UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 598-viii
House of COMMONS
MINUTES OF EVIDENCE
TAKEN BEFORE
CULTURE, MEDIA AND SPORT COMMITTEE
BBC CHARTER RENEWAL
Tuesday 19 October 2004
MR MICHAEL GRADE CBE,
MR ANTHONY SALZ, MR RICHARD TAIT,
MR MARK THOMPSON, MR
ASHLEY HIGHFIELD AND MS CAROLINE THOMSON
Evidence heard in Public Questions 465 - 537
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Oral Evidence
Taken before the Culture, Media and Sport Committee
on Tuesday 19 October 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
________________
Memorandum submitted by the British Broadcasting Corporation
Examination of Witnesses
Witnesses: Mr Michael Grade, CBE, Chairman, Mr Anthony Salz, Vice Chairman, Mr Richard Tait, Governor, Mr Mark Thompson, Director General, Mr Ashley Highfield, Director New Media
and Technology, and Ms Caroline Thomson,
Director Policy and Legal, the British Broadcasting Corporation, examined.
Chairman: Welcome to yourself and
your colleagues, Mr Grade. We are
very pleased to see you. My colleagues
are perfectly clear that this is a session about the BBC Charter Review. We had the pleasure of discussing BBC
current operations with you when you came to see us in July. John Thurso.
Q465 John Thurso:
Good morning.
Mr Grade:
Good morning.
Q466 John
Thurso: Can I ask you about governance in the future of the
BBC. I think it is fair to say that
there is general acceptance that there was some failure of governance in the
past and most observers would be of the opinion that some changes are
required. Can I ask you, first of all,
if you accept that and, perhaps making the assumption that you do accept that,
ask you what you would like to see, how you from the BBC would like to see the
governance amended in the future under a new charter?
Mr Grade:
Thank you. Failure is a fairly emotive
word. I would characterise it slightly
differently, perhaps with the same result, but I would say that the governance
of the BBC has not kept pace with the changes and demands of governance in
other parts of business and society generally in the public sector and the
private sector. The fundamental change
that is driving the reforms that the governors are presently implementing
is ‑ I think, the most serious charge against the BBC governance
over the last ten years or so is that it has not been seen to be as
objective as it might be. It is easy to
see why people would accuse the governors of being captured by the management
by making decisions that were less than transparent based on evidence provided
solely by the management, who clearly have a vested interest in the outcome,
and all the reforms that we are implementing are designed to bring in
independent evidential support to enable the governors to make judgments about
what management is proposing.
Q467 John
Thurso: That, it seems to me, is the core of the problem: that the
governors in the past have been required to undertake two slightly conflicting
roles. On the one hand, they are called
champions of the BBC and responsible for promoting it, and, on the other hand,
they have to perform the role of really a regulator in a way and there seems to
be an inherent conflict. There have
been a number of suggestions as to how that could be dealt with, ranging from Ofbeeb
at one end, wholly independent, through, for example, the governors becoming a
body of trustees, quite apart from any link with the management. The reforms that you have referred to do not
envisage going that far. Why do you
think it is better to evolve the current structure than move to a much more
independent framework?
Mr Grade:
First of all, I do not think there is a problem with the governors being the
champions of the BBC. I think the
licence fee payers would expect us to be champions of their service. Where there has been a problem in the past
has been a perception of the governors as the champions of management, which is
an entirely different thing, and that distinction has to run through every
public utterance, every document, and every decision‑making process. That, I think, is a very important
distinction to make. I think we should
be the champions of the BBC. We are there
to represent the public interest and only the public interest. I have looked at this in some considerable
detail, as you would imagine, over the last few months since I have arrived. There are other models of governance; there
have been lot of proposals. What we
must not lose sight of is the fact that the current constitution of the BBC has
been very effective in maintaining the independence of the BBC. The BBC governance of many persuasions over
many, many decades have attempted border raids or excursions across the borders
of thresholds of the BBC, but the constitution and the independence of the
governors has stood the test of time and it is a guarantee. It is not an accident that the BBC remains
today, despite differences with all kinds of governments over many, many yeas
from Suez, the National Strike, you name it, there have been difficulties with
governments of the day, but the constitution has stood up to that very well,
and the independence of the BBC has never been undermined ‑ it is
been challenged but it has never been undermined ‑ and that stems
from the current constitution. That
does not mean to say that the interpretation of the constitution is not in need
of some repair in order to catch up with what everyone's expectations are for means
of governance, and it seems to me not impossible, if there is a consensus at
the end of this important debate, that the reforms we are implementing could
well be sufficient for the purpose; but those reforms might well be codified in
some way so that they do not rely on the present Board of Governors - they
could be codified - and that degree of separation and the introduction of
objectivity and so on could, I think will, serve us well. Other models that you have described there
are really hybrids taken from other circumstances; and the BBC as a corporation
is really of its own kind and other models are not necessarily
appropriate. We are in charge, we are
entrusted with the public's money and with that trust goes the need to ensure
value for money. It also means that the
governors are in a position to be proactive, unlike a retrospective financial
regulator outside. We are in the
entrails of the BBC. We can ensure
outcomes. We can hire and fire my
colleagues here on the left, which I am sure is not news to him, but outside
regulators cannot do that. We can
ensure positive outcomes. We can really
influence from the inside the strategy and the direction of the BBC to meet
what the licence payers are telling us.
Q468 John
Thurso: Finally, Chairman, if I may, you have mentioned the point
that these reforms are internal and therefore could obviously be varied in any
way and that it might be important to see these codified. Do I take it that you would therefore be comfortable
with a new agreement being more specific in terms of corporate governance?
Mr Grade:
I think that the governance of the BBC is the major issue around the Charter of
Renewal debate. We have to manage the
BBC in the future in a way that gives Parliament confidence and gives our
licence fee payers confidence; and they know where the buck stops, and the buck
does stop with the governors of the BBC, it does not stop with anybody in
between. If you have a twin Board
structure, where does the responsibility lie, and so on? The governors can be relied on to manage the
public interest in the BBC without having to balance that public interest with
any other interest whatsoever, other customers or clients of the regulator,
with shareholders' interests, with advertisers' interests and so on. We only exist as a body to represent the
public interest. May I ask my
colleague, Mr Salz, Vice Chair, to come in at this point?
Q469 Chairman:
Yes, of course.
Mr Salz:
I do so as someone who is relatively new to the BBC and whose background is in
the commercial sector and as a lawyer with some experience of corporate
governance from public companies who look to shareholder value, some experience
of regulators more in the financial services sector than in the broad customer
sector, and, as a trustee, some experience of other models in the sense of
trustee organisations, mainly charitable, as a model; and I suppose the point
you make about conflict is a point that interests me, because I think it is
sometimes rather over-done in relation to a particular position of the BBC and
the governors in the BBC, and that largely arises, I think, because the BBC
governors have duties to the public to produce excellent programming, services
with public value, value for money, all those sorts of things, very much
focused on the licence fee payers; and then the governors have regulatory
obligations; indeed, most, or a lot of them, are in conjunction with Ofcom in
one form or another, either in consultation with Ofcom or Ofcom being a sort of
back‑stop checker of compliance with regulation. The principle ones perhaps the BBC governors
have of themselves somewhat relate to the essence of the BBC in terms of news
and current affairs, around accuracy and impartiality in particular; and those
obligations do not seem to me to be at all in conflict with the basic duties to
the public; in fact, they sit quite well with the duties of the public. In contrast, most other forms of regulation
where a regulator is involved are situations where the regulator has to look
after the conflict between money value for shareholders and rules to protect
the public, and that creates quite a different relationship than we have with
the BBC management, I think, and tends to be, partly as Michael says, rather
reactive, rather rule‑checking, and creates, I think, in many regulated
industries a sense that they are in completely different camps: that the
management are about creating value for shareholders and do the best they can
to limit the impact of regulation upon that responsibility. So that conflict really does not exist in
this particular situation, and, although I am new to it, I think the potential
opportunity for the governors to retain their independence and the new
proposals around the governance unit and access to expert independent advice
and those sorts of proposals that exist are very important to that but maintain
their independence as well as the proactive in terms of achieving for the
public the objectives of public value, the objectives of value for money in an
interactive and collaborative way with management. So the important balance, as Michael focused on, is retaining
their independence and so the proposals currently being put forward in the
context of the Charter Review are very much reinforcing for that. So my point is that the conflict, I think,
is somewhat overstated.
Q470 John
Thurso: The core of the conflict is, as you have rightly identified,
slightly different, but it is where the governors feel that they must support
management, because they are supporting independence, when it actually
transpires that the support was misplaced; and that is the core that has to be
dealt with in a new organisation and structure or the new way of dealing with
it. That is what went wrong in the past
and needs to be dealt with?
Mr Salz:
I hope some of the proposals actually respond to that. There are some proposals, which we have not
fully formulated, which are on accountability and more access to the people we
are looking after, if you like, and through modern technology and governor's
website ideas getting more clarity around those people who we are
representing. So I do not think the
structure is ‑ it is an odd structure, it is a hybrid structure, but I
think it can be made to work very positively.
Q471 Chairman:
Before I call on Michael Fabricant, John Thurso seems to me to raise one of the
most fundamental issues that we need to consider here and which the Government
is going to have to consider in the decision it makes. If one looks at the governance and accountability
of the other television channels or companies, nobody has ever questioned the
objectivity and impartiality of the new services on any of the other television
channels. When Sky Television had a
problem relating to a report it sacked the reporter and ended the problem. If one is looking at Ofcom's or the ITC's
supervision of the other television companies, they never have to go into
issues of this kind. It is typical that
the kind of thing Ofcom does is fining Channel 4 for a fight on Big Brother, but,
without going into the content of the Hutton affair, and I tell my colleagues I
will not permit discussion of that because that is not what we are about, but
the Hutton affair does seem to me to have highlighted the duality of the role
of the governors which you are attempting, Mr Grade, to sort out, but it
is a very, very difficult question of how you sort it out. This Committee, when it recommended the
appointment of the body which is now Ofcom, believed that the BBC ought to come
entirely under Ofcom. At this stage of
this inquiry, I have to say that I no longer take that view, because having
seen Ofcom in operation I do not believe that the way it is addressing itself
to the kinds of issues that are important to you is at all satisfactory. That being so, if you are going to have a
position in which you have lay governors of the kind we have now, even lay
governors some of whom, though far from all of whom, will have considerable
experience of the media, there is the problem, is there not, Mr Grade,
about how the duality of the role, the championing of the BBC, can be combined
with the real, "real", holding of the BBC to accountability, as
evidenced by that utterly disastrous Sunday evening meeting when the governors
were not given the information on which to make a decision and where the Chairman
railroaded a decision through the governors which led, among other things, to
his own departure and that of the Director General. I do not believe anybody round this table at this point in our
inquiry has a solution, though maybe we will try to come up with one before we
have finished; but what you have tried to do, Mr Grade, I have put to you,
though it is commendable that you started almost as soon as you took office, is
not really at this point offering a solution that would be universally acceptable.
