Examination of Witnesses (Questions 180
- 199)
TUESDAY 29 JUNE 2004
BSKYB
Q180 John Thurso: Do you believe
that BSkyB delivers any public service in its broadcasting?
Mr Freudenstein: It depends how
you define "public service broadcasting". Clearly Sky
provides a lot of high quality entertainment and information which
is of a public service. We do it for commercial reasons. So it
does not fit within the narrow definition of "public service
broadcasting", but clearly a lot of what we do is public
service.
Q181 John Thurso: If I have got your
definition right, what you are suggesting is that the BBC should
primarily take care of those areas which the commercial sector
will not be able to do on its own, and that is effectively to
be there to—if you like, it is where there is market failure,
where the market does not support the activity. Is that a fair
summation of your view?
Mr Freudenstein: The words "market
failure" tend to be a bit emotive and tend to send people
off and get excited, but I think that is generally right. It is
the view of a number of witnesses before this Committee—I
quoted Sir Christopher Bland, I think Lord Burns said something
similar. What type of programming do people want? Is it likely
to be provided by the market place? If not, what kind of intervention
do you need to bring it about? So I think, yes, that is basically
right.
Q182 John Thurso: Ideally, from a
commercial point of view, the less the BBC does to compete the
better?
Mr Freudenstein: Sky is certainly
not afraid of competition, but what you are talking about here
is using public money and what you want to use that public money
for.
Q183 John Thurso: Do you not then
end up with the danger that if you have a very narrow remit and
a public service broadcasting that is confined to very narrow
limits and therefore does not have the viewer figures to actually
fulfil its role, the argument being that the BBC, by being in
other areas, has sufficient viewers to be able to deliver the
public service content across a wider spectrum?
Mr Freudenstein: No, I think there
is a lot that can be—there is a lot the BBC can do within
that sort of general "not being done by commercial broadcasting"
that gives them a fairly wide scope to do things; it gives them
a scope to innovate and to take risks that commercial broadcasters
may not want to and it gives them the remit to push the commercial
broadcasters as well. An example might be comedy. The BBC has
a role in investing in innovative and risky comedies which the
commercial sector may not do. I also think if that is the role
of the BBC, then you should not get too hung up on audience figures:
because if it is providing a role that society thinks is important,
I do not think audience figures are the be all and end all.
Q184 John Thurso: Let me ask a last
question, Chairman. If, therefore, the BBC were removed and you
were free to act without the BBC there, you would see that as
a negative rather than a positive in commercial terms?
Mr Freudenstein: I do not think
we have ever thought about a world without the BBC being there.
Q185 John Thurso: I have invited
you to think about it?
Mr Freudenstein: I think there
would be . . . The market would be very different. There would
be opportunities for commercial broadcasters, because clearly
the BBC—anything the BBC does has an impact on the market;
even if it is for a good reason. It has an impact on the way the
commercial sector will invest, it has an impact on strategies
for the commercial broadcasters. So, clearly, if it was not there,
there would be more opportunities, yes, but I do not think that
is something that Sky is advocating.
Q186 Derek Wyatt: Good morning. I
apologise, I have to go after I have finished questioning you
just for an hour to see a Minister, so do not take that as a slight.
In trying to work out whether the BBC should be as it is in 2017
it is quite a gamble, from my perspective, that the entertainment
platform would be the same as it is currently. You are a fast-moving
company. What is your view of where the entertainment platform
will be, say, in 2012, halfway through a 10-year licence fee?
Mr Freudenstein: I think one thing
that is certain is that there is uncertainty. I think in 2012,
for example, even in 2017, broadcast television will still be
far and away the most popular way people receive entertainment.
I think channels and multi-channel platforms will still be very,
very popular. Clearly there will be fragmentation, there will
be more broadband, there will be more ways into the home: mobile,
internet, broadband, and so on and so forth. I think another factor
which will be very interesting in how the whole landscape develops
is that there will be PVRs, our Sky+ and other similar versions
will be very, very popular by 2012 and even more so by 2017. So
there will be a lot of change; it is hard to predict exactly how
it will pan out.
Q187 Derek Wyatt: But if the statistics
show that people under 18 watch much less television now, that
the next generation will watch a lot less again and again, is
it not a development that there will be less interest in television
per se as the next generations inherit different forms
of platforms? I suppose my question is: do you think we should
just pay the licence fee for ever and ever, or, if we are going
to say it is 10 years, should we say, "It is 10 years, but
we are going pay you less over the 10 years because less people
will come into your systems"?
