Select Committee on Culture, Media and Sport Minutes of Evidence


Examination of Witnesses (Questions 20-39)

25 MAY 2004

MR STUART COOKE, MR DAVID ELSTEIN, PROFESSOR JOHN NAUGHTON, PROFESSOR RICHARD TAIT AND DR DAMIAN TAMBINI

  Q20 Chairman: I find what you say about this particularly interesting because it does demonstrate that people do adapt themselves to technology in a way they would not think they could. You have people, friends of mine, for example, who shy away from anything to do with a computer, but they sit in front of their television set operating a computer once they go into any kind of interactivity. It seems to me that we should not operate on the basis that we have a static technological readiness to access because people will conform to what they need to do if they are determined to get their entertainment and information.

  Mr Elstein: You have techno-freaks and techno-fear. Techno-freaks love every last aspect of every last new gismo. Mr Wyatt is famous for being at the cutting edge of everything and giving poor old Nokia a hard time if they have not invented the next thing straight after the last one. Techno-fear sounds like a psychological ailment; it is just lack of familiarity. I suspect the vast majority of people who have mobile phones only understand about 10% of their functionality. Likewise with computers. Most people who buy thousand pound computers probably have mastery of about 2 or 3% of their functionality; their children may have 30 to 50. We just slowly familiarise ourselves and the key issue here—and one of the great successes of Sky-Plus—is that it has a limited number of functions and they are relatively straightforward to use. It does crash and it is expensive to call out an engineer if it does crash and you cannot re-start it, but it is not even cutting edge technology, it is just very well modulated to how the consumer behaves in the home. That is the key to how to bring together the technological opportunities and consumer behaviour: close attention to the way consumers behave.

  Mr Cooke: I think technology will change the way we view that content. It has to be easy, simple and intuitive. However, that content will also be tailored towards different screens: the TV, the computer, the mobile phone. Nobody will watch a full length feature film on a mobile phone, but that content will be tailored to a five or 10 minute video clip, for example, designed for a smaller screen. I think there will be a gradual change. It may be that the family will still sit in the living room watching the TV, but there will also be that time delay when you can watch that content when you choose to because it is on your PVR or your VC or your mobile device. Slowly it will change.

  Dr Tambini: I would hope that we would not get too technology driven in this argument. In the Ofcom review of public service television we can begin to see evidence for the genres of good old fashioned TV that do hold up well in terms of what the audience continues to watch, for example current affairs. The desire on the part of the public for what you might call "water cooler TV" is still very much there.

  Q21 Alan Keen: Can you explain what you mean by "water cooler TV"?

  Dr Tambini: Water cooler TV is, I guess, an industry term for the kind of TV that you talk to friends or colleagues about the next day in front of the water cooler or the teapot or whatever. The fear, however, is that it may be the case that a more fragmented market would have more difficulty in actually delivering those kinds of social benefits and those kinds of collective experiences. I would refer the Committee to the recent report, funded I think by the BBC, on social capital and television and also the work of the French economist Pierre Larouche on the economics of broadcasting markets and the positive externalities of providing these kinds of collective experiences and the extent to which the market might not provide them.

  Professor Tait: Although clearly change is going to happen and has been a constant in the past 10 years in the broadcasting industry, I was struck by how well some things have held up. Television news bulletins, for example; the Ofcom report shows that what people most value from public service television is impartial television news. All the research that has been done on trust shows that although the BBC has had its ups and downs with the political parties and governments it is still trusted as a source of impartial news in a period where an awful lot of journalism—quite properly in a free society—is partisan. That is an absolute value which Ofcom recognised as one of the most important things that public service broadcasting brings into the digital age. If you look at the audience figures for the last two or three years, you will find that what you are talking about—people sitting down and watching television together, perhaps watching a news bulletin—has held up very well. When the news channels started there was the thought that as you get into multi-channel television the bulletin would die because people would see the convenience of being able to watch news whenever they wanted it; with interactivity they could drill down deeper. Those benefits are there and a growing number of people are using them, but not the 17 or 18 million people who watched BBC1 and ITV last night for a fixed fix of news, if you like. As well as looking at the technology and the market changes that are taking place and will continue to take place, we should not forget there is still currently a core value in what the BBC and ITV does, which is providing that fixed point each day where people can get a pretty good take on what is going on in the world without overtly being told what to believe. I think that is a very important value going forward, even though it will be put under pressure by the things we have all talked about.

