Examination of Witnesses (Questions 80
- 99)
TUESDAY 8 JUNE 2004
ITV, SMG
Q80 Derek Wyatt: Good morning, gentlemen.
Can I ask a technical question? Is it possible, in the near future,
for the Freeview box to be incorporated into a television set?
Will that be on the market in three or four years?
Mr Allen: It is technically possible
now.
Q81 Derek Wyatt: Thank you for that.
Two weeks ago we had a session we called Blue Skies, where we
were trying to sort of anticipate what the future might look like.
Have you had a Blue Skies session with your own people and have
you a view about where the entertainment platform might be in
2017?
Mr Allen: That is a very good
question. I think we have looked at a number of scenarios. There
is a lot of scaremongering around that it will change dramatically.
I think what we still believe is that there is a market for what
we might call watercooler television. If you look at 20 years
then 14 million people will still want to watch the rugby—Jonny
Wilkinson's drop-kick—14 million people may want to watch
a programme like Get Me Out of Here! and 12 million people
have continued to watch Coronation Street for many years.
Our vision still has a lot of the things that we see now as part
of people's lives going forward. I think what we bring is a cohesion
to society with issues that people want to talk about because
they share that experience. I think that shared experience will
absolutely be part of the future. I think there will be a lot
of fragmentation, there will be a lot of specialist services,
but we inherently believe that mass-market television has a long-term
future.
Q82 Derek Wyatt: One of your purposes
is the need to satisfy your shareholders. If I could prove to
you that the revenue stream and the share value would be much
better if you just actually had a DVD sent to every household
and that on that monthly DVD was the complete Coronation Street
or the complete ER and the only things missing were live
news and live sport, and that it doubled your share value, you
would have to look at that as an issue, would you not?
Mr Allen: Absolutely.
Q83 Derek Wyatt: That is some of
the thinking in Hollywood; as DVDs go from 10 hours to 100 hours
to 1000 hours that is a scenario that could change, or you could
just dial it down and just subscribe to a service. That changes
almost all the rules, it seems to me, that currently we are talking
about. I suppose my question really is: can you really bet ten
years for another licence fee? Or would it be better to say five
years or seven years?
Mr Allen: Our view is that the
BBC is appropriate to have another Royal Charter for 10 years.
However, what we would say is that we think it is appropriate
for an independent review to take place upon switchover. So when
we actually move to switchover and the date of switchover there
should be a full review. So a ten-year charter that allows the
BBC to plan, to think ahead about how it is going to manage that
set of changes you have talked about, but we do think it would
be appropriate to have a specific review at the point of switchover,
because things will change quite dramatically and none of us can
predict how that is going to pan-out 10 years out. None of us
could have predicted the growth of Freeview even two years ago.
So I think the way forward would be to give sufficient comfort
to the shape of the BBC for a ten-year period but to introduce
a review, either by this Committee or a more general review, at
the point of switchover.
Q84 Derek Wyatt: However, if you
are giving 10 years you are committing the licence fee concept
for 10 years.
Mr Allen: I accept that. For the
BBC to enable itself to plan for that period of time I think that
is a sensible time-frame within which to allow the BBC to plan
its funding going forward.
Q85 Derek Wyatt: If we were sitting
here in 2012—which is probably unlikely in both our cases—and,
say, the actual viewing figures for the BBC were under 20%, there
would come a dislocation between people wanting to pay the licence
fee. Can we be so confident now, in the next year, to give 10
years? I think that is what scares me slightly.
Mr Allen: I think it is a bit
of a chicken and egg situation. I think if you do not have that
level of confidence then the BBC would not be able to plan for
its future. I think the BBC should be given a ten-year Royal Charter
but we should implement a review. Whether that review also includes
funding is the point you are making.
Q86 Derek Wyatt: Would you feel happier
if you had no public sector remit, as a group? Do you feel it
should just be the BBC?
Mr Allen: No, I think it would
be wrong for the BBC only to be the provider of public service
broadcasting. I believe pretty passionately that ITV has a role
to play, Channel 4 has a role to play and Channel 5 has a role
to play and I think it would be wrong to see the BBC as the sole
provider of public service broadcasting. Frankly, a multiplicity
of supply of public service broadcasting has to be the model going
forward.
Q87 Mr Doran: You made a powerful
case for a strong BBC. How much does ITV depend on a strong BBC?
