Select Committee on Culture, Media and Sport Minutes of Evidence

Examination of Witnesses (Questions 460 - 469)



Mr Maxton

  460. I turn to the digital world and your role within it. Do you have a view as to exactly how at the point of switch-off, which should be as soon as possible, you achieve the universality that obviously we want if the BBC is to continue to be a universal service to all providers?
  (Sir Christopher Bland) I shall ask Mr Dyke to speak specifically about what role our new services may play. Over 90 per cent appears to be a daunting target, and it is not clear how easy it will be to get there. All the evidence is that one gets to a glass ceiling of about 70 per cent of people who are prepared to subscribe, pay-per-view and have interactive services, but to go from 70 per cent to 98 per cent will be driven by new free-to-air services. That is one of the roles that we believe will be played largely by the BBC, which is appropriate. That is a public service role which is in the long-term interest of the licence fee-payer and the country as a whole. I ask Mr Dyke to explain how those services may do that.
  (Mr Dyke) At the moment, part of the problem is that people regard digital and pay as synonymous; they see them as the same thing. If we can have a new set of services and promote them when we launch them, and at the same time we promote the fact that they are free services that can be accessed only by digital, we can begin to make some inroads. But we have also done a lot of work on free boxes, whether the BBC can fund them or whether we can give them away. Without an initiative at some stage it is very hard to see how one gets to switch-off.

  461. I believe that eventually television will be on demand and, rather than be broadcast, will be received through some kind of Internet service. Your archive material, which is probably the best in the world, is publicly owned. Do you agree, as I am sure you will, that that must remain within a public broadcasting system and made available free, whenever it becomes available, to the people who pay for it?
  (Mr Dyke) There is an enormous cost involved in the process of digitalising most of the archives, which we have started. That is a very expensive process but one which must be done. We shall then try to work out how that is afforded and can be used. Clearly, it must be available in all our public services at any stage that they want to use it, but it could also have a commercial use so others can use it at some time. The cost of digitalising those archives runs into many hundreds of millions of pounds.
  (Sir Christopher Bland) And the commercial imperative comes second.

  462. What is the cost of broadcasting live on your Internet web site all your radio programmes?
  (Ms Abramsky) I can give you the figures for radio. To stream the five national radio networks costs us merely £200,000 a year. The content sites that we do around them cost about £3.5 million, which is about 1 per cent of the money we spend on radio. For that, we get 17.5 million page impressions per month, and radio is now the most used part of BBC Online after news and sport. At home it has a greater reach than news and sport.


  463. Can you confirm that you have now scrapped the daft system of internal pricing whereby it was cheaper for a programme maker to go out and buy a CD than to use a BBC one?
  (Mr Dyke) Yes. I can assure you that there is no requirement to pay for the pronunciation unit nor to get into the BBC's information library.
  (Sir Christopher Bland) In the good old days I was very happy to pay £26 to learn how to pronounce the Chairman's name. The cost of that is as firmly burnt into my mind as is the correct pronunciation.

Mr Faber

  464. Mr Dyke, the very title of your pamphlet One Year On suggests that a year after your arrival at the BBC a great deal has changed. It suggests perhaps not so much a broom as a vacuum cleaner. In the section dealing with cost-cutting I particularly like the paragraph headed "Croissants, cabs and cars", followed by a proposal for a flatter organisation. Obviously, that will have a greater effect on the waistlines of your employees than anything else.
  (Mr Dyke) In my case, yes; that was why I got rid of the croissants.

  465. Are you making significant cost savings within the BBC, and what has changed in the year since you have been there?
  (Mr Dyke) This was largely intended as an internal document to go to members of staff. We had announced an awful lot but, quite rightly, we got feedback from our internal communications system, which has been improved considerably, to the effect that the results had not been seen. One can announce all kinds of things at the top but one must know that they are happening down below. Are we making the savings? Yes. The numbers in the document mean that we are ahead of our schedule. Are we confident that we can make the rest? Yes, but it will take some pain. This year will see the introduction throughout the whole of the BBC of the Apollo computer system, which has been planned for some years. Once it is installed it will save considerable sums of money. We shall save many millions of pounds by breaking up the different broadcast and production divisions and centralising those services which are now being performed individually. But we are ahead of our schedule in terms of savings. If we want to do the other things we must continue to spend the money. Part of the purpose in preparing the document was to say to staff that we were doing all right but as an act of faith extra money had to be spent in order to make those savings inside the organisation.

  466. Would those savings have been necessary had you been granted a digital licence fee as you wanted?
  (Mr Dyke) I believe that the savings are necessary in any event. Instinctively, when we worked out that 24 per cent of our money was going on the running of the BBC, Governors, management and everybody said that that was too high. That is not a problem that one deals with in profit and loss companies. In publicly-funded organisations one must look for other ways to see how efficient one is. More money does not necessarily make you better; it is quite good to get better without more money.

  467. You have dealt with the issue of sports rights. However, you touched on the football World Cup. The accusation that is being made is that the BBC and ITV are in some way conniving in a kind of cartel and using the benefits of the protected list system for sporting events, which the government introduced, to get the World Cup rights on the cheap.
  (Sir Christopher Bland) It is amazing that it appears to be all right to have one cartel on one side of the bargaining bench but not the other.
  (Mr Dyke) If I thought that what we had offered so far was getting something on the cheap I would be extremely happy. Compared with the prices paid for previous World Cups, we are talking about something that is magnified beyond those. One must bear in mind that the next World Cup will take place in a time zone that means all the matches must be played between six o'clock and midday. That is difficult for a commercial broadcaster like ITV because there is not much revenue to be gained in that period. Earlier a question was asked about public service broadcasting. I believe that we saw it at its best when the BBC covered the Olympic Games. If one considers how we covered it, the amount of money that we spent on it and what could have been obtained for advertising rates at that time, it would not have made it commercially viable. That is public service broadcasting at its best.

  468. Earlier this morning I asked both Sky and ITV about Sky's rate card for access to its platform. ITV told us that in its opinion it would cost that organisation £20 million to gain access to it. I made it clear that I did not begrudge Sky the right to make a profit, or, as it pointed out, to cover its costs, but you are on Sky's platform and subscribe to that rate card. Can you tell us the BBC's rate?
  (Sir Christopher Bland) We are, but we would rather not.


  469. Perhaps you will tell us privately on the basis of commercial confidentiality?
  (Sir Christopher Bland) We shall tell you privately. I am glad to say that it is less than £20 million.
  (Mr Dyke) We also agree with ITV's point that there is a strange anomaly in the White Paper, in that public service broadcasters are must-offer services on cable and satellite which name the prices. That anomaly should be looked at, because those prices should be regulated in some way to ensure that they are not excessive.

  Chairman: Thank you very much. We are most grateful to you.

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