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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 101-i House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE CULTURE, MEDIA AND SPORT COMMITTEE
ITV MERGER: Developments since 2000
Tuesday 9 December 2003 MR D EMSLIE MR S ROSS, MR D THOMSON, MR J McVAY, MR M BRINKWORTH and MS E GALLAGHER MR P McLAUGHLIN, MR J DEAR, MR I McBRIDE, MR A EGAN, MS S ELLIOTT and MR M CLARKE Evidence heard in Public Questions 1 - 94
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Culture, Media and Sport Committee on Tuesday 9 December 2003 Members present Mr Gerald Kaufman, in the Chair Chris Bryant Mr Frank Doran Michael Fabricant Alan Keen Ms Debra Shipley Derek Wyatt ________________ Memoranda submitted by SMG and PACT Examination of Witnesses Witnesses: MR DONALD EMSLIE, Chief Executive, MR SANDY ROSS, Managing Director, Scottish TV, and MR DERRICK THOMSON, Managing Director, Grampian TV, Grampian TV and Scottish TV (SMG); MR J McVAY, Chief Executive, MR MALCOLM BRINKWORTH, Managing Director of Touch Productions and Chairman of the Pact Nations and Regions Committee, and MS EILEEN GALLAGHER, Managing Director of Shed Productions and Chair of Pact, Producers' Alliance for Cinema and Television (PACT), examined. Chairman: Good morning. Thank you very much for coming here this morning at the beginning of this two-stage inquiry. I will ask Mr Doran to open the questioning. Could I make the point that the acoustics in all of these rooms are dreadful and, therefore, could you speak rather more loudly than you normally do. Please feel free, any of the witnesses at the table, to answer any questions you feel you would like to. Q1 Mr Doran: Thank you very much, Chairman. I will address my first question to the SMG representatives. I see from your brief that the company was in favour of a merger between Carlton and Granada but you had a number of quite serious concerns about how the merger might affect the smaller television companies. I wonder if you could outline these for us? Mr Emslie: Good morning. Yes, we were in favour of the merger. We were of the opinion that the merger of Carlton and Granada would strengthen ITV for the benefit of viewers, advertisers and the production community. Our concerns were really twofold: one was in the area of our sales contract, where ITV have a sales house which operates for all of ITV broadcasters, and we are very concerned that the dominant player in ITV would favour their own regions rather than the smaller regions of Scottish Grampian, Ulster and Channel. Our other concerns were in the area of the networking arrangements which, as you will know, are contained within the 1990 Broadcasting Act. The networking arrangements are there really to operate in the interests of all ITV Channel 3 services. We appoint the ITV network centre as our agent to commission and schedule a network schedule that is capable of competing right the way across the country. Our concerns are really that within the merger of Carlton and Granada the independence of this network centre is eroded. We think it is very important for the future success of ITV that the Commissioning Director, Nigel Pickard currently, and his scheduling and strategy team are left free of any influence from the merger entity in order to schedule a network programme schedule that is in the interests of all of the ITV broadcasters, and is not influenced by the merged entity of Carlton and Granada. The post of the Network Director is actually enshrined in the Act as a protected post and I think it is of critical importance - the direct access to the network centre to him as Commissioning Editor - and the continuation of commissioning in a meritocracy, and the idea is what he commissions rather than being forced to commission from the merged entity of Carlton and Granada. The undertakings as drafted I think have alleviated our concerns about our sales contract, because Carlton and Granada have given us undertakings in that regard and a number of our concerns within the networking arrangements have been considered; but the proper implementation of these and the interpretation of these is very critical - and in particular the independence of the network centre, and proper commissioning to regional centres right the way round the United Kingdom as part of the implementation of the Communications Act. Q2 Mr Doran: I will come back to the undertakings in a minute but I saw Mr McVay vigorously nodding his head there. Mr McVay: I would endorse much of what Donald has said regarding the networking arrangements being critical to ensure there is a meritocracy at work in the commissioning of programmes for the ITV network. We think that that meritocracy rewards audiences because it brings true creative competition into the ITV market; and regarding the point about having regional network centres, we think it allows independents to develop talent regionally which can then end up being developed for a network. We think that is a critical element of it. We support a strong network centre, an independent network centre and a network centre that commissions on merit. Q3 Mr Doran: That is very helpful. May I be parochial for a minute. In Scotland they have got major regional centres in Glasgow and Edinburgh but I have an interest in Aberdeen. I assume your interpretation of a regional centre would include Aberdeen? Mr Emslie: Yes, it would. There are two definitions of what regionality might mean. There is the regional production in the regions for a licensed commitment, and that is unaffected by all of this. What we are concerned about is making sure if the Government is truly committed to dispersing the creative and economic benefits of television production throughout the United Kingdom then it should not just be to Amersham outside the M25; it should be truly round the United Kingdom, and Aberdeen would be one of those centres. Q4 Mr Doran: That is important to me personally. As far as the undertakings are concerned, there have been a number of undertakings which, on the face of it, would seem to deal with the problems you have raised. Of course, the key thing is the way in which these are interpreted. I would be interested to know if you have had any preliminary discussions with Ofcom. I know it does not come into effect until later in the year. I am sure you are looking for assurances now about the way they will view all these undertakings? Mr Emslie: Yes, we have had discussions with Ofcom and they have been very willing to engage in a debate, albeit at a very high level at the moment because, as you rightly point out, the vesting day for power is 29 December when the power is transferred across to Ofcom. My feeling is that they are prepared to step in and make sure that the interpretation of the Act is true to its spirit and its written meaning; and that they will want to see the development of independent production companies in the regions and making sure that we have got regions in the United Kingdom talking to regions in the United Kingdom, and everything is not just based in London. Q5 Mr Doran: Those of us who have experience of the ITC, which Ofcom will be replacing, sometimes felt a little bit concerned because the impression was that the ITC took a very soft touch in most of the complaints and cases that were taken to them but know in some they did not, and we have some experience of that together. Do you get any sign from Ofcom that there will be a much more proactive approach, or do you think it will be the ITC approach which will continue? Mr Emslie: It is difficult to see because we are not really in there. From the meetings I have had with Stephen Carter I do get the feeling that his approach to regulation is: "We have regulation; you are running your own businesses, you should be grown-up and mature enough to make sure that you are delivering all your obligations; and if you do not then we have significant powers in order to make sure you do adhere to your obligations". From what he has said I have no reason to doubt that he will not use these powers in order to make sure that our obligations and commitments are met. Q6 Mr Doran: One of Ofcom's first major tasks will be to look at the public sector broadcasting commitments. I would be interested to know how the smaller television companies are going to approach that? How do you see your interests being served in that process and in that review? Mr Emslie: To a certain extent the review has already started, because Ofcom are already asking for quite a number of bits of information from us. Sandy and Derrick as the Managing Directors of the licences are very involved in supplying that information. We will engage fully in that whole process. We have the timetable. We have already had a meeting with Ed Richards, who is leading this for Ofcom. He has laid out the timetable, and we will engage fully in the process. From our perspective, being almost a national broadcaster across all the licences, I think the interpretation of what public service is in an area like Scotland might differ from other areas around the United Kingdom, given our commitment to covering the political set-up in Scotland, the devolved powers at Holyrood, the powers and Westminster, and the news agenda is slightly different. I think we will come from a different perspective, but I do not know if Sandy and Derrick want to say anything on that. Mr Ross: We are supplying the information. Ofcom has asked us for information of all of our regional programming over the last five years, and that information has to be supplied by the end of this month. They have also asked us to supply commentary on what we have done over the past five years, and where we think it differs significantly from other parts of the country. We are in the process of putting that information together for them at the moment. Mr Thomson: We are set for the future. We have just invested over £5 million in our regional broadcast business. The licence is there and under the nations and regions charter we have everything nicely tucked up and have absolutely no concerns about the future of regional broadcasting in the north. Q7 Mr Doran: What I am interested in is whether, as a relatively small company compared to the new mega companies that will be created, you have a different attitude to the public sector and the public broadcasting requirement; or is it going to be along the same lines? Are you going to be sitting beside the BBC and ITV when push comes to shove, or is it a different regional position? Mr Ross: I think the interesting difference between the ITC and Ofcom is when you start to analyse the powers that Ofcom has; Ofcom has more wide-reaching powers than the ITC has. One of the most significant differences - and the ITC asked us if we would behave in this way this year - is that at the beginning of each programming year we have to submit to Ofcom a statement of our programme policy for the following year; and Ofcom, at that stage, has an opportunity to scrutinise that. They have the powers within the legislation that, if they feel the statement of policy which we have submitted to them does not square with their obligations in terms of a licence or Ofcom's definition of public service broadcasting, they can come back to us and ask us to make amendments to that statement of policy. That was not the situation previously with the ITC. The ITC was very much a post hoc regulator; whereas Ofcom has got very distinctive powers to intervene at an early stage. That is the one very significant difference which we are feeling the affect of already. Mr Emslie: I think in reality, while we are a commercial broadcaster and our commercial interests are aligned with the merged entity of Carlton and Granada, I think the interpretation of what constitutes public service broadcasting will be different in Scotland because of the different natures of news and the cultural agenda which we have to follow. Underneath the charter for nations and regions Scotland still makes more regional programmes than any of the regions around the ITV network. That is simply because our viewers have greater expectations and we have got a wider scope of issues which we need to cover, and I do not see that changing. Q8 Derek Wyatt: Given that two years age Granada finally got hold of Meridian and this year Granada finally gets hold of Carlton, you are absolutely certain it is in stone that they cannot take over ITV's network centre or, by subterfuge, cannot say, "We run 85 per cent of this territory now. If you don't like what we're going to do, we're not really that interested". Mr Emslie: The networking arrangements are in the Broadcasting Act and have been carried over to the 2003 Communications Act, and they are very explicit in what they mandate the network centre to be. I think Carlton and Granada will inevitably slim down the network centre because they do not need to have all the finance and engineering support that is there because that can transfer to their own businesses. As far as the commissioning structure is concerned - the network programming director, his commissioning editors, the business affairs people, the scheduling strategy - it is very, very important for all of us (and I suspect Pact would agree with this as well) that that is completely separate from the merged entity of Carlton and Granada. It actually says in the networking arrangements that the ITV companies appoint them as their agent and they should stand separate from any company's interests, whether it be production or commercial. Q9 Derek Wyatt: David Curry is on record as saying he hopes Ofcom will be as transparent as it possibly can. Would you both support the idea that all hearings should be in public when there are disputes? Ms Gallagher: I cannot see any reason why it should not be. I think Ofcom have got enormous powers now. To answer your question on the independence of the network centre, we very much rely on Ofcom to make sure it does remain as a meritocracy. As we sit now, it does very much look like it is a meritocracy. For ITV's own self-interest, because 75 per cent of income, of profit, is from broadcasting, it is indeed in its self-interest to have a real meritocracy at the centre. However, it does not mean that different owners at different times will take a more short-term