Mr Grade:
Without going into... Obeying the
Chairman's instruction not to go into the detail, with hindsight, clearly with
the benefit of hindsight, and not being in the middle of what was a very
febrile and volatile situation and a very threatening one to the independence
of the BBC, if that were to happen again, I think the instinctive response of
the governors would be that the independence of the BBC is best defended by
stepping back and having a proper inquiry leading me into what the management
have said and not relying and jumping too quickly and instinctively and
believing that the best way to defend the independence of the BBC was
immediately to defend whatever management has said. I have no doubt that an inquiry at that moment would have been
the right thing to have done; and if the inquiry at the end of the day said
that the management had obeyed all the guidelines and processes, and so on, and
that the story was well‑founded and there was no evidence, that is the
best way of defending the BBC. Equally,
if you take a step back and take a
couple of weeks, two or three weeks, as fast as you can, to get an independent
assessment of what had happened and a forensic examination of what had
happened, if you flush out problems at that point, again, that is the best
defence for the BBC's independence; and what we are trying to do, and the
governors had started this work before I arrived; I have just kind of
accelerated the process and some of the thinking and some of the ideas ‑
I think instinctively, were such a situation to occur again, the governors will
say, "Stop, we have to take time out here. We hear what the management says, but we believe that the
independence of the BBC is best defended by knowing exactly what happened and
taking time to find out exactly what happened and double checking." The one certain thing you know in a crisis
is that you do not know everything on day one.
Somebody always comes in with an e‑mail six days later saying,
"I don't know if this is relevant, squire, but I just found this",
and off you go and it changes the whole complexion of things. So I think that we are changing the rules of
engagement of the governors, the interpretation, and we are changing the
culture of the way we look at things; and I do not think that is a
conflict. We have again been positive
in supporting management to ensure that our mutual objective of providing
public value for the licence payers at the right cost. We are united on that. We will help them for those positive
outcomes. So I do not think it is as
big a problem. I do not think we need
to unstitch the constitution of the BBC in order to solve an operation
problem. I am sorry, Chairman, may I
ask Richard Tait?
Mr Tait:
From my experience in journalism in commercial television I think there are
difficulties, quite significant difficulties with the external regulation
route, because I think that you find...
When I was editor of ITN I was rather surprised to find that the
defender of ITN's independence was, in fact, the regulator, because ultimately
the external regulator was the person who decided whether the journalism was
straight or not, and that is a body which has got a whole range of other
interests and priorities: because in the commercial sector you have boards
which consist of people who are driven by a whole range of motives, perfectly
proper motives, shareholder value, to try and improve their market share, to
try and get a good return for their shareholders. You have a tension, as Anthony says, between the objectives of
the Board and the objectives of the regulator, which is perhaps, in public
policy terms, to have the highest quality programmes. The difference with the governors of the BBC is that they are
there to represent the public interest and to ensure the BBC's independence,
and that inevitably means they must stand behind the BBC's accuracy and
impartiality, because, if the BBC is not accurate and impartial, it is no use
to anyone, it is not independent and, frankly, it is not worth having the
license fee. Therefore you must have,
it seems to me, a body which is independent of all pressures which can create a
system which can satisfy you that it will be robust, it will be rigorous, it
will look for outside external advice and external input in making its judgments
but that that responsibility rests with the governors; and that is why in the
end, I think, Parliament was right, after a long debate on the Communications
Bill, to decide that impartiality and accuracy should remain with the governors
as part of their core responsibilities, which are independence and
accountability.
Q472 Chairman:
Of course, part of it is the problem of very, very cumbersome bureaucracy, is
it not? Internal processes do not seem
to work as fast or as thoroughly as they ought to. You may recall, Mr Tait, that I had a complaint over the
coverage of the Royal Commission on the House of Lords report. I telephoned you the same evening; you got
back to me the same evening; the thing was absolutely settled in one evening because
the kind of defensiveness that has built up within the BBC was not something
that was happening either within ITN or Channel 4. Both came back to me the very same evening, if I may say so,
saying that my complaint was absolutely justified, apologising, etcetera, etcetera;
and if the BBC were as flexible as that and were not so defensive in all
circumstances as that, a lot of the problems would be solved without getting
anywhere near the governance?
Mr Thompson:
I think perhaps, Chairman, if I can briefly say, I think we should recognise
that the BBC ‑ and I speak as someone who has been involved with
Channel 4 and Channel 4 News - does seem to come under a much greater volume
and intensity of complaints than other news programmes and other news
broadcasters, not because the journalism is less strong but because of the very
high profile of the organisation and the sheer scale of its news
operations. However, what I would
accept is that going forward we should be less defensive and more willing to,
if you like, confront complaints quickly and to start off with the premise that
a serious complainant may have a point which needs to be looked into thoroughly
and promptly. In the aftermath of the
Hutton affair we have developed and are introducing a new complaints system which
we hope will be faster and more effective.
Q473 Michael
Fabricant: The Secretary of State says that she wants to see a
strong and independent BBC, and I think we would all, well I guess we would all
support that. The Chairman just now
says that the independence of the BBC has been challenged on a number of
occasions but has not been undermined, but it seems to be very much a function
of the BBC always to defend itself from any outside influence at all; and one
of the great bastions which the BBC resisted was any interference in its
financial control. It was felt that if
the National Audit Office were to look at the BBC accounts it would affect the
independence of the corporation, and yet now the BBC has agreed to allow the
NAO to investigate, in its normal way, from time to time, the activities of the
BBC, as it does other public bodies. So
has the independence of the BBC been compromised as a result?
Mr Grade:
I do not think so. I think that the
long debate that led to that compromise is a sensible and workable one. I think what the BBC was concerned about was
that the Director General would become the reporting officer and would
therefore be subject to some kind of political decision‑making over the
operations of the BBC which would have undermined the role of the
governors. I actually think that, of
course, the BBC, the two key things for the governors are to maintain the
independence of the BBC and make sure that the money is properly spent, and it
is perfectly right that that comes under external scrutiny, as it does, in any
event, for auditors. The governors
themselves have just commissioned an outside audit of our financial control
procedures, and so on, to make sure that we are comfortable with the way things
are operating. It seems perfectly proper
from time to time for the NAO to inquire into various things, but to go through
the full formal constitutional proprieties of an NAO relationship where the
Director General becomes the reporting officer, I think, was avoided in that
compromise and I think it is a very good compromise and should be allowed to
roll out over the next year or so to see whether it satisfies everything.
Q474 Michael
Fabricant: I am pleased to hear that, but can you not see that a
number of us might recognise echoes in your arguments for saying that an
external regulator, whether it be Ofcom, whether it be Ofbeeb, or whoever, that
echoes of that argument were heard in the defence of the BBC against any
association with the National Audit Office, and yet you now say, quite rightly I
am sure, that the BBC were able to compromise, that the NAO were able to
compromise, that the Government was able to compromise. Can you not envisage in the future that
there might not be a suitable compromise whereby an external organisation can
be there to monitor the activities of the corporation ‑ maybe
"monitor" is not the right word ‑ but not only provide
protection for the BBC and its independence but also for the viewer and the
listener who might just take the view that it is not right, it is not
believable for the Board of Governors to be the BBC's own judge and jury?
Mr Grade:
I agree with the principle of what you have said, but in the implementation of
it I think it is for the governors to call in outside consultants, whoever -
specialists - to look at what we are doing, and that is precisely what the
Government's reforms are going to achieve and what we are actually achieving
now. This is a radical departure for
the BBC for the governors themselves to be taking anything other than the
management's word for everything and signing on the dotted line at five to one,
just before lunch, on some radical plan that is going to have quite a
remarkable impact on the private sector with the net result that some new
initiative gets launched, cries of "foul" from the private sector and
the DCMS police have to come in and call for inquiries and do exactly what the
governors should have done in the first place, which is to get external
independent advice so that when the governors make their judgment and balance,
let us say in a particular case, the impact on the private sector and the
balance of the public value created for what the management is proposing, the
governors can make their judgment, which is what they are there to do, and be
able to say publicly, "We have found in favour of this service. We understand there is... We have talked to the private sector. This is agreed. On the other hand, we are satisfied and these are the people who
have looked at it for us and they concur with our judgment", and you can
make a very transparent case that is evidenced-based and not evidence simply
provided by management, and I think that is exactly what we are going to
achieve with these reports.
Q475 Michael
Fabricant: I suspect other colleagues may wish to pursue this argument. I would like to move on, if I may, Chairman,
to wither goes the BBC in the future. I
wonder if maybe you could outline what services you might envisage the BBC
offering in the medium term additional to the services you offer now? In particular, I am thinking of talk
for ‑ there is some discussion, I believe, of the BBC providing
local news channels, local news television, and I would be interested to know
whether you are going to go down that route.
There is also speculation about the future of the BBC worldwide. You mentioned the conflict that is
occasionally perceived between the BBC and the commercial sector; so what will
be the future of the BBC worldwide; and where do you see the limits of the
BBC? The BBC have gone very
successfully, I believe, into new media, including a website, or whatever, but
that was never envisaged back in 1926.
Mind you, television was not envisaged in 1926 either. Where do you see the limits of the BBC's
activities?
Mr Grade:
The limits, in the end, are financial constraints, and we have in the Building
Public Value document laid out a number of ideas ‑ some are more
firm than others. At the end of this
important debate hopefully there will be a consensus about what is expected of
the BBC, what services, what provision we are expected to make, and there will
be a price put on and presumably‑‑
Q476 Michael
Fabricant: But is it only financial? You would not rule anything out philosophically. You would say the BBC might go into any
area.
Mr Grade:
Of course, but I think we have set out our stall in the Building Public Value
document. One of the things that we are
absolutely certain is a cornerstone of the BBC through the next charter is what
we call, in head‑line terms, our "out of London" policy. We believe that there has been a huge shift,
for good reason. Historically the BBC
was the national broadcaster, and I think it was in 1955 when independent
television, or commercial television, as the BBC used to call it in those days,
commercial television was constructed as a federal national and regional system
to complement the BBC's national service. I think there has been, and I think
my colleagues on the Board and the Executive agree with this, a massive shift
now and the roles are kind of reversing in a way and there is a huge public
service job for the BBC to deliver through the next charter of meeting the
expectations of our licence fee payers and the talent of the UK that does not
live inside the M25; so that is a major plank the BBC are going for. I do not know whether the Director General
would like to--
Q477 Michael
Fabricant: May I just say, in the light of answering, and I hope you
will answer my question regarding the future of BBC very local television,
given the criticism, which I am not totally sure is justified actually, against
BBC3 and BBC4, which I personally enjoy, is this not going to dilute still
further BBC news services and BBC resources?
