APPENDIX 12
Memorandum submitted by IPC Magazines
1. INTRODUCTION
The Report of the Independent Review Panel,
chaired by Gavyn Davies, on The Future Funding of the BBC
may well represent a watershed in the history of broadcasting.
The Report does contain many valuable insights
into the role of the BBC as a public service broadcaster, particularly
the proper approach to the development of new public services
and the BBC's relationship with its commercial arm—BBC Worldwide.
A core element of the Panel's Report lies in
Appendix 8, which includes the observation that"The failure
of free markets to function optimally provides the underlying
rationale for public sector intervention on efficiency grounds".
The Panel makes some telling observations on
the relationship between the BBC and Worldwide. It also underlines
the belief, long-held outside the BBC, of the need for far greater
transparency in the presentation of the Annual Reports and Accounts.
For many years, there has been a divergence between the "broadcasting
minister" of the day, encouraging the commercial development
of the BBC in order to take political pressure off the licence
fee versus the "competition authorities", together
with the wider media industry, all concerned that they face unfair
competition from an over-privileged BBC.
Your Committee may be the last opportunity for
MPs to scrutinise the funding of the BBC, its commercial activities
and its relationship with the commercial world in this Parliament.
We have taken the liberty to introduce, in this evidence, some
arguments that were not considered by the Panel but seem very
important from our perspective.
2. OUR CREDENTIALS
You may wonder why a magazine publishing house
is concerned about these issues. ipc.tx a subsidiary of IPC Magazines
is the market leader in TV listings magazines, our three titles
Whats on TV, TV Times and TV Satellite Week represents
57 per cent of the paid-for listings market: our 7.6 million readers
are heavy users of TV, the majority of them still rely on free-to-air
programming and regard BBC television as central to their home
entertainment. We are at the heart of British television and believe
that the public interest is served by the free and independent
provision of listings information.
The current market for paid-for listings looks
like this:
| Magazine
| |
|
| IPC | TV TIMES
| 825,760 |
| IPC | What's on TV
| 1,813,784 |
| IPC | TV and Satellite Week
| 198,651 |
| BBC-W | Radio Times
| 1,390,481 |
| Bauer | TV Quick
| 725,795 |
|
| Total |
4,954,471 |
|
ABC Figures January-June 1999 (In September, a sixth title
TV Choice joined the market; audited figures are not available).
More than one-fifth of UK homes still choose a paid-for listings
title, despite the fact that, every week, some 26 million "free"
listings guides are distributed as supplements to national newspapers.
In addition, 5.5 million listings guides are distributed as part
of the subscription to multi-channel TV services.
Our interest is not limited to paper magazines. IPC Magazines
has pioneered magazine-related web-brands: nme.com, loaded.com
and yachting-world.com are all world leaders in their niches:
ipc.electric, a new company, recently formed to spearhead our
Internet and Digital developments will soon launch a Women's Network.
3. OUR CONCERNS
That the BBC should be able to continue to provide a high-quality
programming within the public-service remit.
That all our magazines are able to compete fairly and on
a level playing field with the BBC.
That the listings market is not distorted by the BBC or other
broadcasters supplying quality information to their own journals,
EPGs or websites at the expense of independent publishers.
That the BBC's Internet activities are properly regulated
and that licence fee income is not being used to develop commercial
operations.
That there is real transparency of the financial interface
between the BBC and BBC Worldwide.
That BBC Worldwide does not enter into new commercial enterprises
without scrutiny and approval by the Secretary of State.
That the sell-off of 49 per cent of BBC Worldwide is properly
managed to ensure that the sale itself does not skew the marketplace
and that the BBC does not pre-empt such a sale by entering into
partnership deals with specific areas of Worldwide and outside
investors.
That the BBC should be required to consider proposals for
masthead programming from independent commercial publishers.
Those ordinary viewers do have the opportunity to express
their concerns about the roll out of digital television and the
move towards analogue switch-off.
3.1 THAT THE
BBC SHOULD BE
ABLE TO
CONTINUE TO
PROVIDE HIGH-QUALITY
PROGRAMMING WITHIN
THE PUBLIC
SERVICE REMIT
The needs of our readers, and therefore our business depends
on the existence of a broad range of programming: it is hard to
imagine that range without a core of quality programming from
BBC television.
The Panel accepted that the Corporation requires funding
at a greater level than seems possible by the current licence
fee arrangements. The Secretary of State has recognised that some
30 per cent of the UK population see no attraction in subscription
or pay TV, nor any reason to switch to digital. If the Government
is to achieve analogue switch-off in the time frame proposed by
the Minister, then this "reluctant rump" will need a
healthy, diverse mix of free-to-air programming to persuade them
to commit to digital. Although, ITV, Channel 4, Channel 5 and,
possibly SDN, may be able to contribute to this mix, the BBC will
have an essential part to play.
