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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 598-vi House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE CULTURE, MEDIA AND SPORT COMMITTEE
Tuesday 7 September 2004 MR ROGER BOLTON, MR IAN McGARRY and MR JEREMY DEAR MR DAVID FERGUSON, MR JIM WHITEFORD, MR CHRIS GREEN and MR JOHN F SMITH Evidence heard in Public Questions 348 - 397
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Culture, Media and Sport Committee on Tuesday 7 September 2004 Members present Sir Gerald Kaufman, in the Chair Chris Bryant Mr Frank Doran Michael Fabricant Mr Adrian Flook Mr Nick Hawkins Alan Keen Rosemary McKenna Ms Debra Shipley John Thurso Derek Wyatt ________________ Memoranda submitted by BECTU, Equity and NUJ
Examination of Witnesses
Witnesses: Mr Roger Bolton, General Secretary, BECTU, Mr Ian McGarry, General Secretary, Equity and Mr Jeremy Dear, General Secretary, NUJ, examined. Chairman: Gentlemen, welcome. We are very pleased indeed to see you, as always. Derek Wyatt will start the questioning on behalf of the select committee. Q348 Derek Wyatt: Good morning, gentlemen. May I just put a couple of questions to you quickly. Do you think in the year 2017 there will still be an educational system for the primary and secondary schools in this country? Mr McGarry: Yes. Q349 Derek Wyatt: Do you think in 2017 there will be a health service called the National Health Service in this country? Mr McGarry: Hopefully. It may not be in the form it is now, but hopefully yes. Q350 Derek Wyatt: Given that two very public services are a given in 2017, surely the BBC will be with us in 2017, and since neither education nor health has a Charter or some statute, what is the purpose of giving a ten-year Charter when we know the BBC are going to be with us? Mr McGarry: Firstly, I certainly hope there will be a BBC in broadly its current form in 2017 - that is very important to us. I think you all know our constituencies, as it were. For our members the BBC is the biggest single employer so we have a very direct interest in seeing it there and continuing to flourish and to succeed. The nature of the period of its renewal under Charter I think is important, because I think there is a need for stability in an area of ever more rapid change. The BBC is at the heart of television ecology, as it were, and is an important player - key to the role of public sector broadcasting. Whether or not it is a Charter, or has to be a Charter, I think we would be fairly neutral about that, but it has worked pretty well to date and seems to give the proper degree of accountability, and accountability to government. I think a period of ten years would be the very least we would want to see that extended for. Q351 Derek Wyatt: You probably do know in a previous National Heritage Committee, which some Members were members of, they recommended it should be reduced from 15 to ten. It was one of the recommendations taken up by the then government. So ten is not a given. The government has now said over the recess that that a digital switchover will be completed by 2012. Given the substantial changes coming - both in terms of hard drives where BMW will announce in their next range there will be a hard drive inside a BMW so you can get on-demand television and films as you want them, per passenger seat if necessary, and where an i-Pod, which was unheard of three years ago, is now a billion dollar business, which is another hard drive implication - do you not think the pace of change is so phenomenal that youngsters (and we) are moving to a different scale and type of broadcasting which is less broadcast-driven but more software-driven; and by giving ten years you might actually create the death of the BBC rather than the life of the BBC? Mr McGarry: I do not believe that is the case. I understand that the impacts of new technologies are going to affect us all. It will affect the way people we represent work; it will affect the way people watch and how they access programme material; but I am pretty confident in that period you are talking about there still will be a very considerable demand for high quality programme production and broadcasting in this country - and without the BBC I cannot see that happening. Therefore, if anything, it is not the case that the BBC and its funding is lessened by those developments - conversely, I think it is strengthened. It is the major production base in this country. Very few of the new channels and new outlets of recorded performances in fact generate much new work from the point of view of the actors and other performers I represent. It is the BBC which is at the core of that process. I do think it can, does, should and will produce the kind of programmes which will still attract very, very significant audiences. Q352 Chairman: Could I just follow up Derek's question. We have two public service broadcasting organisations in this country - one is the BBC and the other is Channel4. Channel4 was created by statute; it operates under statute; and it operates, indeed, under a statutory remit. Although there is, from time to time, talk of privatising Channel4 (which I personally would be very strongly against) nobody talks about ending Channel4. The BBC, on the other hand, is subject to periodic review because of the approaching expiry of the Charter. As Derek has pointed out, last time, on the recommendation of the National Heritage Committee, the Charter period was cut down from 15 years to ten years. Would there not be an argument to say that the BBC should not have a Charter - the concept of which is, after all, 77 years old - but it should be reconstituted under statute and just be there as a given under statute? Mr Bolton: I think that is an argument, as Ian has said, that we would be open to persuasion on. Our starting point in looking at your terms of reference and the questions you might ask was to ask ourselves what damage the Charter has done in terms of the BBC and in terms of its history. Has it been a stabilising influence? We think that it has, in the main, been a stabilising influence. We have not yet heard any convincing arguments for moving away from the Charter and what the implications of that would be. Q353 Derek Wyatt: Let me give you a suggestion. Five of us were at the Edinburgh Television Festival where we heard Mark Thompson's speech about the future of the BBC. It seems to me that we are in this loving period where they are being jolly good. The Governors are going to behave and be independent. They are all going to be jolly and do decent programmes. Panorama is going to have more money. There are going to be more documentaries. Gosh! Wow! Why? Because they are coming up for Charter renewal; but as soon as Charter renewal is done it is done and that is it, and they will not do anything for ten more years. If they were under more pressure, like a department, and every three years they had to come back and say, "Listen, we said to you we wanted more documentaries. Where are they?" then there is more leverage for us, on behalf of our citizens, to say, "You haven't delivered". A Charter is just for them but it is not for us. Mr Bolton: Is there anything in the Charter itself that compels the BBC to make those types of programmes? The Charter is an enabling piece of legislation that would allow the BBC Board of Governors to exist and to hive off most of its activities to outside bodies. I do not think the Charter itself requires the BBC to make any particular type of programme at all, does it? Q354 Chairman: That is the point, is it not? The Communications Act has got a very clear and specific remit for Channel4. It is the only broadcasting organisation in this country which has a statutory remit to which it has to conform. The distinctive identity of Channel4 under different chief executives stems from its statutory remit. All we have got for the BBC (which of course has a much wider catchment area) is the assumption that it will provide public service broadcasting. Mr Grade himself took up a theme first voiced in this Committee, namely that the only definition of "public service broadcasting" (except