fast. As media develop and fragment, as audiences consume content in different ways and as fake news grows, the role of independent PSBs as a source of trusted content, information and news is as important as ever. Offering such content, free at the point of use, including in UK languages other than English is vital.

 

  1. PSBs continue to play a vital role of ensuring that the breadth and depth of a nation’s culture and interests are represented to viewers. Without the commercial requirements to produce content that draws in a significant volume of viewers in the majority of cases, PSBs have a significant role in ensuring that whilst their services are used, they can reflect issues important to society such as diversity and offer services that stimulate as well as satiate all parts of society.

 

  1. PSBs also have a significant role in ensuring that the UK’s population is educated from a trusted source. As the penetration of fake news and the expansion of what can often be self-selective news reporting through the social media, PSBs have a vital role in providing unbiased, high quality reporting on issues of note.

 

  1. Public service broadcasting plays a key role in sustaining and defining a country’s culture. The smaller the country, the greater the danger that the media available to the public are dominated by content created and paid for elsewhere, The cost of creating content is such that it is almost never in the interest of commercial producers and broadcasters to make programmes in lesser-spoken languages, such as Welsh. The communities who speak these languages are therefore entirely dependent on public service broadcasting for the provision of broadcast content in their own language.

 

  1. As a minority language broadcaster, S4C plays a unique and valuable role in the UK’s PSB landscape. Within this landscape, S4C reflects the diversity of voice and experience of modern-day Wales. In its response to the 2018 review of S4C, DCMS commented that “S4C plays a vital role in reflecting Welsh culture and society and promoting the Welsh language.”

 

  1. S4C offers a wide range of content to appeal to viewers of all ages and to a broad cross-section of the audience. This includes programmes such as children's programmes, sports, drama, soaps, light entertainment, magazine shows, news, current affairs, factual and religious, as well as extensive provision from Wales’ main cultural and national events. With subtitles provided on almost 80% of our programmes, they attract an audience of Welsh speakers and non-Welsh speakers alike. Around 55% of our viewers in Wales are non-Welsh speakers.

 

  1. The PSBs, in this regard, play a vital role in reflecting the heritage and culture of indigenous and diverse populations across the UK. S4C continues to play an important role in normalising the use of Welsh. Its continued provision of accessible PSB content in the digital space will give an opportunity to help preserve the Welsh language as a part of everyday life for future generations. English language content dominates the most popular platforms.

 

2)              What are the consequences of the rise of on-demand providers and the decline of linear television viewing for the production of original UK content for UK audiences?

 

  1. The fragmentation of the audience as on-demand providers have grown in the UK has undoubtedly affected all PSB audiences. As well as competing for audiences used to ever-greater choice, one of the challenges for S4C is to reach its potential audiences to market its content in the first place. On-demand services have sophisticated tools both to reach and promote content to audiences, but also to collect data and trends to identify the types of content with which audiences engage. With its linear, television remit, S4C has not been able to engage and address the issue until very recently. Despite significant investment, we are playing catch-up, with work underway to develop the player S4C Clic and the data it collects. At the same time, S4C must deliver linear television for the core part of its audience that still enjoys screen content in the more traditional television model. For a small PSB with a niche target audience, the complexity of the market has made it more difficult to be heard, requiring a more competitive, and costly approach to marketing and promotion. The move to digital has also meant significant investment in its infrastructure, which to a great extent, are sunk costs.

 

  1. However, with the right investment and application, PSBs can compete. One area where S4C is bucking the trend is in its engagement with 16-34s. It is one of the very few channels seeing an increase in viewing amongst this hardest-to-reach age group - across both linear and digital platforms. Hansh, S4C’s online short-form brand, continues to grow its reach and - more importantly engagement – going from standing start (40k views a month) at launch in June 2017 to 700k monthly views across social platforms by January 2019. The brand has evolved from mainly comedy or light short-form content to include news and current affairs, medium-form drama, thought and opinion pieces. In 2019 Hansh’s evolution continues apace with experimental content – including documentaries, comedy, podcasts - that targets a slightly older 24-44 demographic. The platform has a naturally diverse voice and has proven to be a space to develop and build new talent as well as to experiment and make noise.

3)              What has been the effect of changes in the market on the UK television production sector more widely, including on training, job opportunities and the business models of independent producers?

 

  1. Despite significant budget reductions since 2010 (almost 36% in real terms) and the fact it has to work to far lower tariffs than many of the bigger PSBs and on-demand providers, S4C plays a key role in supporting the independent sector in Wales. As the 2010 Heart of Digital Wales Hargreaves report noted, without S4C, Wales might not have an independent production sector at all.

 

  1. But there are challenges facing the independent sector, both in terms of staffing its productions, and in ensuring that a workforce with the right skills is being developed and nurtured for the future. Recent successes by Wales-based productions in some genres has led to the availability of freelance talent being outstripped by demand. Companies, particularly those not in the south east of Wales report difficulties staffing productions.

