Select Committee on Culture, Media and Sport Minutes of Evidence

Examination of Witnesses (Questions 580 - 599)



Mr Maxton

  580. Given the possible relaxation of cross-ownership, will you buy further into the Scottish radio holdings?
  (Mr Cruickshank) If you will allow me to plead my obligations to the Stock Exchange, etc. We made a statement in early December that said we then had no intention to bid but qualified it by the circumstances, and that remains our position. I do not think it appropriate for me to comment further. Can I generalise?

Derek Wyatt

  581. Did you write the letter to yourself?
  (Mr Cruickshank) Quite. Why are we four here? John manages our radio business, our television business, our newspaper business, and we have another Managing Director—


  582. It is interesting that you have produced somebody who is responsible for radio because when we had an inquiry into the BBC they did not produce anybody with responsibility for radio.
  (Mr Cruickshank) In many ways the competition issues and the regulation and governance of the BBC in radio, even though it is a very much smaller quantum, is actually more serious than in television in our view, the impact that the BBC has on our capacity to serve our audience and make a return to shareholders. The general point I was going to make is we think we can serve audiences, advertisers and our shareholders better if we invest in a range of media. If I can explain why that is the case. We are ambitious to do that, not least because some of the newer media, like radio and outdoor advertising, are growing faster than television but we are constrained, we think unnecessarily and to the detriment of audiences and advertisers and the economy as a whole, by the present rules. We would like to continue our stewardship of ITV in Scotland, but we would also like to build our radio business and demonstrate that our stewardship of newspapers in Scotland, and perhaps outside Scotland, could be well performed without the rules that we are now subject to.

Mr Maxton

  583. What interests do you have outside Scotland?
  (Mr Cruickshank) Our radio interests are UK wide.

  584. Virgin.
  (Mr Cruickshank) We have cinema advertising, Pearl & Dean, outdoor advertising. We have programme production capacity. We are the sixth largest programme producer for the national networks. We do not serve just ITV, we serve Channel 4 and the BBC nationally.

  585. Do you understand, although you said to Mr Wyatt that Scotland must not be looked at as a market in the sense of media products, in terms of new production it is not a single market but it is a very large market, is it not, which you are getting a very firm grip on? I think that may worry some people, particularly in the West of Scotland in terms of news production.
  (Mr Cruickshank) We have a number of interests across the media which can provide news. We would argue, however, that, if anything, the competition is even more aggressive. Newspapers are much more competitive in the UK.
  (Mr Hudson) Absolutely. We are facing a battle in terms of the battle for advertisers and readers from indigenous Scottish newspapers and from English newspapers which are adopting different pricing and competitive policies than they do in the rest of the UK. In addition, our readers can access worldwide New Yorker magazine, they can have today's Washington Post, all of that information is available. We would say that our share of that market is probably falling as audiences fragment and splinter across that plethora of supply. If anything, the level of competitive activity is stronger, certainly in newspapers in Scotland and probably the rest of the UK, and is increasingly intensifying and we see no prospect of that changing.

  586. Can I ask a slightly parochial point on that. Is it true that the Scottish newspapers almost entire obsession with Scottish politics now has meant that there has been an increase in the sale of non-Scottish newspapers within the Scottish market?
  (Mr Hudson) Let me try and deal with some of the facts first, if I may. I am not sure that I would agree with you that the change in sales has happened in the way it has. I think what is happening is that the total market, if you like, the shares between English titles, if I can call them so, and Scottish titles is shifting. I do not think that one is losing copious sales to the other. I would also, with respect, differ with you about the obsession point that you have raised. I would like to think that—

  587. Oh, come on, with this last week.
  (Mr Hudson) It is back to my point about the need for diversity and the level of competition. The Scottish consumer when he looks for a Scottish product is looking for something different from what he would receive in the Daily Mail. If one looks at the articles that appear in the London Daily Mail that do not appear in the Scottish Daily Mail, there are very good reasons for that, because the interests of the Scottish reader differ, and they naturally are interested in those decisions that are in the competence of Holyrood. It would be remiss, it seems to me, not to give that due consideration. We may get that balance slightly wrong sometimes but the balance must shift as the changes of devolution begin to become more intensified and more visible.

  588. I thought the Daily Record got it right when it called it a storm in a teacup.
  (Mr Hudson) Perhaps Mr Roy would disagree with you, but I do not know.

  589. Obviously in Scotland, as you quite rightly say, there is the problem of access for the more remote areas of Scotland where there simply is not the economic return to be made from companies investing in it. Do you think that somehow, therefore, the Government should be putting money into ensuring that there is broadband access and digital access to the more remote areas of Scotland?
  (Mr Cruickshank) Can I just observe that when one examines where the disadvantaged are, there will be many more people in the centre of Glasgow than there will be in the Highlands and Islands. This is a scattered community that we are aiming to provide a universal service at an affordable price to, it is not just the Highlands and Islands. That is point one. Secondly, it is absolutely appropriate for the state to decide what "universal service" means from time to time. I think it is far too early to think about broadband in terms of that definition. What does that mean? As the lady from AOL was saying, the providers have not had an opportunity and sufficient certainty to be able to experiment with what consumers in the UK want, which is a necessary step for the state, the Government, to say "out of that we are going to pick the level of universal service in terms of the network". However, if it did then I am a strong believer that the private sector should be given the opportunity to be the provider of universal service. In other words, it should not just be assumed that it is the province of the BBC, which is usually the case in this area, but it should be open to tender or even partnership with the BBC. We would welcome the opportunity to play a role in that, not just in Scotland but across the UK.