Mr Allen: It is very important
to us commercially that there is a strong BBC. I think a weak
BBC means that they lose ratings and if they lose them to our
competitors our competitors then make more money. So commercially
it is very important to us. I personally believe that from the
public service broadcasting perspective then a strong BBC, ITV,
Channel 4 and Channel 5 gives viewers a range of public service
broadcasting services that is unique in the world, and I think
we should be mindful of that as we look to change and modernise
the BBC and ITV going forward.
Q88 Mr Doran: Do you think there
is a case to say that the existence of a strong BBC actually improves
ITV?
Mr Allen: It is very important
to ITV. I think without a strong BBC then ITV would be weakened.
If you just look at the financial models, that is why I think
in this country we have three funding models: pay generates between
3 and 3.5 billion; there is about 3 to 3.5 billion of advertising
money and another 3 to 3.5 billion of licence fee. That tripod
of funding enables us to have, I believe, the highest quality
programming in the world. With any one of those not being there,
or any one of those being disadvantaged, then I think that is
a problem. One of the things I do think is important, though,
and where there has been a change in the last few years is what
I would call public service scheduling. One of the things that
the Committee should look at is this whole issue of counter-scheduling.
I do not think it can be in the public's interest when the main
channels are targeting exactly the same demographic; whether you
are a 16-34-year-old watching a pop programme or whether you are
a 35+ or ABC1 watching a key drama, that cannot be in the public
interest. So one of the things I think we do need to look at is
what I would call public service scheduling, because you are depriving
the public of a type of programming they want.
Q89 Mr Doran: Just moving on a little,
in your evidence you have talked about the BBC's tanks on your
lawn, and that has obviously become a feature particularly because
of ITV's recent financial weakness. Your innovation has been,
maybe, at a lower level than you would have liked it. Without
that innovation from the BBC (what you call the tanks on the lawn),
the excellence you have described and the strong BBC that you
describe is not likely to be around. So why do you pick that as
a target?
Mr Allen: I think it is not about
tanks on the lawn in that sense. The good news from an ITV perspective
is that despite a significant fall in revenues we have been able
to increase our investment in programming and we have been able
to create more hit dramas, for example, than our competitors and
the BBC. I think healthy competition is good news. But between
ITV and the BBC spending $20 million on Daniel Deronda
and Dr Zhivago and then thinking they should be scheduled
head-to-head cannot be in anyone's interests. What I am talking
about is healthy competition between the BBC and ITV. Equally,
I do not want to see PSB programming ghetto-ised on the BBC. I
think it is equally appropriate for the BBC to be providing EastEnders
as it is Panorama. Actually the question is: how many EastEnders?
The bulk of the money being put into longer runs of Holby City
and more EastEnders—is that the right mix? I am talking
about proportionality and healthy competition rather than scheduling
which just undermines and deprives the public.
Q90 Mr Doran: As a Scottish MP I
could not resist this audience or this group of witnesses in front
of me without raising the issue of regional broadcasting. I want
to say something about Scotland in a second, but one of the disappointing
aspects of the recent merger was that one of the first things
that seemed to happen was the axe came out to some local studios.
Is that something we are likely to see more of in the future?
Mr Allen: I think maybe Donald
could respond on that because all that has happened in some of
the English regions is some of the work that has already started
in Scotland, where there was a modernisation process. If you look
at the work that Grampian did in modernising its studios, I think
the focus for us is moving away from, if you like, an engineering
structure to a talent and technology structure. I think Grampian
did a good job.
Mr Emslie: Frank has heard me
talk about this on many occasions but in terms of modernisation,
particularly as Grampian, we're about to do exactly the same for
Scottish television in the Central Scotland region, we felt that
our money is best invested, as Charles said, in programming, both
network programming and regional programming, which is a significant
investment for us, and the talent of the individuals to make it.
So in Aberdeen we have moved into new studios which are very modern
and highly technical, and that model I think will be replicated
round the ITV network. We have now got more people making more
programmes at Grampian than ever before, so I think the new model
does work. I do not think anyone is suggesting that Grampian Television
does not serve its region very well; it is an area the size of
Switzerland and it makes seven hours a week, but it really focuses
in on the local population, and it does a very good job.
Q91 Mr Doran: I think we are all
very grateful for the new studio, it is an excellent studio; the
only thing you got wrong, I think, is that you moved it out of
my constituency!
Mr Allen: We tried to keep it
in but we could not get a building.
Q92 Mr Doran: There is a serious
point behind that, because although I understand the situation
in Grampian (we have discussed it many times and we have fought
about it on a few occasions) it is the message that it sends.