Mr Thompson:
I will answer your question. Firstly,
we have made it clear in answer to the first part of your question that we do
not see a need or justification for launching new linear television and radio
services, that the television and radio portfolios of linear services are
complete. We do think that there may
well be a need over the next ten years to develop the BBC's existing editorial
mission in a number of ways. Michael
has talked about the rebalancing of the organisation out of London. In terms of local services, local information,
we do think in going forward that licence payers will wish to receive local
information in new and broader ways. We
are already complementing our local radio stations around the country with
local on‑line sites, and we are taking steps right now to make sure that
those websites are distinct from and offer value beyond what is already
available in the market. The local
television idea is an idea of whether, over time, initially through those
websites, we can deliver news, local news, in sound and vision. Increasingly we think the web is going to be
a delivery mechanism for producing what we call television ‑ moving sound and vision, interviews with
local politicians and other leaders following local news events, delivering
these services in the first instance via broadband but subsequently perhaps
using other delivery mechanisms. I
think that whereas in the past the BBC have seen charters as a period where you
have seen lateral expansion of new services and new ideas, I think looking at
the next ten years I would say that the trends we see are to do with
moving forward on demand, towards new devices, new consumer devices, new ways
of using media, and that the challenge we have is more one of evolving,
adapting and developing our services to meet these new challenges rather than
the idea of, as it were, occupying new territory. It is more about saying...
As the Committee knows from your own travels and researches, our world
is moving very quickly; the world of audio visual products is moving; the curve
of change is increasing; and it is very important, if the BBC is to continue to
offer value to licence payers, that we stay at or ahead of that curve of change
in how we think about media and how we develop media.
Q478 Michael
Fabricant: So do you think linear television's days are numbered?
Mr Thompson:
No, I think that some people might have said when the BBC launched television
in 1936 that BBC radio was finished, that television would be the way of the
future. BBC radio remains an extremely
creatively robust and popular part of our services and I believe that linear
television will be a part and critical part of the offer the BBC makes to the
licence-payers ten, twenty, thirty years from now; but to go behind the
question, I think that in the end linear television is one very effective way
of packaging content and offering it to the public. What I would say is right now, but certainly in five or ten years
time, many of our licence payers will be enjoying that content and accessing it
in different ways; so I think other means of enjoying BBC content will co‑exist
with traditional means of television and radio, and the challenge for us, of
course, is that this adds cost. If you
are continuing to provide traditional services and also trying to move forward
with technology, that does produce cost challenges.
Q479 Chairman:
To what extent though, Mr Thompson, does what you have just said reflect
something that was pretty explicit in part of your reply to Michael Fabricant,
namely 10 years time? When we had
our discussions in the United States the assumption was that there was going to
be a break up, not in the way in which television was purveyed, but the way in
which television was received and chosen by those who accepted it; and looking
to the fact that if one makes an assumption, whether that is borne out by
developments or not, that at the end of 2006 the BBC will get another ten-year
charter, inevitably during that period there will be an analogue switch-off and
there will be more and more convergence.
So to what extent is it safe for you to base those assumptions on the
continuing linear reception as distinct from linear provision? One of the idiocies of the Barwise report that
was published last week, in my view, was an assumption that we were going to go
on in an analogue era in which BBC digital programmes would somehow or other
have to duplicate the analogue programmes, i.e. two BBC1s and two BBC2s. The sheer stupidity of that assumption and
recommendation makes one wonder what this man's qualifications truly are; and
surely it is a question not simply of variety, but we went to Homechoice last
week, for example, and Homechoice showed that people are already constructing
their own television channels from everything that is available, and not only
the BBC.
Mr Thompson:
We believe that... As you say, some
consumers are doing this already. We
think there will be millions of earlier doctors doing this over the next very
few years, but we also think many millions of our licence payers will be
continuing to use television in traditional ways, and our duty is, if you like,
about managing a motorway where there are some people almost on the hard-shoulder
and other people shooting along in the fast lane, but the core to me of our
mission is about producing a mass of outstanding useful content and then
finding multiple means of reaching different consumers with that content; and
although this makes for a much more complex life and a life where distribution
costs, for example, will be a much higher proportion of our spend than in the
past, because we will be servicing multiple parallel distribution parts, I
think it is also a very exciting period, and I do not believe there is any
reason to believe that the underlying proposition of the BBC, which is a mass
of outstanding useful and very wide ranging content in exchange for licensing,
why that should not be just as relevant at the end of this digital transition
as it is now.
Q480 Mr Doran:
Can I carry on the debate about the future landscape: because you will be aware
that one of the things that we decided to do as a committee was to look at the
future and see what the landscape was likely to be at the next charter review;
and I do not think that there is any doubt at all that it is going to be
substantially different from the present. A number of points that have been
raised by Michael Fabricant and the Chairman were about the outline of how the
future landscape will develop. On our
American trip what was coming across to us quite strongly from people who were
looking at this in that context was that terrestrial broadcasting was likely to
remain in the future but more likely to be at the low end of the market,
whereas, as you put it, those in the fast-lane were rushing ahead with all
sorts of new technology and new opportunities which are coming onto the market,
it seems, almost on a daily basis now.
How do you deal with that?
Because cost is clearly going to be an issue, and, if these forecasts
are correct, then terrestrial broadcasting is going to become much more
expensive than doing a deal, for example, with Homechoice?
Mr Thompson:
I think the underlying driver of that expected trend in America is long‑term
questions about the economic model for free-to-air television based around spot
advertising. As audiences fragment, as
people use several PDRs, hard discs, to record and perhaps fast‑forward
through adverts, that model which has driven the diversity of free-to-air
television in America will become harder to sustain and you do, indeed, hear
American networks talk about their free-to-air networks almost as "Barker"
channels to drive audiences towards other cable and subscription services. We have a different tradition in this
country, particularly we have a public who have come to expect high quality and
properly resourced free-to-air television and radio. Moreover, and it is a cornerstone of that, the acceptance of a
licence fee, a universal licence fee, which if you like guarantees a block of
investment in free-to-air services, including free-to-air linear television and
radio services. I get no sense at all
of diminution in public appetite for those services; indeed people in multi‑channel
homes, I think, have, I think, been struck ‑ once you have had a
multi‑channel for a few years ‑ of how little investment in
original content you find in the bulk of the channels available in multi‑channel. Now there are some great exceptions to
that. Sky News, I think, has been a
remarkable and valuable addition to the range of choices available to people in
multi‑channel homes, but, beyond new services and certain premium sports
services, there is very little evidence, either in Britain or even arguably in
America in some of the digital channels in America, that the multiplicity of
channels is leading to fresh investment in high quality content. So my view about certainly what we will
achieve in the United Kingdom is that we can continue, particularly if the BBC
continues with a licence fee, to guarantee sufficient investment in free-to-air
services so you do not end up with a picture where there are some people, as it
were, in the slow lane, to use my analogy, who cannot get high quality content
at all; but I wonder whether Ashley Highfield has anything to add a new meaning
to that?
Mr Highfield:
Only that we have already seen with half the nation on line, that the cost per
viewer hour, particularly in some of the services like children's services, is
already equal to that provided in linear television; so there is very little
danger in us providing cheap for the masses and then a high end services in
Broadband and internet. The costs are
already comparable.
Q481 Mr Doran:
I can understand the point that you are making. Certainly one of the other messages we got very strongly from the
American visit was that the content producers will be the kings; and that is
important in the context of the BBC, and certainly I can understand that; but
within the very early days, I would suggest, of the consumer appreciation, if
you like, there are now vehicles available where you are not force-fed by the
broadcasters; you do not have to take the programme when they choose to
broadcast it; and I think that we were all struck on a visit to Homechoice last
week how professional that was. We were
given a demonstration in a closed room, and so it is difficult to know how that
is for the real consumers out there in the market, but I am somebody who does
not yet have satellite, does not yet have digital - it is not because I do not
want it; it is because I hardly watch any television - but it is the first time
I have actually seen an operation which I was interested in acquiring as a
consumer, and that gave me everything that you have said that I want which is
on my terrestrial channels, but the opportunity, because of, I understand,
arrangements with the BBC, to look at the back catalogue over the last seven
days, if I have come home and I have missed a football match or I have missed
the news, then I can switch on to it
immediately. That is going to
become more and more attractive, and it seems to me that people in my position
at the moment who are simply receivers of terrestrial broadcasting are going to
be marginalised substantially in the future.
Mr Thompson:
I agree with you by the way. One recent
example for us is the Olympic Games, this summer, broadcast by the BBC on
television, and, as you know, 53 per cent of households now have
digital television. We provided an
interactive service whereby people could, by pressing the red button, choose
between any one of five different sports, so you could chose whichever sport
you want, and that was used by more than nine million licence payers. These are...
The beginnings of choice and on‑demand are happening now, but to
me that goes to the issue of how quickly and how effectively Britain can move
towards a fully digital television environment and what part the BBC can and
should play in that process. We cannot
be responsible for the whole process; we can play a part; and I would argue in
recent years the BBC has played a useful part in broadening the range of
digital platforms and in particular in ensuring that digital terrestrial
television, where we can provide extensive interactive, more channels but also
more interactive functionality, much more than is available in analogue homes, that
we are playing quite an active role in trying to make sure that no‑one
gets left completely out of this process‑‑
Q482 Mr
Doran: Moving on to another area:
every time we have had the BBC in front of us in the last couple of
years I have banged the drum about British films, and I want to do that
again. What part do you see British
film playing in the BBC commitment to public service?
Mr Thompson:
I think British film and the development and support of the British Film Industry
by broadcasters is very important. I
have been involved over the years both with the BBC and Channel 4 in trying to
support efforts to create a sustainable and successful British Film
Industry. I think there are two or
three different strands to this: firstly, proper prominence for British films
on our airwaves. I think in the past
there has been too little access to the airwaves for outstanding British
films. I have to say, there is another
issue about‑‑. Not every
film that is made in Britain, although a British film, can earn its place on
our airwaves, but I think for high quality British films there should be a place. We are in a position in the BBC where, I
think, as recently as four years ago there were really only a handful, five,
six, seven, British films being shown in peak time on BBC1. We are hoping that this year (2004) we are
going to show as many as 70. So we are
trying to up the number of opportunities for British films to actually be seen
by the public. That is the first
thing. Secondly, I think the BBC, and
Channel 4, but let's talk about the BBC, does have an interesting role in
helping to develop and support British film.
