Examination of Witnesses (Questions 72
- 79)
TUESDAY 8 JUNE 2004
ITV, SMG
Chairman: Mr Allen, gentlemen, may I
welcome you here today. It is always a great pleasure to see you.
Q72 Michael Fabricant: In your written
submission you said you would like to see the BBC's Board of Governors
retained in their present role; but I think you were here just
now when you heard Sir Christopher Bland speak when he said that
he would welcome perhaps a little bit more influence from Ofcom
particularly, say, with regard to fairness. What is your reaction
to that?
Mr Allen: We think the Board of
Governors should take on the role more like non-executive directors
of a plc board, more similar to Channel 4. I think it is impossible
to ask the Board of Governors to be judge and jury. We think it
is an impossible task. No matter how you structure the interface
between management and the Board of Governors we do not think
you can get that level of independence. We think that the Board
of Governors should remain, but the task is much more that of
a role of a non-executive director, and more towards the Channel
4 model. I also think they should be independently reviewed by
Ofcom.
Q73 Michael Fabricant: You would
welcome that?
Mr Allen: Absolutely.
Q74 Michael Fabricant: The BBC is
changing in some different ways, and you will know it has gone
very successfully, as far as the number of hits is concerned,
into its Online facility, very well championed by Ashley Highfield
who is the Director for New Business. While I know you would not
be happy at all with the idea of the BBC having commercials on
its main television and radio services, just as the Radio Times
carries advertising do you think BBC Online should carry advertising?
Mr Allen: I think the problem
is that it is the thin end of the wedge, of whether we want a
commercial BBC or a public service broadcasting BBC. I think we
need to be very clear on the role of the BBC. I personally believe
that the BBC should be focused on public service broadcasting.
I believe that it should continue to be funded by the licence
fee, because any involvement of that team in commercial activities
will actually distract them from their core role of providing
core public service broadcasting. I think that should happen.
I equally believe that effectively their commercial activity should
be privatised, with an even clearer divide between public service
broadcasting, as a broadcaster, and their other commercial activities.
Q75 Michael Fabricant: That is an
interesting suggestion, because if the BBC's commercial activities
were privatised—and that would include all BBC publications,
all their productions, DVDs, VHSs and all the rest of it—then
the profits from that activity would not be able to go back into
programming, which actually helps subsidise and keep down the
licence fee.
Mr Allen: I think we should look
at how it can be structured. I think they should retain the revenues
which come in from those commercial activities; and those revenues
should be put back into funding a strong BBC. We as ITV want to
see a strongly funded BBC; not an over-funded BBC, but a strongly
funded BBC. That is both in our commercial interests as well as
in broadcasters' interests at large, and the public's interest.
We want a strong BBC, and we would like to see the revenues and
profits from those commercial activities fed back into the BBC,
because we want a strong BBC. People sometimes find that a little
bit strange and say why would we as a major competitor want to
see a strong BBC; and the reason for that is basically we and
the BBC obviously compete for ratings but we do not compete with
the BBC for pound notes in the advertising market. We believe
the public is well served by a strong BBC that is providing complementary
public service broadcasting and commercial broadcasting service
to the public. The ideal situation for ITV is ITV getting a 35%
peak-time share, the BBC getting a 30% peak-time share, and all
of the others chasing a 35% share, so we want a strong BBC.
Q76 Michael Fabricant: Do you think
the BBC, through its commercial activities, competes unfairly
in the commercial sector?
Mr Allen: The difficulty we have
is that it really lacks transparency. To be able to answer that
question we would need to have far greater transparency between
the costs that are transferred from the PSB side of the business
to the non-PSB side. I think that is why a clean divide between
the public service broadcasting BBC and their commercial activities
owned separately would give that divide, but not deprive the BBC
of those revenues and income.
Q77 Michael Fabricant: Of course,
the BBC would argue that they have a fairness structure in their
trading activities. Would you then welcome National Audit Office
intervention to examine and try and cut through that lack of clarity
and expose whether or not the BBC is competing unfairly with the
commercial sector?
Mr Allen: We have supported that
in submissions we have made to the Committee. We think that would
be a good idea. I do not think that takes it far enough. Inter-company
trading, inter-corporation trading, is always a nightmare and
it is very difficult to get to the true value unless you are in
a real market. That would be a help but I do not think it solves
the problem.
Q78 Michael Fabricant: Earlier on
you said that the BBC should really restrict itself to its core
activities. You said that they should not be commercial. That
followed on from a question about the BBC's Online services. By
definition, it would seem that you would count that as being its
core service. Do you think there are any activities at present
which are undertaken by the Corporation funded by the licence
fee—I do not know, maybe it might be BBC3, BBC4 or its Online
service—that really is not its core service?
Mr Allen: I think BBC3 and BBC4
are very much its core service. I think it provides a range of
services. We welcome the fact that there is a very clear remit
for BBC3 and a very clear remit for BBC4; we would like to see
that clarity applied to BBC1 and BBC2. I think there is a fantastic
opportunity (a) for this Committee and (b) in this debate to clarify
exactly what the remit and role of the BBC is. So I think the
areas you touched on are core services for the BBC.
Q79 Michael Fabricant: Would you
have any objection if the BBC were to expand its services and
introduce new television and radio channels or indeed got into
other areas of online provision?
Mr Allen: Providing there is a
debate, as there was on BBC3 and BBC4, we would have no objection
to that, providing it really is providing new and additional services
that the market is not already providing. There is a lot of debate
in terms of the BBC's new service and a lot of debate on BBC's
children's services. I think we need to have a very thorough process
where, I think, this Committee can play a very key role in ensuring
that we are actually providing true additional public services
rather than just an expansion of BBC strategy.
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