Mr Freudenstein: I think there
are a couple of issues there. The first is I think there is still
uncertainty about what children will do as they grow up, and,
when they reach a certain age, will they continue to consume media
in the same way as they do when they are 15 or will they become
more like we are: flop at home in front of the television after
a hard day at work? I think that is still a bit uncertain. Clearly
there will be fragmentation. I am not quite sure to what extent
it will happen. As to the second part of your question, I think
it does come back to what you see as the BBC's role, and, once
you have worked that out, how much money do you need to fund that,
and not necessarily get hung up then on how many people will be
consuming it.
Q188 Chairman: Could I come in at
this point, Derek, following what you have been saying? You are
in a very enviable position, taking into account that you have
the issue of winning and retaining the subscribers, which you
have been very good at. You can do what you like within the variables,
within Sky. You can launch new channels whenever you want to,
you can, as you are doing, proceed with interactivity. Taking
into account your commercial business, whose main objective—and
I do not criticise you in any way for this—is to make money,
which all commercial operations have as their main objective,
you are very, very flexible. Could I put a devil's advocate question
to you simply in order to get your reaction, namely this. You
are flexible. Heaven only knows what your flexibility will have
led you to be by the year 2016. Twelve years from now would a
monolithic, relatively inflexible organisation whose new plans
have got to be approved of by a government be the most appropriate
form of public sector, public service television in this country?
Mr Freudenstein: I suppose it
depends how quickly you think things will change. It also depends.
. . You are presuming that the BBC is incredibly inflexible and
slow-moving, which can be true in some areas, but I think in other
areas they move very quickly. I mean, when we, together with the
BBC, launched Freeview quite recently that was very quick on our
part (Crown Castle and the BBC). We all moved very quickly to
re-launch that platform. So, I think, somehow, you have to come
up with a governing regime for them that allows them to move quickly
if that is, again, what society thinks needs to be done.
Chairman: When the previous government
decided on a 10-year charter to the year 2006, the kind of ways
in which people behave now in terms of access to visual and audio
entertainment and communication were practically unimaginable.
The explosion of the use of mobile phones and the increasing amplification
for what you can use a mobile phone for. Things like Ipod, which
have taken over now, etcetera, etcetera, were not even imagined
when the previous government decided on the 10-year charter. Is
there an argument for saying that, in view of the almost utter
incalculability of where we are going to be in 12 years' time,
that a 10-year charter might be too long, or, on the other hand,
because of the incalculability, a 10-year charter might be too
short?
Chris Bryant: Hear! Hear!
Q189 Chairman: I do not want you
to approve of me, Chris; it puts me off!
Mr Freudenstein: Plainly it is
very difficult, and the other thing you have got coming up obviously
is the potential for digital switch-over as well in that time,
which adds another level of complexity. I do not think we know
the answer. Maybe you need a review point around about the time
of digital switch-over might be a way to look at it.
Q190 Derek Wyatt: Just a last question.
It seems to me that in the public sector system there are two
channels the BBC will not do: one is a UK film channel dedicated
to UK film from, say, 1918 to the present day, and, secondly,
a sport and health education channel to look at sport psychology,
sport medicine, sport development, school curricula, and so on.
Yet these are two things that (a) the schools tell us they would
like, and (b) aficionados of film would like. In fact, they will
not get very high ratings, but they are a public service, yet
we cannot persuade the BBC of the efficacy of that; they have
already decided that their current digital platform is it for
the next 12-years; they do not wish to extend that. Would you,
in principle, be for the top-slicing of the licence fee so that
those groups of people in our communities that would like public
sector broadcasting and cannot get it from the BBC at least could
have funding, much like the community radio. The BBC does not
want to do community radio. It is a big growth area in Britain.
Where are we going to get the funding for it unless we top-slice
the licence fee?
Mr Freudenstein: I think there
is always a bit of confusion about what top-slicing actually means.
One concern of ours is that top-slicing means taking public money
and giving it to commercial broadcasters to do what they would
have done anyway. In your example, there are lot of British films
on the Sky platform already, both on Sky and on channels like
Film Four, so I am not sure whether that is a gap that needs to
be filled by public money; and similarly with sport, I am not
sure whether that is a gap that needs to be filled by public money
either. Sky does a range of minority sports. We do a range of
youth sports. So I am not convinced there is an argument for either
of those channels particularly, and I am uncertain about what
top-slicing actually would mean.
Q191 Alan Keen: I am a great fan
of Sky as Chair of the All-Party Football Group! It is a magnificent
presentation, and when I spent years travelling around the country
watching opponents' tactics before we played, TV produced nothing
that analysed games. I also found the BBC . . . I remember asking
a series of questions to them a couple of years ago, and we ended
up almost agreeing, I think, that Sky News, Sky Sports News, and
football was all public service broadcasting really. So much of
Sky's output really is public service broadcasting. I think, as
a fan of both the BBC and Sky, do you not agree, you do tend to
take too hard a line as if you want to get rid of the BBC's entertainment?