 

  1. S4C is working with TAC, the Welsh independent producers’ representative body, to deliver some skills and training for the sector including on creating short-form content. S4C is partnering with Channel 4 and BBC Cymru Wales to support the development of executive producers for factual programming. With ITV Cymru, we are developing new journalists who can create short-form news and current affairs content for S4C’s online brand Hansh. We have also worked with Ffilm Cymru Wales, Arts Council Wales, It’s My Shout, Iris and Theatr Genedlaethol (the Welsh language national theatre) to offer recent training opportunities. Skills and the creative industries are the remit of Welsh Government, and we aim to work with it on our requirements as a sector.

 

5)              Have public service broadcasters responded adequately to market changes?

 

  1. S4C has made a conscious decision to evolve. The 2018 S4C review recommendations give us the opportunity to try to catch up with other broadcasters e.g. on digital, so that we can respond to audience demand whilst at the same time, not forgetting our core audience that still enjoys more traditional linear television. And therein lies the challenge of having to ride two horses to adequately serve our very different audiences.

 

  1. S4C has led the recent resurgence of Welsh TV drama and the portrayal of Wales on screen. S4C Original productions – from Y Gwyll (Hinterland), to Un Bore Mercher (Keeping Faith) to Craith (Hidden) all offer strong content that feels uniquely Welsh.  In both scripted and non-scripted content, S4C prides itself as being one of the first to take creative risks despite having a significantly smaller budget than other broadcasters – a strategy that has served it well over recent years. 

 

  1. S4C works with other broadcasters and partners to respond to market changes. Our strategic partnership with the BBC is working well. We are also co-commissioning with other broadcasters including Channel 4, to ensure innovative, high-quality content like Tŷ am Ddim (House for Free) which is currently in production. Entertainment and music remain at the heart of the schedule, offering opportunities for family viewing in the early evening, formats that sell, as well as new commissions. These include Y Salon (The Salon – bought by the One Show), Priodas Pum Mil (Five Thousand Pound Wedding - one of S4C’s most popular entertainment programmes ever) and Y Siambr (The Chamber) the world’s first underground adventure quiz show. 

 

  1. S4C’s first mid-form drama series Merched Parchus (Respectable Women) launched digitally in April 2019 followed by a secondary linear broadcast. Its bold and challenging tone typifies the creative revival that’s happening at S4C targeting a younger, more diverse audience with riskier content whilst also discovering and developing new writing, directing and acting talent to help future-proof the sector in Wales.

 

  1. The fact remains, though, that S4C, like other PSBs is trying to compete with organisations with considerably greater resources at their disposal and less legacy systems and audiences to take account of. The PSBs compete across a broad range of genres, maintaining the principles of our purpose and have found it difficult to compete.

 

6)              How can commercial public service broadcasters fund original productions for UK audiences at a time of declining advertising revenues? How might public service funding regimes—including the BBC licence fee—be adjusted?

 

  1. At a time of declining revenue, S4C has sought to partner creatively to continue to fund original productions for the Wales and UK audiences. Y Gwyll (Hinterland) brought together a range of sources including distributor funding (all3media), Welsh Government, and Tinopolis. The BBC – for whom the series was initially an acquisition – later became a co-production partner. A co-production model was also followed for S4C’s runaway hit Un Bore Mercher (Keeping Faith) before it became one of the most downloaded dramas on BBC iPlayer ever in 2018.

 

  1. Although small, its size means S4C can be fleet of foot and creative in its solutions to funding productions, consistently punching above its weight and developing innovative content. S4C formats are selling across genres: Channel 5’s new season of drama launched with 15 days, a version of an S4C format. We’ve developed a Celtic Connections brand with colleagues in TG4 and BBC Alba and are looking to take our joint brand to the international markets to promote Celtic content.

 

  1. The question remains though, of suitable levels of funding. Whilst S4C has endeavoured to drive efficiencies, cuts of 36% in real terms over the past decade have made it difficult to compete at a time when new entrants with considerable resources are increasing the expectations of the audience across a range of platforms, all of which require investment.

 

Public Service Funding Regimes

 

  1. PSB services are used by a wide range of audiences – from pre-school children to older people, and each group expects the broadcasters to provide high-quality services, including those tailored to their own particular preferences. The wide and universal nature of the public services provided has been reflected in the universal manner by which such services are funded – either by way of ‘grant in aid’ directly from Government or the television licence fee from which S4C is largely funded. 

 

  1. The scale of resource generated by applying the licence fee more or less universally across the whole UK viewing population has enabled the provision of a rich, wide-ranging free-to-air range of services which are envied across the world. These services support a dynamic creative industry, producing indigenous UK content, increasingly from the whole of the UK, which is sold across the world, projecting a positive and enviable image of the UK and its constituent nations. These benefits derive directly from the scale of the funding mechanism and are threatened by any substantial change to it.

 

  1. S4C believes that the PSB services funded by the television licence fee make a uniquely valuable contribution to the cultural and social life of the UK and its constituent nations and regions. The social values underpinned by the UK’s uniquely strong tradition of public service broadcasting would be under threat if PSB services, which both provide what the market will not, and which seek to maintain a universal appeal, can no longer be maintained in strength.