for that mumbo-jumbo that suddenly appeared in the last Communications Act) is that public service broadcasting is whatever the BBC broadcasts. Mr McGarry: The Chairman of the Content Board of Ofcom said to us not long ago, when asked how to define "public service broadcasting", that he could not think of any better example in the world than BBC radio as providing a public broadcasting service to this country in terms of the range and quality of programmes which it does. He said to us very openly and publicly he would cite that as the best example of public service broadcasting that there is. Q355 Chairman: By "BBC" you mean Radio 3? Mr McGarry: I mean radio altogether - the BBC's radio services. Q356 Chairman: I was in Canada last month and I listened to CBC2 and I thought it was at least as good as Radio 3. Mr McGarry: I know for a fact there is no other broadcasting authority in the world that produces the range, quality and depth of drama production, for example, that BBC radio does. Nowhere in the world is that the case. I personally think that is worth the licence fee in itself. Mr Bolton: On an international basis, they look at the BBC's output with envy, and look at it as being a driver in terms of excellence for the rest of the broadcasting market. Mr McGarry: Chairman, can you assume we are sitting here as uncritical supporters of the BBC. We have fairly long-established relationships with the BBC, which have sometimes become quite difficult, but we do believe that the BBC is essential to the future of broadcasting in this country, and we do think it needs a degree of stability. I was not sure whether you were asking if the Charter was the best way, or otherwise, of securing that; or whether it is the length of the Charter, or whatever replaces it, which is the issue before you. It does, I think, take a long time to build up and develop the kind of programmes the BBC does produce. I think a degree of stability at least is a strong argument for not changing a system that does work. I think the point that the BBC does now seem very ready to approach its own internal reviews - and maybe that is because there is a review there - I do not personally think it is likely that the BBC will depart from the conclusions of those internal reviews the moment it has got its Charter review. Mr Dear: I think it would also be unusual if the BBC were not to be particularly friendly at this point coming up to Charter review; after all, most governments, coming up to an election, also like to show their benevolence towards the electorate. In terms of the question you are asking, partly it is about the flexibility around technological change and if there is going to be a ten-year or 15-year Charter and does that mean the BBC is not going to be able to adapt to what are going to be massive changes in the industry? I do not think that is the case. They have always been able to adapt within the current Charter. They also need, to some extent, to be able to plan for these things. You cannot run an organisation (all the ones you mentioned, really) on the basis that you cannot make long-term decisions about technological change and being able to deliver on technological change. I think the importance from our point of view is that there is proper scrutiny both by Parliament and by citizens, through whatever mechanisms those are and through the governors: whether that is through a Charter, statute or whatever is less an issue than that there is proper scrutiny of what the BBC does and that it is held to account for what it says it is going to do, and for what Parliament and the people want it to do. Chairman: In your two minutes, Mr Dear, you have raised about 15 questions! Q357 Derek Wyatt: Over the last ten years viewing audiences have gone down for the BBC and they are going to go down further - it is inevitable given the way in which we receive entertainment that it will not be above 20 per cent by the end of the decade but probably be 15 per cent by 2012 or 2014 - yet you in your evidence want us to continue to give the licence fee and RPI+1. Why? Why should viewers have to pay more for less? Mr McGarry: Because it is in the public interest that they should because by so doing they provide a firm dependable source of finance which enables the BBC to invest in programme production and programme making in a way which is in everybody's interests. Q358 Derek Wyatt: Even if people are not convinced it is worth doing? Mr McGarry: I am not sure I accept your view that there is an inevitable straight line decline in audiences of the BBC, because there has not been so far. Q359 Derek Wyatt: Look at the facts. Mr McGarry: I think we would accept there is likely to be some decline as audiences fragment; but I still think it is important for the cultural life of this country, as well as the ecology of broadcasting, to have those millions of pounds that come in through licence fee payments to fund what is, after all, the biggest and most successful production based television in this country. Q360 Michael Fabricant: I have to confess, listening to what I heard just now, you seem to be more concerned with the welfare of your members, which I suppose you are paid for, rather than the welfare of the licence payer who actually watches and views radio and television. I wonder if I may just concentrate on the NUJ, and if anybody else wants to come in then please do so. I am asking you these questions on the basis that I very much support the BBC and want to see it continue and go from strength to strength. Yet the NUJ seem to be arguing against any change at all. One of the areas that came up in the Communications Act, when it was a bill going through Parliament, was the question of how much time should be made available to independent producers. I argued on the bill, for example, that radio producers should be guaranteed a particular percentage; yet the NUJ are saying there should not be any independent production at all. Why? Mr Dear: Looking at the submission it says independents to continue to provide programming. I am not sure we do not think independents should provide programming either for television or radio. Certainly we think the value of the BBC's in-house production and the economies of scale it can bring and the immense wealth of experience and expertise that it has is a tremendous benefit to the country and to the broadcasting ecology as a whole. That is why we support the BBC maintaining that. I am not rigid on 25 per cent, 26 per cent or 24 per cent, whatever it might be, in terms of productions. I do think that the BBC has to have its own strong in-house production base in order to allow it to make the kind of programmes we think are necessary to deliver on public service broadcasting. Q361 Michael Fabricant: The NUJ also argue that the commercial activities of the BBC should not be sold off. Although there is a large turnover, with the sale of BBC programmes overseas and various other commercial ventures they get into, the actual net profit and contribution towards programming is actually very small and leads the BBC into whole areas of controversy about whether it is competing fairly or not with commercial companies who are not funded by the licence fee. Why do you oppose any change to that at all? Mr Dear: Again, whether we oppose any change, I think I support what the BBC have done in terms of talking about a public value test about any of its activities, whether they are public service ones or whether they are commercial activities. The commercial activity is around £160 million which is additional to the licence fee money, a very small amount. I think 95 per cent comes directly from the licence fee; something like 3 per cent from the subsidy to the over 75s; and the rest from its commercial activity. So a small amount, but important money that can be reinvested in public service broadcasting in the industry and in programming. I would hate to see that that would be thrown out on a point of principle, without applying this public value test to any of its commercial activities, or indeed any of its other activities at all. Q362 Michael Fabricant: Finally, the