The Select Committee should support the development of free-to-air
services and ensure that the BBC is able to fund these developments,
either through existing resources or the licence fee.
3.2 THAT ALL
OUR MAGAZINES
ARE ABLE
TO COMPETE
FAIRLY AND
ON A
LEVEL PLAYING
FIELD WITH
THE BBC.
Our issue with the BBC may be a competition matter rather
than a broadcasting issue. However, the Committee should be aware
that since the de-regulation of programme listings following the
1990 Broadcasting Act our listings titles have always been at
a commercial disadvantage against Radio Times which has
unique access to "free airtime" in the uncluttered environment
of BBC TV.
In 1992 the MMC, following the Sadler Report, laid down some
guidelines for on-screen promotion, which are still in force.
The climate has changed dramatically since then: it is our opinion
that this privileged access to free airtime does distort the growth
in programme-related magazine publishing.
The Select Committee should ask whether there is still a
case for on-screen promotion of BBC Magazines or if the rules
should be modified.
3.3 THAT
THE LISTINGS
MARKET IS
NOT DISTORTED
BY THE
BBC OR OTHER
BROADCASTERS SUPPLYING
QUALITY INFORMATION
TO THEIR
OWN JOURNALS,
ELECTRONIC PROGRAMME
GUIDES OR
WEBSITES AT
THE EXPENSE
OF INDEPENDENT
PUBLISHERS
Since the 1990 Broadcasting Act, broadcasters have been required
to supply publishers with very limited information about programming—just
the day and time of transmission and programme title. There is
no requirement about programme content or "billing".
In the de-regulated climate post the 1990 Act this was not
a problem. The BBC was eager to see its programming in TV Times
and ITV companies their programming in Radio Times: satellite
broadcasters were eager for maximum publicity within our terrestrial
titles. However, the situation could now be changing. BSkyB and
ONdigital both have their own magazines, which are delivered to
all their subscribers; they both have their own EPGs.
It seems possible that they may choose to give their own
titles specific information about programme content to encourage
reader/viewers to remain in a specific environment.
One area that already represents a problem is "Information
for Viewers" (on sex, violence and bad language within programmes).
The Denton Report and last year's Joint Green Paper on Regulation
emphasised the importance of giving viewers guidance about content
they might find offensive. Current transmission planning procedures
mean that it is much easier to give such information to EPGs or
Internet listings: this would deprive the readers of paid for
titles of valuable and important information.
Incidentally, another factor that distorts the production
of listings titles is the late supply of information. Broadcasters
use our listings titles as a battleground to challenge rivals
into competitive programming. As schedules are sent to publishers,
they are also distributed among rival broadcasters by Broadcasting
Data Services (a subsidiary of BBC Worldwide), who act as agents
for statutory listings information. This means that schedules
are only completed for publication 10 days before transmission
rather than the 14 required by the 1990 Act (even this is an improvement
on previous performance and was only achieved after a recent "summit"
involving all terrestrial broadcasters and all paid-for listings
publishers).
Implementation of this Section of the Act was left to the
courts rather than a regulator.
We invite the Select Committee to consider the possibility
of a single regulator responsible for ensuring that the intentions
of the 1990 Act are carried out and that valuable information
is not channelled to proprietary titles at the expense of the
general reader.
The Select Committee should support the Denton recommendations
and require broadcasters to inform listing titles in good time
when they are aware that programmes contain bad language, violence
or sexual content.
The Committee might consider if it is desirable that TV listings
are all channelled through a single source. We believe that the
virtual monopoly of distribution via BDS is inhibiting the natural
move towards electronic distribution, which would be the natural
"next-step" for broadcasters.
3.4. THAT THE
BBC'S INTERNET
ACTIVITIES ARE
PROPERLY REGULATED
AND THAT
LICENCE FEE
INCOME IS
NOT BEING
USED TO
DEVELOP COMMERCIAL
OPERATIONS
The Secretary of State has made clear his support for the
work that the BBC has done to develop BBC Online; we would agree
that the site is a great achievement, editorially and technically:
nor is there any doubt that it towers over the rest of UK Internet
activities. It is this that worries us together with the lateral
development into commercial sites like beeb.com and Freebeeb.net.
In the years 1997-98 and 1998-99 the BBC invested £42
million of licence payers' money into the development of Online.
There are some serious questions that must be answered about the
way ahead for BBC Internet. What should be the public service
test for BBC on the Internet? Should it apply case-by-case?
Remembering the Panel's observation that public service reflects
a failure in the market, it is fair to ask "what demonstrable
market failure is the BBC addressing in its online activities?
Finally, it seems to us that one can argue properly with
the assumption in the Report, endorsed by the Secretary of State
at Cambridge, that "the Internet is the fourth arm of broadcasting".
