Memorandum submitted by the National Union
of Journalists (NUJ)
1. The NUJ welcomes the opportunity to provide
evidence on the Carlton/Granada merger and the role and responsibilities
of the new company as a public service broadcaster in the future.
In our submissions during the consultation process on the Communications
Bill, and to the Competition Commission inquiry into the merger,
we argued strongly against the creation of a single ITV company,
serving England and Wales. We are now faced with the reality of
the single company and believe it is important to ensure that
it fulfils its remit as a public service broadcaster, serving
the nations and the regions.
We present our evidence under the following
headings: the new company's strategy; ITV and public service broadcasting;
ITV and regional programming; the role of Ofcom.
COMPANY STRATEGY
2.1 The 1990s saw the emergence of Granada
and Carlton as two of the dominant ITV companies after the acquisitions
by Granada of LWT and of Central by Carlton in 1994. The failure
of the planned Carlton-United merger in 2000 led to the acquisition
of Meridian and Anglia by Granada in 2000, and Borders in 2001.
In 2002, after a planned merger between Carlton and Granada was
halted in March, they announced their intention to merge the following
November.
The final hurdles to the merger were cleared
in 2003 with the Communication Act in July, and in October, Competition
Commission approval for the merger.
2.2 The chairman and chief executive designate
of ITV plc, Charles Allen, has given a clear idea of what he sees
as the new company's strategy. After the removal of Michael Green,
as a result of shareholder pressure, he asserted, "I am paid
to drive shareholder value and I think there is a lot of shareholder
value to be created." (Television, November 2003)
Originally the target for cost savings as a result of the creation
of a single ITV was £55 million but this figure was revised
to £100 million when Granada and Carlton announced their
full-year results on 26 November 2003. One news report on the
same day suggested, "Shareholders believe that the combined
companies must go for far more aggressive synergy targets than
have so far been outlined. There has been speculation that Granada
agreed to this as the price for not being hit by the same shareholder
revolt seen at Carlton last month." (The Independent,
26 November 2003).
Job losses form a large proportion of the merger
synergies. The two companies employ a total of 8,000 people. So
far 175 jobs have been cut from the Meridian subsidiary as the
broadcaster moves to a new facility near Fareham. Granada is selling
off its old Quay Street headquarters in Manchester and again this
will be used to cut back the workforce. NUJ members also believe
that a similar strategy will be implemented in the Midlands where
at present there are studios and facilities in Abingdon, Nottingham
and Birmingham. These could all be closed and one new facility
developed along the same pattern as at Meridian. Carlton and Granada's
combined London regional news operation is to move into ITN's
building on Gray's Inn Road, and there are plans for an ITV News
Group, which will absorb regional, national and international
news and include ITN.
2.3 The company currently makes network
and regional programmes in Manchester, Leeds, Newcastle, Birmingham,
Nottingham, Norwich, Cardiff, Bristol, Plymouth and Southampton.
Charles Allen dismisses these facilities, which represented the
buildings and centres for the original regional ITV franchises:
"I've got 43 buildings around the country, which might have
been appropriate 10 years ago. I'd rather have the money invested
in talented cameramen and talented programme makers who can actually
go to where the story is rather than paying for shop fronts around
the country."
2.4 There are also early signals that the
new company will fight a determined lobbying campaign to persuade
the Government that it is burdened with financial commitments
which need to be reduced, namely the £300 million which it
pays for its franchise licences, and another £150 million
for its regulatory requirements. These we assume are the public
service obligations which the company has to fulfil. Patricia
Hodgson, outgoing chief executive of the Independent Television
Commission (ITC), stated in a recent New Statesman lecture,
"If public service isn't economic it needn't be provided
by commercial channels." The NUJ believes the strategy of
the new company is very simple. In order to maximise shareholder
value and please the City the emphasis has to be on shaping the
ITV schedule to the needs of advertisers. Charles Allen cited
an example of this relationship: "Advertisers will say we
need more housewives and children watching in daytime, and we
will drive our investment to deliver what they want."
