Examination of Witnesses
(Questions 1 - 19)
THURSDAY 22 OCTOBER 1998
MR LESLIE
HILL, MR
RICHARD EYRE
AND MS
KATE STROSS
Chairman
1. Good morning, gentlemen and Ms Stross. Thank
you very much for coming to see us today. You have provided us
with a considerable amount of material but, Mr Hill, if you wish
in addition to that to make a brief opening statement, we would
be glad to hear it.
(Mr Hill)
Thank you, Mr Chairman. I would like to make an opening statement
but, first of all, may I introduce my colleagues. On my right
is Richard Eyre, the Chief Executive of ITV and, on my left, Kate
Stross, who is ITV's newly appointed Finance and Development Director.
We welcome this opportunity to explain how ITV is proposing to
maintain and strengthen its range of high quality public service
programmes in a market of multiple choice. I stress that the proposals
we put to the ITC on 2 September are about all of ITV's programmes,
including the news, but I do stress not just the news. We are
required by Parliament to broadcast half an hour of news in peak
time. Peak time is defined by the ITC as 6 pm to 10.30 pm. The
reason we are seeking the ITC's agreement to our plans is that
eight of the fifteen original ITV companies specified news at
ten o'clock in the licences for which they applied in 1991. Lest
there be any misconception, on the news itself we are proposing
changing its timing but not its quality, its authority or its
editorial integrity. Our public service commitment remains as
strong as ever and we want to enable our news—and, indeed,
all of our programmes—to reach the largest possible audience.
The reality is that news at ten o'clock loses views. 27 per cent
of our audience at ten o'clock switch off—nearly three times
the loss of viewers across all channels at this time. Among viewers
in the 16-34 age range, 37 per cent switch off—almost two
fifths. Leaving our peak time news at ten o'clock is likely to
further reduce the number of viewers and will weaken our ability
to compete effectively with other news programmes broadcast nationwide
in the UK, and that is the requirement laid upon us by Parliament.
The popularity of the BBC six o'clock news clearly demonstrates
there is a strong public appetite for news early in the evening.
Moving our peak time news programmes to 6.30 pm would enable us
to provide better competition against the BBC. Moreover, by scheduling
a greater variety of programmes, especially in the 9-11 pm slot—for
instance, our new 60 minute current affairs programme anchored
by Trevor Macdonald, regular sport and the flexibility to innovate
more in drama and comedy—our aim is to attract and hold
viewers until later in the evening so they will round off the
day by staying tuned in to a new, high quality, bulletin of news
at 11 o'clock. What we are doing is paying heed to what viewing
behaviour tells us about when the public wishes to watch our news
and our other programmes. Our proposals for the peak time schedules
are designed to increase our audience since we depend upon advertising
revenue which comes from mass audiences. To continue creating
high quality television programmes we must maintain, and indeed
increase, our advertising revenue. We seek the right balance in
our programme schedule as both a commercial and a public service
broadcaster. We do not wish to change this status. We neither
seek relief from our public service responsibilities nor are we
embarrassed about the need to perform to the satisfaction of the
other stakeholders in ITV—our advertising customers, employees
and our shareholders. Finally, as this Committee said in its Multi
Media Revolution report only five months ago, we are living through
a global communications revolution. We agree. We noted the Select
Committee's certain degree of scepticism about the optimism of
certain broadcasters over their future prospect. You will recall
that the Committee said that although the fall in commercial viewing
was unlikely to be precipitate, it was eventually likely to be
substantial. Mr Chairman, our proposals, taken with the needs
of our viewers and our obligations under broadcasting legislation
and our licence agreements, are designed to ensure that that particular
forecast by the Committee does not come about. Thank you.