  Professor Naughton: Returning to Mr Keen's original question, one of the things that I think is now very noticeable is that audiences—whether they are radio audiences or TV audiences—want to have more control over the way they, quote, "consume" media. The observations that Mr Elstein made about time shifting of television watching using Sky-Plus or other technology, is just part of a wider story. The truth is that we grew up in an era where, for example, scheduling was a really important and black art in all television broadcasters. They created the schedule and then under the broadcast model the population, so to speak, consumed the television according to that schedule. I believe that that model is breaking down and it is breaking down largely because of changes in society and people's expectations and having more control. If you want illustrations of it you do not just have the statistics for Sky-Plus, there are other things. For example, when the BBC on BBC radio introduced its Listen Again feature—that is to say a technology where if you missed Mr Kaufman being interviewed on the Today programme by John Humphries on the divisions within the BBC and you wished you had heard it but you were making toast at the time, you can go to the BBC website and listen to it again. They do that for The Archers and for other things. What they have discovered is that the audience for The Archers has increased quite a lot, not because people are listening to it live but because they are listening to it later. That is an important long term change, I think, which effects how the media environment will work in the future.

  Q22 Alan Keen: It is true that when you record something you no longer want to watch it. A lot of people might record a film, but once they have recorded it, it is not the same as when they could have watched it live on television. There is something, is there not, about this immediacy of watching on TV and once you have the thing in the library it is not the same as when you sit down with your toast and your cup of tea and watch it.

  Mr Elstein: The evidence is to the contrary, unfortunately. Certainly with the old video recorder, the vast majority of what was recorded was never viewed. That was mostly a function of inaccessibility. In other words, you were recording on tape sequentially and finding the programme you wanted to watch was a relatively laborious job and on the whole people did not bother to watch unless somebody told them to watch it. What Sky have established with Sky-Plus is that there is a very high rate of viewing of recorded programming, not least because it is instantly accessible because it is on a hard disc and you can find exactly the programme you want within a couple of seconds, and therefore you do not have any of the inefficiencies. You can also pause, rewind, come back to it, do whatever you like. That is why there is such a huge difference between the proportion of recorded material watched in Sky-Plus homes. There is no reduction in total viewership, but just a major shift as between watching live and recording. If you think about it, how long do we all live? If you can compress last night's three episodes of Coronation Street down to 24 minutes each and watch them all in 72 minutes rather than an hour and a half, you have recaptured 18 minutes of your life and you have lost nothing other than some commercial messages that you are likely to pick up in some other programme. There is quite a powerful incentive to optimise your viewing hours and do a bit of digital compression of your viewing experience so that even if you allocate the same proportion of your life to viewing you are getting more out of it.

  Q23 Alan Keen: I would rather save all the time and not watch any television. Is it not people like Derek Wyatt who are the ones who buy Sky? I would not pay more money for Sky because I do not watch television like that.

  Mr Elstein: It does not cost you anything.

  Q24 Alan Keen: It does cost me.

  Mr Elstein: If you are a subscriber to Sky anyway you get a Sky-Plus box thrown in. They used to charge £10 a month but that has gone now.

  Q25 Alan Keen: I would not spend £10 a month because I do not think it is worth it. There must be a high proportion of people who watch recorded programmes because they think it is worth buying it, but there are people like me who do not think it is worth buying because they like to see the immediacy of it. I think the percentage you are giving is a false one at the moment; it may be right in the long term.