The NUJ in its evidence to the Competition Commission
placed great emphasis on the importance of protecting regional
news and programmes but the CC report does not make any demands
that revenue saved from the merger should be put into these areas.
All the indications are that when ITV plc launches in February
2004 the company will have minimal interest in promoting its public
service remit and regional news and programme making; rather it
will want to move towards programme making which jettisons what
is sees as restrictions on its commercial operations.
ITV AND PUBLIC
SERVICE BROADCASTING
3.1 In 2000 the ITC published the results
of a major piece of research, Public Service Broadcasting:
What Viewers Want. Two of its key findings are relevant here:
— There was broad agreement on the
characteristics of PSB. Qualities that were repeatedly echoed
included diversity, high quality, education, innovation, entertainment,
information, original production, pluralism, accessibility, inclusion
of minorities and free access.
— The consensus across all respondents
was that PSB requirements were prerequisites for good, quality
television and that without them certain strands of programming
would disappear altogether, and that quality itself would diminish.
Few were confident that market forces alone could deliver high
quality or innovative programming.
3.2 One key public service obligation on
ITV was the provision of a high quality, well-resourced news service.
The fate of ITN since the 1990 Broadcasting Act is well documented.
Each time the contract to provide news for ITV came up for renewal
ITN won it but the value of the contract was drastically reduced.
It meant that ITN struggled under budget constraints and staff
cuts to deliver the high quality service it was required to under
the Broadcasting Act. In addition there was the foolish decision
taken by the ITV companies to move News at Ten from its
established slot.
Now there are new plans for news, although how
they will work out is not clear. This is how Charles Allen describes
what will happen: "The regions have sat separately from the
national and international news and the news channel. What the
ITV News Group will do is to bring that together with an editorial
focus. How do you make the regional news drive the national news?
How do we create one editorial agenda there that is actually rooted
in the regions? . . . I'm also keen to create a News at Ten
Thirty that adds value and is forward looking rather than
reporting the day's agenda." It is difficult to identify
what the implications of these statements actually mean for the
delivery of news by ITV. The NUJ hopes the CMS inquiry will want
to explore how the newly merged organisation will attempt to fulfil
its requirements to deliver its public service obligations in
this area.
The NUJ's concern is that the impact of these
proposals will be to weaken, not strengthen, the core public service
obligation to deliver a high quality, impartial news service.
ITV AND REGIONAL
PROGRAMMING
4.1 Section 287 of the Communications Act
requires the company to give "sufficient" time in its
schedule for a "suitable range" of high quality local
programmes, including regional news programmes in peak time. Because
these requirements are expressed in general terms it highlights
once again a fundamental tension between what the company's strategy
is, in terms of seeking to maximise revenue through scheduling
programmes which are attractive to advertisers, and what again
can be considered a public service obligation, namely to reflect
on and report local news and activities. From a strictly commercial
perspective, low-rating regional programmes do not generate the
same profits as quiz shows or other entertainment and films whose
time they might be taking up.
4.2 In the ITC survey cited above regional
programming was highly regarded by viewers, who gave strong support
to regional programming, and thought it an essential service for
ITV to provide. However, "there was public concern about
the concentration of media ownership and a fear that because of
it regional television would be lost."
There is clear evidence to support this fear.
Ever since the 1990 Broadcasting Act, which required the ITV franchises
to supply local programming, but without stipulating a specific
financial investment, the decline in local programming has mirrored
the consolidation of the ITV franchises from 15 companies down
to effectively two—Carlton/Granada and Scottish Media Group.
In other words we have seen the gradual erosion of what was a
central part of ITV's original remit to be rooted in a region
and convey something of its regional identity to both viewers
in the region and nationally.
The NUJ believes that what is happening within
Granada's Meridian franchise illustrates the threat to regional
ITV programming. Indeed the Meridian managing director, when he
announced the plans, heralded them as "the blueprint for
ITV".
These plans include axing network programming
and regional sport, and centralising news operations on one site.