That is partly money - we spend about £10 million a year currently
- but it is also about how you spend the money, and I think focus on early
development of scripts and early support of talent so that at the beginning of
film projects they have some certainty about subsequent television rights and
also money for development up front is very important. I think one of the questions that we need to
look at inside the BBC is whether £10 million a year is enough or whether
we should look at whether we can play a bigger role. So those are two ways in which we can potentially support the
industry.
Q483 Mr
Doran: On the broadcasting, particularly of recent British films,
when you appeared before to us discuss the annual report, you mentioned you
were in discussion with the independent producers. Has there been any conclusion to these discussions?
Mr Thompson:
No, but we are talking both to the Film Council and to film-makers about
whether there are ways in which we can find alternatives, though a lot of it, I
have to say, does depend on the kind of films that are made, and by and large
our experience is that films which fail completely at the box office also do
not attract television audiences. In
other words, what you cannot do is assume that you can use a television window
for a feature film as an alternative, as it were, to a box office success. By and large cinema goers and television
viewers are looking for the same kinds of thing in feature films.
Q484 Mr
Doran: We still see masses of American films which have not even had
a box office release. I understand
about bundling and the packages that you are supposed to require, but that is
something that causes a problem for British film makers?
Mr Thompson:
I agree with that, and I think, and I have tried to indicate what we are trying
to do on BBC1 in terms of our showing of feature films - I think a rebalancing
towards British films, particularly off‑peak British films as opposed to
lower quality American films, I think makes sense. Broadly, and I have said this publicly already this summer, we
have to look at the balance of acquired programmes as opposed to original
programmes on BBC television. I think
that the public still have a legitimate desire to see some acquired programme
as part of the mix, but I readily accept that there are many areas of acquired
programming where the rest of the market, in terms of other free-to-air
channels and also multi‑channel, is providing much more choice and we
need to look quite hard at are we buying the right kind of feature films and
the right kind of US and other foreign television series that genuinely add
value and add choice rather than just replicating what you can see elsewhere in
the market.
Q485 Mr
Doran: One final point with films: at the moment there is a very,
very small proportion of the money that the BBC spends on broad films which it
spends on British films. As this
process proceeds do you envisage an increase in that respect?
Mr Thompson:
I think we should look at that. Again a
key part of this is trying to work with the film industry, with the Film
Council and others to make sure that the supply of films that are being made
are ones that are going to work for our audiences, our first duty has to be to
our audiences and to giving them programming, including feature films, that
work for them, work creatively, and work as entertainment and so forth, but
over time I would welcome a chance to show more high quality popular British
feature films and, as a result, show fewer American ones.
Q486 Mr
Doran: Is that "Yes" or a "No" to more money?
Mr Thompson:
I think it is, "Yes", if the supply of quality is there.
Q487 Alan
Keen: Can I come back to boring old democracy, but before I go on to
the point I really want to raise could I put this to Anthony Salz, because when
I put it to the Chairman of the Board last time he rejected it! That unfortunate episode that happened, the
Chairman said we must not talk about, I firmly believe that had there been a
separated Chairman, an Executive Chairman, working with the Director Chairman,
and a separate Chair of the Board of Governors, that the problem would not have
got to be as serious as it was. You
said you had come from the commercial sector fairly recently. What argument is there that the BBC should
not have two Chairmen, because I believe that would have stopped that previous
problem. It is a pattern; it is a model
that is used in the commercial sector over and over again, that there is an
Executive Chairman who involved with the Chief Executive and there is another
Chairman as a backstop. What argument
is there for not having that in place at the BBC?
Mr Salz:
I suppose, in the commercial sector, one of the great difficulties is to define
precisely what the role of a chairman is as against the chief executive; and so
that tension always exists in the commercial sector; and people do it in
different ways, but it is a very important relationship in corporate governance
and effective corporate governance. I do not for myself see why the Chairman of
the governors cannot, subject to an independent overlay, perform substantially
the role it has performed in a more conventional commercial sector as to
working with the chief executive. Even
in the commercial sector it is a role that is intentionally independent looking
to the interests of shareholders, and in this case it is intentionally
independent looking to the interests of the licence fee payers. If you had two chairmen, I think you are in
danger of just creating an overlap which is unclear and causing some
difficulty. I think the focus should be
on the appropriate independence and the independent support. The governance unit behind the governors is
rather crucial as part of reinforcing that independence.
Q488 Alan Keen: I will not push it but I think that had there
been a separate chairman last time, the board would not have fallen apart like
I think it did. The good news about
this inquiry is there has been universal support for the continuation of the
BBC Charter, even from those who tended to oppose it before. As a strong supporter of the BBC, it worries
me a little bit that there is a lack of democracy. There have been some wonderful very effective dictatorships in
the world in the past where they have said, "Everybody votes for me. I must be right, I give the people what they
want and they all vote for me". Surely
it is a bit like that with the BBC, we know who does not vote for us so we send
a van round with a gang in it and make them vote for us, that is by paying the
licence fee. There is a big gap between
the people who pay the licence fee and the board that runs the BBC. Have you given any thought to having some
real effective democracy, not via the Government and DCMS?
Mr Grade: I think that the messages coming from the
Secretary of State are clearly that the Government would wish to see tangible
ways, measurable ways, practical ways, in which the licence fee payers can feel more sense of ownership of the BBC
than they presently do. The evidence
for talking about support for the BBC, there are all kinds of surveys and
research that has been done about the public's willingness to pay and so on
which suggests that there is not unanimous support but overwhelming majority
support for the continuance of an independent BBC funded by the licence fee. As the governors, I think we do have a
responsibility to improve and clarify the relationship between the BBC and the
licence fee payers who are, in a sense, the shareholders of the BBC. They own the BBC, they pay for it and we
have to find ways to do that. We do an
awful lot presently, much of it the public is unaware of, so there is a start
to be made through broadcasting councils, advisory committees, and the research
that we do ourselves and so on. There
is much that we do and we need to promote that. We have the means to promote that on our own airwaves, online and
so on. We have to have a massive
campaign to involve the public and stimulate them to come back and tell us what
they think about what we are doing. We
need to do more. I hope that by the
time the debate comes to a climax we will be ready with a package of firm
proposals that will do much to alleviate that disconnect that you have
described, which is of concern to us as governors. We need to know how we are doing from the licence fee payers even
more than we do from the politicians.
Q489 Alan Keen: I do not defend our parliamentary democracy
but we have got the technology to do a lot better. The Director General just talked about the website and we talked
to young people in my constituency last week who did not feel that they had any
say. They were in great praise of the
BBC but they did not feel that they had, or would have, any effect.
Mr Grade: That is not acceptable.
Q490 Alan Keen: We have to do something. There has been general support from the whole
of the broadcasting industry for the continuation of the licence fee and
Charter, the only criticism they seem to have is that the BBC does things that
they do not think it should do and they impinge on their own commercial ability
to make a profit. If there was a
democracy they would not be able to sustain that argument because the BBC would
be supported by the public, by the licence fee payers. We do have to look at it. Tesco's is a market democracy; people get
what they want. Even newspapers provide
views that the people they want to buy the newspapers have. The BBC is not the
same as that. Can you give any examples
of what you have in mind? Governors
being elected regionally, is that something that you have thought of?
Mr Grade: Election of governors is an interesting
idea. I would have to say that the
process of appointing governors, and I can speak from recent experience and
from previous experience as a member of the management of the BBC, has become
much more transparent and the Nolan process is now applied to the appointment
of governors of the BBC. I think that
is a tremendous improvement in the process.
If you start electing governors you always run the risk that the BBC
could be captured by a special interest group or by an unscrupulous political
party. There are ways to capture
organisations. When you have got a
voting population of 24 million, they are not all going to vote, are they, on
any evidence. I do not know what
proportion would vote but I suspect that it would be small enough to be really
open to the risk of capture, and I think that is a concern.
Q491 Alan Keen: It does not have to be voting to elect
people; it could be people giving preferences through the website. Again, you sometimes get a biased view that
way but what I want to do is make sure that there is a lot of thought being put
into that, because it is the one weakness of the BBC.
Mr Grade: I do not think that it is weakness provided
that what the licence fee payers want to be absolutely certain of is that
whoever is sitting in the boardroom, whatever anonymous characters are sitting
in the boardroom of the BBC, they have been properly appointed to represent
their interests and that the BBC remains independent and until that is undone
then I think by and large the licence fee payers are content. I do not sense any great concern. I think the concern the public would have is
if they felt that the board of governors had been captured. In our public value document we have made a
commitment and we are going to go out at a minimum of three years, maybe every
three to four years, it depends on what the independent pollsters tell us, and
we are going to do the biggest survey that the BBC has ever done with a sample
of at least 10,000 licence fee payers as a representative sample, and that will
be done on a regular triennial basis.
We will take professional advice as to what the strike rate of that
survey should be. That will be the
biggest survey that the BBC has ever attempted and it will be independently
run. We will be able to start to track
attitudes to the licence fee, attitudes to services, how the governors are
performing and so on and so on. That is
one of the positive steps that we have already said that we are going to achieve. I am in absolute sympathy, and I think all
my colleagues on the board are in absolute sympathy, when the Secretary of
State says that she would like to see a greater connection between the licence
fee payers and the operation of the BBC and the governance of the BBC. That is why some of these other ideas that
are floating around for governance start to confuse that just at a time when we
are trying to get a direct connection and part of that direct connection is
that the public absolutely knows where the buck stops; it stops with us and the
people we represent.
Q492 Alan Keen: Can I finish by conceding that it was proven
not too long ago that the BBC without democracy gives greater satisfaction to
the public than a government that has been elected by democracy. There is not a lot wrong with the final
result but we need to have some more connection than there is.
Mr Grade: Absolutely, and the compulsory licence fee
depends entirely on public support to sustain it.
Alan Keen: Thank you.
Derek Wyatt: Good morning. Can I just go back to the governors and ----
Chairman: Before you go on, Derek, could I just say
that I have been keeping a loose rein on the Committee, including on myself,
but we do have a lot more colleagues who want to put questions.
Q493 Derek Wyatt: Last week there was a report about your
digital channels and I think today it is digital radio that reports. If you are going to be more independent, is
it that the governors will be doing those reports themselves in the future?
Mr Grade: That would be our hope, yes, that we will be
in a position to have gained sufficient confidence that we are able to bring in
outside experts. Under the reforms I
think the governors would have commissioned, let us say, the Lambert Report on
News 24; the difference being we would have done it before the service was
launched, not after it was up and running.