BBC, as you know, are toying with the idea of providing ultra local news programming, community news programming, in up to 60 different cities. While I can see that might well lead to more employment of journalists it reminds me rather of the early days of BBC local radio with which I was involved, which started off as BBC Radio Brighton but no longer exists any more because it became BBC Radio Sussex, and that became South Coast Radio based in Guildford, which is nowhere near Brighton. The BBC has moved away from that and now they seem to be moving back again. I would like your comments on that and how that would relate to independent community broadcasters, who are trying to do much the same thing. Will that not take resources away from national news and international news coverage, for which the BBC is so recognised as being a first-rate performer? Mr Dear: We certainly hope that it will not take resources away from national and international news. That, of course, depends on the level of resources the BBC is given as to whether or not they are able to carry out properly resourced the 60, or however many, ultra local news services. We are certainly very supportive of the idea, but I do think they have to be properly resourced, and they have to maintain the standards for which the BBC is known. It should not just be one person with a microphone. They have to be proper news services if they are going to be done. That, of course, is a question of resources; and that would depend on whatever the final settlement is in terms of BBC funding for the future. In principle highly supportive of that, especially at a time when the ITV network is busy pulling out with a 12 per cent reduction in regional output in 2002-3. I think it is very important there is good quality local news for people to make informed decisions about what is happening in their local area. Q363 Mr Hawkins: I have one general question and then one specific one about one of the submissions BECTU have made to us. The general question: there has, I think, been a fairly widely held perception that the BBC has made a number of very expensive mistakes in relation to its digital services. While recognising you all have responsibilities towards your members, would you accept there is a public perception that some of the financial decision-making in relation to digital services, on-line services, has been pretty disastrous in the BBC's recent history? Mr McGarry: They have done a bit better than ITV, as a starting point. Q364 Mr Hawkins: Our inquiry is into the BBC, because we are talking about licence fee payers' money. Suggesting that somebody else has done worse is not a defence of the BBC? Mr McGarry: No, and I am sure you will be putting these questions to the BBC directly. We would not be in a position to defend every decision they have made. I think many of the decisions they have made have been under pressure from government and what they perceive the government's ambitions to be in this area and have sometimes been over-influenced by that and invested slightly mistakenly in some of those areas. Q365 Mr Hawkins: You do not think there was perhaps a danger, rather than being subject to government influence, that it was a desire to wish to be up with the latest technology, to be perceived to be the leaders, which caused people to plunge so disastrously an awful lot of licence fee payers' money? Mr McGarry: I would not accept your description of it, but I think there is an element of that. Yes, I think the BBC has wanted to be at the forefront of those developments, because I think it sees that as being compatible to its other main function of providing the main terrestrial network channels. I think it is probably right to be there. As for individual decisions, I could not argue about those. I think it is a very difficult area in which to make judgments - not knowing how people are going to want to adapt their watching and viewing and having to experiment to a degree. I think it is very difficult to predict how audiences will respond to different levels of services. Therefore investment is a bit risky but at least the BBC has been in a position to invest and has in fact taken on a leadership position in most of those new technological developments. Mr Dear: I think it has also had tremendous successes. BBC News On-Line is the recognised world lead as an on-line news services. We are always more than happy to admit that it makes mistakes in deciding to fund some things over others; and we will frequently have arguments to say, "More resources should be put in here and less in there". There will be mistakes made on those but, on the whole, it has been a valuable addition to its public service broadcasting role especially in terms of promoting things like media, literacy, on-line learning, language learning and all those kinds of things. BBC News On-Line has been one of the real success stories of the last ten years of the Charter for the BBC. Q366 Mr Hawkins: Can I turn now to my specific question on BECTU. If we have interpreted correctly your submission to us on this, as part of the opposition to any idea that the BBC could be funded from advertising, you are saying, "Nor, incidentally, does advertising ever provide free' television to viewers, since the cost of TV commercials adds an estimated 11 per cent to 13 per cent [you say] to average household bills". I was fascinated to find out a little more about how you come to that conclusion. Mr Bolton: By using the tools available to everybody: looking at companies' expenditure on advertising; how much of that is on television advertising and what percentage of a product price that makes up. You get to a figure by doing that. I do not think there is huge disagreement about the figure we have used. I think the people involved in research would tend to agree with that kind of figure. In the more general sense, in terms of the BBC gaining funding from advertising, not only would that have an adverse effect on the BBC but it would probably have a disastrous effect on the rest of the broadcasting economy which is in some degree of trouble in this country already. Q367 Mr Hawkins: Is not the contrary argument to your interpretation of fees to say that companies are going to advertise anyway, and they will use whatever media are available to advertise. If you suddenly did not have any television advertising at all, companies would still want to advertise. Because companies are going to advertise anyway, I do not think most members of the public would think, "I am paying 11-13 per cent more on my household bills because companies want to advertise on television". It may be an argument you feel helps your cause against advertising, but I do not think it is one which would really be accepted by the general public? Mr Bolton: Let me put it in a slightly different way and that is: it is clear from our submission we support the BBC as being the cornerstone of public service broadcasting. If there has been a debate about what public service broadcasting is, if that has been a pan-European debate, one of the areas with the greatest question mark over it is the status of those broadcasters in Europe that had mix funding, some from licence fees and some from advertising. That is where the competition becomes really difficult. Are they competing fairly with the rest of the market? Generally speaking the answer to that has been, "No". I think the BBC, taking advertising, when place the BBC in a position of very great danger. Q368 Mr Hawkins: One final, very short question. One point which is often made to me by constituents is that effectively the BBC is now the same as every other broadcaster because there are advertising breaks, it is just their advertising breaks are advertising their own programmes. What do you say to that? Mr Bolton: It is reinforcing a brand which all of the broadcasters do. I do not think there is anything wrong with that. There is a very strong brand in terms of what it does. People recognise it is promoting its own programmes. I see nothing wrong with that. Mr McGarry: The specific point that BECTU made about advertising - it does not seem to