The implications for other regions could mean a single operation
for Central's present three site news coverage. There would also
be nothing to stop West Country news being done from Bristol,
or Tyne Tees coming from the studios of Yorkshire Television.
Meridian in the South East of England enjoys
the highest ratings of any regional news programme in the country.
The team that makes the programme will be broken up under the
Meridian plan. Even in production terms this does not make sense.
There are no cost savings in having presenters and production
journalists based in one super centre. The same staff could equally
be deployed in the area they serve. Indeed the technology Granada
intends to install actually makes this easier.
The NUJ believes that the plans, if implemented,
can only result in a worse service for viewers. With production
journalists based outside the area they serve, mistakes will be
inevitable. As on-screen credibility declines so will the ratings.
It will be a slow and lingering death as output is reduced, on
the spurious basis that there is no appetite for local coverage.
In fact there is no appetite for inferior local news.
Selling the Southampton site and sacking 175
staff will generate revenue and savings of between £10-13
million, and there will be an investment of £6 million in
the new facilities in Hampshire. But the rest of the money will
not be invested in Meridian.
The NUJ believes the proposals to close the
existing studios in Maidstone and Southampton breach both the
spirit and the letter of Meridian's franchise commitments. As
such, questions should be asked regarding the role of the regulator
in this process. We believe these actions also contravene assurances
given that the public service remit would be safe in the hands
of a merged Carlton/Granada. The NUJ opposes this proposed reduction
in services to viewers in the South East of England.
The NUJ believes that the process of cutting
back on regional programming and closing regional studios and
other facilities does need to be challenged and reversed. Several
commentators have pointed to what seems to be a contradiction
in government policy. On the one hand there is a desire to promote
regional self-government and to encourage coordinated initiatives
in terms of training and investment at a regional level but one
of the key assets to promote such regional identity and local
communities—regionally based ITV companies—is disappearing
into a single London-based centralised operation.
THE ROLE
OF OFCOM
5.1 Ofcom sees its role as to "balance
the promotion of choice and competition with the duty to foster
informed citizenship and protect cultural diversity." Whilst
the new regulatory body does not come into official existence
until the end of December 2003, it has already announced a major
review of public service broadcasting. The two major ITV groups,
Carlton/Granada and Scottish Media Group, are both keen to lobby
for an end to what they consider prohibitive franchise fees and
restrictive public service obligations. The Carlton/Granada merger
provides a good example of the "balance" which Ofcom
will have to address between the company plans to generate revenue
through advertiser and ratings-driven programming, and the requirement
to also deliver high quality news and programming within the regions.
5.2 Professor Steven Barnett asks the question:
"Can we really expect Carlton/Granada, which wants to become
a dynamic, competitive, commercial force in British—even
global—broadcasting, genuinely to care about enhancing local
identity and character?" (The Observer, 30 November
2003) The NUJ believes that the answer has to be an unequivocal
"yes". We hope Ofcom will realise the importance of
this requirement, and ensure it is fulfilled by Carlton/Granada
too.
CONCLUSION
"Don't trouble me with your history,"
Gerry Robinson said on his first visit to Granada's Manchester
headquarters when he took over as chief executive of Granada.
Sometimes we can learn from history. The Communications Act controversially
allows the takeover of ITV by an American media company,
possibly Sumner Redstone's Viacom, owner of the US
television network, CBS.
In 1986 Larry Tisch of Loews Corporation became
chief executive of CBS and in 1995 he sold CBS to the Westinghouse
Electric Corporation for $5.4 billion, a deal that enriched Loews
Corporation by $1 billion. Larry Tisch's obituary (The Times,
28 November 2003) comments: "Tisch pointed out that, under
his leadership, CBS stock had appreciated at an annual rate of
almost 15%. Critics asserted, however, that Tisch had destroyed
staff morale, failed to develop top-rated programmes and treated
one of America's great institutions as just another business."
The ITV regional franchises, which developed
with the establishment of ITV 48 years ago, have an important
role in our public service broadcasting structures. It would be
a harsh blow if they were finally to disappear because Carlton/Granada
treat them as just another business.
5 December 2003
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