Select Committee on Welsh Affairs Second Report


4.  Memorandum submitted by HTV Wales

1.  INTRODUCTION

  The National Assembly for Wales will be one of the first democratic institutions to have been created in the television age.

  As a national broadcaster in Wales, HTV Wales is fully aware of the opportunities and responsibilities it faces in reporting the Assembly and its deliberations.

  HTV intends to offer a service with the ambition, confidence and vigour that are the characteristics of contemporary Wales. HTV is the most watched channel in Wales. Its audience has a high expectation of news, politics and current affairs. HTV is committed to:

    —  authoritative reporting of the news and the stories behind it

    —  investigative journalism of the highest accuracy

    —  inclusive political analysis and comment.

  HTV Wales will offer a public service to enable the people of Wales to make informed decisions in relation to the range of domestic and political institutions that affect their lives.

  HTV believes that a choice of voices on matters of political debate is an essential element of an effective democracy.

2.  BACKGROUND

  HTV is the independent television contractor for Wales and the West of England. It is entirely funded by advertising revenue.

  Its licence to broadcast was awarded by its regulator, the Independent Television Commission, and came into operation in 1993. It was awarded as a result of a competitive bid under the terms of the 1990 Broadcasting Act.

  In June 1998, HTV applied to the Independent Television Commission to renew its licence for a further 10 years. The outcome of the application for renewal will be made public in late autumn this year, and has a very important bearing on HTV's plans for the future. [see Licence Renewal (point three) below].

  The licence is held by HTV Group Limited. The company, though, operates two separate and distinct programme services for Wales and the West of England. Each has its own management structure. Details of group board, executive officers and advisory boards are attached as Appendix I.

  HTV Wales employs 250 staff. The company's headquarters is at Culverhouse Cross, Cardiff. It has regional offices in Carmarthen, Newtown, Mold, Colwyn Bay and Caernarfon. HTV Wales broadcasts almost 12 hours a week of regional programmes including news, current affairs, sport, documentaries, arts and music, education, religion, children's, entertainment and drama.

  HTV Wales is also commissioned by S4C to produce programmes in Welsh. These include current affairs, drama and documentaries.

  The company is currently producing programmes for Channel 4 UK and Channel 5.

  Since the beginning of the current licence period, HTV Wales has won dozens of awards for its programmes. These include BAFTA awards for drama, current affairs and documentaries. The New York Film and TV Festival has consistently recognised HTV's high-quality programmes with awards for features, music and current affairs.

  HTV journalists have won awards at the BT Journalism Awards every year since their inception, including the award for Investigative Journalists of the Year for a remarkable seven successive years.

  The company's programmes are also reviewed annually by the Independent Television Commission which publishes its performance review. HTV has been regularly praised by the Independent Television Commission for the high quality of its service to viewers in Wales.

3.  LICENCE RENEWAL

  1998 is a crucial year for HTV. On 1 June the company submitted an application to the Independent Television Commission for renewal of its licence. It is likely that the Independent Television Commission's decision will be announced in late autumn 1998. HTV's current licence came into operation in 1993. It was awarded as a result of a competitive bid under the 1990 Broadcasting Act. HTV was one of four competitors for the Wales and the West of England franchise. HTV's successful bid in the face of competition was £21 million per annum. This compares with Scottish Television's successful bid of £2,000 per annum, for which there was no competition.

  The original licence was for ten years with an opportunity to apply for renewal six years into the licence period. HTV has taken advantage of this opportunity to apply for renewal. If successful, the new licence will come into operation on 1 January 1999 for a further ten years.

  The financial terms of the licence will be set by the Independent Television Commission. There is no competitive bid.

  HTV believes that the particular circumstances it faces in Wales place the company in a unique position in ITV.

  HTV's commitment to full coverage of the Assembly elections and the Assembly itself will place a financial burden on the company which is unprecedented in ITV. Apart from Scottish, with a very low annual licence payment at £2,000 no other ITV company faces the challenges and responsibilities faced by HTV.

