Media Viewpoint: Ten million reasons why the cameras will roll: David Elstein bites back at Michael Grade for calling BSkyB's latest film deal an 'insult to viewers'

Michael Grade, in his attack here last week on BSkyB, claimed that BSkyB's deal with British Screen was 'an insult to viewers and producers'. Readers of the Independent must wonder why such a deal, if it is as bad as Grade says, should be endorsed by the whole British Screen board, the film producers' organisation Pact and the Department of National Heritage. Perhaps some facts will help.

British Screen helps to fund more films than any other organisation in the UK. Its shareholders include Rank, Granada and Channel 4 and it receives pounds 4m every year from the government to invest in films.

BSkyB has now guaranteed to British Screen that it will license pay-television rights on at least 10 films a year for one or other of its movie channels, at a cost of at least pounds 2m a year.

In addition to this pounds 6m, three-year commitment to British Screen, BSkyB has said it will offer a minimum prints and advertising budget of pounds 65,000 to any UK producer whose film is guaranteed a theatrical release. The total BSkyB spend on British films will be at least pounds 10m in three years.

The fact is that BSkyB has created additional revenue for all film producers, which will now benefit British producers in a way that will make them the envy of Europe. Grade off-handedly refers to this revenue as 'taking hundreds of millions from British viewers'. Would he similarly describe the activities of cinemas and video shops?

It is also quite false to describe the deal as non-risk-taking. All BSkyB's money is committed before a single film is made, let alone released, and cash-flowed on terms rather more favourable than Channel 4's for film producers. BSkyB exercises no creative controls, requires no screen credits and does not pick and choose between projects. We are determined not to follow Channel 4 and force cinema producers to make niche- market films for television. Nor will we play favourites with producers.

An important fact is that British Screen initiated the deal with BSkyB after Channel 4 abandoned a similar negotiation with BSkyB, offering a series of tortuous excuses for rejecting a pounds 1m- a-year deal. Grade asserts he is willing to co-fund films with BSkyB, but my last written offer to him has been followed by nine months' silence.

The main BSkyB negotiation with British Screen was completed by August, and money should have started flowing to producers in September. That it has not is entirely Channel 4's fault. For six months, Grade has tried every tactic to block the deal. There were threats to remove British Screen's chief executive, threats never to co-finance films with them again and even threats to pull out of British Screen, all combined with a series of bizarre 'reasons' why the deal should be frustrated.

Channel 4's petulant and mean-spirited opposition finally proved self-destructive. Having opposed the original deal, which would have allowed British Screen to exclude at least three films a year for Channel 4 from BSkyB's automatic entitlement, Grade found himself forced to accept a revised version, under which the exclusions disappeared, due to pressure from film producers.

This has not been one of Grade's finest negotiating displays. Perhaps the humiliation of the outcome explains his whinge that 'there is no evidence that this deal will enable a single extra film to be made'. Does he really think British Screen, with a 30 per cent increase in spending power, will be unable to fund a single extra film?

It is hard to avoid the conclusion that Grade has allowed his deep hostility to BSkyB to affect his judgement. Last week, in apparent retaliation for the BSkyB deal, he made clear he would no longer co-produce with British Screen, and offered to sell all Channel 4's shares in the company. To whom? To Sky Television. Another tantrum? Or just keen disappointment that British Screen has had the temerity to conclude an agreement with a broadcaster other than Channel 4? Let the 'insulted' viewers and producers be the judge.

The author is Director of Programmes at BSkyB.