appear in our other submissions - we are all one in relation to the general view of not thinking it would be possible for the BBC to be in whole or part funded by advertising. There seems to be a general consensus that that is the situation. What we do have in this country is a very successful mixed economy of broadcasting. We have a private sector, commercially funded sector and we have a publicly funded sector. It is rather strange that almost uniquely that public funded sector is in fact being criticised because it is successful. From our point of view, we ought to be congratulating, welcoming and celebrating the fact that the public funded sector of the broadcasting industry in this country is, in fact, as successful as it has been. Q369 Chairman: Without taking any sides on that, I repeat that Channel 4 is a public sector publicly owned television organisation which is funded by advertising. Mr McGarry: And would suffer dramatically if the BBC were to compete for its advertising revenue. Chairman: So that is self-interest and nothing to do with principle. Q370 Rosemary McKenna: During our inquiry we looked at how television, not will be delivered in the future, will be received in the future. One of the things which is very clear is that there will be much more recording of programmes by various mechanisms modern technology allows people to have - TiVo and various different ways they can record, select and decide how they are going to view. It has been suggested to us that advertising will be of much less significance in the future because people will be able to cut out the adverts from the programmes they record. They will want to watch a film all the way through, will not want to watch the adverts and will be able to do that. They will be able to record concerts from commercial radio and all sorts of things without the advertising. Advertising will have to be delivered in a different way which means, I suppose, in one way the BBC are ahead of the game because they do not have that problem. Taking on board this is going to be happening over the next ten years, and there is no doubt about that because people will be viewing television in a different way, what would your view be on that basis for continuation of the Charter and the licence over five, ten years or whatever? It is a different angle from the questions you have been asked before. Mr McGarry: It may well be there will be a decline in the traditional source of television advertising as we have known it over the last few decades. We should not be presented as being against advertising on television. That is not a position of principle or anything else that we take. A lot of our members work in the creation of television commercials and, therefore, they have an interest in that. There may be a decline in that form of advertising and, consequently, the source of income that comes from it. As I said earlier on, it seems to me that in all these changes it is all the more important that the BBC should be there firmly funded by the licence fee so that it is in a position to provide the ranges and qualities of programmes others could aspire to. It puts an even greater pressure on a secure future for the BBC. Mr Bolton: If we have a concern it is not just about the BBC within that context. If you look at the date when they have analogue switch-off and the whole thing is delivered in a digital manner, there is a really serious concern that the business model which underpins ITV at that moment in time collapses. I do not know - and I do not know if anybody in ITV knows - what the answer to that is yet, and that places a great number of our members who work for those companies and their employment in great peril. I think that matter has been given urgent thought and urgent consideration. It would be facetious of me to say we have an answer to that particular problem at this moment in time. Mr Dear: If the BBC were to have advertising it would change its mix of programming very definitely - would have to. If advertising across the board were to decline and you had to look at another source of funding, the only other potential is something like subscription pay TV funding, which of course then takes out the universality and accessibility for all people to be able to access those services. It could mean the commercial sector could lose 35 per cent of its advertising revenue, and that would be 35 per cent loss to programme-making and content, so I do not see either advertising or subscription as attractive alternatives to the licence fee. Q371 Rosemary McKenna: Given that scenario where people will watch in different ways and it will be much more difficult to measure, do you believe that the audience share should be significant in the future? I believe that the BBC should be funded to produce programmes that are a benchmark for broadcasting throughout the world. Do you agree that basing it all on audience share is false premise, because it will be difficult in the future to measure audience share? Is that the most important thing the BBC's future should be based on? Mr Dear: I do not believe it was set up on the basis that it had to have a certain level of audience share. It was set up to educate, entertain and inform and it still needs to do those things. The rest of the media are very critical of it. If it produces a programme that is brilliant but nobody watches we slam it. If it produces a programme people think has been dumbed down but millions of people watch it then we slam it for dumbing down. It has to be able to mix those two things to be able to cater right across the board. I do not think that audience share, therefore, can be the only factor you look at. It has to sometimes be taken into account. If nobody is watching a programme there could be no point in making it. I think reach is much more of an accessibility and all these things are much more important than audience share for the BBC if it is to truly stick to its public service values. Q372 Mr Doran: Looking at your evidence collectively, if you views were accepted there would not be any great change in the structures of the BBC, just a little tinkering here and a little bit there. I am interested in particular because I think you are the experts in this and the people in broadcasting. One of the things we are seeing, and my colleagues have mentioned this in their questioning, are very substantial changes in the landscape of broadcasting, certainly since the last Charter review, and extremely substantial changes in the technology. We have been looking at the technology, and one of the things which appears to be coming clear to me is that things are going to change very substantially over the next few years, certainly within the life of this particular review. I wonder whether the status quo really is an option? Mr Bolton: I am slightly uncomfortable being portrayed as being in a position where the three unions sitting at this table here are defending the status quo. I have been dealing with the BBC one way or another for the best part of 30 years - 20 of them as a trade union official and ten as an employee - and it has been my experience that unless you are willing to accept that the BBC is at the cutting edge of technological change, and unless that is accommodated and negotiated through, the BBC will fade away and die. It is part of what we do. It is part of what we are. In trying to help the BBC negotiate through the staffing difficulties that arise from the technological change, when I first had anything to do with the BBC 20 or 30 years ago 95 per cent of its staff were permanently employed, and today approximately 50 per cent are. In terms of ENG(?) being the first country in Europe to actually negotiate and have electronic news gathering, we are not Luddite in our approach to the BBC, but I see the Charter as being a facility to allow the BBC to change to actually deal with the technological change that is coming along. Mr Dear: And should be driving it. Driving the digital take-up are things the BBC can do. One statistic: the majority of training in technological change and adapting to technological change is carried out by the BBC. 