  In addition to our coverage of the Assembly we shall continue to report from Westminster and to cover elections to Westminster and Europe.

  As one half of an ITV licensee (HTV West is the other half of the licence) HTV Wales alone faces significant investment in order to provide the fundamental requirement for full and comprehensive reporting of the Assembly.

  In addition to its commitment to Assembly coverage, HTV is planning to double its drama output from ten hours a year to 20 hours. We believe that the advent of the National Assembly will enhance perceptions of a Welsh identity. There will be a demand amongst viewers for broadcasters to recognise that television programmes must reflect this sense of identity. HTV believes that the most effective and popular way of addressing this issue is through drama. Our commitment to doubling our drama output requires significant extra investment.

  HTV is also conscious of the importance of attracting television viewers back to Wales-based programmes. A large proportion of the Welsh electorate could be denied coverage of important decisions made by the Assembly because they cannot or do not receive HTV Wales.

  This issue is explored in greater detail under Disenfranchised Viewers (point 5) below.

  HTV is anxious to address all the issues outlined above. We have ambitious plans for developing our service to viewers in the new licence period. HTV is the most watched channel in Wales. It should be enabled to continue to provide a popular and successful service for viewers and to respond to the challenges of the political changes in Wales.

  A substantial reduction in HTV's bid is essential if the company is to realise its ambitions:

    —  To enhance quality programming for our audience.

    —  To enable HTV Wales to reflect the challenge of the cultural, social and political change that we face once the National Assembly for Wales is established in 1999.

    —  To allow HTV Wales to make the necessary significant investment required to enable it to cover the National Assembly for Wales comprehensively and professionally.

    —  To ensure that HTV Wales' service is made available to the largest possible number of viewers in Wales.

    —  To provide the Welsh audience with its demand for quality drama produced in Wales, as indicated by recent independent research.

    —  To invest in training and develop new opportunities for those within the industry and for future talent.

    —  To invest in development funding to produce programmes in Wales for transmission on the UK Networks and internationally.

4.  BROADCASTING AND THE NATIONAL ASSEMBLY FOR WALES

 (i)   Impact of the Assembly on HTV Wales' Service

  The creation of the National Assembly will pose a new challenge to our news, current affairs and political departments. This changing environment will need a new kind of political and news coverage and a considerable investment in additional staff and resources.

  The Secretary of State for Wales has stressed the need for the Assembly to be open and accessible. The fulfilment of this aim demands an imaginative new approach to the broadcasting of a democratic forum.

  HTV will establish a new political unit to develop the necessary expertise to report on the Assembly and the implementation of its policy decisions.

  In addition to our substantial news coverage, we shall be producing weekly political programmes and current affairs programmes to discuss stories raised by the Assembly.

  Our political staff will establish close links with MPs and political activists at local, Welsh assembly, Westminster and European level. The Assembly will also present new broadcasting opportunities, not only directly in the coverage of its own activities, but also in the scrutiny it will bring to important aspects of Welsh life.

  For much of the time the proceedings of the Assembly will be important and meaningful in themselves. But HTV will not be able to serve our audience properly unless, when the story demands it, we integrate our coverage of all political institutions in order to give our audiences a full and proper context for events. This will be necessary both because of the division of functions, particularly between Westminster and the Assembly and because of the nature of events.

  In addition to our considerable presence at the Assembly we shall continue to have political staff covering Westminster.

  There will be an increased expectation that broadcasters in Wales reflect social and political changes in their programming. This is not simply about coverage of the Assembly, although that is important. It is about providing a changing and maturing society with a television service which does not replicate that seen elsewhere in the UK. Of course viewers in Wales will still want to watch the programmes from the ITV Network Centre such as Coronation Street and the Bill. There will also be a demand for HTV to recognise that viewers in Wales need a service which reflects their sense of identity and their aspirations. The Assembly will enhance perceptions of a Welsh identity. HTV will be seen as a crucial ingredient in the Welsh social, political and cultural mix.