view of it, and have a vertically integrated structure and reduce the independence of the network centre. I think it very much looks to Ofcom to ensure that it remains a meritocracy. In that regard, having public meetings rather than private ones for disputes would seem a sensible thing, and certainly something Pact would support. Chairman: I was discussing this problem last night. The fact is, the FCC in the United States meets only in public. If more than two members of the FCC have a discussion then that is not permitted except at a public meeting. There is no conceivable reason, except on commercially confidential occasions, that Ofcom should not meet in public. Is it not a sad fact that too many public organisations, like Ofcom, like the ITC, like the National Lottery Commission, weasel out of the issue of open government as though there is something to hide? Derek Wyatt: Chairman, I think that is a statement! Chairman: It was a statement with a question mark! Q10 Derek Wyatt: A small question mark! Mr McVay: Obviously one of the concerns of the Committee is: is Ofcom fit for the purpose and up for the task it has been given in a very complex piece of legislation? Our experience so far over the summer, with the codes of practice and the methodology and approach that Ofcom have taken, is that we have been very impressed. They are evidence-based and they do consult. As a new regulator with significant powers I think it is up to all of us, the industry and politicians, to ensure that we have a transparent and best practice regulator. I think we have a real opportunity to do that. Q11 Derek Wyatt: I am in the Meridian broadcasting area which, as you know, is going to undergo substantial changes if Granada gets its way. What representation have you had from the independent production groups in the southeast of England about their nervousness at the changes? Mr McVay: I will ask Malcolm to answer that. Malcolm is the Chairman of our Nations and Regions Committee, and his company is based on that region. Mr Brinkworth: Not only for the independent production community but also for the 5.5 million people who are served by the Meridian area, I think it is a very significant concern. As far as the independent production community is concerned, we are deeply concerned that an overwhelming move of the network production department to London is a stalking horse, clearly, for that move of other network production departments around the regions to London. The increasing centralisation process of Meridian is maybe the first example. There is a real concern about that. There is a concern because, if one is thinking about the way in which the industry works, one has to think about it as a whole, because you are talking about the whole ecology of the independent production centre running alongside ITV production companies as themselves and also the BBC. As the reviews all last year very clearly showed through the ITC, if you are going to try and create clusters of real creative talent around the UK, then the synergy between an ITV production house, freelancers, the independent sector and the BBC is critically important. Diminish that role then clearly there are questions about what we can do. We believe, as far as we are concerned, that the independent sector has always thrived based on the meritocracy of its ideas and its talent. We live and die by our ideas and our talent. I think we would say we would be in a position certainly to try and pick up any shortfall that comes out of that. On the other hand, it is critically important from Meridian's point of view, and for the viewers, that they maintain their commitment to a diverse production schedule, and also that the 21/2 hours are genuinely regional and you do not simply have Meridian as director of programmes fed by a news machine. There is real concern there. I think that concern is mitigated across the whole of ITV. Q12 Derek Wyatt: Is your concern the fact the southeast is the richest network and, therefore, there ought to be an abundance of opportunities here? Your nervousness is that they will be taken either to Southampton or to London; they are not going to stay in Maidstone, Newbury or wherever Meridian is in the southeast? Mr Brinkworth: I think there is a difference between a bricks and mortars argument over how many studios actually survive in the Meridian area, and actually a commitment to really building talent and building proper creative clusters. Overall if you look at the efficiencies ITV will go through as a whole, there will be efficiencies of scale and there will be studios that will close. That is an inevitability I think everybody recognises. What I am more concerned about is making sure that the production talent does not migrate on the southwest train service to Waterloo on a regular basis. I am concerned that we actually keep hold of that talent which is indigenous in the region and that we develop that talent, so those coming forward into the industry, whether you are graduates or people currently there, have a real role to play and a voice within that region. Q13 Derek Wyatt: Do you think Ofcom missed a trick, or the government missed a trick even, by saying that ITV2 should be the regions? You could have an opt-out channel for the regions and you could have had a regional hub for creativity in every region in Britain. Mr Brinkworth: To be honest with you, if you look at the network production that is going on in Britain actually you are finding that 250 independent producers who are based outside the M25 are successfully competing on a network level anyway. They are successfully competing because of what they do and their ideas and their talent. It is very hard if you are an independent producer in the English regions in comparison with elsewhere, because there are certain commitments you have in Scotland, Northern Ireland or Wales that make it slightly easier for you. For ITV I think the crucial thing is they maintain their commitment to the regional schedule for a regional audience, which I think is crucial . I think it is important there is an open access to the network centre on which independents from across the board from outside the M25 can compete, so that it does not simply become a London talking shop. I think it is also vital that independent producers who are part and parcel of that are able to compete on a level playing field across the industry. At the end of the day that is where you will build work; that is the way you will build a creative industry; and that is the way you will hold onto and sustain and nurture jobs across the industry. Q14 Michael Fabricant: No more Mr Nice Guy, I am going to play devil's advocate with you. First of all, let me take you down memory lane. You will recall ABC, Associated, Redifusion, Granada and ATV and even dear old Southern Television were moaning way back in 1959 and 1960 about not getting into ITV because it was a closed shop for the then big four. What has changed? You are protected by the Communications Act. You were previously protected by the ITC and the Broadcasting Act. I remember all but hell breaking loose and Bruce Grocott moaning that ATV in the Midlands would be destroyed and there would be no more local television in the Midlands because of the acquisition by Carlton. It never happened, because the licensing agreement gives you that protection. What is the big deal? Mr Emslie: I think the big difference for us as a broadcaster in Scotland is, one, we were never part of the big five so we never had direct access to the network schedule. I suspect that production powerhouses of Granada, Central, London Weekend and Yorkshire came out of that protected system. During that era very little production came to Scotland for network programmes and it was not until this direct access to the network centre underneath the 1990 Act arrived that we were able to get into the system and make network programmes. I agree with Malcolm, I think it is very important that in an area like Scotland, and many other production centres around the country, there is this mix of network production alongside regional production for the regional licences that allows talent to develop and talent to be sustained in that region. Q15 Michael Fabricant: Do you feel that the Communications Act has changed the Broadcasting Act so much you do not have that protection any more? Mr Emslie: What I suppose we are seeing is what is fundamentally different that you have now got one ITV player that owns 92 per cent of ITV, and effectively can make all the decisions. They are also the biggest producer, and the biggest supplier to the ITV network through Granada's production houses. If they make a decision to commission in their favour then the meritocracy and the distribution of production around the United Kingdom will end overnight. It is very important that that is not the case. Q16 Michael Fabricant: You have made that point well and at length, quite rightly, to Frank Doran. Are you not going to be protected by the terms of the licence that every independent television contractor has with Ofcom? Mr Emslie: We have a separate licence for both Grampian and Scottish, and they have their own regional obligations regardless of ownership, and it is exactly the same for the licences under the control of Carlton and Granada. Regardless of who owns these licences, they have their individual licence commitments to make in the regions. Q17 Michael Fabricant: Can I move you now to Vinters Park, if I may, (it is not my constituency) because I think it is worth exploring further. A lot of people are concerned that Vinters Park, which is a television production facility in Maidstone serving the eastern region of Meridian Television, is going to close. That was pointed out by Derek Wyatt earlier on. Let me put it to you that when TVS decided to build Vinters Park many people felt that it was old-fashioned even when it was on the drawing board; that they only did it in order to win a franchise away from Southern Television; and that really you could not justify it when it was built, let alone now! Mr Brinkworth: There are two answers to your question, which I will try and deal with. I think as far as the independent sector is concerned, I am certainly not here to make an apology for whatever bid was made by TVS or Southern. To answer you point a different way, clearly there are two points where we are trying to keep the production community alive both in Maidstone and elsewhere. First of all, Pact has been working very hard to ensure that the regional definition, which Ofcom is now looking at, is a robust one. That is clearly looking at not only how much the spend is to be a qualifying programme, but also the amount of talent that is actually there. One of the key protection mechanisms for the future will be showing that that regional definition is not only robust but rigorously enforced. I think Pact is very keen to ensure, while recognising there are some difficulties over the 50 per cent current threshold of talent, that we are keen to see that moved to 70 per cent. Two, it is also critically important that ----- Q18 Michael Fabricant: On that point, you talk about the rigorous enforcement of it, and I understand your reason for saying that. The enforcer will be Ofcom. Have you spoken to Ofcom and what is their reaction to this? Mr McVay: We have been working with Ofcom and broadcasters to agree the new regional definition which will apply to all qualifying regional programmes, both for in-house production and for independent producers. We are also looking to have a dialogue with Ofcom about clauses in the Act which are about appropriate levels of programming outside the M25, about production centres outside the M25. We think it would be very useful for Ofcom to start the work sooner rather than later because we would be concerned, in order to arrive at sensible measurements and judgments about that, if they do not start that soon they will be measuring a corpse rather than a vibrant production community. Mr Brinkworth: Whilst echoing what Mr McVay has just said, whilst currently in the Act we are talking about a suitable number of production centres, I think it is really important (whether it is from this Committee or from Ofcom) that we have an understanding of what that means. What is a suitable number of production centres around the UK? Q19 Michael Fabricant: That is something we might well ask Ofcom who are coming next week. Mr Emslie: Can I come back to your point about studios, because I think it is important to point out that right the way across the country there is much more capacity for studios than television broadcasters actually need. There was a phrase used by Malcolm that it was less about bricks and mortar but more about investment in technology and what goes on screen, and I absolutely support that. I happen to know, because I met with Clive Jones last week, the Maidstone studios were used one day last year. We have a situation in Scotland where our studios are used probably 25 per cent of the time. The cost of maintaining these studios and upgrading them to the new capacities far outweighs any benefit you get from them. You can actually take television production anywhere; you do not need a studio that was designed 25 years ago. We have done exactly this in Grampian. We have moved Grampian out of old studios into a brand new studio complex, with new technology. Maybe Mr Doran would concur, but I think they have now got a state of the art facility that is fit for purpose, and I think it is benefiting the production values of the output of Grampian Television. Michael Fabricant: I agree with you totally. Q20 Chris Bryant: I just wonder whether you think with the changes that are happening to the ITV this is going to lead to not only a change in the way production happens but the percentage of features and drama changing and coming from independents rather than just news programming? Mr Emslie: In keeping with many of our obligations as regional licensees, ITV has many obligations as a network broadcaster. We have quotas for production in the regions; quotas for production outside the M25; quotas for original production; and, more importantly, we have what is called "table one hours" which is very clear and precise in the generation of the network schedule. We