When it was proposed by the management to create a 24 hour news service,
under the new regime the governors would say "That is a very interesting idea,
we have to test it. We have to test it
on market impact, the creation of public value" and at the end of that process
the governors would make a judgment and say to the management, "We are willing
to vote you management resources to do it" and we would be able to explain to
the world that this was the management's proposal, we took evidence from
Richard Lambert, Richard Tait (if he was not a governor), Stuart Purvis,
whoever, the real experts in the field, and we have taken on their expert views
and formed a view. We would have been
able to say to the public, "Yes, we have authorised this, we have shifted this
amount of resources to do it and this is why".
Mr Tait: That is a process that would happen on any
commercial channel launch. If you were
launching a news channel in the commercial sector you would do that
process. You would have a rigorous
analysis of its potential reach, its target audience, the curve at which you
build the audience. All of those things
would have been done before you gave the approval for the launch but also that
gives you a framework within which the governors can then monitor the
performance of the channel, because it is much clearer what you have given
approval for and it is much clearer whether the channel is performing against
the various indicators which were established when the channel was launched.
Q494 Derek Wyatt: I think from memory we made about a sixteen
and a half million pound deficit on BBC World, if I have got that right, so
presumably ----
Mr Grade: This is the last financial year.
Q495 Derek Wyatt: ---- the governors are looking at that. Would the governors be able to report not
only on what the future of that is but also look to say, "Actually, the
Government pays for BBC World Service radio, is there not a role here to look
at how we are represented overseas differently", and would the governors be
bold enough to say, "Why can that not be a stakeholder partnership with Granada
or ITV News or Sky"?
Mr Grade: I think the future of BBC World, in a phrase
that I swore when I arrived at the BBC I would never utter, is under constant
review. I say that in terms that I mean
what I say, not as a means of ducking it.
This is on the agenda. BBC World
is on the governors' agenda. This is
kept under very, very close scrutiny and the management are working on a number
of potential solutions and options to alleviate any losses.
Q496 Derek Wyatt: Can I take up Frank's point about film and
the larger role you have as a cultural entity.
You have a number of orchestras but you do not have a youth jazz
orchestra, or you do not have anything to do with youth music, that you own in
the sense of the way that you do orchestra.
Just put that to one side because that is a problem, that in order to
get to that target audience you are struggling with that audience from what we
can understand from the report last week.
Against that, we do not have an HBO for the UK and I think you spent
something like £87 million on non-British films to show on BBC, so that was
Frank's point about is there a way we can up that to British, but what I might
be saying to you is from a cultural point of view I think we would like the BBC
to have a UK-only film channel. If you
are not prepared to do that, does it make sense, therefore, to ask Ofcom to
suggest top-slicing the licence fee so that a group could come and have a
UK-only film channel?
Mr Thompson: Firstly, do we take our role as a cultural
patron of music seriously? Yes, I think
we do. I am not ashamed at all of the
fact that we have that spread amongst us around the UK, I think that is a significant
and useful contribution. It is true we
do not own a youth jazz orchestra. We
have an increasing and outstanding commitment to jazz on Radio 3 and to some
extent on Radio 2. Move to your point
on Radio 1, our commitment to support for original new British bands and new
British music, which dwarfs anything done by anyone else in this market, is
very striking. To be honest, I am not
sure that owning and operating in the popular music space makes sense, but we
have an enormous commitment to try to find ways of supporting new musical
talent involving young people. I will look at the issue about whether there are
enough opportunities for young people in jazz as opposed to other forms of
contemporary music. There are some
areas - and I think the symphony orchestra is maybe a good example - where I
think our contribution probably is best expressed in support of those
orchestras around the UK and also for new commissions from British
composers. In other ways, simply
finding the opportunity on Radio 1 and not just on Radio 1 UK but also on our
opt-outs on Radio 1 where new bands around the UK can get their chance to be
heard on the radio, I would say our record on that is good. I will turn to the issue of a film channel. I have spent the last few years with
Filmfour, which has been a particular pleasure to look after at Channel 4. I would say a couple of things: the
economics of film channels are tough.
One of my challenges at Channel 4 was getting Filmfour to a point of
break even. Again, we have to be
careful about the BBC sailing into an area where you could distort other
existing players and the feature film channels are already a significant part
of the landscape and both Filmfour and the Sky channels have a good record in
terms of showing British films. Should
we explore with other broadcasters whether there is room for an additional
British film channel showing perhaps less commercial British films? I can take that away and think about
it.
Q497 Derek Wyatt: Before BBC Three and Four, there was Choice
and Knowledge and I do not know what you have spent but I suspect you have
spent between £600 and £800 million on these channels over the last five
years. I guess if they are not working,
which is what last week's report said to us, it was not working, you are not
hitting some of your core targets and not so many people are coming to you,
there will come a point I think, when in terms of innovation you are struggling
in some ways to reach the digital channels.
If you look at the last 20 years you have had Channel 4, Sky, Channel
five and now perhaps a new PBS channel against you, if the Ofcom suggestion
takes route. Given that it is only 2004
now, you have got two more years in the current licence, you could have a
licence fee for five more years which would give you a total of seven years,
that would challenge the whole innovation and the whole sense of the BBC. If you get a ten year you will go to sleep
again. Is there not a way that innovation is one of the problems? You are such a large organisation perhaps
the more innovative talent now no longer resides necessarily at the BBC?
Mr Grade: There are quite a few strands to pick up
there and the first one is about digital channels. I am not sure that I would characterise the Barwise report in quite
as dismissive a way as you have described it.
Nevertheless, the fact is that the BBC's entry into the digital choice
market - if you want to call it that - picking up where there had been a
disaster behind it has driven one of the most successful new take-ups in
Freeview that this country has ever seen, and the BBC has played a part in
it. I do not think we fully understand,
but we need to understand what is driving that, which of the BBC's channels is
playing digital channels and extension of choice, plus the other basket of
channels which are on Freeview.
Freeview is an enormous success and it has accelerated in my view the
day when we will be able to switch over and switch the whole nation across to
digital which is a desirable aid in itself.
I would also caution that all new media ventures are a disaster to begin
with. ITV was a disaster to begin with;
BBC2 was a disaster; Channel 4 was a disaster; Channel five was a disaster; BSB
was a disaster and Sky was a disaster.
They all start shakily because they are entering a very established
market and it takes a long while to build the broadcasting brand and to
establish yourself and find your own voice and fight. I have to say, there is a point where the Governors must
obviously look at the amount of money that is pouring into BBC Three and Four,
other digital channels, radio and television.
I do not think that point is today, it is too early. In my experience and the experience of all
new media ventures is they do take time to find. It takes you a while before you realise you have got a success or
you may have a flop, but you have to fix a point in time and we are going to
look at it and then we are going to see.
Professor Barwise was asked to it at this point. It is early days yet, but on the point of
innovation, there is an awful lot of innovation and shows that have started on
BBC Three are now appearing on the major networks.
Mr Thompson: Despite press reports which - this being
Britain - seem in many ways to tell the opposite story of what the Barwise
report said; what Barwise said about BBC Three was "it was a distinctive
channel with many innovative UK produced public service programmes"; BBC four
has "met or exceeded most of its commitments"; CBeebies is a "triumph"; CBBC is
"a highly distinctive in both content and quality on commercial channels" and
he said "the viewers of all of those channels were either fairly, very or
extremely good value for audiences".
One might criticise Professor Barwise's picture of the future, his MOT
on the progress of these services suggests that they are doing rather better
than Grade's law would suggest. I would
also point to other areas where in online and interactive television, not
always after a fast start, I think you are right, the BBC has not always got
onto the bus of change of innovation, we are making real progress. In interactive television, I think we are
doing some of the most exciting work.
These ideas are on demand of the BBC available for a complete week: on
demand the ideas of having a creative archive, opening up the entire archive to
the public to access when and where they want it, in what we are doing around
mobile technology and getting BBC services on the move. As Michael said, in cracking the problems of
digital television distribution we are leading in some areas. If the core of your point is the BBC is not
good at innovation, I think that is refuted by the evidence.
Q498 Rosemary McKenna: When we have been taking evidence over the
last few months it has generally been men in suits. We decided it was a good idea to go and target an audience who
would be your future audience in terms of how they access broadcast and
programmes and also what their view of the BBC was. We spent last Thursday in West Thames College and Heston Community
School. It was a fantastic visit, they
were wonderful young people who were very open and very free with us.
Mr Grade: What age group?
Q499 Rosemary McKenna: They were what we consider your future
audience, 11 - 18 years of age. They
are all accessing media by different means and they use interactive
services. After some persuasion and
discussion to get them going they came around to the view that yes, the BBC was
a good thing. They really strongly gave
us a message that you are not hitting them at all. CBeebies is wonderful, children's BBC is wonderful and the older
age group fine, but 11 - 18 year olds feel there is absolutely nothing there
they can access, or is in any way inviting them. They come home from school at four o'clock, they want to chill
out for a bit so they watch MTV or Trouble, if they have them available to
them.
Mr Thompson: There are some BBC services we hope they
would use, GCSE Bitesize, for example.
Q500 Rosemary McKenna: Yes they do.
Mr Thompson: That will help them pass their exams we
hope. Radio 1 might well be a radio
station they listen to. A surprising
number of them - they may deny this- would find themselves watching some of our
mainstream drama on BBC1.
Q501 Rosemary McKenna: They all watch Eastenders.
Mr Thompson: Yes. When we say nothing, what we mean is
not that they are not using BBC services but there is not enough that they feel
is particularly targeted to them, their world or their concerns. I think it is a gap we should look at. This is an area which I think the BBC could
do more in. I think the success of our
younger children's channels - these people do not think of themselves as
children and rightly so - the two children's channels which are very quickly
gaining acceptance, with both children and parents, shows that we can work in
this area. It is a tough audience, 11 -
18 year olds are probably the toughest, most discriminating audience that are
out there. I think we can do more.
Mr Highfield: The mid-teen audience does consume quite a
lot of our services, like Radio 1, and GCSE Bitesize, as with those services
are not terribly heavily branded BBC and quite intentionally sometimes. For example, online that core audience is
using the internet all the time. We
syndicate a lot of our news and information to places where they are, like AOL.
We have very close relationships with them.
When we dig deep we do find they are using our services, but sometimes
they do not recognise or associate us with it.
Q502 Rosemary McKenna: One of the areas that I wondered was worth
exploring and they mentioned it themselves, BBC Three does not start until 7
o'clock. You have that time before that
you could use, is that something you would consider?