You said that audience figures are not important to the BBC. You
are about the only person that I have heard say that, because
others say the BBC should justify their existence by producing
decent audience figures?
Mr Freudenstein: It is not the
be all and end all: it should not be the determining factor. If
the BBC is spending the money in the way society wants that is
purely to a group of people that it is important to provide programming
to, I do not think it necessarily matters whether it is a 30%
share, a 20% share, a 15% share. I do not think that is the determining
factor.
Q192 Alan Keen: I do not watch it,
but are you saying that the BBC should not produce something like
Eastenders? You think they should be restricted?
Mr Freudenstein: No, I did not
say that either. I think just because the BBC makes a popular
programme it does not mean it is not public service broadcasting.
You have got to start from the premise about why are they investing?
What they are doing? If it turns out to be a popular programme,
that is great, but they should not just do copycat programming
or programming that the commercial sector would do.
Q193 Alan Keen: One thing we have
been finding out in the last couple of weeks of this inquiry is
that some people say that Sky+, for instance, means that people
can select the programmes and watch them when they want to. On
the other hand, I have not been convinced myself. I wonder if
you can convince me from statistics maybe, as you are learning
from Sky+. I like to sit in front of the television and be entertained
and see a show. It might be a series of three programmes, three
different programmes. It is not that I do not look to see what
is going to be on, but I like in a way to be surprised, and it
seems an immediate thing to me, like going to the theatre. What
is Sky+ showing? Is it showing that people are going over to that
sort of thing?
Mr Freudenstein: I can give you
some statistics. I think 62% of viewing in Sky+ homes is to live
television, 38% is to recorded. 85% of people check what is on
live before they go to the recorded programming. So there is still
a majority of live programming. That is partly because of the
way we have set up our Sky+ system. If you turn on our electronic
programme guide, the live programmes are on first and the recordings
are at the bottom, which is, for example, different from the way
TiVo does it in the United States, where the first thing you get
is the recorded programming, which could tend to throw you more
to recorded, whereas we are quite happy to throw people to live
first. So there is a lot of viewing to live television, but, as
I said, 38% of viewing is recorded programming. Within those statistics
people are watching more movies, more sport, more basic channels,
as a general rule less terrestrial television in Sky+ homes as
well. Overall they are watching more television, and it goes up
from 23 hours to 27 hours on average per week.
Mr Darcey: One other comment about
the recorded programming. Some people tend to think of this as
being about watching something from a week ago or a month ago.
Some of the recorded programming viewing could just be time-shifting
it by 20 minutes. It would still come up as recorded viewing,
obviously, and people find that functionality very attractive.
It helps them cope with the complications of their life and they
are able to watch a television programme when they are ready rather
than when it happens to be on; so even time-shifting by 20 minutes
can be pretty valuable.
Q194 Alan Keen: Following on from
that, one last question. Do you foresee, for instance, in 10 years
that somebody like me will not sit in front of the television
set thinking, "Now I will watch this and then watch this"?
Do you think all of this virtually will be choosing and drawing
down the programmes you want to see, or do you still think there
will be what I call the theatre effect of sitting in an armchair
and being entertained?
Mr Freudenstein: I think a lot
of people will have the Sky+ or PVR devices in their homes. I
think there will always be event television which people will
want to watch live, but I think there will be more use of recorded
time-shifted programmes. As Mike said, it might only be by 20
minutes, it might be by one night if you happen to be out on the
night and you want to watch a programme, but there will still
absolutely be a place for event television, live sport being an
obvious example and things like the big soaps, and things like
that, clearly people will want to watch them live or very close
to live.
Q195 Chris Bryant: Many congratulations
on your "Freesat" package, which I know a lot of people
will be looking forward to. When is it going to start?
Mr Freudenstein: We have not announced
a definite date, but we did announce that it would be this year,
this calendar year.
Q196 Chris Bryant: You do not want
to announce a date?
Mr Freudenstein: Not today.
Q197 Chris Bryant: Let me check.
On funding of the BBC, you are not in favour of the BBC being
funded by subscription?
Mr Freudenstein: I do not think
we have—. We have not said, we have not made a comment on
that. I think again it comes back to the principle: decide what
you want it to do, decide how much money you think it needs to
do that and then have a debate about how you are going to fund
that.
Q198 Chris Bryant: Do you think it
should be funded by subscription?
Mr Freudenstein: I think once
you have gone through that analysis, I think at the moment you
might find that the licence fee is probably the least worst way
to fund the BBC at the moment.
Q199 Chris Bryant: So "Sky supports
the Licence Fee"—that is the headline today?
Mr Freudenstein: No, as I said,
I think we have not come to a definite conclusion. I think you
need to go through that analysis first: what you want it to do,
how much money you think it needs, and then have a debate about—
|