have quotas for how many repeats are allowed; what is our acquisition volume in the overall schedule. Actually it results in the focus of ITV schedule being original production, and that is very important. The reason that ITV is the market leader in terms of audience, and effectively drives the market-leading share of advertising, is because it has traditionally invested in original production, particularly drama at nine o'clock; and there is an absolute commitment from ITV to continue that. Q21 Chris Bryant: There is a lot of nervousness amongst audiences about whether that is really going to survive. People want to see programming that reflects their own communities, their own environments and the buildings and streets they know in their own communities and regions. That seems to be the strongest thing that people are nervous about, that that will not happen and in the future you will see Britain on television, and you might see the northeast or the southwest on television on news or things like that, but not from documentaries, not in features and not in drama? Mr Emslie: Underneath the Act each licence output is protected. For example, the Scottish licence has to make 12 hours a week, and the Grampian licence has to make seven hours a week. On average, across England and Wales, it is about 81/2 hours a week they have to make and not all of that is taken up by news. There is a significant output for other programming which is non-news related, and that is contained within each licence and within each area. Q22 Chris Bryant: I understand that, but when you start talking about figures and statistics and meeting quotas that is when my heart sinks. I think what audiences are probably looking for is more of a deep and ongoing commitment, and not just producing Emmerdale and Coronation Street, but really creating an imaginative future for regional drama. Features is an area people are even more nervous about, because with drama if you have got a big name you can get a lot of publicity for it, but features are the bread and butter. Ms Gallagher: That is what we are talking about in terms of the obligation from Ofcom to look to enact the words when it says "as a proportion of expenditure outside the M25", that is the clause we need specified because absolutely we need dramas, features, comedies and all the high costumes coming from across the UK. That is why we are working with Ofcom to get the definition of how you define a regional production, which means talent, actors as well as expenditure, and that is for the network. You are quite right, there is a lot of confusion between a regional programme for the region and a network programme made in the regions. What you are talking about is the latter. I agree with you, for democracy and enjoyment of the audience it is very important that you get a genuine regional production across all the genres. I like seeing Scottish drama because it is from Scotland, and I like watching it in London. This is where these definitions are critical. What we are saying in terms of a specific point today is that we would like this Committee to be looking at Ofcom to define exactly what it means by a suitable proportion of expenditure. I know it is a quota and you do not like quotas, but without quotas I think there is an inevitable London centric and drag of talent towards London, and I think it has to be enacted. Mr McVay: This is actually an opportunity, because this is the first time we have had the same rules apply to all broadcasters in one bit of legislation. I think it is a real opportunity for Ofcom and the industry to really encourage and celebrate the different regionalities of the UK and actually reflect that in our broadcasting ecology. Mr Emslie: ITV currently makes 8,000 hours of regional broadcasting more than any other broadcaster. 40 per cent of the network schedule comes from the regions. Regionality is in ITV's blood; that is how it has grown up over the last 50 years. I do not see that this merger is going to take that attitude out of the production communities of ITV. Q23 Chris Bryant: That is now, but I think many people's nervousness is about the future and whether we hold that great strength. Mr Emslie: It actually comes back to the sustainability of the production industries. One of the other things we have been arguing for is within the system that a small broadcaster, like ourselves, without any influence should become an independent broadcaster, an independent producer, which can help sustain a production community in Scotland. Q24 Ms Shipley: Given your answer, just so that we are absolutely clear that all your stuff is regional stuff, what exactly is a genuinely regional programme? You gave percentages that you are producing genuinely regional programmes, so tell me, define it. Mr Emslie: If you look at it from our output from our licence regional licence perspective, Scottish estimate 12 hours of licence programme in a week. Q25 Ms Shipley: What I want to know is what the content is of a genuinely regional programme? Mr Emslie: It is a programme that is made in the region by our own resources, by our own people that are based in the region, either people that work for us or an independent producer based in the region. It is a programme that would be of interest and of relevance to the regional audiences. Q26 Ms Shipley: Would you disagree with that? Ms Gallagher: No, I think the confusion always happens between a regional programme made for the region, made for the local population, and, on the other hand, a programme that is made in the region for the network. For instance, where the definition comes into it, I would agree entirely with Donald on the definition of a regional programme, but where we get into definitional issues is if a drama is shot in Glasgow but edited and all the talent comes from London. Is that a regional drama? In the past there was a lot of trickery going on. A broadcaster can say to an independent producer, "If you set up an office in Manchester, but you are shooting it all in London, we will call that a regional programme". What we have tried very hard to do in the past is to work with the regulators of Ofcom to stop these abuses. Having said that, I think ITV is the least channel to abuse these rules. Q27 Ms Shipley: I would like to know whether you think lifestyle programmes are regional programmes? Ms Gallagher: Depending upon the definition of regional programmes. If you are talking about a regional programme for a regional audience, I remember arguing with ITC when they said my series Scottish Women (when I was a broadcaster) could not discuss abortion because that was not a Scottish issue. I think you can get into some really silly instances about regional definition. To be quite simple about it, if you have 100 Scottish women debating something of interest that is a regional programme. Q28 Ms Shipley: I have picked up from many of you things such as the spend is important, the talent is important and things like that. I think most viewers consider a regional programme one which has a regional identity, not instead of what you have just said. Mr Brinkworth: There are two issues: there are the regional programmes made for the regional schedule - and I think it is critically important that has a local voice that is talking to that regional audience ----- Q29 Ms Shipley: So regional identity? Mr Brinkworth: Yes, regional identity. It is critically important that the 21/2 hours that is normally reserved in the ITV licences or non-news programming genuinely reflects the diversity and plurality of each individual region. I think that is critical. That is the local identity. I think there is a second issue, which lies behind the other question you were talking about, about regional definitions, which Mr Bryant was talking about, over the issue of network productions from a regional voice and I think they are different issues. Ms Shipley: Yes, they are. Chairman: Thank you very much indeed. Memoranda submitted by the NUJ and BECTU Examination of Witnesses Witnesses: MR PAUL McLAUGHLIN, National Broadcasting Organiser, MR JEREMY DEAR, General Secretary, and MR IAIN McBRIDE, Maidstone Branch, National Union of Journalists (NUJ); MR ANDY EGAN, Research Officer, MS SHARON ELLIOTT, Supervisory Official for independent Broadcasting, and MR MARTIN CLARKE, Branch Secretary for Meridian, BECTU, examined. Chairman: Good morning. I will ask Mr Wyatt to start the questions. Q30 Derek Wyatt: Could you tell me what consultation has taken place between Meridian and/or Granada with the impending closures at Maidstone and the move to Southampton? Can you tell us how many jobs are likely to be lost, and what sorts of actions and feelings there are amongst the workforce? Ms Elliott: We are at the point of beginning consultations on the proposed redundancies. You will be aware from the press that it is proposed that 175 jobs should be lost at Meridian, prompted essentially by the company's desire to move away from the Southampton base into new premises that will accommodate significantly fewer number of people. As a result of these proposals we believe regional programmes clearly will be majorly affected. Certainly the intention also is to move network production to London, and Meridian has a fine record in network production; and also to move Granada sports based in Meridian to London, which we believe is contrary to the many statements that have been made by senior executives in the company in relation to their commitment to regionality, and their commitment to sustaining an infrastructure at local level, which not only supports good quality regional output but also programme production for the network. Q31 Derek Wyatt: Is there any good news? Mr McLaughlin: The issue about consultation - there was a lot of consultation seemingly in the press and in the media around the impending announcement of closure and relocation of the studios in Meridian, but there was no consultation at that time with the trade unions. It was very unfortunate that we were aware of the likely announcement but not given the opportunity to comment formally to the employer on their plans. You can contrast that with the approach that was taken at the ITC where it was clear and emerged there were discussions with the ITC prior to the announcement, and I think that is a contrast. I noticed in your earlier discussion you were picking up issues around Ofcom and the difference between the ITC's approach and Ofcom. I think one of the things we have found - although the ITC have worked within the legislation, obviously, and we had a good relationship with them where possible - from the discussions we have had with Ofcom thus far they seem to be in very much the listening mode and that is prior to decisions being taken. That is in contrast with the way in which the ITC has approached matters. Mr Dear: Just to put it in perspective, the 175 jobs is more than half the workforce. Q32 Derek Wyatt: News is one of your biggest shows, certainly in Kent, huge figures. How would production of that change? Mr Clarke: We are short of specific details but the intention is to move all the production of the news programmes into a site between Southampton and Fareham. We have traditionally been on a site in Southampton going back to TVS and even Southern Television, so the site is quite old. I can understand the reasons why the company wants to move off that site. That might be a purely commercial decision. The reasons for moving the news production from Maidstone are as yet unclear. The operation is likely to be split between a production team in the television sense of production and a producer being in the east., and the technical production under the charge of the director being in the west in Fareham. Control will pass from one to the other at approximately five o'clock in the afternoon, we have been told. As yet, we do not have any technical details on how this is going to be achieved. This, we are told, is all part of the consultation process which has yet to be formally started - a projected date is this coming Friday; it was actually going to be last week but the company delayed it because the information they are required to provide on the HR1 in terms of redundancies and the regions and the technicalities of it all they did not think were sufficiently well prepared to be able to produce, and so they asked us to wait a further week. Q33 Derek Wyatt: The consultations - they have bought the new Fareham and they have bought the new Maidstone or rented, so this is about redundancy and is not about services, is it? Mr Clarke: We are told that they have an option on a site in Fareham. They have not actually bought. We do not know where the site currently is projected to be in the east. There is speculation that it might be Ashford. We believe it is not going to be the current site at New Hythe. If I might take the opportunity to correct you, the TVS Vinters Park studio was only used by Meridian for the first 12 months. They then built a purpose-built news emporium out on an industrial estate in New Hyth on the outskirts of Maidstone. Meridian only uses that studio very occasionally, or Granada does for some of its production, but it is not actually part of the Meridian operation, or even the Granada operation. Mr Dear: The point you may be getting at which we have a fear of is that it is a sham consultation; that options are already there on studios; numbers of job losses have been announced; and savings have been announced; and then the consultation will start once all those things have already been announced and build into budgets and build into programme-making and so on. Our fear is that it is not a genuine consultation about what is best for the viewer, but a consultation about how they can make the savings that shareholders are demanding. Q34 Derek Wyatt: On the new board of Granada is there a non-executive director who is your liaison director who looks after trade unions and human relations resources? Mr McLaughlin: For industrial relations issues we mainly deal with personnel and human resources. Q35 Derek Wyatt: There is no specific director or non-executive director you would have some access to at board level? Mr McLaughlin: We are comfortable with approaching all levels of the companies. Depending on the issue we would approach