Mr Thompson: There is an issue on digital/terrestrial
television about our children's channels which use the same band width. I think the idea, again if it can be
afforded, of producing a block of programming which we can offer on all digital
platforms and which perhaps is a multi-media offering, so we are offering
something which has got a linear television expression on an existing digital
channel and it is also available on broadband and it has got extensions onto
the internet, I think it is a very interesting idea. I have talked about not wanting to launch any more television
channels, I think it is not a fresh service but whether there is a block we can
find on an existing service. As you can
see, there are debates for both sides.
Professor Barwise's view of BBC Three is it should be more mainstream,
more broad spectrum and less targeted.
One of the interesting debates of the BBC going forward is to what
extent do you want a collection of, as it were, targeted services and to what
extent is the BBC's duty to be more mainstream and we have to work those
debates through.
Q503 Rosemary McKenna: I should pass on a message which I had said
previously and I thought I was just an old fogey, but they did not like the Eastenders storylines over the last
year.
Mr Thompson: Thank you for that.
Q504 Rosemary McKenna: Can I move on to another issue which you
brought up, the BBC children's programming and take us on to your
regionalisation, your moving out. There
are two issues there: moving staff out of central London, out of the M25
corridor, what are your plans there?
For example, it has been suggested that BBC children's programmes should
move to Scotland? Staffing is one
aspect. The other aspect is regional
broadcasting and you said yourself there was a clear shift in how the
independent television producers were delivering regional news and programmes,
do you think both of those are something you would do in the future?
Mr Grade: The Governors are awaiting the result of the
Director General's deliberations on practical moves out of London. We are united, both boards the Executive
Board and the Board of Governors - as we expressed in the Building Public Value document that for the BBC to be quite such a
heavily London central organisation is not a long-term future for the BBC.
There are independent producers, producers, writers and performers, there is a
job to do outside London, that is absolutely clearly visible now and that is a
public service, public value territory that the BBC must populate. The
provision of news on an international, national and regional and local basis is
an absolute cornerstone of public service broadcasting for the BBC and we have
to meet that and we have to put resources behind that. What is different this time, and Mark's plan
when he eventually comes forward to the governors I hope will be driven by this,
is that previous BBC tokens about moving out of London have meant moving Janet
Street-Porter and a religious programme to Manchester, so they all got on the
train at Euston on Friday and went up to Manchester, did the programme and all
came back to London and the whole thing cost 30 to 40 per cent more than it
needed to, but it meant the BBC could say, "Yes, we are moving out of
London". The only way effectively to
build roots, real roots and foundations outside of London is to move resources
and airtime. Those are the only two
currencies that mean anything inside the BBC.
Money and airtime has to move out of London. How it moves and what the cost of it is, that is all being worked
on by the executive and the governors.
That commitment is an absolute cornerstone - I cannot stress this
enough. We do see that one of the
justifications for the existence of the BBC going forward is to fill that
vacuum which is so clearly evident today.
Mr Thompson: Specifically, in network production we talk
in Building Public Value about our
vision of a major new network production centre in Manchester, but it is worth
emphasising that when we talk about network production outside London, I think
that has also got to mean new opportunities for network production in Scotland,
Wales, Northern Ireland and also other parts of England as well, notably our
centres in Birmingham and Bristol. This
is not about, as it were, Manchester gaining at the expense of other parts of
the UK other than London, it is about Manchester as a big part of the vision
but actually looking at what we can do in terms of network production in
Scotland and other parts of the UK as well.
Q505 Rosemary McKenna: I think it is also important to say that with
the investment in the infrastructure, certainly in Glasgow, it has involved a
real regeneration of an area so there are other spin-offs that are just as
important as actually doing the broadcasting.
Mr Grade: I think it is unacceptable in this day and
age for talented people in the nations and regions to have to come to London to
work, it is nonsense. It flies in the
face of the whole experience of ITV where there were centres of excellence with
Granada in its heyday of production in Manchester, Yorkshire Television in
Leeds, Scottish Television and so on and so on. They built up fantastic centres of excellence and they were
magnets for local talent, new talent. A
lot of it eventually came to London.
The late Jack Rosenthal was a local lad up in the North-West who got a
job writing on Coronation Street and
became one of our finest television dramatists. Where are those opportunities today? It is the BBC that must create those opportunities because they
do not exist anywhere else.
Mr Thompson: If I can just add one last thing. I think whereas in the past people have seen
this as an imperial gesture, in Glasgow and Pacific Quay, in our new centre in
Manchester, in the Mailbox we have just opened in Birmingham and elsewhere in
the UK, we are very keen to do this in collaboration with other broadcasters and
other partners. It is partly about
where STV is going to be and Channel 4 in Glasgow. It is about can the BBC and Channel 4 together help build an
independent sector in Scotland with medium sized and large players as well as
small independents. We see ourselves as
more of a catalyst working with others to create sustainable creative
industries in these other parts of the UK rather than, as it were, the BBC
doing it all on its own.
Q506 Mr Hawkins: Good morning. I want to say first of all that I have been somewhat reassured on
some of the points I was going to raise by what Mr Thompson has said to us this
morning. There are a couple of things I
will come back to briefly. My first
point is really to ask you all, given that the Public Accounts Committee is
often referred to as one of the most important, if not the most important,
committees of the House, how worried were you by what certainly appeared to be
some pretty savage criticism recently, about a month or so ago, by the Public
Accounts Committee? In particular, a
very senior Member of this House, not normally somebody who says extreme
things, a former Minister, he will be Father of the House after the next
election, was describing the BBC as "arrogant" and "self-satisfied". Do you find that of concern?
Mr Grade: Of course.
We must be concerned. I think
that is part of what we are trying to address with the reforms that we are
putting in place. Historically,
arrogance is the word that the critics of the BBC would reach for first in an
appraisal of the BBC's performance.
Having worked inside the BBC previously it did not feel as if we were
being arrogant but now, coming back, I can see how the lack of transparency,
the lack of objectivity and judgment making by the governors, easily could be
described as arrogance and as a former competitor of the BBC either at Channel
4 or in ITV, at London Weekend, which is another example of a disaster when it
started, another one to add to Grade's laws' list - it had recovered by the
time I got there - the fact is that from the outside the BBC has looked
arrogant. It is not arrogant, it takes
it accountability responsibilities very seriously. The problem is that the decisions that it has made have been
behind closed doors, a cosy discussion between the two boards, the executive
board and the board of governors, no transparency, no objectivity, no
independent thought, until after the decision had been made and, of course,
that must seem arrogant but we are addressing that. Decisions will not be made to do anything, adjust anything,
change anything, launch anything, until we have been through that process of
objectiveness so that we can tell the world how we reached the decision we
reached and what evidence we took in order to form that judgment. That is a radical departure and I hope that
will address the PAC's very robustly expressed concerns.
Q507 Mr Hawkins: Obviously the PAC were looking at some things
that some of my colleagues have already touched on in relation to the digital
services particularly. I said earlier
on that I was somewhat reassured by what Mr Thompson had said because I was a
bit worried in preparing for this session seeing that Mr Highfield was
described as somebody who was looking forward to a 100 per cent digital
Britain. Like my colleague, Frank,
certainly I do not regard myself as a Luddite, I am quite keen on information
technology, but I do have a lot of concerns expressed to me by constituents who
say that there is far too much concentration in almost every BBC programme on
both television and radio promoting things to look on the internet, to look at
BBC websites and, particularly having come recently from being a sports
spokesman for my party, sports fans saying "It is all very well Radio Five Live
constantly talking about you can get these extra services on digital radio" but
we know how low the number of digital radio sets there are, very, very low
take-up. In a world where still an
awful lot, particularly of the older generation, not only are not on the
internet but have no intention of going on the internet, do you accept that
there can be some criticism that the BBC has become too obsessed by that?
Mr Thompson: Perhaps if I can begin. We have a difficult and ever changing
balance to strike. More than half of
all households have now got digital television and more than half of all
households have now got web access. We
are particularly interested in how we can potentially encourage and attract
older audiences to think about digital technology, both the digital buses we
have and projects like People's Wall,
which is an attempt to find subject matter which is particularly likely to
attract older audiences and to engage them with digital. We talk about our efforts to broaden the
digital offering to all audiences, that is part of what we are trying to
do. I absolutely recognise that for
quite a few years to come we will have people who are still in analogue
television households and for a generation we will probably have a minority of
audiences who are really living in other than television in an analogue
world. We can mitigate this problem, to
some extent, by trying to take the best of our digital programmes, for example
on BBC3 and BBC4, and showing them as well on BBC1 and BBC2, so analogue households
can see them as well. I absolutely
agree that we have to be very careful that we do not end up where you do not
feel you are getting, as it were, a proper service on analogue because you are
constantly being pointed for the full information to digital platforms. However, all I would say is, taking all
those things on board, nonetheless, I think our role and our success so far in
accepting, if you like, the innovation that Mr Wyatt talked about and of taking
the advantage to strengthen and broaden our services and, also, to encourage Britain
to adopt digital technology early - we have now got the deepest penetration of
digital television anywhere in the world - is basically a success story, and
although we have to keep that balance in mind I do not think you can deduce
from what has happened so far that we have got the balance way out of kilter; I
think we are broadly finding solutions to that balance, though I accept that
individuals will still get frustrated when they year about services they cannot
receive.
Q508 Mr Hawkins: You clearly, from the answers you have given,
take the view that it is part of the BBC's mission to say to everybody, "You
have got to go digital." That is
something that you have sort of adopted in your minds, even though I was
putting to you analogue switch-off is clearly not going to happen in 2012, it
is going to be a lot later than that.
Mr Thompson: Can I say I would not put it quite the way
you put it? I think it is probably part
of our mission to say "Here are the advantages of digital" - whether it is GCSE
bite-size for your exams or whether it is People's
War and remembering your and our collective history - but I would never say
to an analogue licence payer, "It's your fault" or "You're old-fashioned". I think we need to offer a full service to
them as well. As far as digital
switchover goes, it is interesting to reflect on the fact that not only are
more than 200,000 Freeview digital adaptors being sold every month now (200,000
households every month, so a million in five months) but I believe there is now
a Freeview box on sale at £25. This is
ceasing to be an expensive or, in any sense, heroic piece of technology; it is
a routine thing.
Mr Highfield: I think we probably have reached the tipping
point on the net in Britain anyway, with 55 per cent of homes having the
Internet. In fact, the fastest growing
are the over-55s, through things like genealogy, which the BBC can promote an
interest in. It kind of goes with my
job title that I have a technical brief.