The Internet is a new medium—NOT broadcasting. To us it
seems much closer to book or periodical publishing than to broadcast
media. The platform is cheap, there is an infinite amount of spectrum
available, and most sites rely on thousands rather than millions
of customers. We see no justification for a public corporation,
using money hypothecated for public service broadcasting, building
an edifice so huge that it will permanently distort the market,
and using that as a platform for purely commercial services.
The Committee could well ask: How can legitimate extensions
of BBC broadcasting be distinguished from new publishing ventures?
How does the BBC Fair Trading Commitment apply—to interconnectivity
between free and commercial sites and the issue of cross-promotion?
How can we as commercial publishers be sure of fair and equal
opportunities? How do we ensure the best commercial development
of e-commerce?
At the very least, the BBC should be required to ring-fence
Online so that it is not linked to, or channel users to, commercial
BBC sites.
On-screen promotion should be required to conform to the
"Sadler Rules", and limited to still images after programmes.
The use of the presenter within a programme, promoting the Internet
site should be stopped.
A full log of on-screen promotion for BBC Online should be
included in the Annual Report and Accounts.
Independent auditors should monitor any commercial development
of Online abroad to make sure that it does not crossover
to Online in the UK (We support completely the evidence submitted
to you by the British Internet Providers Alliance).
3.5 THAT THERE
IS REAL
TRANSPARENCY OF
THE FINANCIAL
INTERFACE BETWEEN
THE BBC AND
BBC WORLDWIDE
The Report says:"There should be a clear organisational
and accounting separation between the BBC and its commercial subsidiaries
. . . and there should be greater transparency in the BBC's accounting
arrangements".
It appears to us that the lack of transparency in the accounts
(and their presentation) is a contributing fact to the concern
felt outside the BBC about the "fuzzy" relationship
between the public service and commercial arms of the Corporation.
The Select Committee should seek a radical overhaul of the
BBC's accounting procedures—and their presentation within
the Annual Report. The overhaul should aim to clarify the relationship
between the BBC as a broadcaster and BBC Worldwide. It should
make clear how Worldwide subsidises programme making and where
the licence payer subsidises the development stage of commercial
enterprise.
3.6 THAT BBC WORLDWIDE
DOES NOT
ENTER INTO
NEW COMMERCIAL
ENTERPRISES WITHOUT
SCRUTINY AND
APPROVAL BY
THE SECRETARY
OF STATE
Although it is clear that the BBC cannot develop new broadcasting
services without the approval and authority of the Secretary of
State, there is confusion about the development of new commercial
services.
There must also be proper audit and regulation of the BBC's
commercial expansion. The BBC's own Commercial Policy Guidelines
sets out five criteria—that new services:
"Offer the prospect of generating significant funds for
reinvestment in BBC public service programmes".
"Offer genuine added value to customers generated from
the intellectual content owned by the BBC, the creative talent
it employs, or the craft skills it maintains consistent with its
core public purpose".
"Are consistent with the long-term strategies of the
BBC, and its position as a public service broadcaster".
"Of their type, reflect BBC core values of quality, integrity,
decency and distinctiveness—and avoid bringing the BBC into
dispute or causing widespread offence"
"Offer good value to the consumer".
These are fine sentiments but we would add the over-arching
importance of not unbalancing the total market.
— The Select Committee should endorse the Panel's
view that no new public services should be launched without a
transparent and public period of consultation and the criteria
applied by the Secretary of State must be made public.
— There must be the closest scrutiny of new commercial
activity to ensure that (1) public money is not used in its development
and (2) that it does not exploit the BBC brand at the expense
of the total market.
3.7 THAT THE
SELL-OFF
OF 49 PER
CENT OF
BBC WORLDWIDE IS
PROPERLY MANAGED
TO ENSURE
THAT THE
SALE ITSELF
DOES NOT
FURTHER SKEW
THE MARKETPLACE
AND THAT
THE BBC DOES
NOT PRE-EMPT
SUCH A
SALE BY
ENTERING INTO
PARTNERSHIP DEALS
BETWEEN SPECIFIC
AREAS OF
WORLDWIDE AND
OUTSIDE INVESTORS.
If BBC Magazines should cease to be wholly owned by the BBC,
the company must then lose all rights to on-screen promotion.
The future of BBC Worldwide needs the most careful consideration;
it's not just a BBC issue or political decision but one that will
have a profound impact on the UK media and entertainment industry.
The Committee should encourage the Secretary of State to consult
widely within the industry.
In the meantime, the Committee should invite the Secretary
of State to put an immediate bar on any new partnership arrangements
between the BBC/Worldwide and third party investors. Such deals
wouldappear to be an attempt by the BBC to pre-empt the Secretary
of State's decision and to compromise eventual sale.
