Examination of Witness (Questions 479
- 499)
THURSDAY 2 DECEMBER 1999
MR KELVIN
MACKENZIE
Chairman
479 Mr MacKenzie, I am very sorry indeed that
we have delayed starting this meeting. We had a little private
business, some of it not a million miles away from the Borough
of Brent. Since your last appearance we have streamlined our activities
and we do not now have brief opening statements or even long opening
statements. We simply launch into the questioning, if that is
acceptable to you.
(Mr MacKenzie) Yes, of course. Fine.
Chairman: Thank you. Mr Fearn.
Mr Fearn
480 Good morning. How would you respond to suggestions
that your criticism of the BBC is just sour grapes because of
your own falling figures?
(Mr MacKenzie) It is certainly true that
we had one poor quarter which has just gone, and you will be pleased
to know that I have just been told that they have recovered. The
issues about the BBC are ones that have come to me since I have
owned the business. This is not an academic exercise. It is not
like everybody looking at it from the outside and saying, "What
effect has the BBC?" I actually quite like their shows. The
easiest way for people like me who do not want to lose money when
competing against a taxpayer funded monopoly in radio—virtually
a monopoly and I will come back to that later—is to look
at the Microsoft case. I am not saying that what is produced is
not of excellent quality, in the same way as I would not say that
Windows 95 was not of excellent quality or their Browsers was
not of excellent quality. Heading towards the substance, I am
not criticising the quality of what is produced. I am criticising
the effect, in a commercial world, that a taxpayer funded organisation
has. Let me give you examples. When it comes to sport rights,
before Talk Radio turned up—and one of the effects of putting
the sports rights in is that it has moved part of our audience
out, women of 50 or 55 and over—but I do not see why the
BBC radio should be allowed to be the dominant provider if it
can give me an audience, (and that is another answer to your question),
why they are now bidding amounts of money paid for by you to stop
people like me, who are prepared to fund it through advertising
and shareholder funds. You see, there is some kind of sense. One
BBC executive said to me, "Look, Kelv, you don't understand."
I said, "Explain it to me." He said, "If we do
not buy the sports rights for television, under all circumstances
we will buy them for radio." So what they are saying is this,
"This is the way we like it. We insist, as part of our public
service remit, that we have to have sports rights." Why on
earth should that be the case? Why on earth should they not just
say, "There is somebody else who can do it, let them get
on with it," because what you are denying me is the possibility
of an audience. If I cannot get an audience, I cannot get the
advertising. If I cannot get the advertising, I continue to lose
money at an astonishing rate. That is the effect of a publicly
funded broadcaster against me. These are not theoretical things.
These are actual things. I am aiming for a lump of audience. I
am aiming for an 18 to 45 year old male audience. I cannot get
sports rights. I cannot get sports rights because the taxpayer
has a lot more money than I do. It is utterly bizarre. The truth
about the matter is that the taxpayer no longer is in the telecommunications
business. They are not in the gas making business. They are not
in the steel making business. Why on earth should they be in the
television and radio production business? I would honestly say
to everybody here that I do not know one intellectual argument
against it. There is certainly no commercial argument against
it. I have never heard anybody say anything except, "We are
here."
481 May I ask as a person who was in charge of
LIVE TV—
(Mr MacKenzie) And proudly in charge
of it.
482 —what advice you would give to the
BBC on how to manage its digital and paid channels then?
(Mr MacKenzie) I do not believe that
they should be in the digital business. I think the time has come
to face the issues in relation to me. I am talking about my radio
business. I say two things should happen. We should privatise
those businesses, especially Radios 1, 2 and 5. Why should the
Government be in the pop business? Why should I, as a taxpayer?
I have Capital, I have Heart, I have Magic, I have everything.
I do not want the Government to be in the pop business. I do not
even want them to be in the easy listening business on 2. I say
I would be quite happy to go head-to-head with 5. We would then
be in a similar, although not identical, position because they
would have an audience overhang which would last a few years.
Why should we not compete? Why should the ordinary man and woman
in the street put their hands in their pockets when commercial
enterprise is prepared to do it?
Mr Fearn: Thank you very much, Mr MacKenzie.
Mr Maxton
483 May I ask you, is Talk Radio covering this
live?
(Mr MacKenzie) No, it is not.
484 Very interesting. BBC is, of course. The
BBC is a public broadcaster.
(Mr MacKenzie) But if there were two
of us, Radio 5 and Talk Radio, then it would be a choice between
the two and you would have a choice today. What I am saying is
that both choices should be commercial. One choice should not
be publicly funded.
485 It is live on television.
(Mr MacKenzie) Excellent.
Mr Maxton: It is live on the BBC website.
Chairman: John, you put a question to
Mr MacKenzie. Let him answer it.
Mr Maxton
486 On sporting rights, is it a fact that, of
course, it is your commercial desire to have the sporting rights,
which has actually forced the BBC into having to pay for them,
because most of these sporting events the BBC already covered
on radio? If you had not intervened, then the BBC would not have
had to use licence payers' money to get the rights, would they?
(Mr MacKenzie) Mr Maxton, with the best
will in the world, I am a commercial venture. I am seeking to
expand one particular audience, the sports audience.
487 Expand it or take it?
(Mr MacKenzie) Create it for us, for
me for Talk Radio. I do not think you understand. In the real
world there are no shops. I do not go down to a Tesco's and have
a state funded food shop next to it, which demands that they have
all the blinking cakes in the area. It is as simple as that. All
I am trying to get people to address is the changing world. The
amounts of money that the taxpayer is prepared to spend as the
licence payer, against a narrowly funded business like my own
losing a considerable amount of money, is denying me the right.
