Select Committee on Culture, Media and Sport Minutes of Evidence

Examination of Witnesses (Questions 440 - 459)



  440. Earlier we heard from ITV that one regulator should be good for all broadcasters and each channel, however distinctive each channel might be. There is a point at which you must accept that you cannot get your own way?
  (Sir Christopher Bland) The White Paper does not agree with that analysis. It will come as no surprise to you to learn that we do not agree with it either. The White Paper recognises that there are different forms of broadcasters and public service broadcasting. To have a uniform regulatory régime that incorporated absolutely all aspects of regulation would be inappropriate. The BBC is at one end of the public service broadcasting spectrum; Channel 5 is at the other. They are funded by different means and there are different imperatives once there is an obligation to satisfy shareholders. We believe that the key element to be retained in the BBC, within the responsibility of Governors, is the responsibility for delivering the BBC's public service remit in the terms that we spoke about earlier.

  441. But some parts of the BBC are seen to be more commercial than others. Could you not split off those and have them separately regulated? Aside from your public service remit, there are other aspects which could come under one regulator?
  (Sir Christopher Bland) They already do. Our commercial activities are clearly and separately identified and reported on, and those are subject to the same kinds of commercial regulation as are the commercial activities of our competitors. For example, it is entirely appropriate that the OFT should take a view on whether or not the BBC is trading fairly. We have no problem with that.

Mr Fearn

  442. Ms Thomson, last week you claimed in a letter to The Industry Standard Europe that the proposal for the BBC's non-UK web sites to carry advertising was "endorsed and encouraged" by this Committee. Surely, that was far from the truth. Did you get it wrong?
  (Ms Thomson) As you will be aware, we have been looking for some time at the fact that a significant proportion of the traffic to our online site comes from overseas. Is it right that the licence fee should pay for that? We had a number of recommendations from the Secretary of State, the Davies Committee and, I believe, this Committee, that we should look at this and see whether that subsidy should continue or whether there were other ways round it. That is what we are doing at the moment.

  443. Therefore, you say that you are right and we are wrong?
  (Ms Thomson) As I understand it, yes, but if you want me to go back and get the reference I shall do so. If I have got it wrong I apologise.
  (Sir Christopher Bland) I do not believe that we relied on the Committee alone. The Committee tells us to do many things but we do not always take its advice. However, we always listen. The primary reason for investigating this is that a large number of visitors to the licence-funded site—we believe that it is of the order of 30 to 40 per cent—do not pay the licence fee because they originate outside the United Kingdom. The question is whether there is a sensible mechanism to distinguish those who are genuinely outside the UK. We are not clear about that, and our tests which begin in two weeks will try to identify it. If the answer is that we really cannot distinguish them there is not an option for us to explore further.

  Chairman: Perhaps I may steal a moment of Mr Fearn's time to read out what we said in our report on the funding of the BBC published in December 1999: "BBC Online is the start of services which the BBC will increasingly be required to provide in future, but we consider that it will be stultified if it remains on its current basis. We recommend that BBC Online should be transferred to BBC Worldwide to enable it to expand its scope and service and take advantage of the commercial opportunities thereby created."

Mr Fearn

  444. Mr Dyke, what types of public service broadcasting do you think are best provided by organisations other than the BBC, and why?
  (Mr Dyke) The history of British television is that until comparatively recently—the last decade—all television broadcasters had an obligation to be public service broadcasters. The advent of multi-channel television and Sky changed that, and the White Paper clearly identifies that and says that certain broadcasters should continue to have a public service remit, although in the realm of some of the commercial broadcasters that should become less so over time as competition grows. Clearly, the principal responsibility must lie with the BBC, but there is still a responsibility with Channel 4 and ITV. The White Paper says that that is less so with Channel 5. If the BBC is to provide further digital channels, clearly they must be part of the public service remit.

  445. What types of programme do others do better than you, or are you the top and no one can do better?
  (Mr Dyke) All these things move over time. At the moment, we are probably pre-eminent in news, but there are other areas of programming in which others have done better than the BBC, and at other times we have done it better. This is a cyclical business. I believe that to do the best in public service broadcasting there is a need for money and talent. What is the best way to combine the two? Clearly, it is no longer the case, if it ever was, that all the best talent works for the BBC. A lot of people now work for ITV and a considerable amount of good talent is out there in the marketplace, and we commission from it as well, as we are required to do. Even if there was not such a requirement we would do it because it is very much in our interest. For example, in situation comedy the outside marketplace is very strong.