  Professor Tait: I think one of the crucial issues of this session is emerging, which is: how far is the fact that something can be done mean that it is going to happen for the whole population? None of us know the answer to that because it is in the future, but there clearly is currently quite a lot of evidence of people who do not want to go that far down this road; they are a diminishing group but they are quite a big group and they are not all poor people, although a lot of them are poor people who do not want to buy the technology and are quite happy with free to air terrestrial television as it is currently. They do watch news programmes and sports programmes; television is still a shared experience; they are a group who will be quite difficult to transfer to a wholly interactive world. They may just be quite happy to sit down and watch the BBC news at 10 o'clock. Another focus of the BBC is to ensure that that news is of extremely high quality and meets their requirements as well as providing for the interactive future for a growing number of people. One hopes with affluence more and more people will be able to afford it. We know there are a number of people who would take your view. By the time they have paid their licence fee they have paid enough for entertainment and they have other things they want to spend their money on. I think it is quite a difficult balance how one mixes the old world which does provide a lot of public goods free to air in a fairly straightforward way, and the new technology which is going to provide a wonderful richness of content and richness of formats but at a price.

  Q26 Ms Shipley: I am interested in going back to exploring the public service broadcasting because I really want to know what the BBC's unique selling point is going to be. Professor Tait, you said that news is holding up well, the BBC is doing really well with the news bulletins, then you said: "and ITV". Then we had current affairs: BBC is doing very well on current affairs, "and ITV". What exactly is special about the BBC as a public service broadcaster?

  Professor Tait: We can guarantee that the BBC will continue to do it. In the current environment it is quite clear from the Ofcom report that they are pointing to a world in which ITV and the other terrestrial commercial channels will say, whether they are right or not: "We cannot afford to do this any more".

  Q27 Ms Shipley: I think it is well worth having that on record, that we can guarantee that the BBC will produce high quality, unbiased news and current affairs and so on. However, how can we guarantee that? How can we guarantee the high quality? We are all agreed that the governorship is problematic.

  Professor Tait: There are two issues here. One is resources. Take Patricia Hodgson who used to run the ITC, she said last year that during the previous 10 years ITV had halved their spending on news in real terms. At the same time the audience of their main evening news programme had halved. That is before you get the sort of commercial pressures which are going forward which we can see with multi-channel television becoming even more popular. The first issue is resources and as a former news editor who worked for both organisations, I have great admiration for the professionalism of both groups of people, but the reality is that you need resources to do high quality news.

  Q28 Ms Shipley: Or you need a much tougher watchdog—tougher than Patricia Hodgson was—that can require it otherwise you do not give them licences and so on.

  Professor Tait: Yes, but you do need the resources. There may come a point where ITV can say, hand on heart, that they cannot afford to do it. Already they are spending far less than the BBC and that gap is widening. I think the first issue going forward is that the BBC has to be properly resourced to do proper news and current affairs well, and it has to spend the money it has been given by the public on that and not on other things. In terms of its priorities it has to make that its key priority. The second issue is that you have to have a very clear regulatory management regime to ensure that it does news to the highest possible standard and lives up to what it currently has, which is a very public esteem. If you look at polls, the BBC News is regarded as being a benchmark of impartiality, accuracy and truthfulness, and the organisation has to ensure that it lives up to that reputation and continues to do that, and if there any problems they need to be sorted out very quickly.

  Dr Tambini: On this issue of guaranteeing quality, we are back to the regulatory question and I agree with David Elstein in fact that it was a mistake for the Government not to take up the Beveridge Committee's recommendations from 1949 and remove the governors physically from the BBC, give them more powers and more control over their own budget. I think there are a number of improvements to the transparency of the appointments process which would beef up and make much more legitimate the regulation of the governors. In terms of regulating news, there is particular sensitivity about independence and I think a separate argument for regulatory pluralism in a sense that there may be an advantage in having more than one authority responsible for this very sensitive issue. In terms of giving a regulator teeth, I think that is certainly possible by—to use the jargon of the times—developing a co-regulatory structure analogous to ICSTIS, the premium-rate telephony regulator, which is able to levy fines but it has a relationship with Ofcom which enables Ofcom as the person who gives permission to network operators to develop premium rate services, Ofcom could in a sense be involved in terms of receiving reports from the BBC governors as the self-regulatory body and making decisions about whether the BBC purposes have been exceeded or whether the BBC is doing something it should not be.

  Q29 Ms Shipley: Presumably none of you would think that the BBC should only be a news and current affairs channel so could I take the opportunity to ask you what else should be brought into the public service broadcasting round? What constitutes public service apart from news and current affairs?

