Examination of Witness (Questions 176
- 199)
TUESDAY 23 NOVEMBER 1999
SIR ROBIN
BIGGAM AND
MR PETER
ROGERS
Chairman: I should like to welcome you
here this afternoon. We have received your very valuable submission,
for which we are grateful and I am now going to open up questioning
right away.
Mr Fearn
176. You suggest that there is an urgent need
for a Government-led consultation on what services should be funded
from the licence fee. What form do you think this consultation
should take?
(Sir Robin Biggam) We have actually suggested that
probably the simplest and easiest format would be a public consultation
under the control of the Secretary of State for Culture, Media
and Sport. That would be the basis on which, if there were public
services which the BBC should provide, they should be debated,
consulted upon and determined.
177. To whom should he go to consult?
(Sir Robin Biggam) He goes to the public and that
means that any of the commercial broadcasters or other interested
parties, the Internet providers who were here earlier, would have
the opportunity to contribute to that public consultation.
178. Do you think that BBC Online should continue
as a licence fee funded service or should it be subject to greater
commercial development?
(Sir Robin Biggam) There is no fundamental reason
why that should not be a commercially funded development.
179. Why do you say that?
(Sir Robin Biggam) Because it is accessible
to a very few licence payers at the present time. We believe that
there is no fundamental reason why the resources they put into
that, which cover a whole variety of BBC services, should not
be supported by advertising, that is that part of it on the Internet.
Mr Maxton
180. You do argue that News 24 does not meet
public service criteria. Let me look at another of the BBC's channels
which has almost certainly a much smaller audience than BBC News
24 and that is BBC Parliament. It is very interesting that MPs
are very quick to criticise BBC News 24 but I have never heard
an MP yet say the BBC should not have taken over a bankrupt commercial
company in order to run BBC Parliament. Surely under the criteria
they should have done. They should just have said no, it is not
commercially viable why should they take it over.
(Sir Robin Biggam) There is an argument that parliamentary
proceedings being broadcast is a public service and if it were
not capable of being supplied by others, then there is no fundamental
reason why it should not have been taken over by the BBC. Again,
we believe that should have been subject to a public consultation,
so that if there were others who were prepared to carry out the
service they would have been heard. We believe that at the time
that decision was taken, there were differences of views between
the major cable operators as to whether it should remain a cable
service funded by them or whether it should be given up. There
were mixed views.
181. It begins to look as though your concept
of public service broadcasting for the BBC is that it does everything
that nobody else wants to do.
(Sir Robin Biggam) It is not a case of
nobody else wanting to do. In the case of BBC News 24 there are
already at least two commercial operations which provide impartial
high quality news services: Sky News and CNN. Of course they have
to charge for the wholesale supply of their services whereas BBC
News 24 is provided free to the cable industry and obviously that
is a major issue for Sky who have to charge for their services.
We believe that would not have been a channel which would have
been seen to be something which the commercial sector were not
already providing.
182. There are criticisms of BBC News 24 but
as someone who watches both Sky News and BBC News I happen to
think BBC News is better or, rather, they are different. The Sky
News is closer to a popular news service providing popular stories
of the day, whereas the BBC 24-hour news service gives a much
more detailed in-depth rational look at news stories which otherwise
would probably not be covered at all.
(Mr Rogers) We have not commented on
the quality or otherwise of BBC News 24 since essentially where
we are coming from analytically is accepting the Gavyn Davies
point that if public service broadcasting is going to be more
than a slogan, it needs to be based on some form of market failure.