  New satellite, cable channels and digital terrestrial networks will, in future, offer more UK and international news and programming. By contrast our schedule will brand itself even more strongly as a national Welsh service, commanding the loyalty of Welsh viewers as audiences inevitably fragment with increased competition.

  We intend to double our drama output from 1999 to reflect the expectations of Welsh viewers.

 (ii)   Elections to the National Assembly for Wales

  The election for the Welsh Assembly will be a defining moment in Welsh history. It will be an enormous challenge for HTV to provide a comprehensive service about the campaign, including the election results and their aftermath. The voting system is new and complicated—a combination of first past the post and proportional representation.

  As the most watched channel in Wales, we intend to provide comprehensive coverage of the build up to the campaign, the campaign itself and the results.

  Summarising HTV's approach to coverage of the elections and the Assembly itself:

    —  we are committed to a substantial editorial response;

    —  we are conscious of the challenge to our journalism;

    —  we are aware that it will require a heavy new investment within our operations;

    —  pluralism is essential for the democracy of the Welsh Assembly. HTV will ensure that there is healthy competition in the coverage of the National Assembly.

5.  DISENFRANCHISED VIEWERS

  A large proportion of the Welsh electorate could be denied coverage of important decisions made by the Welsh Assembly because they cannot or do not receive HTV Wales.

  There are three aspects to the reception problem:

    —  The inability of some homes to receive an HTV Wales signal because of transmitter/frequency deficiencies;

    —  The lack of awareness amongst some viewers of the availability of HTV Wales;

    —  Overlap areas where viewers can receive more than one ITV channel.

  In July 1997 HTV began broadcasting from a new transmitter for the Wrexham area and this enabled residents of the town to receive HTV by either re-tuning their sets (if they already received BBC Wales/S4C) or by purchasing a new aerial. In view of the frequency problems on Deeside and part of the Welsh Marches there are insurmountable problems to the introduction of an HTV service on analogue.

  Engineering solutions and frequency deficiencies are not the reasons why the majority of the 330,000 do not receive HTV Wales. In overlap areas (HTV Wales/Granada, HTV Wales/Central) viewers may be unaware of their ability to receive HTV Wales or may have failed to take advantage of the opportunity to do so. This significant section of the audience must be offered positive motivation to choose HTV.

  We have commissioned NOP to conduct research which evaluates the extent of the problem. We have also commissioned research jointly with BBC Wales and S4C to assess the impact that aerial installers may have on householders' choice of TV station.

  HTV believes that it is possible to address the issue of extending coverage by developing a marketing strategy to increase awareness of the availability of HTV Wales and to inform viewers that they may be able to tune into HTV Wales with their existing aerials.

  A marketing campaign would ensure that viewers who wished to enjoy a plurality of coverage for the National Assembly would be aware that they could receive HTV Wales.

6.  DIGITAL TELEVISION

  In October Sky launch their new Digital Satellite Television services and in November Digital Terrestrial Television (DTT) is due to start. In the context of broadcasting regulation, it is important to understand that digital technology blurs the boundaries between broadcasting, computing, publishing and telecommunications.

  Most homes within digital terrestrial coverage will be able to receive DTT using their existing aerial; others will require a new one. The set-top box will plug into the existing socket on the television set. New integrated digital television sets will also be available. These will receive a number of new free services.

DTT Reception in Wales

  The Independent Television Commission has acknowledged that up to a quarter of the Welsh population will not receive digital terrestrial television, at least initially.

  The topography of Wales with major centres of population based in valleys makes it hard for signals from main transmitters to reach them. The areas most likely to miss out on digital are the towns in and around Gwent Valleys and rural areas such as Mid Wales. Since digital broadcasting is still in its infancy the true situation could be better or worse.

