Select Committee on Culture, Media and Sport Minutes of Evidence


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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