Examination of Witnesses (Questions 95
- 99)
TUESDAY 29 JANUARY 2002
MR STUART
PREBBLE, MR
CLIVE JONES
AND MR
MICK DESMOND
Chairman
95. I should like to welcome you here today.
Do I take it, Mr Prebble, that you would like to make a brief
opening statement before we start questioning?
(Mr Prebble) I should like to do that, with your permission.
96. I cannot recollect, Mr Prebble, is this
the first time we welcome you as Chief Executive of ITV?
(Mr Prebble) It is indeed.
97. In that case, we ought to place on record
our pleasure that we are doing so.
(Mr Prebble) Thank you for inviting my colleagues
and myself to address the Committee this morning. The Committee's
inquiry into communications is timely. As we await publication
of the Government's draft Communications Bill, much of the media
industry finds itself in difficult economic circumstances. ITV
itself is facing the toughest economic and competitive environment
since its launch in the 1950s. Revenues are significantly down
as a result of the worst TV advertising recession in history and
we are facing unprecedented competition in the new multi-channel
environment. Against this backdrop the current regulatory approach
to public service broadcasting which was conceived over a decade
ago is looking increasingly outdated. The UK has a delicate broadcasting
ecology in which public service broadcasting is not the sole preserve
of the publicly-funded BBC. ITV1 has historically played a crucial
role in the UK's public service broadcasting ecology, providing
an alternative source of funding for high quality indigenous programming
from around the UK and competing with the BBC to guarantee improvements
in quality and programme innovation. Regulated competition between
public service broadcasters has delivered a range, diversity and
quality of programming over the years for which the UK has been
admired. The way in which the system now operates needs to be
modernised. We must focus less on direct competition between the
public service broadcasters and more on how we regulate to get
the best out of each by recognising their individual strengths
and weaknesses and the differences between them, not least in
the way they are funded. ITV1 remains firmly committed to its
public service broadcasting role, which we see in the future as
being focused around three core elements: a continued commitment
to a high quality and diverse schedule of programmes with national
and international news at its core; a commitment to indigenous
production; a commitment to the production and broadcast of programmes
both in the regions and for the regions. The current system is
no longer capable of providing the regulation that public service
broadcasting as a whole needs, in particular because the cornerstone
of public service broadcasting in the UK, the BBC, sits outside
the regulatory framework. Over the past year the consequences
of the existing fragmented regulatory system and the delicate
ecology of UK broadcasting have become clear as the BBC has adopted
a much more commercial strategy without any apparent regard to
the impact on the rest of the ecology. Populist actions such as
moving the BBC News from nine o'clock to ten, fully in the knowledge
that News at Ten was due to return to ITV and thus proactively
denying viewer choice, shunting Panorama to Sunday night and introducing
a fourth episode and maybe a fifth episode of EastEnders formed
part of a strategy to dilute BBC1's public service commitments
and to improve its ratings. In its last report on these matters,
the Committee concluded if BBC1 were to become ITV without the
commercials, then this would affect the justification for the
BBC as at present constituted and funded. We fear that we are
perilously close to that point. Whilst the Government recognised
in the Communications White Paper the need for a system of regulation
which creates more of a level playing field that is fair between
different broadcasters, taking into account their different missions
and funding sources, it failed to recommend OFCOM have responsibility
for the BBC under the all-important Tier 3. We believe that the
Government should reconsider this position. It is worth noting
that the only people with fundamental objections to this seem
to be the BBC themselves. During the passage of the OFCOM Paving
Bill through the House of Lords, there has been near universal
support on all sides of the House for bringing the BBC within
Tier 3 of the Government's proposed regulatory framework. I should
like to say a word briefly on the issue of digital strategy. ITV
and its two main shareholders have made a significant investment
in the digital project with the launch of the digital terrestrial
platform, ITV Digital. This now has over one million subscribers
and is responsible for virtually all digital terrestrial TV viewing
in the UK. However, it has faced significant obstacles to faster
growth since its launch and there is a range of issues which needs
to be addressed swiftly if we are to make rapid progress towards
the Government's ultimate objective of digital switchover. For
example, the number of households able to receive the digital
terrestrial signal at launch was significantly lower than that
promised in the invitation to tender. Over the past two years,
we have worked hard to make improvements in coverage of the reception
of the digital terrestrial signal, but this work has been hampered
by the bureaucracy surrounding the terrestrial spectrum planning
process and the lack of Government leadership on this issue. We
welcome therefore the recent publication by the Government of
its Digital Action Plan. This initiative clearly signals that
the Government is determined to drive forward the switchover to
digital and maintain the UK's lead in this important area. Having
published this preliminary Plan, the Government now needs to maintain
the momentum and ensure that a clear route map to digital switchover
for the UK is produced in the coming months. A strong digital
terrestrial platform is vital to the future of public service
broadcasting in the digital era and to ensuring that no-one is
excluded from the digital revolution. It will not be possible
to maintain universal access to free-to-air channels without digital
terrestrial. DTT also offers the UK the most affordable route
to switchover and is vital to underpin competition and choice
for consumers in the digital future. Finally, and very briefly,
I should like to say something about the Government's plans in
the forthcoming Bill to lift specific legislative restrictions
on single ownership of ITV. This is welcome. A further consolidated
stronger ITV will be better placed to continue meeting its public
service obligations and to provide the BBC with the kind of competition
in the digital era which will be needed if diversity in UK programming
is to be maintained. The Bill should also end the current absurdity
whereby the licence payment of ITV companies can only be varied
at the point of licence renewal. The ITV companies are currently
making licence payments which are based on an assumption of three
per cent real growth in advertising revenues per annum when in
fact in the past year we have seen revenues significantly decline.
I hope that this brief statement has been helpful in providing
the Committee with some idea of our priorities as we move forward.
Mr Fabricant
98. Surely part of the reason why your advertising
revenue has fallen is not only because of lack of confidence among
advertisers in the economy, but because your ratings have been
so bad. You blame the BBC for shifting round News, Panorama and
EastEnders and whatever, but are you saying that the BBC should
not compete for an audience at all?
(Mr Jones) We are not saying that at all.
99. It sounds like it.
(Mr Jones) We recognise that ITV is a mass market
channel and indeed to justify the licence fee or any form of public
funding the BBC has to be fully successful in commanding audiences.
We are simply facing a downturn in the economy. We won peak time
51 weeks of the year last year. We get most of our money from
peak time, that is where most of our investment goes and we dominate
that. We are seven points ahead of the BBC. The only week we lost
was Christmas and that was because the BBC decided to spend a
lot of money on Hollywood films and we stuck to original production.
Rumours of our decline are greatly exaggerated. We are still dominating
the peak time market.
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