2. Thank you. Before calling Mr Fabricant, I
would just like to ask you one question regarding something that
you have just said in your opening statement. Seeking to provide
some evidence or justification for your proposal to have a 6.30
pm news bulletin, you spoke about the popularity of the BBC six
o'clock news. In fact the BBC six o'clock news is losing audience
very fast indeed and losing audience proportionately more than
your 5.40 news is losing audience. The BARB figures that we have
here show that the BBC six o'clock news has lost over a million
viewers since 1994—6,312,000 down to 5,199,000—and,
since the end of last year, the 1997 figure for BBC six o'clock
news was 6,392,000 and it is now, in the quarter ending September
of this year, down to 5,199,000. That does not seem to me evidence
of the enormous popularity of the BBC six o'clock news.
(Mr Eyre) We should be just a little cautious of the
quarter ending September because that is the summer and, of course,
in the summer months people tend to spend more time out in the
garden and less time watching the television, but the trend you
describe is absolutely correct. Our point is not specifically
to address the BBC six o'clock news but that, in that period between
a quarter to six and seven o'clock, there is a very large news
viewing audience of around 11 million people and so that and our
attitudinal research has led us to conclude that this is a good
time for news and a good time for our main evening news bulletin.
3. You may well be able to draw that conclusion,
or seek to do so, but Mr Hill said that you were basing your proposal
to hold a 6.30 pm news bulletin on the basis of popularity of
the BBC six o'clock news bulletin, and the statistics show that
each year, with a slight spurt up in 1996, as well as quarter
by quarter, the BBC six o'clock news is losing its audience. Therefore
whatever you, Mr Eyre, have just said about your feeling that
somehow or other that period is a popular period for news, your
quoting the BBC is simply not justified by the BARB statistics.
(Mr Eyre) I hope I have tried to put this in the context
of the viewers to news to ITV, BBC, Channel 4 and 5 at that time
of the day. Despite the problems experienced by the BBC news—and
in some ways I am delighted by the statistics you have just quoted
and they support our view that ITN is the pre eminent news provider
in the UK—I am very confident that the proposals we have
will bring forward an enormously effective bulletin at 6.30. But
the point is, if I may get into this, that, regardless of the
BBC's problems, there are still a large number of people switching
on at six o'clock for the BBC news and there are still quite a
large number of people switching off at ten o'clock for ours.
Our problem is not the quality of the programme; it is the scheduling,
and those two factors weigh together in terms of audience performance
and that is obviously what we are judged upon.
Chairman: That may or may not be so but
Mr Hill specifically drew attention to what he said was the popularity
of the BBC six o'clock news as a justification for your having
the 6.30 news. Yet, as I say, the BARB statistics show the BBC
six o'clock news is losing popularity; not gaining it. That seems
a curious recommendation for your launching a 6.30 news bulletin.
Mr Fabricant
4. I have to say there seems be to a sense of
deja vu here. I remember five years ago when Mr Leslie Hill came
here with Greg Dyke and Andrew Quinn on very much the same subject,
at that time the National Heritage Select Committee came out with
a report that the News at Ten should not be moved, and
it was not. Now, you have touched on this in your opening remarks
but perhaps you would like to go into more detail as to what has
changed in the last five years. Why should this Committee come
to any conclusion different from that which we came to five years
ago?
(Mr Hill) I would like to explain the changes that
have taken place. First of all, Channel 5 is now up and running
and taking a regular 5 per cent share of the audience. Cable and
satellite penetration now stands at 28.5 per cent and, in some
parts of the country, in London, for example, cable and satellite
now attracts a larger share of the audience than ITV does. Channel
4 is a much cannier competitor. You are aware of the changes;
Channel 4 has far more money to spend on programmes because of
the change to the funding formula and, also, it is scheduled very
much more competitively against ITV. It picks off ITV's weak spots,
one of which is ten o'clock when it will often schedule programmes
such as Frasier, NYPD Blue and, also, a raft of films at ten o'clock.
That is one of the reasons why we lose such a large audience.