It has to be borne in mind that I am responsible for only 3 per cent of
the licence fee, but I think that is still £100 million that we spend on the
net and on interactive TV, and we have a responsibility to make people aware of
those services - often far too deep and analytical news, for instance, that we
can possibly broadcast from our linear schedules, but you are actually tackling
the balance right.
Q509 Mr Hawkins: It has been suggested to us, as a Committee,
not only by other witnesses but in recent reports we have had from academics,
that there is a real issue about the BBC unfairly using its position, as it
were, to cross-subsidise and compete with channels in fields like Arts World
and History Channel, and that kind of thing.
You are all aware that that is an issue. At the same time, I suspect that to an awful lot of the British
public your suggestion in your recent document that you are eliminating
derivative programmes and ideas from the schedules would simply cause hollow
laughter. How do you respond to that,
because certainly from my own experience as a regular viewer and a great
supporter of what the BBC has done both in history and the arts I would have to
say that some of the things you have done with your recent channels are clearly
an attempt to muscle in on successful markets which have been created by the
History Channel or Arts World. I think
there is a real issue here that you have to look at. I see the commercials, as it were, you are doing for your own
products, and a lot of constituents say to me "In the old days we liked the BBC
because there weren't commercials on it; now there are commercials on the BBC,
but it is just the BBC promoting their own stuff all the time."
Mr Grade: On the interaction with the private sector, I
think that we are currently undergoing a review of all our commercial
activities. The first thing to say is
that the BBC embarks on commercial activities - what it amounts to is -
exploiting beyond broadcast the intellectual property that the BBC has created
and in which the licence-fee-payers have invested. We embark on commercial activities for two reasons: first of all,
Parliament requires what is colloquially known as self-help - that we maximise
our commercial advantages. Secondly, we
owe it to the licence-fee-payers to give them a return on the IP that they have
invested in and created. So there are
two good reasons for doing it. You then
have to say, "Are we doing it fairly?
Are we doing it in a way that is fair to the private sector?" All the evidence that I have seen so far
suggests that the controls and mechanisms and the procedures and guidelines
that exist within the BBC, which have been independently audited, at least once
- Caroline can, perhaps, tell us how many times we have had outside people come
in and look at our procedures - have not been found to be wanting in any way,
shape or form. There is a fair trading
committee of the Governors, which entertains complaints after the fact, and
there are complaints. What I would say
is that in future the way we intend to run it is that in launching any new
commercial activity or any activity which is likely to have any impact on the
private sector we will examine that not on the evidence of what management
tells us but we will go to the governance unit of the BBC and we will call on
outside experts, we will get the information and we will get the views of the
private sector before we move.
Therefore, let us say, we launch some new commercial activity; of course
we must not abuse our privileged position with the distribution that we
presently enjoy to promote commercial activities with an amount of air time
that is not available to our competitors.
It has to be a level playing field, and that is policed and there are
very serious strictures. It may not
seem like that to our commercial competitors who would love to win politically,
sometimes, what they cannot commercially.
It happens, in some cases, that their complaints are founded, but not in
every case.
Q510 Ms Shipley: I am not sure it has to be a fair playing
field, actually. I do not see why the
BBC cannot have its own unique area that it leads, and if it tramples on a few
commercial stations so be it, if it is in unique areas. I do not really think it ought to be on the
grounds of the non-unique areas. When I
start thinking about "I want to believe in the BBC", what worries me is the
areas where it is not unique. So I
starting looking at where is it unique, and I think the news reputation is
very, very strong and the children's television is very, very strong, but in
terms of its unique selling points there are a lot of dodgy areas which,
hopefully, you are addressing through your Building
Public Value. I would like to ask
you, Mr Grade, what is the difference between public service and public value?
Mr Grade: Public value is the result of the public
service, we hope, and we are striving always, in whatever we do, to be able in
some way to measure the effectiveness of what we do. Public service broadcasting, in the end, is the result of the
unique, securely and adequately non-competitive funding of the BBC. That creates the climate in which public
service broadcasting can thrive. It is
interesting to note that ITV had a monopoly of revenue, up to the point when Channel
4's arrangements were changed - if you remember, ITV sold Channel 4's airtime
up until 1980-something - but once Channel 4 and ITV were in competition for
revenue it affected the nature of the service, undoubtedly. So the conditions for public service have to
be created by the unique, secure and adequate funding mechanism.
Q511 Ms Shipley: Do you agree, then, that there is a whole
area that is not unique about the BBC at the moment; that really it has moved
itself into competitive areas where, actually, it should not be competing and
that it really, really should be focusing on its seriously unique
possibilities?
Mr Grade: We should be striving at all times to be the
benchmark of quality, innovation and the highest rate of delivery of those
qualities. The more you strive you are
going to have failures. You are going
to make decisions about programmes which seemed like a good idea at the time
----
Q512 Ms Shipley: For the life of me I cannot understand why
the BBC has to do game shows, for example.
Okay, it comes under entertainment, but I cannot understand why it has
to do game shows.
Mr Grade: It is dangerous straying over this line here,
but there is a BBC quiz show and there is an ITV game show.
Q513 Ms Shipley: Is that not a little pedantic?
Mr Grade: No, no.
Who Wants To Be A Millionaire
is an ITV show, in my view.
Mr Thompson: If you think of Have I got news for you? or The
News Quiz on Radio 4, I think it depends on the game show. I think there are game shows which the BBC
should not do. Comedy is quite an
interesting area because people say, perhaps, "That is not unique, it sounds
very commercial, it is about entertainment."
Actually, the BBC has got 60 years of heritage in comedy and, probably,
as a matter of fact, is investing more in comedy than the whole of the rest of
----
Q514 Ms Shipley: I was not talking about comedy.
Mr Thompson: In other words, the idea that some parts of
entertainment could be distinct and the BBC could be making a unique
contribution can be just as true as in news or in children's programmes.
Q515 Ms Shipley: Mr Highfield, you said in answer to my colleague's
question that you do not brand all your services and that you do that on
purpose. So why do you not brand all
your services? I cannot understand that
- the proud brand of the BBC. Why do
you choose not to brand them?
Mr Highfield: We do brand all our services.
Q516 Ms Shipley: It is on record earlier on in these
proceedings.
Mr Highfield: We syndicate into others, we keep branding
quite light for that particular audience.
Q517 Ms Shipley: Why?
I do not understand.
Mr Highfield: Because with some of the new services that we
may put into AOL, the branding at that particular age for some audiences may
just not appeal and yet we still think there is public value built by providing
news or educational services, you just need a more subtle approach sometimes to
it rather than slapping in big, bold letters "This is good for you" all over
it.
Q518 Ms Shipley: Is that what the BBC is? Good for you? No, come on. There must
be a way of branding.
Mr Thompson: Just to explain, I think what that means is
if you imagine a young subscriber going on to their AOL homepage you would see
"BBC News" embedded on the homepage. It
is still branded BBC but it is in that AOL environment, as an example.
Q519 Ms Shipley: There is room for manoeuvre here, I think.
Ms Thomson: I think it is about increasing reach as a
news service, which you yourself just said is an important part to do, to new,
young audiences which we are trying to get to.
That is the point of it.
Q520 Ms Shipley: I suppose what I am trying to get at is that
when I turn on the radio I know when I am listening to the BBC - actually, on
any channel I know. With television I
do not always find that; I am really not always sure what I am watching, which
brand I am watching. With CBBC I can
because there is no advertising (that is its major selling point, as far as I
am concerned) and certainly no advertising of products I would not like during
children's television. However, why you
cannot be running your branding very, very strongly in other products I do not
agree with you.
Mr Thompson: I think the notion here is that a young
Internet user who might not naturally go to a BBC news site might, nonetheless,
connect with and bump into BBC news and enjoy it in an environment - the AOL
homepage would be one example - where they are more comfortable.
Q521 Ms Shipley: Fine, but would they not be turned off by it
being the BBC?
Mr Highfield: Maybe another way of putting it is that 93
per cent of AOL's traffic does not leave AOL, so we either become imperialist
and say "If you do not come to us we are
not going to bother", or we actually find ways of engaging with them on
their terms, particularly for the teen audience.
Q522 Ms Shipley: But then you educate them that there is the
BBC, as well. If the product is good
and you want to sell it to young people and the young people have found it,
once they are there surely you underline ----
Ms Thomson: That is exactly the point.
Mr Thompson: They can click through and they can then
actually come into the BBC world, but they might come upon it first in this
other environment.
Q523 Ms Shipley: When I last looked at branding, which I did
in some detail, branding is a lot more than that; branding is about creating a
whole identity. Is it not? So where is your bit about "We don't, on
purpose, brand part of our function"?
Mr Thompson: In a way, to get people in in the first
place.
Q524 Ms Shipley: It is distressing, is it not, that they would
be off-put by the BBC?
Mr Highfield: That is teenagers!
Q525 Ms Shipley: Then you have not got your market.
Mr Grade: I think the trend is for the BBC to partner
other, outside, organisations. In doing
that you must respect their brand and their right to display their brand, and
when we move into an environment where we are in partnership - and the example
of AOL is a good one - that is AOL's site; it is branded "AOL". The BBC gets the credit for the content, the
authorship of the content, but it is important for AOL to explain to their
users where it comes from. So the BBC
is there but you are in somebody else's house.
You do not bring your own furniture when you go to someone else's
house. That is a rather clumsy
expression. Gray's Law is best.
Q526 Chris Bryant: Now we are getting carried away with
metaphors. "That's teenagers for you" -
just ungrateful, are they not?
Incidentally, Chairman, can I apologise for lateness, I have been on a
Standing Committee, so if I ask something which has been asked by others, I
apologise - just say "I refer to my answer previously". We have already had four cornerstones of the
BBC today and I note it is a word that is used an awful lot about the BBC and
broadcasting, and then Ofcom says that the BBC "is the cornerstone of public
service broadcasting." However, one
that is generally recognised is that it is about universality, and you put that
in your own charter commitment. Of
course, as we have already explored, it is not just 3 per cent of the budget
which is not available to everybody, it is a significantly higher percentage of
the licence fee now which goes to programming and services which either
themselves are physically not available to everybody or which everybody does
not yet have because they do not live in a multi-channel household. What percentage of the BBC's licence fee, do
you think, is a suitable amount to be not universally available? Secondly, do you think that you will have to
develop your own free-to-view satellite option?
Mr Grade: I will take the second point first. Undoubtedly Freesat, whoever provides it -
whether it is a consortium led by the BBC or partnered with the BBC or whether
it is Sky and the BBC, however that emerges - is the easy solution for those
people in parts of the country, many licence-fee-payers, who are unable, even
if they bought the Freeview box, to receive the Freeview basket of services. So that is a matter of urgent development.