the chief executive or any other member of the board. Q36 Alan Keen: I sympathise greatly with your situation on job losses and it is understandable you are on the defensive at the moment. Could I move away and ask, what do you think should have happened in the reconstruction, instead of what you are faced with now? Mr McLaughlin: It is a good point. We are all been aware that there would be changes in ITV, obviously consolidation , ownership changes and so on. I think how you approach those changes is important. We should have an open dialogue. We should have a degree of transparency. We should have the courtesy of discussions at the earliest possible stage. We may not agree with all the plans, but at least we can be involved in the process properly. At Meridian the discussions have not yet properly begun, so I would not want to write off our opportunities there. Clearly we will aim to reverse the decision that has been to relocate the studios, because we believe it breaches not only the spirit but the written licence commitments. It is an evolving process. In terms of the changes, I think one of the things we fear across ITV is that the kind of operation of moving localised news programmes into one centralised news operation can lead to a situation where not only is the local viewer compromised, but also it is a very easy step from there to say, "Why have three separate local news programmes, we could just have one local news programme that covers the whole of the franchise". I would be interested to know what guarantees could be given around that from the companies themselves. We very much fear that is the way they are going. We saw it last year with GMTV, where they applied for and were given approval from the ITC to vary their licence so that the local bulletins which they had, the regional opt-out bulletins from the Central region and from Meridian, instead of being three separate opt-outs they were in fact combined opt-outs. The loss there is obviously in terms of the breadth and depth of the coverage for the local community. Mr Egan: Could I just add on behalf of BECTU, in terms of the regulatory structure, we think one of the problems is that there does not seem to be a clear requirement for a certain percentage of production for the network region by region. In other words, we would like to see each region of ITV having a minimum percentage of production for whole network that is required of them. At the moment there are requirements about spending outside London, that is not spending broken down region-by-region; it is just outside the M25 which could be anywhere just a couple of hubs within that vast area. It does not specify that that spending should be on productions for the work, as opposed to regional productions just for the region. If something is not done about that it could well be that production within ITV retracts to London, Manchester and Leeds. Outside London, Manchester and Leeds you have shell productions just for local news and current affairs, nothing more than that - which is a very far cry from ITV even now, its defining characteristic being that it is a spread of regional productions throughout the whole of the UK. Ratchetting back to just three centres would be a step backwards. We fear, if that is allowed to happen by Granada, Carlton and/or by Ofcom, that will make it much more likely and much easier, somewhere down the line, for an even worse end game, which would be a foreign company, a foreign broadcaster, coming in and picking up and running with that. Unless there are strong regional commitments with meaningful facilities, staff and freelancers visibly there and visibly required to be there, it will be much easier for a foreign broadcaster who will come in and be able to replicate what is there, because it will be just a shell. If there is a very strong vibrant regional culture within ITV foreign broadcasters will not be able to meet it and will not want to meet it and, therefore, will be much less likely to come to the UK. Mr Dear: I think we also want a tough commitment to the public service broadcasting remit that the company have. The past of much of the regulation is that companies, ITV franchises, have been able to circumvent some of the public service broadcasting remits, and there have not been tough enough regulation of that. Our fear, and Charles Allen and others said it, is that they are being driven by advertising demands to put on in peak time areas game shows or those that attract the bigger audiences, than news and documentary programmes. You can go through a whole list of regional and political programmes and documentaries that have disappeared over the years, or gone from peak time to late. Only 2.6 per cent of peak time viewing in the ITV network is now on news and current affairs. That is a situation we fear will get worse unless Ofcom takes a very tough approach to the public service broadcasting obligations that this company has, and does not allow it, in the interests of its other commercial concerns, to be able to minimise those through making regional production a nameplate on a door just outside the M25 and so on. Q37 Alan Keen: As somebody who represents a constituency close to the M25 - and originally the other company that Michael missed out was Tyne Tees, which was the first regional station I ever watched - in those days we tended to support Wales, Scotland and Ireland against England at the rugby because we felt Rugby was a public school. I did not support them this time because I realised, with experience, how much the Welsh hated the English so I started to support England! My constituents do not really class themselves as Londoners. The only part of the Borough of Hounslow that classes itself as London is Chiswick, west of that we do not really get represented on television news so there is a problem in London. It really needs looking at over the whole of the country because not everyone is represented to the fullest extent. Kent is going to suffer badly. What do you think should happen? How should it be reassessed? You have got a chance to look forward, and I know you are defensive because you have got a real problem but trying to open it up and look forward, but how do you think the thing should be structured in the future? How do you think we can make sure there are not any regional programmes ------ Mr McLaughlin: I think it is about the public service broadcasting commitment versus the commercial commitment. There is that dynamic which obviously the ITV companies have always faced. It is important we find a way in which the public service element can be absolutely guaranteed. We have seen the tensions between the two in the last 18 months to two years, and it is obvious within the companies (and soon to be one company that will be ITV) there is a battle in place between those people who would seek preserve the kind of things we are talking about, the regionality and so on and making sure that voices locally are heard, and those who would say, "Actually it is about balance sheets and really there should be no subsidy for the public service role, and if the money does not come in for it then we jettison it". It is about making sure that there are those guarantees. One of the things where we have sympathy for the broadcasters in this is obviously the money that they have to pay for the licences. I think they have quoted £300 million as a figure. There is an area there which one could explore with the relationship between the licences and the payment for those licences, the quid pro quo being the public service guarantees going forward. The problem is that we believe the battle has been won by the dark side, if you like, by those who would simply seek to acknowledge the commercial interests within ITV. Therefore, it is a matter of their certainly looking to reduce their commitments. One of the things Meridian point out, Lindsay Charlton the Managing Director of Meridian has stated that the Meridian plans are a blueprint for ITV. Obviously we have found those plans, at face value, to be an absolute disaster for Meridian and for ITV. It is not homeopathic medicine. You do not dilute the workforce by more than half and expect to strengthen the thing you are working with. Our business is a very labour-intensive business; it is journalists; it is technical staff; it is support staff; it is very labour-intensive and you cannot take that level of commitment out of an organisation and not lose as a result. Mr Dear: What it mean is fewer filming days, less time for research, less time for in-depth investigation and so on in the news context, which cannot produce better programming. It just does not add up at all. Mr Egan: We ask, "What is the way forward?". We think that one thing Ofcom could do within the spirit of the Communications Act sections 286 and 287, which talk about regional programme production, is to require that each ITV region produces a certain amount of production for the network. That is simply not a requirement at the moment; it used to be but it is not a requirement at the moment. That would be a great step forward. That would be a way of preserving a certain minimum commitment within each region, not just to a shell of local news, but to a broader range of production for the whole ITV network. We think that is perfectly compatible with the legislation as it is, and perfectly within Ofcom's power to do that. If Granada and Carlton's words which they sometimes come out with about commitment to regional programming mean anything they ought to be able to live with that. Q38 Michael Fabricant: I share Alan Keen's concern about job losses and the restructuring. I am even more concerned about the manner in which it would appear that Meridian Television has dealt with you. In all my recent experience with BECTU and the NUJ I have found you both to be very responsible and constructive trade unions. It is unfortunate that Meridian chose, it would seem, not to discuss these matters with you. Having said that, I do not think any production centre should be enshrined, with the possible exception of the production centre which is now knocked down in Birmingham where the late great Noel Gordon starred in Crossroads! As I was saying before with the earlier witnesses, there was considerable concern when production went through Nottingham out to Birmingham. At the end of the day the programming output remained the same. I just put it to you: I can understand why you are concerned about the manner in which it has been announced, the closure of Maidstone, Vinters Park or not, but what is it going to mean in terms of programming in the region? Is there actually going to be any less regional news as a consequence? Is there going to be any less regional production as a consequence? Ms Elliott: Where we are at the moment is in the first year of a new agreement that Granada and Carlton reached, indeed, the ITV companies reached with the ITC - the so-called standardisation of hours which, in effect, led to a reduction in the obligations of the broadcasters in terms of regional production. Meridian, for example, produced 16 hours of regional programmes before that agreement; it is now only committed to producing 81/2 hours. What we are steadily seeing is a position where the minimum requirement is, indeed, becoming the maximum requirement. It is quite evident that the proposalal to cut 175 jobs, move to much smaller facilities, is not going to result in that figure being increased. We believe very much that regional programming will be poorer off, and certainly that the capacity of the regions (whether we are talking about Meridian, Granada Manchester, Tyne Tees or Border) to produce output for the network is going to be severely compromised. A good starting point for the executives would be to actually be truthful to their words. Lots of statements have been made about their commitments to regional programming but they are not being followed through. It is quite evident that different things are being said within different contexts. The reality in the workplace is that talented people wanting to produce a good quality service for their audiences are finding themselves having to work with their hands very much tied behind their backs. Q39 Michael Fabricant: Let me put this to you too: there have not only been changes in legislation, not only changes in the amount of broadcasters that are now in existence putting a real pressure and strain on ITV, but there have been changes in technology too, and there is over-capacity in the British television studio market. I know that and that was also borne out by the earlier witnesses. Surely you accept that the status quo cannot remain either? Mr Dear: The quote of "I've got 43 buildings and I don't need them because I want to invest the money in talented cameramen [talented camera operators], talented programme makers" was the justification for this. There may be some justification if that was what really happened; but the experience of consolidation of the ITV network over the last ten years is 2,000 hours of regional opt-outs over that period. There are now less hours being put in, and less money being put into each programme. For each half-hour less money is being spent by the different ITV regional franchises and so on. The money for each programme in the Carlton Central region is down 14 per cent over that same period. All of those things point to the fact that, yes, there may be issues to do with you needing some rationalisation of buildings or you needing more modern facilities in different areas; but the fact is that local people want local news and local programmes and they are not getting it, and they are getting less and less of it. What we think needs to happen is that they actually need to get more of it, and that really needs to be done very often from local facilities, even if they are new and better. We do not have a fetish about a 25-year old building; we are not worried about what the building is. The point is, if you want local journalists reporting on local events they need to be in local areas and they need support teams - otherwise they are doing all the jobs and less time is actually spent on making and collecting the news. Michael Fabricant: The question I will be asking Carlton and Granada later is the point that you made