38,000 training days a year are given over by the BBC, more than the whole of the rest of the industry put together, and that is people taking up, understanding and learning the new technologies very often they are going to have to work on. It has a good record in that - something we pushed it very hard to do, and we are pleased that it does. We wished the others would do more to keep up with it, to be honest. Q373 Mr Doran: Let me take it forward a little. Some of the evidence we are hearing is pointing in the direction of quite substantial changes, for example, in the way in which consumers want to control the product they receive. We know about TiVo and various other technological developments. One recent fact-finding was that we were presented with a scenario by one very influential individual who suggested that what we may be seeing is a slow deterioration and decline in normal terrestrial broadcasting, to the point where terrestrial broadcasting - digital or analogue- could become a fairly low end niche market, where advertising would not provide the income it does at the moment, for example, for commercial broadcasters. In a scenario like that it was speculated that the people who would win were the content producers - which puts the BBC in a very strong position - as compared with, for example, my local television company which produces a very small amount of its own broadcast. That must mean substantial changes for the staff. I think most of them would be positive, but I am interested to hear how you are preparing for that if you accept that sort of scenario, and what it will mean for the people inside broadcasting? Mr McGarry: I am not sure we would accept that scenario or the timescale in which it has been advanced, but it is a question which needs to be addressed. I do believe all three of us sitting here can say very honestly and genuinely that we have led the people we represent in a process of reform and change and the acceptance of change. If you just think, for example, in relation to the rights which actors and others in Equity enjoy in the programme material, we have adapted and extended those to cover all the new areas and the new technologies. I think essentially the point you are making is the best argument I have yet heard, with respect, for the future continuation of the BBC funded as it is. It is the only guaranteed way of securing the production base; which I think is absolutely essential, not only from the point of view of training but, indeed, having all of the abilities to make programmes over a whole range and quality one wants to expect in an otherwise uncertain area of commercial activity and investment in television production. We do need that investment from the licence fee into the production base because otherwise it will disappear. Mr Bolton: It is probably no accident that the National Training Organisation, the Sector Skills Council for the audiovisual industry, where the BBC has a huge influence, is seen as a trailblazer in terms of training in this country and is leading the way in trying to define the needs of the employees over the next five to ten years. Q374 Mr Doran: If the scenario I present is accurate or even close to accurate, what you could see is a very distorted market where you have a preserved megalithic BBC and a very much fractured market everywhere else, surrounded by very, very small companies. Mr McGarry: The answer to that scenario does not seem to me to in any way damage the BBC. Q375 Mr Doran: Except it is a very distorted market. Mr McGarry: Rather that than no production base at all, surely? Who else is going to make programmes? Most of the new channels exploiting the technologies, as far as my members are concerned, are not really investing much in programming production at all. Largely the BBC, to a lesser extent ITV, and to an even lesser extent Channel4 are investing in that programme production. The BBC is absolutely key to it. Whereas if you look at what Sky is producing in terms of originated drama that would be challenging to audiences in this country, you would have to look long and hard to find any. Q376 Alan Keen: I am not discounting what you are going to tell us, if anything, but we are going to interview and talk to young people, because when we are talking to you and most of the people we have as witnesses here it is the people who have been brought up on the BBC over the years and are used to being presented with a schedule. When we went to the States we were told by two people, and one particular person was not putting an argument but was he was absolutely dogmatic that people will not be presented with schedules of programmes, or if they are they will not take any notice of them. We have already seen a decline in individual channels viewing numbers, obviously because there is more choice. If this comes along, where the future viewers and listeners have no interest in being presented with a schedule of programmes - and this is one of the strengths of the BBC, and I am a strong supporter, and it has been mentioned a number of times by your panel this morning - presenting a whole variety, some of which would be definitely defined as public broadcasting and others as wonderful entertainment and mixed up with education, if in fact all the public want to do is draw down from whatever programme they want to watch, what future is there for the BBC if nobody wants to be presented with a schedule? It is not easy for you to respond to but it is something we have to face. Mr Dear: I think that is a tremendously existing future for the BBC, rather than a negative one. If you take the Olympics, even with digital TV you press the red button and you can decide not to watch the 4 x 100 metres but you can watch the world record attempt at pole vault or the long jump. The ability for people to demand what it is they want to see and when they want to see it of course is going to increase through technology, but think of the tremendous archive that the BBC has in terms of people being able to demand that kind of stuff. There also has to be a certain point where you have watched everything there is to watch you want to watch and people have to make new and original programmes and original content, and that is where the BBC really comes into it strength. Pay TV only reinvests three per cent into original production; the BBC reinvests the vast majority back into its own production and into other productions. I see it as an exciting future for the BBC where it has to compete on the basis of the best content. From all our points of view that is what we want - strong content that people want to watch. When they watch it and how they watch it will be up to them, but you still have to have the content that people want to be able to watch. Q377 Ms Shipley: Part of the BBC's unique selling point is listening to discussions through public service broadcasting and it comes back to that time and time again. I think it would be very helpful to have on record what each of you defines as "public service broadcasting" because it does seem to be something of a moveable feast from time to time. Mr McGarry: The easiest answer is to say that you know it when you see it. Q378 Ms Shipley: That is not a definition. Mr McGarry: I know. I think it is a system of broadcasting which provides for the totality of the available audience a range and series of programmes of quality which do fulfil what Jeremy was quoting earlier, to educate, inform and entertain. I do not think you can say there is any one programme - and I was asked last time I came to your committee, "Did any particular programme qualify as public service broadcasting?" - I think you have to look at the service as a whole and see the balance of it and the range of choice of programmes that are delivered because there is an audience for them, and not necessarily driven by the size of audience. I think the broadcaster, to qualify as a public service broadcaster, must fulfil that remit. Q379 Ms Shipley: How is it a public service to entertain? Mr McGarry: I believe it is. If you asked anybody ----- Q380 Ms Shipley: I know that you believe it because you have stated