Q527 Chris Bryant: There seem to be delays about the Sky version
coming into existence still.
Mr Grade: Sky will launch very shortly.
Q528 Chris Bryant: We were told that back in March. "Shortly" has become not very shortly.
Mr Grade: No, talks are going on all the time to try
and figure out the best route. It is
quite a significant step and we want to get it right, and we want to know we
are talking to all the potential partners.
Q529 Chris Bryant: Is it going to be by Christmas?
Mr Grade: Sky's box, from what they have announced to
the markets, is going to be available before Christmas, so that will offer an
immediate option to licence-fee-payers.
Whether we go in with Sky or offer an alternative is a big decision but
that opportunity is available from Sky very, very shortly. It will be an encryption-enabled box, I am
sure.
Q530 Chris Bryant: I am sorry to unpack this, but I think from
what you are saying you still think it might be necessary, even once Sky's
Freesat exists, for there to be another Freesat/BBC?
Mr Thompson: We think that one of the reasons Freeview has
worked so well, and we were saying before you came in that over 200,000 units
are being sold a month now, is because there has been quite lively competition
in that market which is driving the price of the Freeview receivers down to
£25. If it can be achieved, the idea of
a rather similar free satellite standard and healthy competition between
different box manufacturers-produced devices so that consumers have a choice of
device, a choice of functionality in device, if they want to have the option of
upgrading to pay it is there through Sky or through others, if they want a very
low cost box without encryption they can have that, if they want a box with a
PVR, a hard disk on it, they can have that.
We would like to see a market opening up in free satellite, particularly
for the people who currently cannot get Freeview. The broader point is with over 50 per cent of households already
seeing digital television, the best path to universality now is to deliver,
subject to Mr Hawkins' scepticism, switch-over as quickly as possible because
at switch-cover we can then deliver DTT across the whole country. I have to say, I am at the point now of
thinking that the best way we can get back to a point of universality, which we
absolutely have to get to, is by moving swiftly to switch-over and freesat is
part of that.
Q531 Chris Bryant: That ties up the first question. Can I ask something about accountability and
the governors. I wholly applaud the
direction that you have moved in in terms of trying to segregate the two and
create greater independence for the governors, but at the end of the day there
is still the problem of how accountable a governors' report is? For instance, you have announced one on
European coverage and you have set your own terms of reference. I think they are very biased terms of
reference and I think they are pointing in entirely the wrong direction, but
nobody in Parliament or as a licence fee payer has an opportunity to question
you on your own terms of reference.
Several months ago you announced that you were going to do a report on
expenses in the BBC and I think it was going to report within a week but it has
not reported yet and it is more than three months later.
Mr Grade: On the second point, the Ernst & Young
report, there was no commitment at all to anything than a thorough report into
the financial procedures inside the BBC which the governors commissioned. There was no commitment made. I would not have thought that any report of
that nature done inside a week would have much value, to be honest. Ernst & Young are doing their work and I
am hoping that they will have completed it pretty soon, I have not got a date
yet, but it is well towards completion now.
Sorry, the other point was?
Q532 Chris Bryant: Just about you set your own terms of
reference and that was the problem because who then says "I am sorry, we
disagree with you"?
Mr Grade: I can assure you that the terms of reference
for the impartiality review of European coverage were not set by the news
division or anybody who was parti pris
to the argument and the review will be conducted with independent outside
consultants, experts and so on, who are not parti
pris. I sincerely hope when that
report is published and the governors' views on it are published that people
will accept it for what it is, which is going to be a very independent and
impartial view of the BBC's coverage of the European issue.
Q533 Chris Bryant: Just one final area. Barwise suggests some targets for BBC 3 and
BBC 4 but the danger of setting targets for audience reach and share is
obviously that you are saying you should chase audiences, and yet one of the
basic principles of the licence fee, and you have advocated this not only here
today but when you have seen us before, is that you are rather eschewing that,
that you do not need to chase audiences all the time. How do you resolve that tension, especially in a world where
digital television will mean that you will not be able to hammock programmes in
the same way, you will not be able to guarantee that people serendipitously
land upon a programme that they might not have chosen to watch in the first
place? How do you reconcile that?
Mr Grade: Governors in their stewardship of the
public's money are not in the business of endlessly granting money to the
management to spend on services that clearly nobody wants to watch or to listen
to or to use online. In the case of
embryonic services, which is what the digital services are, we will have to
take a view at a certain point as to whether they are making progress and
growing, whether they are flat or whether they are in decline, and you do that
through a regular process of review but also when it comes to the management's
presentation of the budget and the allocation of financial resources the
governors will scrutinise where the management are proposing to shift money and
will take a view in the interests of the licence payers as a whole as to
whether we think that money is going to be well spent or not. In future, that will be backed up by the
service licences which will be issued by the governors.
Mr Thompson: Building
Public Value suggests a metric which is not just looking at audience size;
it is looking at reach, quality, impact and value for money with a large number
of parameters for a more balanced assessment about whether or not we are
driving public value.
Q534 Mr Flook: May I also apologise for being somewhat
late. Since we started this inquiry,
several times we have come across the perception that those in their twenties
are not watching television like those in their thirties, their forties, their
fifties, their sixties or their seventies, that they are moving on to video
games, they are not slumping in front of the TV. Because we are looking at possibly a ten year Charter renewal,
will those people in their thirties be doing the same things they are currently
doing in their twenties?
Mr Grade: The first thing to say is that sort of late
teen, early twenties audience has never watched television in large numbers,
they have always been the light viewers.
Q535 Mr Flook: I am told that is happening also in their
mid-twenties. Is that true, Mr
Highfield? Is it moving through or not?
Mr Highfield: There is some evidence that the audiences are
declining and then the question is will they come back. That is where the jury is still out. I think that from my perspective we place
bets on where they may stay, which is in new media, digital radio, digital
interactive television and so on. What
is clear is that they do not just drop one medium forever, as every new medium
comes along it squeezes into the overall space of people's media consumption.
Mr Thompson: Careful about assuming that they are not
watching television, but what they watch on television may now be the DVD of Little Britain they have bought. The DVD explosion in this country is
actually driven by this demographic.
For me, it goes back to the point we were talking about earlier on,
which is if the mass content you are making is the right content and works for
audiences, and BBC comedy would be a good example of something this audience
loves, we should accept they are going to access the comedy in new and
different ways as well as watching it on BBC 2, as it were.
Q536 Mr Flook: Mr Thompson helps me make my next point more
easily. The Chairman mentioned the
phrase "public service broadcasting" and I do not deny that the big thing the
BBC has over the next 50 years, 100 years, is your content. The question mark I have is over that word
"broadcasting" because of things like TiVo and personal video recorders, and
maybe they are watching DVDs but they are not watching the broadcasts. I have a particular point because in
Somerset, and also on the Devon border, it is quite hilly and we do not get a
lot of the broadcast and people have been driven to Sky because the quality of
the transmitter is not very good. That
is part of it. The other part is if
people are changing their viewing habits, or what they are viewing, is there a
need for the BBC to be broadcasting in 12 years' time without being a social
service?
Mr Thompson: One of the interesting trends in audience
figures over the last year or two is that the big live events are getting
bigger. The Olympics' audiences,
audiences for events like D-Day remembrances, are getting larger, the audience
is getting larger for the Cenotaph. The
premium on events which you have to watch, whether it is some enormous news event
or Kelly Holmes winning a gold medal ----
Mr Grade: Two gold medals.
Mr Thompson: Two gold medals. The premium on the live broadcast event is growing. I readily accept that the live broadcast
moment, and more generally the broadcasting of the day, today's Eastenders or today's Holby City, as well as the Ten o'clock News, is going to be part of
a richer mixture where people sometimes say, "Actually, I do not want to watch
what is on BBC 1 tonight, I want to watch what is on BBC 1 tomorrow night or
next week or a year ago, or the DVD I have got of this classic BBC comedy, or
to go on the web, or I want to make my own programme and I will take some of
the BBC archive and start creating a programme of my own". To me, what makes it an exciting moment in broadcasting
is the ways in which people use material and manipulate it are going to grow
and multiply, frankly in ways which I think are going to leave them more
discerning, more empowered and overall, I have to say, having a richer
experience.
Mr Grade: For the foreseeable future, the main broadcast
channels will remain the showcase for the content. There are ancillary benefits that we can create to leverage that
content into other delivery platforms.
It is not unlike the cinema in the sense that the gap between the
availability of a movie first run in a theatrical exhibition and the arrival of
the DVD in your store or on Amazon.com has shrunk, so if you miss a movie it
does not matter, you know you can get the DVD, but still it is that shared
experience, that immediacy, the showcase of the cinema release - cinema
attendances are holding up pretty well - that drives the rest of the engine and
I think the broadcast channels of all networks will remain the showcase for the
content that we will continue to be able to produce.
Q537 Mr Flook: If I can explain, my concern is that we have
this possible ten year Charter renewal and that ten year timetable is coming up
with no regard, necessarily, to what is happening in terms of technology and
digital and social changes, it is fixed where it is because of where it was
eight years ago and you will have a change in roughly two years' time. My real concern with the BBC is if you do
get a ten year Charter renewal, in 2016 you will wish that you had not been
given ten years, you may wish that it had been for seven years. Is there a flexibility? The reason I ask that is because every
single company that came and sat where you are sitting today over the last
three or four months, every single one of them, said they want the existing
situation to continue. That tells me
you are either doing something wrong or it is a very cosy existence. That is a real concern, that there is no-one
pushing up against and challenging the status quo, apart from within some
walls.
Mr Grade: Digital switch-over is a huge event in the
life of UK media as a whole. I come at
it from a slightly different point of view.
I think that we have to have some continuity through that period of
change. Leave aside the BBC's role in
effecting digital switch-over, I think there would be widespread support for
one cornerstone of British broadcasting where there is a guaranteed supply of
international, national, regional, local news, current affairs, a guaranteed
supply because of our funding set-up of high value, high content British
indigenous production produced throughout the UK, throughout these
islands. I think there is an enormous
case for being able to rely on that as a source whilst the market sorts itself
out and we see what the market is going to produce. I think that ten years in, going through that digital change,
that continuity and that consistency, that bedrock, that cornerstone, is
vital. It is our content that is going
to help to drive digital take-up, as we have proved with Freeview.
Chairman: Lady and gentlemen, could I say this: I have no idea, and I do not think anybody
around this table has any idea, what conclusions we are going to come up with
and what we are going to recommend, but I will say that it is very fortunate
for the future of the BBC that the change of leadership came about and that the
BBC has its present leadership.