  The Independent Television Commission will look at the problem of a lack of DTT reception once the first phase of digital TV has been launched. One possible solution may be use of microwave transmission.

  Forecasting the rate of digital take-up Wales is precarious, as is determining which communities will not able to receive DTT. However, the Digital Network state that they hope that Wenvoe and Moel y Parc transmitters will be on-air with the new services at the time of their launch. The roll-out for digital will continue with the following transmitters.

  Kilvey Hill  —  December 1998

  Blaenplwyf  —  December 1998

  Carmel  —  January 1999

  Llanddona  —  March 1999

  Preseli  —  March 1999

  Aberdare  —  October 1999

  Pontypool  —  December 1999

  The UK Digital Terrestrial Group (DTG) plan to operate a database of predicted reception such that prospective purchases can find out whether they will be able to receive the new services. There are over 70 member companies of DTG who represent the industry, broadcasters, manufacturers and major retailers.

Analogue switch-off

  The Government has recently conducted a consultation exercise on some of the major issues relating to the timing and manner of the transition from analogue to digital delivery of television services. This is known as the "analogue switch-off".

  ITV does not support a premature decision on a switch-off date, given the embryonic state of the digital market. It recommends instead that the Government identifies a target date within the next two years and takes specialist advice on whether and how progress is being made towards that date in the coming years. The target date can be confirmed or changed in the light of experience.

  The aim should be to ensure that broadcasters, manufacturers and consumers are given a clear indicative time-scale, whilst ensuring that technical and economic conditions are met and public interest considerations are safeguarded before a final date for switch-off is announced.

7.  ROLE OF THE ASSEMBLY IN SCRUTINISING BROADCASTING IN WALES

  HTV is a commercial broadcaster regulated by the Independent Television Commission. HTV Wales and HTV West form a single licence area within ITV and are regulated as such.

  HTV in common with all independent companies, contributes towards the cost of the ITV Network budget. Although federal in structure, ITV has a governing body, the ITV Council which oversees the operation of the ITV Network.

  HTV recognizes that the National Assembly will wish to consider the accountability of broadcasters in Wales. We look forward to active participation in the debate.

8.  COMPETITIVE ENVIRONMENT

  1998 signals the start of a new era in UK Broadcasting.

  Digital television will transform viewing choices for the public. There is a significant degree of uncertainty about a number of critical commercial and technical factors which could affect the rate of development of digital services in the UK market. In 1998 we cannot have a clear picture about how people will watch and use television in 2009. The only certainty is that anyone's forecasts over this time period will be incorrect and that there will be intense competition for the attention of our viewers.

  The key factors which will impact on the UK broadcast market and our performance over the next ten years are:

    —  A reduction in economic growth in the period. Third party macroeconomic forecasts generally suggests that the UK economy will enter a downturn in 1999.

    —  Significantly increased competition within television resulting from the launch of digital platforms. This will result in pressure on ITV viewing shares and, therefore, increased pressure on the share of television advertising revenue that Channel 3 is likely to command.

    —  Increased competition from non-television media such as the internet, and other in and out of home leisure activities. This will both divert viewers away from the television and generate more competition for advertising expenditure.

    —  Rising programming costs through competition for talent and rights.

—  The need to respond to major changes in the political structures in Wales.

9.  CONCLUSION

  As we have described in detail in this document, HTV faces critical challenges in the years ahead - challenges which are unprecedented in ITV.

  The outcome of the licence renewal process is clearly crucial to our ability to realize fully our ambitions for the future.

  We are determined that HTV's coverage of the election to the National Assembly and of the Assembly itself will inform, challenge and stimulate our viewers.

  Our coverage of the Assembly is but a part of our intention to enhance our service to viewers in Wales. HTV is the most watched channel in Wales, its programmes are popular, successful and highly regarded. We shall continue to provide a service of variety and quality to viewers in Wales.

Menna Richards

Managing Director

2 October 1998


 
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