  Professor Naughton: Essentially anything that market driven organisations cannot or will not provide which society, viewed broadly, regards as important.

  Q30 Ms Shipley: Such as?

  Professor Naughton: For example, the experimental programmes, high quality serious drama, challenging intellectual material. The kind of stuff that, in a commercial world, would be seen immediately as depressing ratings. The central issue we have in a lot of these areas is that free and open societies need high quality availability of ideas in the public domain. In some cases I do not think the market is disposed to provide that. Societies have to make some arrangements for ensuring that there is that kind of rich culture and it includes difficult broadcasting, it includes challenging material and it includes, not least, unbiased, impartial and thorough news coverage. The difficulty we have with news right through the broadcasting system—and this applies increasingly in the United States, for example—is although broadcasters regard the provision of high quality news as a major responsibility, nevertheless in market driven organisations there is always a pressure to provide news that the market is interested in.

  Q31 Ms Shipley: What you have just done, Professor, is to construct a really powerful argument as to why the BBC should be protected for its uniqueness.

  Professor Naughton: With respect, I would suggest we should make a distinction between what and how. I feel we are talking this morning about "what". The BBC is one particular "how" for doing these things; it may not be the only one.

  Q32 Ms Shipley: Your whole premise was based on the commercial ventures could not provide these things; this is what the BBC could do because the other ones could not do it.

  Professor Naughton: I would say that the record up to now has not been promising, especially since the Thatcher reforms of the broadcasting system changed the ITV network out of all recognition. The record is—not 100% but on balance—that market driven organisations do not have an incentive to do some things that are difficult and do not attract large audiences. That is perfectly understandable.

  Mr Elstein: It would be a mistake to think that there was some exclusive quality about the BBC in terms of delivery of high quality content. Channel Four is a non-profit distributing publicly owned public service broadcaster which has a remit to provide challenging, innovative programming and, indeed, high quality news. Despite what Professor Tait has said, I should point out that there is a long body of ITC research into public opinion about impartiality in programme services and the BBC has been consistently behind ITV, Channel Four and even Sky News in terms of public view of who is least biased in terms of delivery and impartiality. There is not an exclusive, genetic component inside the BBC that ensures that you get every aspect of high quality content. I think it is also important to recognise that we have this kind of funding confusion. The biggest single utilisation of the BBC licence fee is on BBC One; roughly half of all BBC content spend is on BBC One. I would not like to put an exact figure on it, but something like 90% of everything that BBC One transmits is perfectly ordinary entertainment, hard to differentiate from what you would find in commercial services. That is why the Broadcasting Policy Group, when it looked at these issues, concluded that the broadcasters collectively had been failing public service broadcasting because, under the pressure of audience fragmentation, they had all marginalised certain types of public service content or stopped investing in it, or, as Professor Tait just said in terms of ITV, simply walked away from news and regional programming and allow their audiences to decline and use that as an excuse for no longer investing in them. The view that the Broadcasting Policy Group came to was that we would probably be better off with a distinctive fund for non-market content (as Professor Naughton has described it), that which the market cannot or will not provide, provided by a variety of broadcasters. Again, the Ofcom review emphasised the importance of having competition in supply of public service content.

  Q33 Ms Shipley: So you do not think the BBC has a unique selling point, then?

  Mr Elstein: No. The BBC is a very effective but extremely expensive organisation and it has a very inefficient method of funding, it gives you very little transparency and accountability and the kind of news, current affairs—9% of BBC expenditure—is used to justify the other 91% which you think to yourself, hang on a minute, in a properly functioning consumer market place anyone can supply Eastenders or Ground Force. You do not have to threaten people with jail in order to make sure it gets funded, which is what we do at the moment. Because we have inherited a funding system which has long term historic justification—and may continue to have some justification—we tend to miss the point about what is distinctive about public service content. I think the Ofcom review tentatively moving away from genres and towards what I call applehood—in other words, all nice things, motherhood and apple pie and would it not be nice if we could end poverty in the Congo as well through public service television—all these kind of unquantifiable, immeasurable undeliverable characteristics of public service broadcasting, those are in the end not going to get us very far. Public service broadcasting is simply how we, as a society, choose to correct a gap; how much we want to spend, what are the categories and year by year it may change. Year by year we may say that what we actually need is more arts programming of a particular type or more regional programming.