you believe it, but how is it? Mr McGarry: I believe the majority of people in this country look upon the provision of entertainment in its broadest sense - if one can define it. We are not talking here just about comedy and light entertainment, we are talking about entertainment which can be serious drama or the range of programme provision. I think the majority of people in this country do believe that that is a service they are getting in return for paying their licence fee. I do think that is what the majority of people believe. Mr Bolton: Firstly, I would not disagree with anything that Ian has said, so what I say will be relatively brief in adding to it. The BBC is not just a broadcaster, it is a cultural institution in this country that reflects in terms of what people see and hear and the life of this country, and helps the country feel at ease with itself. I think that is a public service responsibility. It makes a contribution to the democratic process in this country. When, in times of crisis, people want to know what is happening and want to go somewhere that is reliable and feel they are going to be properly informed they go to the BBC. That is public service. They are the only two things I would add to what my colleague has said. Mr Dear: In one of our early submission we put a five point definition about accessibility: access to all to a range of high quality programmes; impartial news; broadcasting free from political and commercial pressure; broadcasting that caters for all sections of the community; and broadcasting that is owned by the public and accountable to the public. Within that different programmes will fulfil different remits. I think you can have entertainment programmes that also educate and inform. What would you say East Enders is? Some people will say that is public service broadcasting. Some people will say it is not. It serves sometimes to educate and sometimes to frustrate, but it can have a public service role; it will depend on how that is defined. If you have a broad definition of programmes along the lines of what I have put out ----- Q381 Ms Shipley: I think what Mr Bolton says, the bit where you say you are unique, I thought that was an extremely powerful and important piece of public service broadcasting and unique for the BBC. What I was asking for was a unique selling point and not what could anybody do. What worries me about what you said, Mr McGarry and Mr Dear, is that actually any and all of the other broadcasters could do that, should they choose to and one might argue they would not but they could; whereas the unique selling point of the BBC is extremely important. Mr McGarry: I do not disagree with that statement rather than question. Mr Dear: The fact is that there is a whole range of programmes that fit in with how I have defined it, that the BBC would do what no other commercial broadcaster would do, because they would not be commercially viable programmes for them to be able to produce. Mr McGarry: I do not see anybody competing with the BBC to broadcast the Proms. Q382 Ms Shipley: I have a statement - that the BBC has to have its unique quality. What worries me is that parts of what you just said in answer to "What is its unique selling point?" have not been unique. Where it has been unique it has been very, very strong. Where it has not been unique it gets weaker. Mr McGarry: Yes, I tend to agree. I think the BBC has to do what it says on the can, which is produce the kinds of programmes of quality and depth and challenging nature that others will not do. I think it can do that in the context of broadcasting a whole range of programme material, but central to its role must be that - to do things that others are not doing. Chairman: Thank you very much, gentlemen, much appreciated. Memoranda submitted by Creators' Rights Alliance and Music Business Forum Examination of Witnesses
Witnesses: Mr David Ferguson, Chairman and Mr Jim Whiteford, Chief Executive Officer Directors Guild of Great Britain, Creators' Rights Alliance, Mr Chris Green, Chief Executive of British Academy of Composers & Songwriters and Mr John F Smith, General Secretary of The Musicians' Union, examined. Chairman: Gentlemen, welcome here today. I will ask Alan Keen to start the questioning. Q383 Alan Keen: I asked the last panel about the certainty that one or two individuals in the States had that there would be no place for schedules and, in that case, where would the BBC be. You are representing creative people, if those changes come about do you disagree with that altogether? We will know better when we talk to young people and how they want to watch TV. How it was put to us was that young people will no longer have any interest in sitting in front of the television being presented with a variety of programmes, and they will want to go in and pull down a piece of music for five minutes and then disappear somewhere else. Have you had a chance to think about this and how it would affect you as creative people? Mr Smith: As far as music goes we are experiencing that with music on the Internet already. They can actually pull down the song they want, the track they want, and the record companies are still producing albums with songs they do not want. I think we have got to come to terms with that. As far as music on the BBC is concerned, we are not there yet, are we? It is available on-line and lots of music is available. There is an immense amount of music on the BBC. I do not see why music as a product cannot adapt to that. It is up to the inventiveness of broadcasters and technical people to make that available. There should not be any reason for schedules, but maybe there should be genres which are available. Mr Ferguson: What you will also notice is that if you look across the digital span the vast amount of the content that is actually up on the other digital channels was originated by the BBC. If you look at the satellite broadcasters it is either made by the BBC or it is imported from America, and what becomes important in this context is the BBC's production base, and the fact that it is able to distribute its work through a variety of different medias in the future, and the schedules, I agree, will not become terribly important. But that does not diminish the importance of the BBC as the prime producer of programming in the first place. Mr Green: There is just one thing I would like to add which is, again, thinking particularly of music but this could apply more generally, greater opportunity for people to access what they want also provides greater opportunity for minority areas of creativity to have an opportunity to be exposed, to be seen, to be understood, to be appreciated and to be shared, and at the moment there is a tendency obviously for the more popular areas of creativity to squeeze out the minority ones. So it does provide a very important base for a wider and more diverse availability of all our art forms. Q384 Alan Keen: It may or may not make the BBC more important because there is at least two or three billion pounds which someone who has the duty of providing a whole range of everything from education to out and out entertainment will spend in the creative industries, so would you agree with me we are feeling our way through this, and it was a bit of a shock to have somebody tell us that nobody in the future will want to sit and be presented with a variety of programmes ‑‑ what I call the fear effect of TV? Would you agree with me that maybe it makes the BBC more important; that at least that amount of money is going to be spent in a broad sense with education part of it? Mr Ferguson: It also has a huge importance in terms of how the BBC is able to do more than just produce the programme. I happened to see an example of this on Friday night where my son decided to watch a documentary on BBC about the Battle of Naseby, and immediately afterwards he was on the internet looking at the history page, checking through the whole thing to do with it afterwards. This is a classic of example of something where the BBC is the only real player capable of delivering this sort of service and it is because he happened to be