I have a suggestion, because I recognise that this Parliament,
not in a month of Sundays, would privatise 1, 2 and 5. Why do
you not say, "Okay, what we do recognise is that there is
an unfairness in this market," (which would normally be dealt
with by a competitions commission or OFT or whatever), "What
we will do is to cap the spending of 5." Just cap it. At
the moment, 5 spends probably £65 or £70 million a year,
something like that. I spend around £15 million. Why do we
not do exactly the same so that it has two effects. One is that
it drives down rights prices because we have not got much money.
Secondly, I am giving back to the taxpayer £45 to £50
million which everybody must be in favour of.
488 May I come back. You are creating an audience
for yourself. You are not creating an audience. The audience for
those sporting events in terms of radio is already there. It has
listened for years to the BBC broadcasting those sporting events.
All you are trying to do is to take those sporting events away
from the BBC. Is that not right?
(Mr MacKenzie) Mr Maxton, the same thing
has happened in television this last 20 years. I know you are
not young and I am not young, but you must remember a time when
the sports rights were only effectively on the BBC. That world
has completely changed. I am at the beginning of changing this
world now. It may take 20 or 30 years. I have no idea. That is
how long it took with the BBC. Nobody, certainly not a publicly
funded body, has the right to hold on to everything for ever.
489 If I want to listen to a football or rugby
match in Scotland, I go to BBC Scotland because they will give
me that. Is Talk Radio competing in that market?
(Mr MacKenzie) My company has just bought
Scot FM. We are considering putting live football on to compete
with. You see, we come to it from completely different ends. You
are saying that for historical reasons the BBC should continue
to have large audiences. I am saying that is anti-competitive
and something has to be addressed in that area when they are using
my money effectively to bid against me for rights being paid for
by others.
490 You keep saying "me" and "I"
in terms of Talk Radio, but you do not actually own the station,
do you?
(Mr MacKenzie) No, but I have a substantial
equity stake in it.
491 And how much has Rupert Murdoch got?
(Mr MacKenzie) 20 per cent.
492 Do you tie up with Sky in terms of sport?
(Mr MacKenzie) No, I would like to. That
leads me to another point. It is nice of you to put it to me,
Mr Maxton. I am also going to see, after this little bit of bear
baiting—
Chairman
493 Which is the bear?
(Mr MacKenzie) Quite right too.
Mr Maxton
494 Two of us, I think.
(Mr MacKenzie) I am going to go to the
OFT to stop bundled rights. What happens is that the BBC buy radio
and TV together. Of course, I, being in a small way of business,
do not own any networks. I cannot turn up with bundled rights.
If I turned to ITV and said, "Will you bid with me?"
they would not take any notice of me. These are big issues for
me. They are issues which cost me money and job creation. Also,
the other effect on this is that the inability for us to make
money means that the commercial speech sector cannot grow. Effectively,
LBC, News Direct and ourselves are the only all-speech stations.
That effect means that because the BBC is so oppressive in its
spending—by the way, one more time, I am not criticising
its output, it is the criticism of its very existence and the
commercial effect it has—we should have grown a vibrant
commercial network across this country, a whole series of all-speech
stations like the United States and Australia. We have not done
so because of the huge spending power and political power of BBC.
495 Because they are so good. Thank you.
(Mr MacKenzie) We know who is paying
his licence fee anyway!
Chairman
496 I take it, Mr MacKenzie, that your argument
about not doing everything but having the right to compete has
an analogy in journalism. There could have been an argument that
because you had a red top tabloid, the Daily Mirror, that
there was no call to have another red top tabloid competing. Whereas
your argument would be, let the red top tabloids compete with
each other and the one which does better will win.
(Mr MacKenzie) Yes, that is it. If I
do not have some of this content I certainly will not get out
of the blocks.
Ms Ward
497 I was having some sympathy for the commercial
sector case until you came along. Now I have serious doubts.
(Mr MacKenzie) Why?
498 Are you honestly saying that you do not see
any purpose for a public sector broadcaster that is not about
your interest? What I have heard so far is constantly what you
want to be able to do and you can play rather than what
is right for a broad section of listeners' needs in this country.
Do you not think there is a need for a public sector broadcaster?
(Mr MacKenzie) Personally, I do not,
but that is not really my argument, that is a side effect, and
that is another argument entirely. I think the commercial world
does most things much better than any kind of taxpayer funded
business. On this question, I do not know how you can talk on
behalf of broad sections of society. I do not know how anybody
knows those things. I have run national newspapers which has this
election every day. I used to get it hopelessly wrong three or
four times a year. Talking about broad sections is very dangerous.
The only reason, by the way, why the licence fee is paid, is because
otherwise you go to gaol. I am always inviting the BBC, or anybody,
any politician to say, "I will tell you what we are going
to do. We are going to make a substantial change. What we are
going to say is that you will not go to gaol if you do not pay
your licence fee." I wonder how long it would take us to
get down to 5 per cent of the nation actually paying. People only
pay it because they are forced to pay it.
499 Do you think there should be a cap on the
spending by the BBC on each of their radio stations, and who would
set that cap?
(Mr MacKenzie) The issue is that I personally
would like privatisation. Because that is not likely to happen
I only put forward the spending cap as an alternative. After all,
it happens in the NBA to stop their wage spiral and various other
things. It has been suggested in the United Kingdom in relation
to football clubs. I am only suggesting that to help out. I do
not know what the answer is. What I do know is that the present
system damages me tremendously.
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