Examination of Witnesses (Questions 120
- 131)
TUESDAY 8 JUNE 2004
FIVE
Q120 Chairman: Following on what
Derek has been saying, if you make a bloop you pay for it—you
suffer, one way or another.
Ms Lighting: Yes, we do.
Q121 Chairman: If the BBC makes a
bloop we pay for it. Basically, hardly anybody watches the BBC's
digital channels. I personally find BBC 4 an attractive channel,
but I must be practically the only person in Manchester who watches
it. They spend all of this money on this, as Mr Bryant has pointed
out and as others have pointed out. When I turn on Radio 3, all
of the frequent interruptions on Radio 3 tell us "This is
BBC Radio 3 on so-and-so FM plus digital radio", to which
nobody is listening. You, like ITV, although not so much Channel
4 (that is in a different area) are susceptible to the market;
the market decides how you do. Is it really acceptable that you
have to compete against a broadcasting organisation who, provided
in the case of new channels the Secretary of State allows them
to go ahead, can do whatever they want, spend whatever money they
want and obscure their accounting as they do (that is very well-known)
and yet the only people who pay for it in the end are the licence-payers?
Ms Lighting: I have a few points
I would like to make around that. One is that I think the new
channels BBC3 and 4, as I say, are important additions to the
BBC. I think that it was the right decision for them to enter
that market. What I think is important is that we find a way of
ensuring that the BBC does keep to the remit as set out around
those channels. The area that I have, from Five's perspective,
more difficulty with is actually when we see the BBC investing
licence money in acquiring foreign programmes. That, for me, is
an area that gives me more cause for concern as we see the BBC
either going out and acquiring blockbuster movies or buying commercial
series from, usually, the States and doing so against what is
already a healthy environment, a commercial market which would
be just as prepared to acquire those programmes and to pay the
price for those programmes. Effectively, what happens is often
the BBC will drive up the price of those programmes beyond the
commercial market rate. I had an example just last week of a series
that the BBC acquired. We were in competition with them, we got
to a certain level where, commercially, it was not viable to bid
any further and yet the BBC continued with their bidding. So there
are those more practical areas that I would like to call upon
that we should look at in terms of how the licence fee is used.
Where it is used for original programming and where it is used
to provide programmes via different platforms I have far less
of an issue, particularly where those programmes are British products.
Q122 Chairman: I do not want to be
rude to you but you, Channel 4 and Channel 3 have all got a vested
interest in the continuation of a licence because if the licence
did not continue then somehow or other you could be undermined.
Ms Lighting: Absolutely, yes.
Q123 Chairman: But that is not the
deal, is it? The deal is not that you are insulated from possibly
formidable competition from the BBC because of the fact there
is a licence and, therefore, they do not have commercials or,
in the case of Sky, they do not have subscriptions or whatever.
I can accept that that is the deal for you but what about the
deal for the licence-fee payers? That is not their deal, is it?
In the end, the licence fee payer does not care whether there
is a 3, 4 or Five because the licence fee payer is paying for
1 and 2.
Ms Lighting: I think the licence
payer and the viewer at large does care if there is 3, 4 and Five,
very much so. I think that when you look at the television economy
as a whole, it is important to bear that big picture in mind.
So, it is not as simple as saying that if we reduce the licence
fee or we find a different way of that licence fee being covered,
it would have no other impact on the viewer at home.
Q124 Derek Wyatt: I have asked this
question of a number of people. Do you think that 10 years is
a reasonable period of time? None of us can be confident where
the technology market is going to finish up in 2017. Would it
not be better to have a shot across the BBC bows and say, "We
will give you five maybe or seven but we want to come back and
review this" and not let it just drift? Would you be in favour
of shortening that period?
Ms Robertson: We think there is
a considerable amount of sense in what you say in that, how we
can know now what the market is going to be looking like in 10
years' time? We have not seen through the whole digital switchover
process. So, a shorter licence than, say, the ten years that is
currently being mooted might be a wise track to take. On the other
hand, I do understand the pleas of people who say, "We are
constantly being reviewed; five years is not long enough."
We think as a channel that one needs to look at that length and
the implications. Maybe something along the lines of what Charles
Allen was talking about, a sort of root and branch review at the
point where what is going to happen with digital switchover becomes
much clearer. That might be the way forward.