earlier on, where you said that ITV is now putting out programming which is of game shows at prime time, yet the consequence, it would seem, if there is a linkage is that ITV is losing market share. The question which has to be asked is: why? Maybe, as you said, people do want more news and more heavy programmes. Q40 Ms Shipley: You mentioned Carlton and, earlier on, the time slots in relation to advertising. In Carlton the regional programmes have actually been reduced I think to two, 7.30 pm on a Thursday and 5.30 on a Sunday, and all the other ones they have got are graveyard slots, 2.00 pm on Sunday, 11.00 pm on a Thursday and 11.30 on a Friday. Apart from having daytime slots, they are all half an hour, very short ones, which actually means 23 minutes when you take out the ads. All of that is not only important to the viewers, but it is also important because of the amount of money. It is my understanding that Carlton's programme budget is dependent on its slot, so the peak time slots attract around 24,000 and that is down from 35,000 four years ago, and other slots get 18,000-22,000. In defence of Carlton Granada spends even less. Given that there are going to be savings made, what do you think the impact will be on regional programming? Mr Clarke: I took the liberty of bringing with me the erstwhile publication the Radio Times and on the train I went through it with a highlighter looking at our regional programming and its output. You are right the slots we have got that are supposedly regional are what you rightly call "graveyard". There is one here at 11.00 on Wednesday last week; it is a regional slot and if you look at it it says, "Great Escapes Spectacular footage [of] horrifying accidents ... Presented by Martin Brundle". It does not say that they happened in the New Forest, so I am not too sure what the regional importance of that is. If you look at the side bar, the other regions which touch round, it says, "ITV1Anglia ... TV's Naughtiest Blunders"; "Carlton Central ...TV's Naughtiest Blunders"; "Carlton Westcountry ... [a regional programme] Talking Totnes"; "ITV1London ... The Evening Standard Theatre Award", that is regional; "ITV1 West", which I presume is HTV, "TV's Naughtiest Blunders". Q41 Ms Shipley: I think you have made your point! Mr Clarke: It says all of them are "as Meridian". There are no regions. Mr McLaughlin: At the time of the discussion with the ITC about the new charter for the nations and regions which allow changes to the regional programmes, one of the arguments which was put was about the fact there was a programme called JobFinder which was transmitted through the night, which basically was televised Ceefax with very little production value and very little budget behind it. What we were sold and what we were told was, "This change to the arrangements with the ITC would allow free-up money to be spent on proper regional programming. We are in a situation, again without wishing to labour the Meridian point, but it comes from the example, that they are talking about a programme they are planning for the next year which has loosely been termed "Jackanory for grown-ups", which you can imagine, in terms of production values and in terms of a budget, the kind of figures we are talking about, is a matter of a very few thousand pounds for half-an-hour's programme. That is the kind of thing we need to make sure that Ofcom (ITC at the moment), and obviously the wider community, actually scrutinise and make sure that you have properly funded programming; it is not just a matter of having regional programmes. I do take the point that these are difficult issues because you do not want to be prescriptive on the one hand, but you do need some mechanism where it is not just about ticking a box and it is not just about saying "We will have local programmes at the lowest cost"; that there will be a proper spend allocated. Mr Dear: We were told they would be back-funded - and you precisely made the point that they are not - and Sharon has just whispered then, when we talked about that programme, that £5,000 is for half-an-hour compared to the £27,000 we were talking about in other regional programmes. Q42 Ms Shipley: Can I ask the union representatives about this as well? I have got in front of me the criteria for redundancy for producers and editors, and what-have-you. Under "additional skills" one of the things that their job may or may not rest upon is "knowledge, experience and expertise of particular benefit to future regional schedules", and the only example that is given is lifestyle. What does that indicate to you? Ms Elliott: It indicates that the jobs are being deskilled. What we would hope is that the people who are employed will reflect a range of experience and specialisms, and that is being factored out of what is required, it would seem. Q43 Ms Shipley: Just to clarify, it said "of benefit to future regional schedules", and for regional scheduling the example is lifestyle. Mr McLaughlin: I am not certain where, precisely, that kind of criteria came from. Is it Central? Q44 Ms Shipley: It is Carlton. Mr McLaughlin: I know that there are discussions on-going about that so I would not want to say those particular words are set in stone; I am sure they are a matter of consultation. Q45 Ms Shipley: You mean you, as a union, have not seen them? Mr McLaughlin: As a union we have seen them but I personally have not seen them, and obviously there is an on-going dialogue with the employer about that situation, so I do not want to ---- Q46 Ms Shipley: Why I raised it is I would have expected the "knowledge and experience ... of particular benefit" would have been to have been able to show that you had a regional expertise, not that you had a lifestyle expertise. Mr Dear: But also, of course, across the whole range of programmes that would constitute regional, not just one type. Mr McLaughlin: It is our intention to show that any such criteria are going to be not necessary as we will commit to a voluntary process for any redundancies as opposed to any compulsory selection, which is what that document talks about. Q47 Mr Doran: Over the years I have worked very closely with my local television company which is Grampian Television, and with the unions involved. It seemed to me that over the past five or six years anyway most of the work we have been involved in is fire-fighting, and listening to you today it sounds a bit like that. All of it, I suppose, is just a symptom of the fact that the whole ecology of broadcasting is changing, has changed quite dramatically and is going to continue to change. The Communications Act is just one example of a body being forced to make massive changes because of the change in that ecology. That is the Government changing the law specifically to do something which was unthinkable ten years ago and allow this company, Carlton and Granada, to be created. I would be interested to know from both of your unions, because I have worked closely with them during all the various things which have happened, both locally and nationally, just how you see yourselves in the future dealing with this changing ecology rather than just fire-fighting. What strategy have you got for the future? Mr McLaughlin: I think there are several elements to that. Obviously, it is an inevitable role of the trade union to defend the interests of its members and to make sure that those are promoted. That is on-going business. In terms of the ecology of broadcasting and the way forward, obviously we look to Ofcom, just as others do, as now being in charge of steering a path through all this. One of the initial jobs for us is to respond to the public service television review that Ofcom has begun, as was said earlier. One of the things that I think we have noticed, certainly at the NUJ, which is absent from that review - and we have had it confirmed - is that the review will not consider Sky when it considers its deliberations. It seems to me that although Sky does not currently have any public service broadcasting obligations you cannot ignore a huge player in the broadcasting market when you are talking about the next five to ten years. Obviously Ofcom has yet to open for business, but the early signs are relatively encouraging that although they work within the regulatory framework they will listen to what we have to say, and I think as one of the earlier witnesses mentioned that is almost before things happen rather than after it and asking you to comment. We have had encouraging signs from that already. Q48 Mr Doran: So is it fair to say that your view is that you see Ofcom and the way it is constructed as really being a lot more proactive than the old ITC was, for example? Mr McLaughlin: I would not go too far on that because, as I say, they have not opened their doors yet but the discussions we have had have been very positive and they have said that it is not just about waiting till after the event, and if we feel there is something we want to bring to them or to talk about in relation to changes to the programme status, for example, we should be doing that sooner rather than later. We will certainly be taking up those opportunities. It remains to be seen whether they will (a) listen to us and (b) take any action, but that is what we are hoping. Mr Egan: Without repeating the points, yes, you are quite right, past experience has been one of largely fire-fighting. In fact, if you ran the film back over the past 20 years it has been death by a thousand cuts in many ways; it has been redundancies here, reduction in facilities there, narrowing of the number of programme genres made in the regions, centralisation of decision making in London. It has been a long, not dramatic - some dramatic - events but a lot of very small events which lead to a very different picture at the end. Can we do anything about it? We are probably at the last ditch here in terms of the future era of broadcasting. We do talk to Ofcom; we are talking to them as the Federation of Entertainment unions to take a strong stance - stronger than the ITC did in terms of defending regional production. At the moment we cannot be confident that will happen. We do not think that ITV is necessarily in safe hands at Granada and Carlton, but we are trying to be as constructive as possible in terms of our members' interests. However, in talking about meritocracies before, you are talking about the same senior executives who gave us ITV Digital - they are still there. Can you be confident that they are safe hands for the future of ITV? Therefore, we look for Ofcom to take a strong stand, because if Granada Carlton fails we are probably looking at a foreign broadcaster, probably American, coming in to run ITV in the UK. Some people might say there is nothing wrong with that, but we would really fear for the local nature of production. Such as we have got, that is likely to decline if that was ever to happen, so Ofcom has a key role and we want to press them to take a strong stand. Requiring minimum network production percentages from each ITV region is one simple thing they could do within the Act at the moment. Mr Dear: In the short term it is greater public service requirements across all the television media that we would see as a solution to it, but I think there is a longer-term thing. When the 1990 Broadcasting Act came in we said "It will lead to one ITV company eventually", and everybody pooh-poohed that idea; then in 1996 we said the same thing. Now we are in the situation where we have got that and we think there is a need for a real debate in this country about what we believe public service broadcasting should be about. We actually welcome a lot of the reviews and discussions that are happening because it is about whether we want commercialised television, commercialised information with a little bit of public service on the side, or whether we want public service at the heart of British broadcasting. We think that is the right way to go, but we understand that that is not something that a Committee is going to say "OK, we will pass something to say that is a debate the country and people who work in the media and people who consume the media and legislators need to have about what they want out of broadcasting." We think public service would really be popular in broadcasting if people have that debate and see what is on offer. Q49 Chris Bryant: I just wonder about what you have just said. Let me put another version of the same problem, which is that we are now in a far more competitive media situation than we have been ever in the past, where people in my own constituency - nearly 60 per cent - are in multi-channel homes, they have a vast array of channels before them, and the income is being distributed between a vast range of different broadcasters. ITV itself has had a very difficult couple of years, and it probably will have better years to come, but declining audiences mean declining income and, at the same time, it is extremely competitive for staff because, of course, the vast majority of people who work in the industry are probably freelance - whether you are talking about actors or make-up artists or designers - a vast array of them who probably get slightly different representation or minimal representation and have very little power when it comes to getting a job. For those people, because there are so many, it is extremely competitive, their price is going down year-by-year - or not rising. In that environment, is it really realistic to expect little to change in the nature of public service broadcasting on ITV? Mr Egan: Just one brief point. I think you would be wrong to conclude that PSB programming is a loser in the marketplace; it is not a loser. Audience research shows that, by and large, given the choice between original programming and bought-in commercial programming from abroad, people prefer the former. There is also research to show that the UK viewing public does strongly value programming made in the regions. It need not be about their region, although that is part of it, but it is programmes made in the region for the larger audience. So there is no reason to think that in the marketplace that kind of programming that we are advocating cannot be a winner and that ITV could not have the role, along with the BBC, of presenting that kind