  Q34 Ms Shipley: Who is the "we"?

  Mr Elstein: "We" is the people of Britain as represented by you.

  Q35 Ms Shipley: Yes, but year by year you consume whatever is given to you, do you not?

  Mr Elstein: If you look at the Public Service Television Review that Ofcom has just published there are some very interesting gaps between what the public sees as important and what the public sees as being delivered. If you ask them what they think is important and then ask them what they think the public service system has delivered, you will find gaps like 57% between what they think is important—85% say X—and what they think has been achieved. Year by year a good regulator is able to say, "We have tested the system and this what is missing, therefore if we are going to correct what is missing, this is what we think ought to be spent and this is what we think it ought to be spent on". It is not rocket science but equally it is not a very precise outcome.

  Q36 Chairman: I would just like to follow up what Mr Elstein said about this business of threatening people with jail. Can you imagine not simply Lord Reith but Hugh Carleton-Greene countenancing a licence campaign which said, "Get one or get done"?

  Mr Elstein: I think they would improve the grammar and maybe the sentiment, but there was a far stronger public justification in terms of spectrum scarcity and allocation of national resources in Reith's day and in Carleton-Greene's day than there is now. Our problem is that if the licence fee is not large it is actually even more inefficient because it costs £150 million a year to collect, with evasion rates of around 7%. If you cut the licence fee down and the evasion rate stays the same and the cost of collection stayed the same, it would become even more inefficient. We are stuck in a bit of a trap in terms of how to fund (a) the BBC and, what we thought was rather more important (b) public service content which is not identical to the BBC.

  Q37 Ms Shipley: I would also like to touch on the notion of the BBC as a promoter of UK plc. I take it you all know what I mean by that. Is that a valid thing for a public service broadcaster to do? Is that something that Britain wants its broadcasting to do?

  Professor Naughton: Yes and no. Yes, indirectly; no, directly. If I can illustrate that, a few weeks ago I had an American guest and we were listening to a radio programme on Radio Four after nine o'clock in which Clive Anderson was discussing with a very senior law lord and some distinguished and experienced lawyers the concept of sovereign immunity which is actually quite an important issue for the public to understand in relation to Iraq and other issues. It was an extremely demanding, high IQ conversation which made no concessions at all to popularity, but it was deeply interesting and deeply enlightening and deeply helpful. At the end of it my friend said, "That would be inconceivable in the United States". I think he was right. That is the kind of thing, in my opinion, that public service broadcasting exists to do.

  Q38 Ms Shipley: What I am asking you about is UK plc, actually selling Britain in the wider arena if you like as a certain image, a certain way of thinking about Britain.

  Professor Naughton: That was the point of my anecdote, which was that what happens is in a sense a reflection that a society that can produce and sustain something as good as this has something going for it.

  Mr Elstein: UK plc is, I am sorry to say, a bit of a distraction. UK quality content will find audiences overseas whether the BBC exists or does not exist.

  Q39 Ms Shipley: Apparently not, though.

  Mr Elstein: How you fund that content is an issue, but audiences will find that content without the intermediary of BBC Worldwide distributing it. Independent producers are meant to supply—but they do not—25% of BBC broadcasting. Those producers are real people who do not belong to the BBC. The programmes they make will find an audience. BBC America incorporates a lot of programmes not made by the BBC. We should not confuse the existence of the BBC with the existence of a thriving, creative community, if properly funded, capable of generating high quality content.

  Mr Cooke: One of the other wider issues is Digital Britain and getting everybody connected and keeping us competitive in terms of our use of digital technology whether it is wired or wireless. I think the BBC will have a strong role in persuading the mass market to adopt internet, mobile, digital TV et cetera. I think the BBC will have a role in Digital Britain. I think that is a wider issue also.

  Chairman: Gentlemen, I cannot imagine a better start to our Inquiry than what you have provided for us today. We are very grateful to you. Thank you.





 
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