This new company is formed and, obviously, Grampian and SMG are
not part of that new company. Offices closed down, and some of
my colleagues round the table had real concerns about what was
happening, and I know that fellow colleagues have. There is just
a sense that the PSB part of the remit is not being abandoned
but there is a move away from it, in the sense that it will all
be left to the BBC and that is coupled with concerns about what
we see as a very light touch from Ofcom. I think it is important
to understand exactly how you see that and where you are in the
process.
Mr Allen: I think Clive can probably
deal with that because he is managing the detailed changes throughout
the whole of the English and Welsh regions.
Mr Jones: I think the key thing
is to actually judge what we are still putting on the screen and
what we continue to intend to put on the screen. We provide 27
regional and sub-regional news services across ITV, and we are
not proposing to diminish any of those. That is far more than
the BBC does; the BBC in the English regions does around half-an-hour
of non-news regional programming every fortnight and we do three
hours a week—more in Scotland, more in Wales and more in
Northern Ireland—to recognise the nations alongside the
regions. This is a process of change to the process of investment—investment
in new technology which is happening in Derek's area, in Meridian,
which is happening in the Midlands which we are planning to do
in Wales and which we are planning to do in the creation of a
new news-gathering centre in the East Midlands in Nottingham.
This is not a retreat in any way from regionalism or from public
service broadcasting; this is a real investment in regionalism
going forward and continuing to provide a range of regional news
services and national news services and regional non-news programming
which is unrivalled. No one else gets anywhere near us; Channel
4 cannot do it, Channel 5 does not do it (they are not required
to do it) and the BBC does not do it. Regionalism is still alive
and beating well in the heart of ITV.
Q93 Rosemary McKenna: Can I go back
to the point I raised with Sir Christopher? It was based on something
I read recently, a suggestion by one of the directors of Ofcom
that there ought to be a ratings system applied to television
programmes, similar to the ratings system that is applied to cinema
films, particularly, I think, in view of the concerns recently
over certain storylines that have been appearing. I agree that
times have changed and people are much more aware, and children
are much more aware, but would it be helpful to the parents and
how would you feel about being asked to produce a ratings system?
Mr Allen: I think you make a very
good point. As we move from analogue terrestrial television to
digital then a lot of the rules and regulations we have accepted
as the norm do not apply in the digital world. So I think you
make a very good point about how we are going to deal with that.
I think there is a big issue there. My only concern, or the issue
I would raise, is that when Channel 4 attempted something similar,
going back to the 1980s and 1990s, it actually had the opposite
effect; when there was the identification of violence then it
actually drew the people that you did not want to the programming.
So I think it is something we should think through, but I think
the more strategic issue is how we deal with something where we
have got acceptable roles and structures in analogue television
and the watershed, which is not something which would naturally
apply in a digital world. I think it is an issue for the industry
to debate and I think it is an issue where the Committee can play
quite a key role in acting as a catalyst. I do not think there
is one easy answer because there is always the law of unintended
consequences. If you think you are doing something that will improve
the situation, the findings of Channel 4 when it attempted to
do something along similar lines, I believe, was it actually had
the opposite consequence. I think we should look at that and bear
some of those lessons in mind as we try to create a new structure
in the digital world.
Rosemary McKenna: I think that makes
a lot of sense. There are many occasions when parents are concerned,
but one of the problems I think is that families have so much
access; it is not uncommon for four or five television sets in
a family home, with each child having their own television set
in their room, and how do parents control what they are actually
viewing when they are viewing it? I think it is a huge issue but
probably you are right there should be a proper public debate
about it and about how we get the right answer without having
a knee-jerk reaction. Thank you, Chairman.
Q94 Chris Bryant: Part of the sort
of concept behind public service broadcasting, as embodied not
only in the BBC but in yourselves, is relatively authoritarian
or paternalistic; it is trying to make people watch programmes
that they might not otherwise choose to watch if they had freedom
to do so. Of course, that is much easier in an old environment
because you could "hammock" programmes, you could put
something they have got to watch between two things that they
want to watch and all that kind of stuff, but with Sky Plus now
coming along and lots of people choosing not to watch the adverts,
and choosing their own programmes rather than channels, there
are some enormous challenges out there for public service broadcasting.
Can it really survive? Can you survive that?
Mr Allen: I think we can. I think
there needs to be a clearer definition of public service broadcasting.
A good example of that would be when we are trying to get political
programmes. Sadly, for yourselves and for us, it is part of our
PSB remit but we need to come up with more creative solutions
that engage people in politics. Sadly, when we brand politics
then we get quite a high turn-off rate. If we brand as issues,
whether it is education, whether it is health, whether it is obesity,
you can actually engage people in a debate. I think we need to
change, and are changing, to try and get the debate, because people
are interested in issues, they are not as interested in a red
one, a blue one and a yellow one debating their point of view;
they are interested in getting people to debate the issues more
generally. I think there is a type of programming that will engage
a number of people. It will not engage all the people but it will
engage a number of people who want to be in the debate, and I
think it is down to our creativity in getting the right people
on the screen.