I do not need to explain to you the digital channels coming on
stream—you are well aware of that. The BBC, of course, is
also stronger and more competitive in a commercial sense than
it was in 1993; it schedules, again, very strong programmes against
News at Ten at ten o'clock—They Think It's All Over,
and programmes on BBC 2 as well. BBC 2 does particularly well
at ten o'clock when we lose a share. In 1993 we reported a loss
of share at ten o'clock from what had been 46 per cent to 35 per
cent. It is now down to 28 per cent. At that point we were only
six months through our licence period. We are now in the sixth
year which, for a number of companies, may be the end of that
particular licence period because they are entitled to apply for
a new licences at the end of six years, and 11 of the 15 have
done so. Also, on that particular occasion, as I pointed out at
the time, we had never actually come to a decision at the ITV
Council (which makes the decision) about whether to change News
at Ten or not. I think the broader point is that also, since
that time, life styles have changed. We have become much of a
24 hour society and there is probably more news available in all
sorts of places than there was then. So, trying to do this rather
quickly, those are the main changes we see.
5. On the question of life style, are you arguing
that prime time has actually changed from 6.30 to 10.30?
(Mr Hill) 6.00 until 10.30—well, the ITC defines
peak time and they define it as 6.00 to 10.30 so we do not have
any control over what is peak time.
6. But are you arguing that, as life styles
have changed, peak time has changed—not by definition of
the ITC but in terms of audience or potential audience?
(Mr Hill) Yes, we would argue that because, as I say,
people now tend to live in a rather different way. Increasingly
they live 24 hours of the clock and things that used to happen
in the daytime happen at night and vice versa.
7. In your main answer to my first question
I rather got the impression you were arguing for increasing advertising
revenue rather than for the benefit of the news viewer. How is
the news viewer actually going to benefit by seeing a shift to
an 11 o'clock bulletin?
(Mr Eyre) ITV's economy is a simple one. It starts
with programme investment which is designed to bring about a good
quality of audience—and we can talk a little bit about that
at some other point. So satisfied viewers create high audiences
which we sell to advertisers and that then funds next year's programme
budget so there is a virtual circle here. Now, in the course of
the last few years, ITV has not been performing very well. I think,
probably rightly, when we last faced this Committee, we were urged
to buck up our ideas alongside other terrestrial broadcasters
and that is exactly what we are trying to do. We have a new approach,
a new management team over the course of the last year, which
has been single mindedly trying to address the examination of
problems that led to what has been a 15 per cent loss of audience
over the last five years. That is a terrible loss of audience
if you are trying to sell that on to advertisers. So as part of
this overall review of performance, structure, strategy and governance
of ITV, we have looked at the quality of our programmes and the
scheduling, and tried to identify those points during the daytime
and the evening where we appear to be less attractive to viewers
than we could be—certainly relative to our competitors.
As you have heard, arising out of the 9.30 to 10 o'clock half
hour (which is now the peak viewing half hour of British television—that
is something that has changed and gradually gone later—and
where on the back of that inheritance where we really need to
build audience, we are not doing so well, so this change is one
feature of a breadth of changes. It is not about marginalising
news. It is about extending our commitment to news. We absolutely
believe, over a period of time, we can deliver better quality,
more complementary audience between a 6.30 and 11 o'clock bulletin
over a period of time but it is, as part of this breadth of proposals,
designed to arrest this rather cataclysmic fall in ITV's audiences.
8. You mention quality several times and that
is a function of the budgets available, to a large degree, for
programme making. What would be the ramification to ITN in terms
of the amount of money that ITV or the ITV companies would be
passing over to ITN, if these changes were to go ahead?
(Mr Eyre) If the changes go ahead the amount of money
passing to ITN will be the same—actually a little larger,
because of the set-up costs of the new programmes. What it will
mean, however, is that the budget available for the programme
at 11 o'clock will be considerably higher than anything else broadcast
at 11 o'clock at night on British television. It will be a very
high class programme.
9. One could argue that is because of the slot
of 11 o'clock at night. I would not say that is a particularly
strong thing to be proud of.
(Mr Eyre) Yes, but that goes hand in hand with a £50
million increase in investment in ITV programmes, in no small
part designed to bring an audience to 11 o'clock. Essentially
we see this as being an opportunity to spend more money in the
10 o'clock to 11 o'clock hour on new programmes, and the Chairman
has mentioned just one of them.