  446. Over what timescale do you envisage digital radio becoming a mass market medium?
  (Sir Christopher Bland) Slowly. The take-up of digital radio has been much slower than we and the Committee would wish. One of the matters that Ms Abramsky may deal with is the way in which BBC can help to drive the take-up of digital radio through offering new services.
  (Ms Abramsky) It will be slow because the critical factor is when cheap sets will appear in the marketplace. The commercial sector as well as the BBC have been at the forefront of the attempt to drive digital radio in this country. We have formed a partnership and are trying to promote it jointly. We are talking jointly to manufacturers and retailers. But radio is a cheap medium and people expect to be able to go out and buy a cheap radio. Therefore, it is important that cheap sets are available to the general public so that they can access the new service. As to timescale, digital radio is a number of different things. It is digital radio in the normal sense of a portable radio, such as a car radio; it is also listening to radio on the Internet and on digital satellite and digital cable. There are now a number of radio services on that medium. We predict that by about 2008 there will be 30 per cent availability of digital in this country, but that does not mean that everyone will be listening to it through a digital radio set. The process is very slow. I am always startled by the length of time it took to move from medium wave to FM: about 25 years. I believe that it will be the same for the move to digital radio.

Mrs Organ

  447. Some of us have not completely moved from medium wave to FM. Mr Dyke, this morning ITV Network claimed that the BBC should be the most regulated channel because of its particular method of funding. It also suggested that there should be one regulator for all. How do you feel about that? At present do you consider that you are the most regulated of broadcasters?
  (Mr Dyke) I have the advantage of having worked in all systems. As Director-General of the BBC I feel more regulated now than I did as the chief executive of an ITV company or when I was on the board of Channel 4. The length of discussion about strategic change, and the amount of convincing of the Governors, is considerably more than I expected, and I believe that it is right. We do not always get our way as the management because the Board of Governors has a wider remit. I have not found it a pushover in any sense, as is implied in some areas. There is a greater degree of scrutiny than I ever experienced when I was regulated by the Independent Broadcasting Authority or the ITC. In recent years the problem with regulation by the ITC was that it became regulation by numbers; for example, that a promise had been made to provide 32 hours of such and such but only 28 had been achieved. That appeared to be too formalistic, and it is good that the White Paper recognises that. The ITC has also recognised it and wants to move away from it; but we are under scrutiny by the Government, as is right and proper. I suspect that we are the most regulated, although not in the mechanistic way that ITV was regulated.

  448. If we look at what is happening in the media, we are moving into a different world. Perhaps the regulatory framework to which you are now subject is not wholly appropriate to the new world. Do you believe that the system in place and the remit in your charter are sufficient, or, as the White Paper suggests, should it be different?
  (Mr Dyke) We are not at odds with many of the proposals in the White Paper. As management, obviously we accept that regulation changes over time. I was very anxious that we did not have a single content regulator across the whole of British television. Plurality in regulation is as important as plurality among broadcasters in terms of deciding on what is and what is not fair and those kinds of things. However, I believe that the process by which someone can complain about the BBC, namely via an overall regulator, is perfectly fair.

  449. Obviously, the White Paper put out by the Government is pre-emptive of a communications Bill. Do you believe that such a Bill should be drafted so as not to pre-empt the outcome of the 2006 review of the BBC's Royal Charter, because the timing can be quite difficult?
  (Sir Christopher Bland) We agree that the drafting of the Bill must pay attention to what may now seem to be a long way away at the moment. However, we are only five years away from the process of deciding whether there is Charter renewal, and, implicit in that, arguably licence fee renewal and sustainability. The drafting of the Bill needs to pay attention to that future timetable which is rather closer than one might have first thought.

  450. It has been said by others who have appeared before us over the past few days that the BBC with all its clout and finance is able to pick off any new service from any commercial sector. It is set up, you identify it and then knock it out of the marketplace.
  (Sir Christopher Bland) Do you mean the way that Kelvin MacKenzie and Talk Radio identified sport and news as a lively possibility and the BBC came in afterwards? That is not how it happens.

  451. Surely, there will be commercial sectors that identify a particular niche audience and exploit it for commercial purposes, quite rightly, and you then come along and recognise it as a good hole to pick and enter.
  (Sir Christopher Bland) We should not do that. I do not think that we often do. Quite often, the job of the BBC—Radio 5 Live is a good example—is to be a pioneer of new ideas in broadcasting. On the whole, it is the commercial side that comes in afterwards. But we should not do as you have just described; namely, see a commercial company in radio, television and online do something and just imitate it. Before our day there were occasions when the BBC did exactly that. You will recall the timing of Breakfast Television and the extreme disinterest of the BBC in such broadcasting until the IBA, as it was then, decided to award a breakfast franchise. The BBC then piled in speedily. I do not believe that that was the right thing to do; it was a spoiling tactic.