absolutely fascinated in that particular battle. Whether he would have done it with another programme does not matter but the BBC offers this and nobody else offers anything parallel to this. Alan Keen: I will not push this but it is something we need to think about all together. Q385 Rosemary McKenna: We were all quite fascinated by the evidence we got about how things are going to change in the future. It was very clear that things are going to change, and I think you made reference, Mr Smith, to the fact that the broadcasters and the providers have to find ways of using new technology. It reminded me about the discussions that were had during the passage of the Communications Bill and the pressure that the music industry were putting on to make sure that local music was on the face of the Bill, not just local news. Has that had an impact, or is BBC still the main provider of local music? Mr Smith: It will have an impact, we hope. We are talking to Ofcom about it at the moment. It has not really had an impact yet. We were very pleased when it was on the face of the Bill and it is a test of local music. We are disappointed. We are supportive of the BBC but there are areas where we want the BBC to improve and that is one area you have just hit upon ‑‑ and I am talking from the music sector now. Music coverage on local radio we think is a bit lacking on the BBC services, and we believe there has been some market research which shows that people in various localities want to listen to local music, and we think there are ways of doing that. We are talking to the BBC as well, and hopefully we can help. But yes, it is an exiting opportunity which has not been delivered yet by the commercial sector or by the BBC. Mr Green: I think another issue here, and I entirely agree with John and we do not think the BBC is doing all it could be doing on that front, is that there is also sometimes within the BBC a strange lack of communication between what happens in local radio and on national stations, and there is a fantastic opportunity where interesting new music is found locally for it to be shared with a wider audience, and that is something that the BBC certainly should be leading on, and I hope it will. Mr Ferguson: We have been in the process of trying to set up a branch of the Academy of Composers and Songwriters in Scotland and one of the things we were really struck with on several visits to Scotland is how important everybody there we talked to regarded BBC Scotland. Particularly in this context given that the STV television franchise is becoming such a marginalised player in the face of the amalgamation of Carlton and Granada, and it is finding it increasingly difficult to make programming that goes out nationally across the United Kingdom, the importance of BBC Scotland as a player in this became even more important. Q386 Rosemary McKenna: That is something we are very concerned about, although it is not specific to this inquiry but it is an issue. Can I ask about another issue? The music industry seemed to get itself tied up in knots on the issue of pirating. There is a very good line here suggesting that rather than resorting to traditional copyright protection models, should it not be i‑Pods rather than injunctions? Mr Smith: Maybe that is right! Everything moves so fast and the record industry was still looking at its old business models and the way that consumer taste was, and consumer taste changed very quickly. I mentioned earlier on that people did not want to buy albums with things, they only wanted one song, or two or three songs perhaps, of that particular artist. The record industry has changed; it is looking at digital rights management methods of protecting its copyrighted material. It is a risk because with new technology there is always a high school person in California that can hack into it straight away. Q387 Rosemary McKenna: What I mean is that people will want to download and are quite happy to pay for proper downloading of good quality music, and it seems to me that there is a real opportunity there because a lot of the pirated stuff is not high quality, and people will be willing to pay for it. Mr Smith: It is being developed now and Apple are leading the way with that, and we are very pleased about that development. Q388 Derek Wyatt: It seems to me that the next big area is digital rights management, and in a sense music has kicked it off but the BBC has this phenomenal archive and it is going to shortly put the natural history three minute clips on. What problems do you see in digital rights management for your own bits of business that you are in charge of? What makes you apprehensive or nervous about the developments for digital rights management? Mr Smith: Lots of things! On the creative archive that you have mentioned, speaking for my own personal organisation, the Musicians' Union, we have talked to the BBC and we are told that the onus is on them to protect the rights. We will co‑operate; in natural history programmes there is lots of music involved; we understand why the BBC wants to do this and we will not stand in their way but, if anything goes wrong, it is the BBC's responsibility to make sure our members' rights are protected. Now that is easily said and we will see what happens, but the BBC seem confident that they can protect their own rights, although I do believe The Office is available on CASA at the moment to be downloaded illicitly. Q389 Derek Wyatt: But is one of the issues, though, and this has been hinted at by others round the table, if digital rights management is a key factor in future rights, that the BBC, having maybe decided to sell BBC Worldwide, will then tell the independents that are pre creating programmes, "I am awfully sorry but instead of buying the rights off you for two hits or for two hits and a repeat, in order to make BBC Worldwide stand up commercially for a sale we will want rights for the next 15 years", and the independent sector will have no leverage whatsoever on product they have created? Mr Ferguson: The code of conduct which has been negotiated between the BBC and PACT(?) obviates that, and that is not going to be the case. I think the case is going to be whether or not the independents do decide to do their marketing of their secondary usages through an organisation like BBC Worldwide or not and, indeed, as far as I am aware, there is some discussion between BBC Worldwide and ITV on joint marketing ventures into foreign territories. I think the most important thing with digital rights management in the context, and the implication behind this is much more to do with television it seems to me than with radio, the way we are coming at this, is that we strongly welcome the archive being made available to the British public. The British public have paid for it; they certainly should have access to it. What I do think the BBC have to be very careful about in doing is not making this archive freely available around the world because it is the property of the BBC and the BBC should be making a return on that intellectual property in order to fund its own activities as well as to remunerate the people who contributed to making that archive in the first place. So what the BBC have to be careful to do, and which Apple certainly seem to be able to do with i‑Tunes, is to make sure that the archive is available free to the British public and if people from overseas wish to access it they pay for it, and if Apple can do this, if the newly launched Sony Connect can do this and various other download sites can do this, I see no reason why the BBC cannot do this. Q390 Derek Wyatt: Let me just push that digital rights idea. We have the greatest library in the world in the British Library; it failed to raise £150 million in a joint venture PFI bid to digitise its archive, which is a huge shame because the Smithsonian has now taken a quantum leap against it. The whole thing about digital rights is that we, as the creator of the language, as the owner of the longest legacy of language and English, have a phenomenal chance in the next eighteen months to win this system, but it is not just the BBC stuff we