10. We are talking about news and while I accept
the argument that more money might be made available for entertainment
programming, what I am trying to get to is whether there is going
to be more money made available? Is there a real commitment you
can demonstrate as a trade-off for shifting the broadcast hours
of the news programmes in terms of extra money going into ITN
for the provision of high quality programming at 11 o'clock and
6.30?
(Mr Hill) There remains a very real commitment to
high quality news. We will be spending, next year, £44 million
on news from ITN and that will be maintained. There will be some
additional one-off costs in making these changes. Also we spend
more than any other commercial terrestrial broadcaster on our
news and that will continue and we will spend what is necessary
to maintain that high quality news which, we are all agreed, ITN
produces.
11. Like the Health Service, I think news can
be a bottomless pit but you are saying, although you want to see
a change in programme hours, you are not prepared to spend more
money to make news more attractive on ITN and, indeed, cover news
in more depth?
(Ms Stross) ITN over the past five years has changed
its working practices very considerably, as have many of the programme
producers in this country. It is now a much more efficient organisation
than perhaps it was five to ten years ago. We have just started
a new contract for news provision in 1998; it is a five year contract,
and I think the management of ITN are comfortable that that contract
will adequately fund news provision in either today's programme
pattern or the programme pattern we are proposing to move towards.
Mr Fabricant: I think that is something
we will return to with ITN when they come before us.
Chairman
12. Mr Hill, arising out of the answers that
have been given to Mr Fabricant, I would like to raise two matters
with you. You just said that you are by far the biggest investor
in news of any commercial channel. Well, that is not surprising,
is it? You have three times as many viewers, Channel 3, as the
next largest commercial channel which is Channel 4, so it is not
a really an extravagant claim to say you are spending more than
Channel 4 or 5 on news. Indeed, it would be remarkable if you
were not.
(Mr Hill) Yes. I agree.
13. So it is not really much of a claim, is
it?
(Mr Hill) I was just trying to make the point that
we do spend money on high quality news service and we intend to
continue; no more than that.
14. That is fine. That you intend to continue
is one thing; somehow claiming it is another.
(Mr Hill) The other point that was being made is that,
because of efficiencies, because of new technology, we are getting
more value for our money as time goes on.
15. So is everybody else as well.
(Mr Hill) I am sure they are.
16. Now you were discussing with Mr Fabricant
the question of changing life style and the possibility that this
might provide you with a different kind of audience—a bigger
one—that might be expected for an 11 o'clock bulletin. We
have already dealt with your claim that there is a special kind
of attractiveness around the 6 o'clock area by demonstrating that
the BBC six o'clock news has lost a very great many viewers and,
indeed, so has your own 5.40 news. If we are looking at life style,
however, if we are looking at viewing habits of the nation, what
is very interesting is that, although you make a very great deal
about this 27 per cent decline in Channel 3's audience for the
10 o'clock news, overall the single biggest drop throughout the
day in viewing figures is precisely at 11 pm. The BARB figures
for October 1997 to September 1998 show that, at 10.00, the overall
audience falls maybe by a couple of hundred thousand. You are
saying you take a disproportionate part of that fall but, nevertheless,
the overall audience falls at 10 o'clock by a couple of hundred
thousand. If you are looking at 22.45 to 22.59 (ie, 11 o'clock),
what you are finding is the biggest single fall in the entire
viewing day in viewing figures. Something like 5 million are turning
off by 11 o'clock who were watching throughout the day. Therefore,
while you may be concerned—and are concerned—that
you may be having a larger than average turn-off at 10 o'clock
on what is a pretty static audience, you are somehow seeking to
indicate that you can get a justifiably large audience for an
11 o'clock bulletin, which will be 20 minutes long or half an
hour. Lord Bragg should have read the briefing you gave him a
little more carefully before he wrote his regurgitation of your
briefing in The Times today. I read it with very great care and
I compared it with your document. There are extraordinarily striking
similarities except that he got the length of your bulletin wrong.