of market - and still could live side-by-side with BskyB. You could put the argument on its head and say, "Why should BskyB be allowed to get away with minimum requirements to original production? Why should that be the case?" We in the UK could decide that such a large broadcaster, now well-established, making lots of money, making profit after a long period, should be required to make greater commitments to original production. That would balance out the marketplace as well. Q50 Chris Bryant: I agree with that, and I said earlier that I think one of the things that audiences are looking for is programmes that reflect the world in which they live. I agree with that entirely. But ITV, also, has to be able to provide it at a price that they can afford, and with digital technology having changed the nature of production as well, quite substantially, over recent years, I wonder how realistic we need to be about our expectations and whether, in the future, public service broadcasting in the main is going to be the intervention in the market that the licence fee provides. Mr McLaughlin: I think it is absolutely important for us to carve out, make sure, that terrestrial commercial television has a role for public service broadcasting. I think the marketplace in Wales, for example, is obviously doubly interested in the fact that you have got dual language issues and so on. We would be interested to know from ITV what are the guarantees, given that it is a particularly unique marketplace, that they will be able to deliver on public service commitments to the people of Wales? HTV, obviously, currently hold the licence and we are not, at this stage, convinced that they will be able, as they do now, to punch above their weight. If you play the commercial argument in Wales then there would be no contest; there would be virtually no public service commitment other than the BBC in Wales. So it is important that we find a way to ensure that that is properly managed, because it cannot be left to the commercial market. I know it looks, perhaps, pessimistic at the moment but we will never give up, because I think it is a political thing. It is not just about industrial relations, it is not just about the viewer, it is actually about making sure that people have a set of choices, properly funded information sources, from which to make their decision. Q51 Chris Bryant: I know I am playing devil's advocate slightly, but we in Britain have the largest intervention of any country in Europe in the market, by virtue of the licence fee. Is that not enough? Mr McLaughlin: No. Mr Dear: When you talk about competition, there are two ways to compete: you can compete on the basis of the lowest cost or you can compete on the basis of the highest quality. There are lots of people who will make the choice based on quality programming, which includes, in our mind, good regional content rather than on the basis of the station that puts out programmes at the lowest cost. We think that is the right debate to be having. One of the things that the licence fee does is allow the BBC to be able to be a market leader, very often, in good regional programming and good quality content. Despite what criticisms others may have, you go around the world and the BBC is, rightly, regarded as the best public service broadcaster there is anywhere. I do not think that is enough of an intervention; I think there needs to be some other public service commitment, but as a whole there also needs to be a debate about whether we simply compete on the basis of low cost or high quality. We would obviously hope that high quality wins out and that the skills of the people we all represent are therefore used to their fullest. Mr Clarke: Can I just make a point about one of our successes? We have a regional programme down in the south of England called Monkey World (there is a monkey sanctuary in Dorset) and the nation became fascinated by the activities of monkeys. So much so that the programme is a network success even though it was regionally produced. There was the ironic situation about 18 months ago where our own Granada intranet site had, as its main headline, "Monkey World beats the competition"; it knocked the BBC into a cocked hat on Sunday night at 5.30 and, therefore, started the evening very well. We were, of course, very proud. The second headline was "Regional cutbacks in programming" and we were going to be reduced from our 15 hours down to the 8.5 that we now make. That was ironic in itself. We are still proceeding with Monkey World; the next series that is to be commissioned, we are rumoured to believe, will be commissioned by the BBC, not ITV. Michael Fabricant: And then there is the Parliament channel! Chairman: Thank you very much for your evidence. Memorandum submitted by Granada plc and Carlton Communications Examination of Witnesses Witnesses: MR MICK DESMOND, Joint Managing Director, Granada plc and MR CLIVE JONES, Joint Managing Director, Carlton Communications, examined. Chairman: Gentlemen, good morning. Thank you very much for coming here today. Mr Fabricant will start the questioning. Q52 Michael Fabricant: You were here for the earlier evidence and I think you heard Andy Egan just now, of BECTU, ask the question "Is ITV safe in Granada's and Carlton's hands?" I will not ask whether it is because you will say yes, it is, of course. Let me ask you this question instead: given that ITV is under pressure because of all the increased competition that has arisen over the last few years with cable and satellite and changes in technology, do you feel that you can increase the profitability and viability of ITV by merger and reducing overheads in that way, or will you be able to increase market share by investing in the sort of programming that we have heard about a little earlier from Jeremy Dear? Mr Desmond: I think our fortune is really very much in the hands of driving our schedule. At the end of the day, we are totally funded by advertising revenue. Clive and I went in to run the network over 18 months ago, and one of the fundamental decisions we made and presented back to all the plc companies involved with ITV at the time was to invest more money into the schedule. To put it in perspective, in the year 2000 ITV took just under £2 billion in advertising revenue, and by the end of this calendar ITV will have taken just over £1.6 billion worth of advertising revenue, yet in the same period we have increased investment into the network schedule from £725 million to just under £840 million. Q53 Michael Fabricant: Advertising take is a function of two things, is it not: the availability of budget to advertise on television generally (as opposed to any other media) but market share as well? If ITV is losing market share your rate is going to reduce accordingly, and people are going to make investment decisions, media decisions, which might not include as much on ITV has would previously have been the case. I get back to my question: while I accept the argument, of course, that ITV is funded by advertising and sponsorship - commercially funded - and that is to be applauded, there is a linkage, is there not, with audience share, and does it not follow that in order to get audience share you have got to have the right sort of programming to attract an audience? Mr Desmond: Totally. Our audience share, within the commercial television sector, is exceedingly important. It has been even more emphasised now with the recent regulatory conclusion from the OFT with the new mechanism we have called CRR. Yes, we are investing in new programming. I listened to some of the evidence this morning: far from dumbing down, the major drive in our programming in this calendar year has been major drama; we have increased the amount of drama quite substantially, we have increased the amount of lifestyle programming quite substantially and that is really what gives us a premium within our television marketplace, which also attracts the advertising market. So it is a vicious circle that we are trying to break here; we are trying to get far more confidence from our advertisers and from our viewers, that our programming is very strong. In order to do that - and what we have seen over the last three years, as I say, is our advertising revenue shrinking - we have had to look at our business in a very focused way and look at where we can take duplicated costs out of the system in order to fund this programming investment. That, really, is going to go on into the future as well; we are determined to keep funding our programming proposition because at the end of the day that is what is going to drive our revenues. Q54 Michael Fabricant: Let us move on to the ITV network. One of the concerns expressed by the first group of witnesses, including Donald Emslie - who, of course, as you know, is Chief Executive of Scottish Media Group - was that there might not be a meritocratic system for deciding which programmes should be shown on the ITV network as a whole, and that because ITV will be, in effect, possessed by Carlton and Granada, Granada and Carlton will quite naturally, from an economic point of view, focus on Granada and Carlton's production capability rather than that of the regions. Mr Jones: There has to be meritocracy. We make our money by presenting the best possible schedule to our viewers, and that means you have to have a broadcasting division and network centric that can commission the best quality programmes. We have taken more and more programmes from the independent sector because they have delivered ratings to us. It is the problem, indeed, of having regional quotas; you cannot have a Stalinist command high post and say "There will be programmes coming from here or programmes coming from there". Leeds and Yorkshire Television has bloomed and blossomed as a production centre over the last few years; 800 people now working in Leeds, working on network programmes because they are delivering high-quality drama. There must be meritocracy, we cannot live by quotas. Q55 Chairman: Can I just follow up, as it were, the converse of what you have just been talking about? You talked about an apprehension that production might be concentrated on Granada. Mr Desmond will know that in the North West there is the opposite apprehension, namely that Granada will base itself in London and that the old concept of Granada-land will die. There have been reports in the press that Granada is intending to give up its existing headquarters building. Brenda Smith has attempted to controvert those but I think this would be a very good opportunity for you to state with great clarity what the intentions of Granada are. Mr Desmond: We have been very clear: there is no intention of moving out of Manchester. We have a vibrant production capacity in Manchester, it is the home of Coronation Street which, obviously, is broadcast on a regular basis. I think what we are talking about, again, here, is the debate that was discussed earlier, which is the actual site. Yes, the Quay Street buildings are very old buildings. Certainly I have worked there in the past and people who have worked in there do not have the same kind of state-of-the-art facilities that are in other centres around the country. This is about refocusing the site. This is also very much about the fact that, as Mr Jones said earlier, the way that productions now take place - certainly dramas - is that they are far more on location than actually in studios, and therefore studios are laying dormant. We are quite excited about the plans for Manchester; we are working very closely with the development authority in Manchester and Brenda Smith (as you have mentioned) is overseeing this, and we are very encouraged by what we are seeing, the idea of having a centre of excellence in Manchester and ensuring that Manchester remains a very vibrant production capability. You should also be aware that from a studio perspective we have a joint venture with the BBC and still, even with the BBC working in tandem with us, the capacity use of the studio is very low, because I think the way programmes are now made has fundamentally changed. Even entertainment shows, the mainstay of our entertainment over the last year or so, has been less studio-based entertainment. Entertainment events like I'm a Celebrity, Get Me Out of Here, are obviously done on location. So the fundamentals of business are changing. Q56 Chairman: I can quite understand you are dissatisfied with the present building because it is a very unsatisfactory building by any standards, but what I would be grateful if you could clarify is whether the new building you are hoping to build and intending to build will contain all of the facilities that are now available in the current building. Mr Jones: No, because currently there are four studios on the Granada site and in terms of ITV production we probably only need two. However, there are talks going on with the Regional Development Association about the possibility of them building two sound stages, which could be useful. Manchester is going to remain our biggest production centre outside London. In the bonded warehouse I am planning to develop a major new regional production centre; we need to switch to digital technology, we need to work to a far-server basis (?), so there is going to be major investment on this site, but the facilities will not replicate what is there now because some of them are no longer fit for purpose. Q57 Chairman: I do not think people will be very happy with that, if I may say, Mr Jones. Certainly, I do not think people in the North West will be happy with that reply. Could you then be specific about what facilities which are available in the current Granada headquarters building will not be available in the projected new building? If you are, in fact, scaling down then all the misgivings which are being voiced at the moment in the North West would seem to be justified. Mr Jones: I do not think we are scaling down at all. I do not think there will be a reduction in facilities; there will be differing facilities. Some of the studios which are currently unused - which they are, they are dark and they are not used. When I began in television everything was made in the studio. Now very little is made in the studio. A lot of things are actually made on location. So