Q95 Chris Bryant: So the kind of
Shakespeare, Schiller and Shostakovich understanding of public
service broadcasting is dead, really, because people will have
so much choice that there is no way you are going to be able to
force them to watch what is good for them?
Mr Allen: I do not know if I accept
that completely. Last year we did a modern adaptation of Othello
and got not very good ratings because, sadly, the BBC went head-to-head
and undermined the ratings. There is a creative opportunity and
challenge in actually having a range of programming that can attract
people who would not naturally come to Othello. I think
that is our challenge. I do not think prescriptive box-ticking
and hours of PSB is the way forward.
Q96 Chris Bryant: This issue about
going head-to-head, counter-scheduling, that you have mentioned:
one of my beliefs for a long time has been that you should not
have politicians in any sense trying to tell people when things
should be on television, getting their sticky fingers on scheduling.
How do you get round this complication, especially at a time when,
last week, I had a row with the BBC about a programme where they
refused to tell me how many people watched the programme because
they said it was commercially sensitive? How do we get round these
problems?
Mr Allen: I find that difficult
to believe. The information is publicly available—
Q97 Chairman: Chris, if you let me
know about that, I will write to the Acting Director General.
We have had that kind of nonsense from them before, and I will
not put up with it.
Mr Allen: The information is publicly
available almost on a daily basis, if you read any of the trade
magazines. I think the issue is there is not an easy answer. I
think it is about setting it in the principles; of basically saying
to the BBC and to other public service broadcasters "It is
not in the public's interest for you to schedule head-to-head"
and that being embodied in the Charter. It is not there. I do
not suggest that politicians then become prescriptive if that
was there but if you then had an independent body, such as Ofcom,
reviewing how we are performing to our public service remit then
that could be something that could be reviewed, because you could
actually look at the number of instances when that is happening
and say "Is that really falling within either the spirit
or the letter of the law?"
Q98 Chris Bryant: Freeview. A few
years ago people said that the idea of a box that you buy, you
plug in and which involved no subscription at all would not be
an attractive proposition, but Ofcom's latest figures show, I
think, an 18% increase in the last year in Freeview. It is clearly
going extremely well. However, it may not be a solution for every
part of the country because geographically it just may not be
possible. I am loath to return to the issue of my own constituency
but there is no Freeview in the Rhondda. An important point: do
you think that it is vital to have a free-to-air option, maybe
on digital satellite, in the digital environment so that everybody
has an opportunity to have not just the BBC channels free but,
also, you and Channel 4 and Channel 5? If so how are we going
to make that happen?
Mr Jones: It is one of the issues
that we have to deal with over the next year in terms of our deal
coming to an end with Sky and we have had certain discussions
with the BBC about the concept of freesat. We have to be concerned
both about maintaining control of our transmission, both in terms
of analogue and digital, and in terms of cost. We are facing an
enormous potential bill from the Government in terms of bearing
alongside 4 and 5 and the BBC, the complete load for converting
all the digital transmitters—that is 1,100 transmitters—at
a time when we have already invested in partial infrastructure
for the existing DTT transmission area, which as you said do not
reach the Rhondda. Even if we did the complete conversion of 1,100
I still do not think it is going to hit the Rhondda because of
problems in relation to the topographic nature of Wales. So I
think these are the issues we are going to have to grapple with.
I think we also need to be aware that as Broadband rolls out this
is another potential delivery mechanism for television channels,
so it is not necessarily solely around a Freesat option.
Q99 Alan Keen: David Elstein said
the other week that 90%-odd of the BBC was just out-and-out entertainment
anyway, so the public service broadcasting aspect of it was very,
very small. In the case of ITV what difference would it make to
you if you did not have to provide—what none of us really
understand exactly—public service broadcasting? The regional
aspect of it Frank has already been asking about.
Mr Allen: If you look at the total
ITV schedule, 33% of the ITV schedule is public service broadcasting.
ITC did a review for Ofcom and they estimated that there was approximately
£250 million of opportunity costs in providing what is currently
a range of public services ranging from news, regional news, international
news, regional programmes, art, and religion—a whole range
of programming. So a third of our schedule is currently constructed
around what is currently defined as public service broadcasting.
So that gives you a sense of scale.
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