 

  1. The BBC now finds itself in the position of having to consider sensitive issues relating to the age-related licence fee concession and the need to ensure sufficient resources for the BBC to continue to provide a wide range of services to the population of the UK. S4C acknowledges the difficult decision for the BBC – either maintaining the concession and finding annual efficiencies and scope reductions of c. £750m within the BBC’s services, or terminating or amending the concession and impacting upon a significant number of users of the BBC’s services.

 

  1. S4C believes that there are fundamental questions about the role of PSBs in a future digital world. As global competitors continue to erode viewing for the PSBs in the UK there is a question as to what extent the UK Government supports the values on which the PSB model was built. At a time where the expansion of news sources, trusted and otherwise, S4C would highlight the increasing role that all PSBs play in providing trusted news and discussion and also how they reflect the national characteristics of the component nations of the UK.

 

7)              How important is prominence for public service broadcasters? Can it be maintained in the face of rapid technological development and greater personalisation of content?

 

  1. Prominence for PSBs is vital and must be ensured and extended to online as technology develops and viewing habits continue to evolve. This is a particular concern for PSBs such as S4C with a very specific remit – in our case Welsh language content - given the increasing choice of other channels with strong brands and greater promotion budgets. S4C has held slot four on the Electronic Programme Guide (EPG) in Wales since it was launched in 1982. We welcomed the view in Ofcom’s recent consultation document that S4C continue to hold this slot, which is where our audience expects to find the channel. It is wholly appropriate that S4C is grouped with BBC One Wales, BBC Two Wales and ITV Wales, and that viewers in Wales can discover all of the public service television content that is relevant to them in one place.

 

  1. S4C plays a crucial role in providing a full-service channel in the Welsh language across a wide range of genres. It makes an important contribution to the future of the Welsh language as a modern language and an everyday language for people of all ages. With its high percentage of original production, S4C's children's services, including Cyw and Stwnsh, are recognised as making an important contribution to normalising the use of Welsh amongst younger and older children. In an age where an increasing number of English language and American services attract children and young people from the UK, it is important that they see Welsh-medium television in the mainstream by appearing side by side with the other main PSB providers.

 

  1. We welcome the recommendation in Ofcom’s consultation document that S4C should appear within the top three pages of UK-wide EPGs and believe this recommendation should extend to all platforms, irrespective of whether they have an area-specific EPG for Wales.

 

  1. Ofcom’s consultation (paragraph 5.50) includes S4C as one of the nation-specific channels but S4C is by now recognised as a channel which serves the whole of the UK, whilst also having particular responsibility towards the population of Wales. The 2018 review of S4C noted the need to update the statutory remit for S4C to remove the geographical restrictions upon it (within Wales.) With such a high percentage watching S4C outside Wales, “S4C should be able to provide content without the current geographical restrictions to provide programmes ‘wholly or mainly’ to people in Wales.”

 

  1. We therefore feel that S4C should have a degree of prominence outside Wales – in England, Scotland and Northern Ireland – and believe that securing a slot on the first three pages of the EPG in those countries is the most appropriate way forward. We also believe there is a need to extend PSB prominence provision to the online world so that PSB is not held back as technology evolves. Ensuring public service content is accessible across all platforms is a key concern for S4C.

 

9)              What should the relationship be between public service broadcasters and on-demand platforms? What are the risks and opportunities of collaboration, for example in coproduction?

 

  1. At a time when gateways or portals to viewing are being constrained through major SVoD platforms such as Netflix etc, the commercial and broadcast relationship between the PSBs and these portals is critical. For a broadcaster such as S4C, being excluded from these portals effectively closes off potential audiences. Given our inability to compete through marketing due to funding restraints, fair access to PSB content for reasonable recompense is critical. The alternative is the new SVoD giants using PSB content to further their commercial gains at the expense of the PSBs or alternatively excluding viewers from this content, both of which are unwelcome.

 

10)              What are the implications of ‘Britbox’? Is there scope for more collaboration amongst public service broadcasters? What more could PSBs do to compete with on demand services?

 

  1. There is without doubt growing consumer demand in the UK for steaming services with evidence that some 12 million households have at least one SVoD service. Appetite for home-grown content is high. As the home of Welsh language screen content, S4C wants its content to be available on as many platforms as possible. Collaboration is key. Our partnership with the BBC that enables S4C, to be available on the BBC iPlayer, gives us a degree of access to a wider audience. As new platforms such as Britbox develop, S4C is open to further discussions with other PSBs for opportunities to take Welsh language content and S4C Originals to as wide an audience as possible.

 

  1. With one series of the Crown estimated to cost at least £100m, S4C is pragmatic about its ability, with a total content budget of some £65m, to compete with on-demand services and even the larger PSBs. Nonetheless, in recent years, S4C has successfully attracted co-production partners to its drama, factual and entertainment programming. We are open to co-producing with on-demand services as well as the traditional PSBs.

 

  1. As mentioned above, S4C’s online brand Hansh is evolving, offering a range of content for on-demand viewing from comedy to some factual programming and the service has just released its first digital first medium-form drama Merched Parchus. The S4C review recommendations are enabling us to develop our online player S4C Clic, and we are increasingly offering on-demand services from boxsets to digital-first content.

 

 

April 2019