Ms Ward

  452. You said in your first answer that you regarded your role as being to provide services not provided by commercial competitors. Frankly, that is not quite so, is it? There is a whole range of services now provided by commercial competitors where the BBC uses licence-payers' money and yet is not regulated in the same way as other competitors in the market?
  (Sir Christopher Bland) I said that that was one of the tests but it is not an exclusive test. For news services we require the permission of the Secretary of State. We are now in the process of applying for it for our new radio and television services. One of the jobs of the Secretary of State, as it is of the Board of Governors, is to take a look at those new services and see whether they simply replicate something that already exists. We take the view, which must be confirmed or contradicted by the Secretary of State, that those new services do not fall under that heading. Were that to be the case we would expect the application to be turned down.
  (Mr Dyke) When we announced last August what we planned to do we made it clear that that was our plan until the end of the Charter period. We did not wish to do more. The plan is based on one thing: if we believe that analogue switch-off is coming, how many BBC services will be available in every home? Universality is the basis of the BBC and if you remove that much of its value disappears. We thought that there would be a minimum of five. There could be many more in digital satellite homes and more in cable, but in digital terrestrial we thought there would be the ability to have five, or perhaps six, services depending on the technology in terms of digital compression. Therefore, we said that that was what we should do in the period leading to switch-off. We have to work out the services that we should deliver for free eventually to every home in the country. One area that is now causing some controversy is children's services. An interesting analysis was produced by Spectrum last week. If one looks at most of the children's services available in this country one finds that they comprise in excess of 90 per cent American material. That is not our intention. Therefore, we shall offer a very different service. If one looks at the consumer research carried out, and the consultative process that we have undergone, in this country there is overwhelming support for children's services based on British production without advertising. If one then sees largely American media organisations complain that that may undermine their market here, that can be taken into account but it should not be the major criterion of what the BBC supplies, particularly in circumstances when for them it is a wholly secondary market; it is one of many that they have set up around the world based upon production in America; in other words, it is a cheap service because it is product that has already been made for the American market. I do not believe that that should be the criterion by which the BBC, the Secretary of State and, ultimately, Parliament decide what should be provided by the licence fee.

  453. But we are looking not only at a public service broadcaster to make good deficiencies in the market but also value for money?
  (Mr Dyke) As we are.

  454. There appear to be a number of areas identified by you in which you wish to compete, for example 24-hour news. Certainly, there was 24-hour news broadcasting before you decided to launch News 24. You have also mentioned children's television. Without doubt, there is already provision in that sector. You say that that is American-based, but do you have an opportunity to provide some BBC productions to other children's broadcasters?
  (Mr Dyke) We have sold some of our library to other children's broadcasters. We have an extensive library of children's programmes which we shall use on some of our channels and will also invest additional sums of money. We shall invest an additional £41 million per annum in the production of British children's programming.

  455. But you are also investing money in providing a new children's channel which provides an opportunity for you to use your productions?
  (Mr Dyke) But one must pay to receive that channel.

  456. What does it cost the BBC for that service?
  (Mr Dyke) It will cost approximately £41 million. However, in the end we are talking about channels that are available in every home and to every member of our society, including people who cannot afford to pay for television. There is a good deal of evidence that about 30 per cent of the people in this country either do not have pay television because they do not want it or cannot afford it. In the multi-channel world that is emerging we believe that those who are unable to pay are entitled to more for their licence fee than they are receiving now.

Mr Maxton

  457. As to sporting rights, can Mr Dyke provide an assurance about the deal which has been struck with Lennox Lewis? While people are very keen that the BBC should show as much sport as possible and have campaigned for additions to the list system, some do not believe that professional boxing is the best thing to go for. Can Mr Dyke assure the Committee that that deal does not mean that the BBC will be unable to bid for the English rugby rights when they become available, for example?
  (Mr Dyke) I can give an assurance that we shall bid for them, but I cannot be sure that we shall win them. According to the figures that we announced this week, we are increasing our sports budget by £30 million a year, which will allow us to do additional things. None of us knows what will happen to the further escalation in the cost of sports rights. Hopefully, it will slow down. However, if the Committee looks at what is happening to the football World Cup at the moment, that process is certainly not slowing up. The Lennox Lewis deal is a comparatively small amount of money. You would be quite surprised at how little Lennox Lewis was making out of pay-per-view, which was why he came to us. Whether or not one likes boxing, which is still a legal sport, it is interesting that many of people who switched en masse to pay television in the early 1990s are very keen to move back, because the interest in and support of boxing in this country has declined significantly since it ceased to be broadcast on terrestrial television.

  458. That is also borne out by the fact that at Murrayfield last year the Calcutta Cup drew an audience of 6 million when put out by the BBC and this year it will have an audience of 600,000 when it is broadcast by Sky.
  (Mr Dyke) One begins to see the sporting bodies in this country recognise that they cannot just take the highest figure, which may mean that there is less impact. Clearly, soccer is a difficult area.


  459. Quite often sporting bodies prefer to be televised by the BBC with a very much bigger audience for commercial reasons; namely, that millions of people see the advertisements around the ground on BBC that they would not see in a smaller niche channel?
  (Mr Dyke) Clearly, that is a factor which they must weigh up when making a decision, but the difference in money between pay-per-view and terrestrial was so large that that would have been a drop in the ocean.
  (Sir Christopher Bland) The argument that is now going on in the context of rugby union is interesting. The non-professional clubs are saying that one of the ways to encourage interest in the game and sustain it from the grass roots up is by having a universally broadcast service, whether it be on ITV or BBC. If in the short term one goes for the maximum money on either subscription or pay-per-view that is fine, but in the long term the game or sport may wither.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2001
Prepared 23 February 2001