It is clear what the market failure is in relation to Channels
1, 2, 3 and 4. According to those criteria, we would not have
thought that BBC News 24 was an example of market failure because
it is an example of where the market was prepared, is prepared,
and new plans coming from ITN show that they seem to be prepared,
to provide that kind of service. It is a bit closer to the wire
in relation to parliamentary broadcasting although, having been
involved with some of the discussion at the time, had there been
a consultation I am not convinced that some of the commercial
sector would not have been willing to take it on. A part of the
problem with market failure, which I do accept, is that it is
very difficult to define the market failure in the digital world
in such a way that either the BBC is not left with the fag end
of ghetto broadcasting, or on the other hand the brief for it
is totally open ended to spend as much as it can lay its hands
on. Whilst the market failure is clear as a crowding out argument
in relation to Channels 1, 2, 3 and 4, it is not at all clear
in relation to digital. That is the issue to which I have no easy
answer but it needs very substantial public debate led by the
Secretary of State, not by the BBC, but with the BBC as an important
participant.
183. Is not the BBC 24-hour service an investment
by the BBC in the future rather than something which is going
to be highly popular and commercially viable?
(Sir Robin Biggam) We have no objection in principle
to the BBC News 24. What we are saying is that it should have
been part of the commercial service, not a public service broadcast.
They could have competed with others and they could have charged
for the service.
184. Your commercial broadcasters would be happy
for BBC News 24 to be put out carrying adverts.
(Sir Robin Biggam) I do not know whether they would
or not. What we are saying is that there is no fundamental reason
why the BBC should not have had it as part of their commercial
activities, provided of course there are brickwalls between their
public service broadcasting and their commercial activities and
they would find it hard to do that on News 24.
(Mr Rogers) We would be powerfully opposed to mixed
funding of individual services, but we are not opposed to the
BBC going into commercial services. Where there is no public service
criterion or market failure, then if they are going to go into
the activity, we think that is what they should do. That is what
they should have done with News 24; not that they should not have
done it at all, but they should have done it commercially.
185. The cable companies are making money out
of it because the BBC provide it to them free and they charge
me for it.
(Sir Robin Biggam) That is right.
Chairman
186. The market would be an interesting test,
would it not? If the BBC tried to attract advertising for BBC
News 24, we would soon see whether potential advertisers regarded
its audience as worth advertising to.
(Sir Robin Biggam) The current audience is pretty
small.
Chairman: My friend Mr Maxton here says
they would. If they did, fine, they would pay for it instead of
the licence payer paying for it.
Mr Keen
187. When we went on a previous inquiry to Brussels
to see the Commissioner he said, much to the chagrin of the Chairman,
how lucky we are in the United Kingdom to have a universal charge
for broadcasting services. He said they would never be able to
justify charging everybody. What he meant was that he wished they
had got to that point we are at now. It seems as though people
who have been here this morning, including yourselves, are saying
there is something wrong with that and somehow I do not have to
go and justify that to my constituents. I do. The BBC is part
of the market. I feel I can justify that. The Secretary of State
feels he can justify charging people £2 per week for all
the services they are providing. May I ask you the same question
I asked the previous people? If the BBC can charge £2 per
week and produce these things, including the stuff on the net
as well, do you not think it would be wrong to the point of doing
the public a disservice, to say we must stop doing this and we
must start making BBC boring and we can keep the price the same,
we can keep it or reduce it down to £1 per week instead of
£2 per week. Do you not think we would be doing the public
a great disservice?
(Sir Robin Biggam) We have not said that
we oppose the licence fee. We think that it is probably the most
appropriate way to fund the BBC and it has a lot of life left
in it yet. We have no fundamental problem with the licence fee.
In terms of the services provided, the BBC, as a publicly funded
organisation does have to justify very clearly where it requires
extra funding what these services are and that they are not being
provided by the commercial sector and not competing unfairly with
the private sector. We have no fundamental problem for licence
fee funding the core services of the BBC. We think it is appropriate.
(Mr Rogers) Going beyond that, we are not even saying
that the BBC should be frozen in aspic and that there should be
no further development of licence fee funded service on digital.