Ms Lighting: I think one of the
biggest questions around it is actually what will happen with
platform delivery and I think that once we know how the various
digital platforms are rolling out in the UK, then we will see
the role of the BBC within that and I think it will be much easier.
Q125 Derek Wyatt: Is it your view
that the deciding bit of technology is actually free-to-air satellite
and that will have to be out on the market and then we could see
how that went before you could make a defining decision about
the future of the BBC?
Ms Lighting: Free-to-air satellite
is important in terms of the timing of digital rollout as a whole.
I find it hard to see that we will get to the dates we would all
like to reach unless digital satellite is something that is addressed
in the short term.
Q126 Mr Doran: You made a point earlier
about the competition you were in with the BBC over a particular
programme which you lost. Is that not always a problem for you?
They are a big beast with 30% of the market; you are much smaller
with about 6% or thereabouts of the market.
Ms Lighting: The BBC is certainly
larger than we are by a long way! Actually, there should however
always be what you could loosely call a commercial market rate
for programmes and there is an acceptance that, over and above
certain levels, one is certainly justifying the acquisition of
a programme for other reasons than commercial market rate. It
is not so much that the BBC clearly has bigger pockets than us
and therefore could buy more programmes if they wanted to, but
we do not have this problem in the same way with Channel 4 or
ITV.
Q127 Mr Doran: You do not have that
problem with ITV? Surely the commercial considerations which ITV
take into account—
Ms Lighting: We can still beat
and win programmes from Channel 4 and ITV because we are bidding
on the same basis that we are bidding on a commercial basis. So,
what is commercially viable for us will be commercially viable
for ITV and vice-versa.
Q128 Mr Doran: I find that a little
hard to understand because they have a much larger income from
advertising.
Ms Lighting: They do, so their
overall budget will be larger than ours but, in terms of their
justification for an individual product, our justification will
be very close to theirs individually.
Q129 Mr Doran: I do not think I understand
that but we will move on to something else. The ecology of the
broadcasting market is always changing and, for a long time, we
have had one big beast in the market and that was the BBC. We
now have the ITV company which is another big beast and the range
which you are more familiar with than I am. What I am getting
across quite strongly in the evidence we have heard today and
in the written evidence is that, despite the changes and despite
the movements in the marketplace, the BBC is still extremely important
to every one of the other players in the market. It may be going
a little too far to say that it provides a sort of umbrella but
it certainly provides a touchstone set of standards etc for everyone
to weigh themselves against. Can you comment a little on that.
Ms Lighting: I think our view
from Five's perspective—and Charles is not here at the moment—is
that the BBC is a particularly good touchstone for ITV. We would
not claim to be large enough to be trying to compete with the
BBC ourselves. However, it is a standard setter across the whole
industry. I think that, in terms of the quality of programming
that the British public not only enjoys but expects, a lot of
that has historically been driven by the BBC and it continues
to do that. So, for all of us in terms of us keeping on our toes
and delivering quality that will be really appreciated as quality,
the BBC will continue to have a role for quite some period.
Q130 Mr Doran: So, the whole of British
broadcasting benefits from a strong and vibrant BBC?
Ms Lighting: We do and our view
at Five would be that we are generally very supportive of the
BBC. I will have a few niggles that I will quote of things where
we feel that they are using their position to influence the market
negatively, particularly where it is unnecessary, where it is
acquired foreign programming that really, as long as that programme
is going to be brought to the UK and aired in the UK, then my
view would be that the BBC, as the public service broadcaster
it is, should, frankly, withdraw from such head-to-head battles
and should commit its investment to British original programming.
Q131 Mr Doran: The big issues in
this whole debate about the Charter are about the length of the
Charter, about the role of the governors, the separation and regulation.
Are these issues that matter to you in the day-to-day marketplace?
Ms Lighting: Yes, they do. We,
as I say, are less affected by the BBC than, for example, ITV
would be, but the BBC nonetheless has an important effect on us.
Even the BBC, for example, showing high levels of football on
BBC 3 will have an impact on our own viewing share. So, yes, they
do have an absolute effect on us. In terms of governance and so
on, obviously that has less of a direct effect on us. It is their
commercial activity and their scheduling activity that has more
of a direct effect on us.
Ms Robertson: We do believe that
there should be more of a role for Ofcom in terms of regulating
some of the areas of the BBC's activities, such as cross promotion,
new channels and probably into tier three as well.
Chairman: Thank you very much indeed.
We are most grateful to you.
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