actually what we are talking about is a different facility mix, but no less potency in the number or range of facilities. Chairman: I cannot say that I find that reply reassuring. Q58 Michael Fabricant: Moving to your relationship with Ofcom, Ofcom does not become operational until December 29th. We have already heard that they are in listening mode. Do you think that Ofcom will provide the safeguards that the Chairman and others seek to ensure that regional broadcasting within the region and also regional broadcasting on the network will be maintained? By "broadcasting" I mean production. Mr Jones: The protections are there in our licences, and it is for Ofcom properly to police those licences and for us to live up to our licence commitments. We make 8,000 hours of regional programming and we make more than 5,000 hours of regional news. The amount of regional news in peak has actually gone up in the last couple of years. Over 40 per cent of our network production is made outside London. That is far more than the BBC, it is far more than Channel 4 and we make double the amount of regional programmes on ITV1 than appears on BBC1. The BBC cannot hit their quota for regional production, they have failed it, as they have failed their independent production quota for the last three years. It is interesting that we are described as the "dark side" of British television when, actually, we are delivering on the promises that we have made. We have not missed our regional quotas, we have not missed our independent quotas. More than 40 per cent of our programmes are made outside London, and that will continue. One cannot imagine us wanting to move Coronation Street or Emmerdale or any of the regional dramas, or Kay Mellor or Paul Abbott (one of the great playwrights in the North West) to a different place and not making programmes there. Mr Desmond: I think we also see it as one of our USPs. We are talking here from a broadcasting perspective, but when presented to advertisers that is one of our major USPs, that as a broadcaster we are broadcasting to the nation, it is not broadcasting a London-centric message to the nation. I think that is very important. Q59 Michael Fabricant: On one specific point, and my final point, of public service broadcasting (slightly at a tangent but, hell, why not?) Channel 5 on digital is now providing audio description on D-stat for 500,000 viewers - and that is something I spoke about during the passage of the Communications Bill. Have Granada and Carlton given any consideration to providing that sort of facility to its many disabled viewers? Mr Jones: We have. We spent, along with Channel 4, $1 million in developing a chip to fit into set-top boxes to allow audio description to be made available. Sadly the set-top box manufacturers have not picked that up. To put a service up on Sky could be incredibly expensive because we have to put up 15 or 27 regional or sub-regional services and we would have to buy 27 channels. However, we do recognise that we are putting out these services at the moment and very few viewers can pick them up. Q60 Michael Fabricant: You would not have to do that, would you? Mr Jones: Which is one of the reasons why we are in discussion at the moment. Could we put out one network service which would actually service everyone? We are looking into that. Q61 Derek Wyatt: Good morning. As you will understand, as a Kent MP, I am concerned a lot about Maidstone. Can I ask when Meridian started to talk to the ITC about the changes that affect Maidstone? Mr Desmond: I think the first conversations would probably have taken place over three or four months ago. Having listened to the earlier evidence, the fourth consultation process has started, and we have not purchased any other sites. There are options and conversations about other sites. Q62 Derek Wyatt: So you have taken first options on two separate sites, one near Fareham and one, presumably, in Kent somewhere? Mr Desmond: Yes. Q63 Derek Wyatt: When is the deal date by which you have to sign or not sign on those two options? Mr Desmond: We are talking, really, about a period of a year. This has to be planned through very thoroughly. I think this is the full consultation that will take place with all staff at the Meridian site. Q64 Derek Wyatt: How do you square the concerns of the workers (I am talking about Maidstone) where they want the news provided by local journalists in a very high-rating show, with moving maybe to this new place in Fareham? How will that give a better local show for people in Kent? Mr Jones: Can we make it clear what we are planning? I think there is a misconception about what is actually proposed. Some of the facilities in the Meridian region are very old. The Southampton newsroom I actually know very well because I built it 14 years ago. I went back there ten days ago and, to my absolute horror, it had not changed one single jot. There are newer facilities which the original Meridian broadcaster created in Kent; they moved off the old Vinters Park site and created a small news centre. We are not proposing to diminish the number of journalists on the ground at all; we are actually proposing major news-gathering facilities at Newbury and then we will come on to Kent, probably in the Maidstone area. All we are talking about is moving a presenter and, maybe, a technical director; the journalists will stay there, the reporters will stay there. In fact, we hope to have more facilities: new offices in Hastings, new offices in Ashford, and a live-links truck available every weekday for that programme. We are talking about an advance of technology, we are talking about trying to improve our ability to get pictures and to get stories on the screen, and we are talking about a £6 million investment. I do not think that is a diminution within the region, I think it is just a modernisation and a reflection that we want to use new technology. Q65 Derek Wyatt: Given, as it were, that you would like to change the way that Meridian works, is it a natural leap to come to the House of Commons where there is coverage by regional ITV companies, where you will say "Well, you have three for Anglia, four for Meridian and whatever it is for Granada. Actually, why don't we just have one and we will have four people and we will sack eight journalists"? Is that the next stage? Mr Jones: No. We deliver 27 regional and sub-regional news services. We are the premier regional news broadcaster in the UK. We are maintaining that and we will continue to deliver those 27 services. We will change, over time, as technology changes, perhaps the way that we deliver those services, but I would hope and I would wish that you would judge us by what you see on the screen, and we are not planning to take any of those services away. Q66 Derek Wyatt: You have heard some of the debate earlier about regional programming being commissioned locally, the difficulty with quotas and so on. In the way that you see a much stronger, central ITV - which is what you are going to be - would you rather that the public sector regional remit was dropped from what you have and that this was paid for through the licence fee? Mr Jones: No, I would not. I would like a level playing field. At the time where we face an enormous increase in competition and our revenue over the last ten years has dropped by £400 million per annum, we maintain our regional commitments and we want to continue to maintain our regional commitments, but I think we would like relief from the massive super taxes that we pay in terms of cash bids and PQR. We are paying £250 million a year, at a time when Channel 4 pays nothing and Channel 5 pays a small amount of special tax and all the BBC seems to get is an ever-increasing source of revenue. They get their increase in revenue, but has their regional production gone up? No. Have their regional services gone up? No. Maybe it is for this Committee to assert whether that is right, but that is one of the questions I would address to the BBC. Mr Desmond: I think, also, in the balance of the schedule. We are proud of the number of regional programmes that we transmit. For example, in Meridian we have a programme coming up called The Making of English (?), which will feature against Eastenders at 7.30. I think what we are seeing across the whole of the UK map is an opportunity for us to take on programmes like Eastenders with a very different demographic; slightly older, more up-market demographic than Eastenders, which tends to be younger and more sort of mass-market. I think there are commercial opportunities for us here as well. I think that is where we should focus far more. Also, from a network perspective, Mr Jones and I introduced a network funding of £2 million last year and we have reintroduced it again for 2004 to try and encourage ideas to come from wherever across the country. Last year we had a number of regional companies who then produced network propositions that played out in, primarily, daytime and children's TV. That is something we still want to continue to do because we are looking for strong ideas. Q67 Derek Wyatt: I have asked this of previous witnesses, but given that you went to the ITC, maybe three or four months ago, without anyone sitting behind you knowing - none of us - would you have any objection if, in the future, when that first letter goes in, that is put in the public domain and that all the discussions about Meridian and its future, or whatever it is, is always held in public hearings rather than behind closed doors as in the ITC's days? Apart from commercially sensitive information. Mr Desmond: I think there is commercially sensitive. but there is also the means by which you have to communicate to staff who are on that site. Again, listening to the evidence earlier, certainly the coverage in the press did not come from any comments from ourselves. I think you have to have the responsibility of having a discussion, and then having a discussion with your staff before then the whole thing becoming far more public. Q68 Derek Wyatt: I am not sure that is an answer on whether you would like Ofcom to deliberate in public. That is what I am really asking. Do you have any objection to that, apart from commercially sensitive information? Mr Jones: I am not quite certain where you are coming from, Mr Wyatt. Are you talking about the public service broadcasting review? Should that be done in open consultation? Q69 Derek Wyatt: That the principle of Ofcom should be that when it takes evidence it should take it in the public domain so we can hear it, not behind closed doors, as it has been in the past 50 years of broadcasting. Mr Jones: If Ofcom were to take that approach I am sure we would be happy to go along with it, but it would be a decision for the regulator not for us. Q70 Chairman: The fact is, is it not, that you, Channel 4, Channel 5 and Sky all operate upon the basis of an Act of Parliament which has provided you with the facilities? All except the BBC, who are not relevant to these discussions, go into the market with the objective - which is by no means a discreditable objective - of making money out of television broadcasting. What conceivably can be the objection to an organisation, which exists solely because of an Act of Parliament passed in this House of Commons, having their activities, apart from the commercially confidential activities, scrutinised by the public? Mr Jones: We have no problems with that at all, Chairman. We publish an annual statement of intent in terms of our programming, both regionally and network. We are held accountable to that each year in terms of our annual programming, we publish the statements of intent, our performance reviews are published and we are subject to regulatory hearings. We do not have a problem. Indeed, we are also very happy to come along and see you and your Committee from time to time. Mr Desmond: I think, on a number of these issues as well, each of our licences have boards; we have two non-executive directors, in the case of Meridian, and we have regional advisory groups where, again, they will play an active role in this process, and the regional advisory groups would represent the views in the Meridian region or the Central region or whatever region, and they play an active role and will play an active role in this process. Q71 Chris Bryant: You have heard from the other witnesses speaking this morning about people's ambitions for what you called your unique selling point in terms of being able to provide audiences with a vision on television of the world in which they live rather than the world that is imported either from America or from London, or wherever. I just wonder, in the changing economics, as you look forward to the next 5 or 10 years, what strategy you are going to put in place to make sure that the variety of voices that we have enjoyed over the last 10 years coming on to television screens is enhanced, maintained and strengthened? Mr Desmond: As we said earlier, and the previous evidence said, UK-originated productions are ITV's USP. I firmly believe in that and I know Mr Jones does. We have reduced the amount of acquisition we have been making over the last two or three years; we buy less movies. We actually buy less sport going forward and are basically putting far more money into drama, lifestyle programming and major entertainment events. That is what will drive the proposition, and, alongside that, current affairs, a strengthening of the news proposition and, again, an assurance that we have strong regional programmes, but, also, strong regional programmes that people want to watch. So I think there is a strong USP and certainly our productions which reflect the nation are very important. As I said earlier, we are not a London-centric proposition trying to broadcast to the nation, it is very much the nation broadcasting to the nation. Q72 Chris Bryant: You understand that people are nervous that that is what you are going to become. Mr Desmond: I am sure they are, but I think we have dug deep over the last two years of what has been - certainly in my career and probably Clive's as well (he has been in it a bit longer than I have) - the worst advertising recession that we have seen. We have been in deep advertising recession for three years. Whilst there are some signs of coming out