Memorandum submitted by Granada plc
1. Granada plc is the UK's leading commercial
television broadcaster and producer, and has a growing presence
in international and new media markets.
2. Granada hold six regional ITV licences:
Granada Television in the North West, LWT in London, Yorkshire
Television, Tyne Tees Television in the North East, Anglia Television
in the East of England and Meridian Broadcasting in the South
East. Together these licences provide well over 3,000 hours of
regional programming each year. Granada also has interests in
Border Television; SMG, which holds the Scottish and Grampian
ITV regional licences; the ITV breakfast provider, GMTV; and ITN,
which provides news for ITV and Channels 4 and 5.
3. Granada produces much of ITV's most successful
programming. Programmes such as Coronation Street, Tonight
with Trevor McDonald, A Touch of Frost, Dimbleby, Blind Date,
Cold Feet. Stars in Their Eyes, Survival, Where the Heart Is,
Emmerdale and Hornblower are produced in Granada's
regional production centres up and down the country. In addition,
Granada production companies produce some of the most successful
programmes on other UK channels, including The Royle Family,
What the Papers Say and University Challenge for the
BBC, Longitude, Spaced and Countdown for Channel
4 and an increasing volume of programming for Channel 5 and other
channels, including Granada's own pay-TV channels.
4. Together with Carlton, Granada owns ONdigital,
the commercial digital terrestrial television platform. In little
over two years, ONdigital has reached over one million households
and rolled out services including e-mail, Internet access and
pay-per-view movies. Granada also has interests in a number of
pay-TV and free-to-air channels and is developing multi-media,
digital television and broadband services in education, health
and other areas. Granada's broadband and online partners include:
Boots, Ask Jeeves, Arsenal FC and Liverpool FC.
5. Internationally, Granada has taken stakes
in commercial broadcasters in Australia and Ireland and has launched
production companies in the US, Germany, Australia and China.
Programmes from Granada's massive programming archive are distributed
to broadcasters worldwide.
6. Granada endorses the points made in the
ITV Network submission to the Committee. Granada supports the
Government's aim to create a more flexible, fair and clear regulatory
framework for broadcasters. Granada agrees that support for original
UK production and regional broadcasting should be at the heart
of ITV's public service role. Together with the other ITV companies,
Granada is committed to making the three tier framework for content
7. Granada welcomes the establishment of
an Office of Communications (OFCOM) covering telecommunications,
television and radio. The new regulator has the tools to ensure
effective regulation of communications across the board. As competition
continues to increase, OFCOM must ensure that sector specific
regulation reduces proportionately.
8. The failure to bring the BBC under a
common regulatory framework as the rest of the industry is the
big missed opportunity of the White Paper and seriously undermines
the Government claim to create a level regulatory playing field.
The delicate balance of the public service broadcasting ecology
will continue to be upset if the UK's largest player continues
to sit outside the regulatory framework for the rest of the industry.
External regulation of the BBC has the near unanimous support
of the commercial industry, consumer and viewers groups and the
regulators. It would post no threat to the editorial or political
independence of the Corporation, but do much to demonstrate that
modernised and fair regulation is more than a promise. Granada
hopes that this issue will be reconsidered.
9. The following paragraphs deal with those
parts of the White Paper where the ITV Network submission does
not take a view or interests of Granada are more directly affected.
10. Granada accepts that independent production
obligations have helped maintain the diversity of British television
and supported the development of the UK production industry. The
obligations had originally been intended as a temporary market
intervention to stimulate a then infant industry. Granada believes
the independent quota needs to reflect the changed production
market of the twenty first century. The public policy priority
should be securing the best on-screen programming and supporting
production as a creative industrynot promoting one form
of organisation of production company over another.
11. The current definition of "independence"
for production companies creates a number of anomalies. Small
producers with links to broadcasters outside the UK may cease
to be classed as "independent" in the UK. Large producers
with genuine market power in the production market, but no direct
links to broadcasters, may remain "independent". Producer-broadcasters,
such as Granada, seeking to compete for commissions from broadcasters
with whom they have no links are currently not deemed to be "independent".
12. The current rules are having a doubly
punitive impact on Granada. ITV network commissioning is strictly
regulated by the OFT and the ITC. As the Competition Commission
recently concluded, there is a level playing field for ITV commissions
and the market is "competitive".