  590. You do have this broad scope of media interests but you are not directly involved at the moment, are you, in any of the Internet providers or companies? Obviously you have got your own web sites but are you involved in investment in satellites or in cable companies or even in BT and ADSL? Maybe we should have insisted many years ago that BT replaced all their network with fibre optic rather than allowing them to go down the ADSL route.
  (Mr Cruickshank) Pretty much the only bit of the distribution network, if I can all it that, that we have physically invested in is the printing presses and that is for quite good reasons. We do not invest in the networks. Let us comment on what we do do using the new networks.
  (Mr Hudson) We have all of our newspapers online, a number of our major TV programmes in terms of news provision to Grampian, all the STV region also have online versions. We have also just launched, for example, a jobs web site specifically for Scotland where our primary competitor is, an American company. What we are involved in is, if you like, content provision and we are looking to do that within the marketplaces that we operate. Through Virgin Radio and Virgin Online we are also providing web site content.
  (Mr Cruickshank) We are, I think, the leader through our acquisition of Virgin and John has led that effort.
  (Mr Pearson) We were the first European radio station to have full-time streaming. According to the authorities around the world we are still one of the top ten streamed radio brands. We see ourselves as very much a content provider and the Internet and other generations of platform are where we need to be to ensure our access to audiences. We have done very, very successfully on that.

  591. I can listen to BBC Scotland Radio and watch BBC Scottish News here on the Internet, can I watch STV News like that?
  (Mr Emslie) If you log on to the web site you will get a digest of the news that day and you will be able to see the top three stories and there will be video clips on the web site. We are not yet video streaming the whole programme at the moment.

  592. Can BBC Scotland do that?
  (Mr Emslie) Yes, through BBC Online.

  593. In fact, they have now totally put BBC Radio on as continuous.
  (Mr Cruickshank) Yes, which brings us back to the issue of whether a consumer is best served by the present patron of regulation of activities of the BBC and ourselves. The answer is no.

  594. You and I will disagree on that, as we have done in the past. Are you investing further in your web site? I am going to be slightly critical in that I think The Herald's web site at the moment has become slightly old-fashioned in that it allows you to watch this day's edition but, except for your columnists, you cannot read the previous editions.
  (Mr Hudson) If I may say so, I think that is a very fair criticism. We are not able to provide the level of service, using The Herald site as an example, that we would like to. There are lots of issues around that but I guess there are two principal ones. We have got an obligation to our shareholders, so we have to be able to justify those investments and we have many competing demands for those investments. As far as newspapers are concerned I go back to the point that we have a very, very competitive market and, through The Herald, we faced very major competitive action last year from The Scotsman in terms of its price cutting policy.

  595. The Scotsman web site is exactly what I would expect.
  (Mr Hudson) Indeed, and they do not have some of the problems that we might face in terms of obligations to our shareholders, or have made different decisions about where to devote those resources. I am conscious of that and I would like to see further development happening during the second part of this year to address some of the issues that you have referred to. For example, the fact that we do not update more regularly is a major disadvantage as far as that site is concerned, so we would like to change.

  596. Can I just raise a question so you can put our minds at rest on the problems that you did have with Grampian, with some people in Grampian who believed that you were downgrading the regional part of that when you took it over. Have you resolved those problems? Do you believe, however, if you do go to cross-media ownership and it becomes even more flexible that there must be some way in which you can ensure that TV companies in particular provide at least on a local and regional basis?
  (Mr Cruickshank) I will ask Donald to answer, but just to say perhaps the perceived issue, which was our devotion to regional broadcasting in Grampian and investment, was not a reality issue. The storm was about the way we were getting there and the particular impact that had on certain groupings of staff.
  (Mr Emslie) Following on from what Don has said, the ITC acknowledged at the point of coming to discuss Grampian Television with us that they had no concerns over either the quality or quantity of broadcasting. Effectively the issue came down to the scheduling of Grampian only produced programming in the peak hours, and that has all been clarified with the ITC. There were never any issues about it, we were happy to work with the ITC to solve the issue. I would pick up and extend Don's comments about the timing of this. It was due to a time in Grampian's history when we were going through quite a lot of change, both in terms of working practices and technology and staff changes, and it was a very well orchestrated union campaign in terms of raising it to the level that it was raised. At the end of the day it was over one job. All of these issues have now been sorted and I am delighted to inform you that we have a very forward thinking union agreement over the next two years and Grampian Television has received significant investment and wide screen digital technology and new studio equipment and is making more programmes now than it ever has to, I think, better public acclaim and critical acclaim.

  597. Do you hope that your ex-Chief Executive will play a leading role in the Communications Bill?
  (Mr Cruickshank) Who is that?

  598. Gus.
  (Mr Cruickshank) I think not.


  599. We are grateful for what happened at Grampian but we wondered if it would have happened if this Committee had not been prompted by Mr Frank Doran to take up the issue. Let us hope it does not get to that point again.
  (Mr Cruickshank) After taking over Grampian, in which very little had been invested, and this was before the so-called dispute, significant investment was made, not just in premises but in outdoor broadcasting equipment and, crucially, in the quantum of programming made at Aberdeen and in the number of creative staff. It was in changing the ratio of the creative staff to the support staff that that industrial dispute arose and became, or seemed to become, an issue about our obligation to Grampian Television, which was never in mind to be the case.

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