What we do say is that it is actually very difficult and we bring
you no answers this morning to find a practical policy which decides
that yes, in the digital world the BBC should do this rather than
that. It is easy to see how it could be forced into a ghetto and
it is easy to see how the BBC, when it went to Davies, came out
suggesting that in this digital world, without articulating the
strategy or the plans, it should double the amount of money it
was spending on BBC1 and BBC2. Then, in response to the Davies
Committee, they came out with a press release which increased
it still further! Where is it all going to end? The problem is
there seems to be no strategy or no criterion which is somewhere
between the ghetto and total open endedness, ie spend on anything
you like as much as you can get your hands on.
188. Can I put it to you again? Surely there
is a tremendous restriction. How do the Secretary State and the
Prime Minister and we as MPs justify it to the public? We justify
it by saying we think it should be increased by the cost of living
or whatever. So it is restricted. If the BBC can produce wonderful
services within those restrictions, why do we not say that is
the freedom, that is the freedom of the market. What is the difference?
It is just a different way of funding it. What is the difference
between the BBC being part of the market and commercial companies
funded through shareholders and everything else. Why should we
restrict the BBC? It is restricted by the fact that they cannot
put up the licence fee more than a certain amount. Why do we not
say to them that whatever they can produce within that £2
per week, they should go ahead and do it, because they are doing
a brilliant job or a bad job and if they are doing a bad job and
not producing what the public want who pay the £2 per week,
then we as MPs would have to start saying to the BBC that they
have to cut back on this. This is the debate we are having now,
but what justification is there for telling the BBC to start producing
boring stuff and stop producing this innovative stuff on the Internet.
What is the justification for that?
(Mr Rogers) A couple of reasons for that. Firstly,
the BBC is not satisfied with the licence fee growing in that
way. It is making a bid to double the amount of the expenditure
on television. The other thing is that within the licence fee
they should not be able to do anything they like because that
will become anti-competitive. As Gavyn Davies said, if public
service broadcasting is not going to be a slogan, it has to be
based on market failure. They should only be operating under the
licence fee where the market failure exists. In relation to BBC1,
BBC2, Channel 3 and Channel 4, the market failure is clear, it
is a crowding out argument. It is an argument that 85 per cent
of all viewing is to those channels and there are only four of
them. If the Government did not intervene through the Royal Charter
in the case of the BBC, or the positive programme requirements
and remits of Channel 3 and Channel 4, then you may get decent
quality programmes some of the time but my goodness you would
not begin to get the diversity you see now. That is the market
failure which justifies public service broadcasting 1, 2, 3 and
4. It is much more difficult to find the market failure which
gives a practical policy in relation to the digital world.
Chairman
189. So you are saying, are you, that the BBC
is there to fill gaps? It is a kind of Heineken, reaching the
parts that the others cannot reach.
(Mr Rogers) No, the helpful thing about BBC1 and BBC2
is that because the market failure is one that would not generate
diversity, the requirement on the BBC to generate diversity keeps
it away from ghetto broadcasting and covers the whole lot. But
you cannot run that argument in relation to digital and I am rather
reticent to say that the role of the BBC is just to cover the
gaps. That is the ghetto side of it which I do not much like.
Equally, I do not like the totally open ended approach, not revealing
in public what your strategy is, where the beginning and the end
of it is. That is what I do not like. I cannot find the middle
ground but I am very happy to participate in the debate that seeks
it.
(Sir Robin Biggam) We are fairly close to the middle
ground at the present time, probably because we do not want to
see the BBC being in a public service ghetto because it does not
work in other countries, eg if you have to have regard to where
they are in other parts of the English speaking world. We have
no wish to see that. We believe that the BBC1, BBC2 do need to
have popular programmes as well as just public service broadcasting.
If there is going to be any step change of the type which is visualised
at the present time, then it does need to be justified through
public consultation. It is the public money which is going into
it.
Derek Wyatt
190. One of the disappointments about the BBC
is that they always come asking for more money. They never look
at their own financial model. For instance, if it were a Channel
4 operation entirely, presumably you would save about £300
to £400 million and yet still would be a public service broadcaster.
(Sir Robin Biggam) The £300 to £400 million
being?
191. Being the cost of getting rid of layers
and layers and layers of bureaucracy and staff.