You are somehow seeking, however, to indicate to this Committee
and the ITC that, although at 11 o'clock the audience falls more
precipitately than at any other time of the day, and, indeed,
by 11 o'clock is 9 million less than it is at 10 o'clock, somehow
or other the attractiveness of this attenuated bulletin of yours
is going to be such that people will stop going to bed—because
you tell us that they watch the news and then they instantly go
to bed - they are not going to do that. Although their habit is
to go to bed in very large numbers at 11 o'clock, they are going
to abandon this because of the fact you are introducing an 11
o'clock bulletin even though, if they really wanted to watch the
news at that hour, they could be watching Newsnight.
(Mr Eyre) Firstly, I think Lord Bragg is, indeed,
an independent commentator and the last thing he is going to do
is take a brief from me.
17. So he got all that material without any
reference whatever to your material?
(Mr Eyre) Our material is pretty much in the public
domain. We have been making the same points for some time. However,
the availability to view is quite a complicated phenomenon. It
is a cheap point but the largest audience at News at Ten
this year has been when it was at 11 o'clock and that is to do
with the programmes that surround it and that lead people into
the news at a certain time. People do not have fixed bedtimes:
they tend to move back and forward depending on what is on the
box. So there is an argument that says that whatever people currently
do may be variable if we can entice them to stay up a little longer.
I do not demur from the points you are making; they are absolutely
right. Journalistically, though, we do believe there is, at 11
o'clock, an opportunity to bring better news coverage of America,
more analysis of what happened in this House during the course
of the day, as well as to lead into the following day's news by
picking up on the morning headlines of the newspapers, as well
as, because of the news access agreement which prevents us from
showing sporting action whilst it is still being shown on another
channel, we will be able not just to talk about goals but be able
to show them, and altogether this makes for a better quality bulletin
at 11 o'clock. So I do think it is not stretching the imagination
too much to imagine we might be able to improve upon ITV's current
audience levels at 11 o'clock. As I mentioned earlier on, we will
be spending substantially more on our programming at 11 o'clock
than we currently do—or any of our competitors do. I accept
all the points you are making but I think the commercial imperatives
here are something that, obviously, we have to be very mindful
of. We would be daft to be doing this to cut off our noses to
spite our face. We have weighed these thoughts quite carefully
and, at the end of the day, we conclude that the behaviour of
the British viewing public is something that is not set in stone,
and that will respond to changes in programme scheduling.
(Mr Hill) We are not moving the Ten O'clock News to
11. Our half an hour of news in peak will not be at 10 o'clock
it will be at 6.30. It is the combination, in terms of audiences,
of 6.30 and 11 that some of our modelling suggests means we may
get a larger audience overall for news.
18. But that is all speculative and, on two
issues which I have been questioning you on, you are somehow rebutting
the matters that you yourself raised. Mr Hill mentioned this extraordinarily
popular 6 o'clock period for news, and I pointed out that both
of your news are falling. Mr Eyre now dismisses this business
of watching the news and going to bed. I did not introduce that;
it is in the material you have sent me. On page 6 of your Newspaper
Programmes More Choice document, what you say—and it did
not occur to me, I live a cloistered life—is "for many
people, a news bulletin completes their evening viewing and provides
a natural point to go to bed". You said that—I did
not invent it. What you are now telling me is the propensity of
people to go to bed at 10 o'clock or half past will somehow be
abandoned at 11 o'clock because of your wonderful new bulletin,
even though statistics show that more people go to bed at 10 o'clock
(abandoning watching television of any kind) than at any other
period in the evening.
(Mr Eyre) I understood the point you were making,
Chairman, that 11 o'clock was too late and that people would be
in bed by the time it came on. The only point I am making is that
people's going to bed habits can be influenced by the timing of
television programmes.
19. All I am doing is looking at the statistics.
As I understand it, you operate by the BARB statistics.
(Mr Eyre) Yes.
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