In addition, "independent" producers benefit from the
25 per cent quota for ITV, which have led to the largest independents
producing more for ITV than some ITV companies. ITV's quota is
made even more onerous by the loss of independent status for larger
external producers, whose ITV productions now fall outside the
quota. Endemol and Pearson, for example, have been involved in
recent deals, which mean their productions do not count towards
13. But if ITV producerssqueezed
by external producers for ITV commissionslook elsewhere
for commissions, they are hampered by the fact that any programmes
they produce will not count towards other broadcasters' own independent
quotas. The BBC, in particular, has had difficulties in meeting
its quota and therefore has a strong incentive to steer external
commissions away from Granada, despite Granada's strong production
track record. Producer-broadcasters competing for commissions
from broadcasters with whom they have no links do not represent
a problem, but provide evidence of a healthy production market.
In such cases, the current, narrowly defined quota is reducing
competition in the production market, rather than promoting it.
Granada's production successcreatively and economicallyand
its development into one of the UK's leading television producers
for all channels is occurring in spite of, rather than because
14. The bias against ITV producers also
has an unfortunate regional dimension. The independent production
sector is skewed to the South East and to London in particular.
Investment and employment in the ITV production companies are
spread more evenly across the UK's nations and regions. The current
independent quota therefore favours a relatively metropolitan
segment of the UK production industry over more regionally representative
15. While welcoming the additional leeway
to broadcasters on the timing of independent commissions envisaged
in the White Paper, Granada believes that the revision of the
independent production quota needs to go further. Granada has
proposed that production companies be classed as "independent
producers" for commissions for broadcasters with whom they
have no ownership links. This would help reduce the regional bias
and resolve the major current anomalies in the system:
producers with links to broadcasters
in the UK or abroad would no longer lose independent status when
producing for channels in whom they have no ownership stake (eg
Pearson for ITV); and
producer-broadcasters would no longer
be penalised in competing for commissions from channels in whom
they have no ownership interest (eg Granada for the BBC).
16. Granada welcomes the White Paper's proposals
on relaxing ITV ownership restrictions and its determination to
ensure that no "additional barriers" are placed in the
way of ITV companies.
17. The London licence rule is unnecessary,
given that any competition issues can be addressed via the competition
authorities. Granada also supports the removal of the 15 per cent
audience share limit, which has proved an increasingly blunt instrument
in protecting plurality. As the Government states, further ITV
consolidation will have a number of potential benefits, in terms
of ITV's performance and ITV companies' ability to build an international
presence. Any proposed ITV mergers will naturally be subject to
the merger provisions of the Fair Trading Act, safeguarding the
interests of consumers and advertisers.
18. Granada does not believe that full ownership
of GMTV by the ITV companies would pose any threat to plurality
or diversity, or to advertising competition. Likewise, Granada
supports the White Paper's pledge to consider relaxation of the
ownership limits on ITV nominated news providers. Granada agrees
with the view expressed by the Independent Television Commission,
that it is:
"not . . . necessary to retain the current
statutory rules for the appointment of nominated news providers,
or the statutory fragmentation of the ownership of nominated news
19. The Government indicates in the White
Paper that a "new system for ensuring plurality in television
services" will be introduced. The lesson of the 1996 Broadcasting
Act is that any such limit should be confined to secondary legislation
and open to amendment by the Secretary of State (on the advice
of the regulator) without recourse to primary legislation. The
media and broadcasting sectors are developing too rapidly for
Parliament to be confident that any yardstick of pluralityhowever
straightforward and simple when introduceddoes not become
outdated or even counterproductive well before the next round
of major communications legislation is due.
20. Granada welcomes the Government's commitment
to further consultation of the complex issue of cross-media ownership.
Given that the Government considers that a system to protect plurality
will continue to be required within sectors such as television,
some form of cross-media restriction may also be necessary.
21. The White Paper refers to "share
of voice" models for gauging and limiting cross-media holdings.
Any such cross-media formula is likely to prove unsatisfactory
in practice as different media are not equivalent in "share
of voice" terms. In particular, the independent broadcast
mediatelevision and radioface thoroughgoing, external
content regulation. For television and radio, regulation protects
the impartiality and balance of news services, for example. The
same is not true of the newspaper sector, where there is a strong
tradition of partiality and even political partisanship, and no
external regulator seeking to impose minimum content standards.
22. For these reasons, the common ownership
of television and radio companies may be less of a concern from
the plurality perspective than cross-media holdings between newspapers
and television or between newspapers and radio. Significant relaxation
of cross-media ownership restrictions between television and radio
is unlikely to lead to an unacceptable accumulation of media interest
across the two sectors or any dilution of media plurality. Because
of the additional tier of content regulation, impartiality and
balance would be preserved as they are now in each sector. The
same may not be true of cross-media consolidation involving newspapers
and the broadcast media, where two very different cultures of
impartiality and partisanship collide.
5 Carlton Communications Plc and Granada Group plc
and United News and Media plc, Competition Commission, para
Communications Reform White Paper Response, ITC, page 17. Back