of this, certainly the forecasts for 2004 do not look brilliant either. Having said that, we have put our money where our mouth is and we have invested back into our schedule, because we know that our schedule has to remain strong, otherwise we will face the double whammy of not a buoyant market and our audience share slipping away, and advertisers penalising us. Q73 Chris Bryant: Let me be parochial for a moment and talk about HTV, because we have had the Scottish this morning and now we can just talk about Wales for a brief moment. It seems to me there are two problems: one is that Wales has a border but its border does not particularly coincide with its broadcasting heart, as it were, and there are many people in the North who identify much more closely with Manchester and Liverpool than they would with Welsh television. So there is a question there about how do you maintain that regional identity or do you give people the options in those areas? Secondly, Kim Howells has often referred to the fact that it is difficult to get Welsh television programmes made in Wales on to the network. Do you still see that as an ambition? It may be that you are interested in drama and lifestyle and entertainment, but the budgets for features and current affairs seem to be so painfully thin that the seats, in fact, on which we end up sitting when we do the programmes, are frankly painful. Mr Jones: I will try and answer three of those. Transmission has always been an issue in Wales, particularly in the northern part of Wales because of the great power of the Winter Hill transmitter. We keep trying to address that. We have addressed it in terms of digital satellite delivery to North Wales where we have switched all the signals away from Granada and they are now at HTV Wales. I wish that I could wave a magic wand and actually sort out the topography of Wales and ease the digital terrestrial and analogue terrestrial signals, but I cannot. So that is going to be an issue we have to deal with over time. Hopefully, technologies like broadband will help deliver differing ways of people getting pictures. It is our desire that actually everyone in Wales should be able to receive the Welsh service from HTV Wales. Q74 Chris Bryant: And not Granada? Mr Jones: We are trying not to give people those options because it is easier to sell it as a proposition to advertisers. However, if you are clever in D-stat you can find any service that you want, if you are technically adept - which I am not, but my kids are and seem quite able to do it. Q75 Chris Bryant: I know a lot of colleagues will say that that element of choice is vital because people's identification - if they are on the border between two areas - with how you choose and how you live your life is quite important. Mr Jones: We have traditionally offered that choice. I hear what you say and this is an issue we shall return to. In relation to programmes from Wales being broadcast to the rest of the country, I share Kim's view (and as a Welshman I would be equally passionate about it), we have not done well despite all the encouragement that has been given over the years in actually getting network production out of Wales. I think this is as applicable to the BBC as it is applicable to ITV. I think, possibly, it is a structural thing that has happened, that a lot of the production community in Wales are actually very introspective. It is obviously pleased by the creation of the S4C (?)for the Welsh language population of Wales but it has made the Welsh production community very introspective. They are more concerned about making programmes in Wales for the people of Wales, and I think it would be great to broaden that perspective out because it is something we continue to try to do but we have not been that successful as ITV. We have been successful for Channel 5 and for Discovery and some other channels, but less so for ITV. Mr Desmond: We know we are going to have an advert for that next year. Griff Rhys Jones has got a production which is set in Swansea next year, which has now been commissioned as an ITV drama. Propositions like that will help. To go back to your point on features as well, in the schedule next year we have a number of strong compositions coming out. We have a series on Churchill, which will run over four evenings, we have a series about the building of the Titanic, which, again, is a series that will run; we are investing more money into the South Bank Show, and, again, we have the successful return of The Making of English. So we are not trying to duck the issue. Where we have strong propositions and brands that we believe we can build then we will invest because we want them to return strong audiences. Q76 Chris Bryant: Just one final question: the next licence round is going to be starting in the not-too-distant future. I just wonder what public service broadcasting requirements that are presently in the licence you are going to be looking to have ditched. Mr Desmond: I think this is two-sided. It is part of a much broader conversation which I know Ofcom are very keen to have defining what public service broadcasting is. Certainly we are entering into that debate with Ed Richards of Ofcom over the next couple of weeks. There is the whole role of the BBC, and over and above that I think we are just very keen to enter the debate. Chris Bryant: Can I push you a bit for a slightly clearer answer? Chairman: Mr Bryant, you said "Finally, may I ask another question." You can ask the other question but do not say "finally", it prejudices you. Q77 Chris Bryant: I would hate to face prejudice, Chairman. For instance, religion. Mr Jones: I think, as part of the public service broadcasting review, the ITC in the last few months has actually been doing a cost-benefit analysis, trying to work out which programmes viewers value, both in a regional context and in a network proposal. I think that is going to be part of the debate. We are going into it with a fairly open mind. We are the only broadcaster that currently broadcasts a live act of worship every week. Is that appropriate in a multi-cultural Britain or not? I do not know. It is an interesting debate. In terms of regional programmes, particularly with the likelihood of greater devolution, I am more concerned - and perhaps I should correct something which was said earlier - half our programmes we make regionally. Regional programmes, other than the news, are broadcast in peak. They are not at the edges of schedules; there are two 7.30 slots, on Tuesday and Thursday, and there is a 6 o'clock slot on Sunday. So there are a lot of regional programmes in peak. I think they should concentrate on current affairs, particularly as devolution goes on, because I think current affairs is at the heart of a regional schedule and at the heart of regional awareness. Those are some of the priorities I would be thinking of. Chris Bryant: I have finally finished, Chairman. Q78 Ms Shipley: What are the plans for the studios in Birmingham? It is only 10 miles from my constituency. The reason I ask this is because in 1996 when the move was made from Broad Street, where there were three live production studios and one news studio, MPs were briefed: no change; there was still the potential to make studio programmes (underlining the word "potential"), but the reality has not been like that. Although it is a big studio there is news and some children's television, but the sort of production side of it has gone. So what is going to happen to Birmingham? Mr Desmond: We have no plans to change Birmingham at all. Q79 Ms Shipley: What is going to happen to Nottingham, because that is what happened to Birmingham - it is news and a bit of children's TV and no production? If that happens to Nottingham as well, which must be the fear of those around the Nottingham area then actually there would be no ITV production facility in the whole of the Midlands. Mr Jones: Two of the old ATV studios were mothballed and were not in use whatsoever. So as with the studio we had before, there is still a vibrant studio in Birmingham. In Nottingham, as part of the process that we go through in any merger, we are going to have to review all our studios. We have an over-provision of studios in the country, as has been referred to in earlier evidence. I think the important thing is actually a continuation of the programme-making tradition in the Midlands. Largely, that has been based around programmes being made on location, such as Peak Practice or, more recently, its successor Sweet Medicine. So I think there is an on-going commitment to production in the Midlands, but with all our studios we are going to have to look at them because a lot of them are not used any more. Q80 Ms Shipley: All right, so Birmingham got reduced down to news. Mr Jones: It has not been reduced down to news: news, regional programmes and it is the home of CITV links, which is done seven days a week. Q81 Ms Shipley: I could be wrong here but I think if you really wanted to do production in the Birmingham studio now you would have a lot of problems because of the lighting rigs, you would have to bring in outside riggers; there is not the staff ---- Mr Jones: It is used seven days a week. Q82 Ms Shipley: There is a very limited number of lighting rigs there. The news that is going out would mean that all of that would have to be taken out, and then put back in, taken out, put back in - so realistically, although if you are going to get down to semantics there is the potential, it is not going to happen. From what you have just said, it sounds like Nottingham is on the same agenda, and it is all going to go out to location broadcasting, and although location broadcasting is very nice it does mean that the studio potential for the Midlands will be gone. Mr Jones: The vast majority of our programmes are not made in the studio any more. There is a very major studio in Cardiff ---- Q83 Ms Shipley: I take it you are agreeing. Mr Jones: I am not agreeing, I am not saying that at all. What I am saying is we are going to carry out a review of all our facilities, which any sensible company would do. We have a very major studio in Cardiff which was built in the 1980s and which now we do not use at all; it is run by a small independent company. Q84 Ms Shipley: Do you think if there was a loss of the studio facility in Nottingham and, therefore, the studio facility for the Midlands, that is a problem? From what you are saying, you do not think that is a problem. Mr Jones: I do not necessarily think it does because I do not think the majority of television programmes are made in studios any more - as Donald Emslie referred to earlier. The main studio in Southampton has been used once in the last year; it was used by an independent production company to make Question Time for the BBC. Q85 Ms Shipley: You could say the same about Birmingham. Very little is done in Birmingham because you would have to take out the news facility every time if you are going to do it; therefore you do not do it, therefore it is not made, therefore you can argue "We do not do it in Birmingham, therefore we do not need it". Mr Jones: The studios in Birmingham were not used before. Q86 Ms Shipley: They were not there before. Mr Jones: There were three major studios which were mothballed. Q87 Ms Shipley: They were moved; you moved to a new facility. In that new facility ---- Mr Jones: Because we were required to do so by the ITC. Yet another intervention in the market. Q88 Ms Shipley: In the new facility you have not made studio programmes because you cannot, because you would have to take out the TV news all the time and put them back in, although you can argue there is the potential. However, then you can also argue "We are not making any programmes there, we are doing much more outside now, therefore we do not need the facility because we are not using the facility." Mr Jones: I can only say that as we go forward, as we are now, we shall be judged by the programmes we put on our screens and not on the bricks and mortar. Q89 Ms Shipley: What sort of impact do you think digital camera filming will have? It is a lot cheaper - £3,000 instead of about £30,000 - it has a lot of flexibility and it has many positive sides to it. What are they? Mr Jones: Most of my newsrooms are already digital. The only newsroom which is not digital is Nottingham. The majority of our regional programmes are already shot in digital cameras. I think we are going to have a mixed format. A lot of drama, for instance, will continue to be made on film because directors enjoy working on film. However, as we move towards high-definition television, which is all-digital, maybe that will have an effect. I could not anticipate what it might mean. Q90 Ms Shipley: I am sure they enjoy doing it and I am sure all the technicians and everybody, professionals, enjoy making that sort of film, but if the industry moves towards the one-person operated camera, sound facility, everything, how can the skill base be kept up in order to enjoy making those sorts of films? Mr Jones: I think you are always going to have an enormous variation in terms of the levels of skills. In certain news situations and in certain regional programme situations a one-man operation is appropriate. I think in others, in terms of certain types of features, certain types of drama and certain types of entertainment, it will continue to work on the basis that one has now, with full crews. You cannot do major drama productions with the same sort of commitment that we have on a feature film. Q91 Ms Shipley: And news and current affairs? Mr Jones: News and current affairs have gone through an enormous revolution. When I started ---- Q92 Ms Shipley: No, please, not a history lesson. News and current affairs with a digital camera? Mr Jones: Digital cameras enable you to operate, to some extent, a one-man crew. Does that mean that all our newsrooms will be staffed by video journalists shooting everything and asking questions? No. Q93 Ms Shipley: So definitely, for the record, you see it as complementary and not taking over? Mr Jones: Yes. Q94 Chairman: You referred to the ITC. On whose initiative was the application made to the ITC to move the Ten O'clock News to 10.30? Mr Jones: It was at ours. Chairman: Thank you. Thank you very much for your evidence. |