The Select Committee should encourage further study and industry-wide
consultations about the future status of BBC Worldwide and support
an immediate bar on new partnership deals.
3.8 THAT THE
BBC SHOULD BE
REQUIRED TO
CONSIDER PROPOSALS
FOR MASTHEAD
PROGRAMMING FROM
INDEPENDENT, COMMERCIAL
PUBLISHERS
Masthead programmes—programmes with the same title
as a magazine and made or funded by its publishers—have
been allowed on all UK commercial services, including Channels
3, 4 and 5, since 1 September 1998.
To ensure that masthead programmes do not blur the distinction
between editorial content and advertising, the Independent Television
Commission strengthened its Code of Programme Sponsorship. The
revised code specifies that programmes may not be a television
version of current editions of the parent publication and that
similarities in editorial content must be confined to the general
subject matter. They also propose tighter rules on oral and visual
references within the programme to the programme title and a prohibition
on references to the parent publication or articles within it.
It has to be admitted that there has been little progress
in the subsequent 12 months; publishers and broadcasters have
needed time to get to know one another and establish sensible
working arrangements. At IPC, we have already developed programming
with Channel 4 in association with New Musical Express, as
well as a number of deals with satellite broadcasters.
At the present time, it may well be right for the Panel to
reject advertising and sponsorship on BBC TV. However, masthead
would not only provide the Corporation with a modest extra income
but also broaden the creative base, bringing in ideas from our
(and other publisher's) huge fund of creative enterprise.
The Select Committee should encourage the development of
masthead broadcasting on BBC TV.
3.9 THAT ORDINARY
VIEWERS DO
HAVE THE
OPPORTUNITY TO
EXPRESS THEIR
CONCERNS ABOUT
THE ROLL-OUT
OF DIGITAL
TELEVISION AND
THE MOVE
TOWARDS ANALOGUE
SWITCH-OFF
Speaking to the Royal Television Society in Cambridge, the
Secretary of State proposed a Viewers' Panel to provide "a
reality check" on the roll-out and development of digital
television.
We welcome this proposal. With a total of 14 million readers
for paid-for listings titles every week our magazines already
represent a form of "Viewers' Panel" both in our ability
to communicate with them and as their "trusted guide"
but also as a forum for their views through our letters' pages.
The relationship goes a lot deeper, like all consumer magazines,
we all have a more direct relationship with a proportion of our
readers through focus groups and other market research. The three
magazines within ipc.tx all have large reader panels, each with
around 500 members. We poll these panels regularly to discover
their attitudes not only to our magazines but broadcasting issues
generally.
We would be very happy to work with DCMS to help develop
the Viewers Panel as envisaged by the Minister.
The Select Committee should support the Secretary of State's
proposal for a Viewers' Panel and encourage the involvement of
paid for listing magazines in its development.
CONCLUSIONS
At the heart of this debate is the fact that the BBC is an
extremely valuable brand: the Corporation and DCMS are both eager
to exploit the brand to benefit the licence payer. This is understandable,
but the Panel has recognised that it creates tremendous pressure
on the market and needs far more rigorous regulation than at present.
To achieve confidence that licence money is not being used
to develop commercial activities and that the commercial arm is
not exploiting its access to BBC TV and Radio (rather than vice
versa), government not only needs to adopt the Panel's recommendations
for an annual audit by the National Audit Office, but to introduce
the concept of a single, independent regulator of the BBC's commercial
activities, to ensure that new activities conform to proper criteria.
In general, we hope that the Select Committee will support
the main conclusions of the Panel, concerning the funding of public
service broadcasting.
— We would also ask that you take note of our concerns
about the supply of listings to magazines and to the issue of
on-screen promotion of BBC Magazines.
— The question of the BBC and the Internet is a
serious and complex one: the Committee might well ask whether
there should be limits on the Corporation's activities and a much
clearer divide between the public service and commercial sites.
We argue that it is time for on-screen promotion of BBC Online
to be required, at least, to conform to the "Sadler Rules",
and be restricted to still images after programmes. The use of
the presenter within a programme, promoting the Internet site
should be stopped.
— We hope that the Committee will seek a radical
review of the BBC's accounting procedures in the name of greater
clarity and transparency.
— The Select Committee should encourage further
debate and consultation over the proposed sale of BBC Worldwide
and support an immediate bar on new partnership deals.
— It should encourage the development of masthead
broadcasting on BBC TV.
— Finally, the Select Committee should support the
Secretary of State's proposal for a Viewers' Panel and encourage
the involvement of listing magazines in its development.
A lot depends on your deliberations—not just for the
future of broadcasting but of the Internet and e-commerce. I will
be pleased to attend the Committee if you think it would be useful
or provide you with any further factual information about the
market for listings magazines and our relationship with the BBC.
November 1999
| 