(Sir Robin Biggam) I am in no position to comment
about that.
192. It is a fact that we are continually asked
for more money for more things but never to look at the actual
structure of public service broadcasting.
(Mr Rogers) That is one of the reasons for allowing
the BBC perhaps to do some commercial things. My own private view
is that where things can be done in a trading framework, they
are best and most efficiently done within that framework, but
where by definition we get into the market failure point about
the BBC, there are some parts of it which could not be done on
a trading basis. If the BBC, so long as you have the separation
of accounts and so on, funded some of its activities in relation
to commercial services, then BBC internal efficiency comparators
would be available. Even now in relation to Channel 3 and Channel
4, in a very broad sense, there are comparators for BBC1 and BBC2.
The world is not without comparators to hold them to the line,
if perhaps they had the separate regulator outside.
193. Let me flesh that out a little bit. Radio
1 and Radio 2 could be very good commercial services, they would
attract huge amounts of advertising and that advertising could
pay for Radio 3, 4, 5, 6, 7, 8 and 9. There is a solution. The
commercial radio people at the back are shuffling a bit but the
fact of the matter is that that is the solution to this aggravation
of continuing the licence fee.
(Mr Rogers) Sure.
194. That is not something you want to do.
(Mr Rogers) To some degree it is. We have said in
relation to News 24 it should have been funded by commercial means
and not by the licence fee. In other words, the BBC are finding
it difficult to live within the licence fee because they are putting
an undue strain on it. They are putting a strain on it for things
which are not legitimately part of public service broadcasting.
195. Is it not a fundamental weakness that going
digital means a smaller audience and the smaller the audience
you get, the more problems there are to sustain a licence fee.
(Mr Rogers) It means the audience share is going down
but the reach need not go down.
(Sir Robin Biggam) The reach will still be the same.
Another aspect is that over time the BBC has to become more commercial.
We hear the Secretary of State complaining about the lack of international
media companies based in the UK, and the BBC is actually probably
the largest media company in the UK. In a sense, when it comes
up to the Charter renewal in 2006, the basic structure probably
does need re-examination because it will be very much, and increasingly,
in the commercial world. That will place some stresses and strains
on the existing structure of the BBC.
196. Do you think we can really wait seven years?
(Sir Robin Biggam) No, I do not think you can.
197. Your advice would be to do it all at once.
(Sir Robin Biggam) We expect that there will be Acts
affecting the parts of the industry we regulate within the next
two to three years and I do not think it will be feasible to look
at these in isolation of the BBC position.
(Mr Rogers) One answer to Mr Wyatt's point is that
an important part of the structural problem is that the BBC is
governed by Royal Charter instead of by statute. If it were governed
by statute, the various issues across broadcasting would come
together at the same time instead of always being out of sync.
198. Just out of interest, I did write to the
Speaker to ask whether I could have questions on the Order Paper
about the BBC. She said it was a matter for the Secretary of State.
I wrote to the Secretary of State who said it was a matter for
the Governors; the Governors said it was a matter for the Speaker.
(Sir Robin Biggam) I am sorry, we cannot help.
Mrs Golding
199. The thing which bothers me about this discussion
is the BBC's request for more money for digital. Is there any
idea how they are going to spend it? Are they going to spend it
on new channels? Is it going to be ring-fenced? Can they take
the money allocated for digital services? Can they use it on analogue?
What is going to be the balance? Has there been any discussion
on this and what are your feelings about it?
(Sir Robin Biggam) They gave an indication in the
Davies Report how they wished to split the increase in resources
they were seeking between existing services and new services.
Essentially they wanted a lot of support for the existing services,
primarily BBC1 and BBC2, and a further significant sum of money
for the new digital services. That is exactly the dilemma we had
when we read the Davies Report. We could not understand what was
behind the request for funds, where the funds were actually going
to be allocated. That is why we have said that does require public
consultation. It is only by going through a public consultation
that you will be able to break it down and determine where the
money is actually being spent.
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