want; we would like the Lowry ‑‑ we would like whatever we have in our own museums and art galleries, we would like a collective digital rights scheme, but the BBC is not interested in that. Do you think there is a bigger issue? That it may be that the BBC ought to handle it on behalf of the nation because it is a cultural centre? But there is this bigger drive of which the libraries and art galleries and so on are a part which do not seem yet to be in this debate. I know that is not necessarily your own interest but you are citizens as much as we are, and it is a very big discussion because we do not want the Smithsonian to beat us. Mr Ferguson: No, but the Smithsonian funding and the way it operates is very different from any United Kingdom institution. I have to say I think it is unfair to bring this sort of question into what the BBC should or should not do because the BBC at no point has ever been charged with that sort of activity ‑‑ Q391 Derek Wyatt: After all, you could say, if you were creating the BBC today, why would you allow them to have orchestras? Mr Ferguson: Personally I feel that what you are talking about there is something that would be much better run by something set up by DCMS to promote culture as a whole rather than the BBC which has been set up as a disseminator of broadcasting product which it makes, primarily. Q392 Chairman: But it ain't broke, so why fix it? Mr Ferguson: I am not saying it ain't broke. Q393 Chairman: Nor for myself do I think it is a very good idea to have state orchestras. Mr Ferguson: We do not have state orchestras. The BBC has. Q394 Chairman: But if you are saying the DCMS should take over this kind of responsibility from the BBC, whatever else one says about the BBC ‑‑ and there are lots of things that can be said about the BBC ‑‑ one of its huge contributions to the culture of this nation is the range of first rate orchestras which would not exist if the BBC did not exist? Mr Ferguson: I completely support that. What I said about the DCMS is they have responsibility for libraries and archive at the moment and it is them that should be coming forward with policy ideas like that, or people should be proposing it to them, rather than trying to pull the BBC into this which I see certainly as currently constituted operating in a different way. I completely agree with what you say about the BBC and orchestras. Derek Wyatt: World Service radio is sensational and no one disputes that. If we could have that for the whole of the nation, a cultural centre for digital rights ‑‑ not just for the BBC but for the whole of the nation, that is what I really think ‑‑ then I think if the BBC was a 70 per cent shareholder or whatever, or you make it a co‑operative, a trust or charity, whatever, the fact of the matter is we do not want to get behind in this area as we have been. Chairman: Derek, I know you care about this but this is becoming very tangential to BBC Charter review. Derek Wyatt: I will stop there, Chairman! Q395 Mr Hawkins: I have a couple of questions about your views, and I appreciate you all may have different views on this, about digital. Firstly, do you think that the digital switchover will be achieved by 2010? Mr Smith: That is a good question. I am dubious if they can achieve it. It is to do with take‑up. We have spoken to the DCMS about this through the feedback we get as an industry and they are dealing with things like blocks of flats and hotels and they are scratching the surface. The multiple television household really has not been addressed. Even though the set top boxes are now down to about fifty pounds that is quite a lot if you have four televisions in the house, and I think there is going to have to be some impetus to reach that target. It is quite soon. Mr Green: It is the last twenty or ten per cent that is going to be difficult. Mr Ferguson: The BBC is to do with granting access free at the point of delivery to everybody in this country and the BBC has been successful, very successful indeed and could only have done it from the position of the BBC of getting freeview under way and has demonstrated the need for free‑to‑air digital programming, but the BBC itself probably would not want to see analogue switch off if it knew that ten per cent was still foundering, and it is crucial I would have thought that the BBC has to be there to include everybody. That is one of its roles. That is what makes it a public service broadcaster rather than a commercial broadcaster. Q396 Mr Hawkins: Expressing a personal view I am delighted to hear what all three of you have said about that because I share the scepticism, but the second question is should there be at some point in the future digital switchover for radio, and is there any pressing reason why there should be a switchover? Mr Smith: There does not seem to be such a pressing reason. There is plenty of radio available on the analogue spectrum at the moment, plenty of variety, and the digital services ‑ I am not sure what the take-up is or what the figures are but there is certainly not as much publicity about the digital radio services, although in our music industry we are quite keen because of the potential quality that can come out the other end ‑‑ Mr Green: It is still quite expensive too, that is the trouble. You can buy an ordinary radio for five quid off the shelf, and you are spending a lot more money on a digital radio. They do not always work in cars I understand too. Mr Ferguson: I think the take‑up of digital radio will depend much more on whether there is value in freeing the bandwidth that is currently used by ordinary analogue radio which therefore would encourage both broadcasters and manufacturers to make digital radio more available, but I had some statistics given to me the other day. There are over 100 million analogue radio sets owned by people in this country, and if you compare the proportion of that to the amount of digital sets that are available you cannot see analogue switch off being a reality without a massive carrot being held up to encourage everybody to do it, but you may come up with a piece of technology which may be on the i‑Pod scale that has the same effect that the DVD machine seems to have had over the VHS. You can scarcely find VHS machines on sale unless it has happened within a two year period, so somebody may come up with the digital audio receiver that suddenly everybody does go and buy. The other thing is that even though the prices of DAB radios have gone down to fifty pounds, you get given radios in garages that operate on analogue, so it has to get into that zone before it becomes workable, I think. Q397 Chairman: It is an interesting question you raise, Mr Ferguson, about whether analogue switch off is related to radio rather than television, because whereas the manufacturing industry is going pretty fast in terms of digital television, they are very laggardly indeed on digital radio. I heard BOSE radio and I thought the sound was so brilliant that I would like to buy a digital BOSE radio and I rang up the stores that stock them and they said BOSE have absolutely no intention of manufacturing a digital radio because there is no commercial interest in it. Mr Ferguson: But if you get a specific part of the market that becomes very interested in it, I understand, for instance, in the Asian community digital penetration is up to 90 per cent because those people have particularly realised that they have access to media that they particularly want through digital, and I think that is what I mean by the carrot working; that if you are offering something digitally that is not available in an analogue way and it is something you really want and you can get the pricing of the sets down and encourage the manufacturers to be able to mass produce, that is how you get there, but I agree with John Smith's starting point ‑‑ I do not see much movement in this area at the moment. Chairman: Gentlemen, thank you very much. You have provided us with a very interesting perspective on this subject which we shall continue inquiring into for several weeks still. Thank you very much indeed, and I declare the session concluded. |