Examination of Witnesses (Questions 307
- 319)
TUESDAY 6 JULY 2004
VIRGIN RADIO,
GRAMPIAN TV, SMG
Chairman: Ladies and gentlemen, we welcome
you to this inquiry and Frank Doran will start the questioning.
Q307 Mr Doran: We heard it from the
horse's mouth: the commercial companies are withdrawing from the
local market and you will be replaced by the BBC. What is your
reaction to that?
Mr Thomson: Absolutely not, Frank,
is the answer to that. We have done more than anybody in recent
years to keep ourselves at the forefront of broadcasting. Grampian
itself, as you well know, has just moved to a brand new station
where our studio in Aberdeen invested five million pounds in putting
us at the forefront of cutting edge technology and the BBC are
behind us at the moment because we have done it first. Colleagues
at Scottish Television will be doing the same thing at Pacific
Quay in the not too distant future.
Q308 Mr Doran: You must be a little
bit worried because the whole reputation of commercial television,
particularly in Scotland, was built on its local content. Ever
since 1955 when STV was founded and 1961 when Grampian came on
the scene it has been a key part of local culture. Over the years
we have seen much more homogenisation and with the merger of the
companies in England to form one mega company are we not going
to see more of that?
Mr Thomson: I can only talk for
Scotland and the way that I see it we have, as I said, done a
power of work to ensure that in a multi-channel world we are producing
programmes that are watched by our community. Nobody understands
better than we do what that community currently wants. What we
do under our licence terms is create range and diversity, and
indeed quality, because we have to. If we do not we will quite
simply disappear off the Richter scale altogether. In Grampian
we still have the most popular news programme on mainland Britain
and a regional series which broadcasts once a week in a Friday
or Thursday 7.30 slot, again achieving enormous ratings in this
multi-channel world.
Q309 Mr Doran: One of the major criticisms
that has been made this morning about the whole of British broadcasting
is about its failure to pay any attention at all to British film
production, not just in terms of investing in films but also showing
British films. It had not struck me until I was listening to the
BBC people, and it is not an issue to raise with the regional
teams, that we have been fairly heavy with the BBC in terms of
its failure to show British films. Usually it is because American
third-rate films are cheaper. If you look at Scottish broadcasting
we have got two major companies who invest heavily in Scottish
television and in drama, but we never see any opt-out from the
film production which is carried out by the major English company.
You may show them at different times but it is the same films.
We never see any attempt to show Scottish movie production. Over
the last few years we have developed our own industry with a number
of very significant people like Lynne Ramsay and Peter Mullen
but getting no showing at all on Scottish television.
Mr Thomson: I would disagree that
we are not fully involved in some sort of film making, first and
foremost in New Found Films, and our effort to introduce new talent
into the film industry has been enormously successful and that
is something that we intend to continue to do.
Ms Partyka: New Found Films is
an extension of a scheme called New Found Land which is a joint
project between Scottish TV and Scottish Screen, exactly as you
have identified, to allow young and new in Scotland to spread
their wings and get their first attempt at a movie. That has been
very successful in talent terms.
Q310 Mr Doran: But they do not get
shown on television in Scotland.
Ms Partyka: Yes, they do, and
some of them get theatrical releases.
Q311 Mr Doran: Okay. I will move
on because this is an inquiry about the BBC. Reading through the
SMG submission, you are fairly critical of lots of aspects of
the BBC but I must be honest: when I read them it seemed that
you were ploughing your own furrow rather than taking a proper
objective look at the BBC. For example, on funding you are quite
happy to see subscription but not anything which attacks your
own income base of advertising. It does not seem to me that you
take a very realistic or responsible approach.
Mr Thomson: On the contrary, we
take a totally responsible approach to it. First and foremost
we are a commercial public service broadcaster and we take our
money from advertising revenue and possibly the sale of programmes.
The BBC get three billion pounds per annum come rain, hail or
shine. I think we are being absolutely responsible in our approach
in asking them to be less abusive of their market dominance. It
is a difficult position. It has been a difficult position for
broadcasters in the commercial world over the last four or five
years and the BBC has become an extremely commercial animal, scheduling
programmes head to head with ITV that are exactly the same, and
that is a disservice to the British public.
Q312 Mr Doran: We heard last week
from the new Chairman of the BBC that there is going to be a new
approach which is going to be very different from what you might
call the blatantly commercial approach which might have been adopted
before.
Mr Thomson: We have read the document
which has been produced with interest. Time will tell, frankly,
if they will be able to deliver that. I am not so sure at the
moment. There is a lot in there to chew through. We have not got
crystal balls. We welcome those changes if indeed those changes
are going to take place. It is a very well written document but
time will tell.
Ms Partyka: I would like to make
the point in terms of the commerciality of the BBC that sometimes
it is viewed very favourably insofar as within the document I
noticed that Michael Grade hailed CBBC as a wonderful channel
because it is lacking in any form of advertising. I would like
to point out that 10 minutes of Bob the Builder six times
a day is actually a 10-minute ad for Bob the Builder in
terms of merchandising and licensing. The BBC took programmes
like Bob the Builder. They then reduced the licence fees
in a way to shop-window merchandising and licensing that is the
backbone of those kinds of projects. To say that the BBC is not
commercial in any way is a misnomer.
Q313 Mr Doran: I do not think anyone
would deny that the BBC is commercial. It has got to be. It has
to pay its way but you seem to be criticising them for innovation
and being entrepreneurial.
Ms Partyka: I just think that
we have to accept and uphold that the BBC are doing that and not
pretend that they are providing purely a public service broadcasting
remit within children's television. They are actually making quite
a lot of money for the BBC worldwide.
Q314 Mr Doran: We have criticised
them in the past for not doing enough of that. We are talking
about the charter which will be in place for the next 10 years.
I would be interested in your views on how in this region of Scotland
the BBC and the commercial companies can live together, particularly
bearing in mind some of the things you have said in your submission,
which is a little bit different from what we have had from the
ITV companies in England because theirs was much more accommodating
of the BBC, recognising some of the benefits of the BBC to the
commercial companies, the way in which it drives up quality and
standards and, if you like, provides a cover for everyone else
to operate under. There is a sense that the BBC is essential for
the success of the ITV companies rather than a threat.
Mr Thomson: Nobody would disagree
with your comments about the BBC being innovative and delivering
quality, but what is key to the BBC's future in Scotland is delivering
in an arena where talent can grow in Scotland because that is
what we all want at the end of the day. We want a talented positive
Scotland in terms of television production. We in ITV currently
are heavily regulated and we have quotas that we need to meet
in this process. The BBC should be doing exactly the same thing.
I heard from the gentlemen previous to us—they did not discuss
a lot about Scotland, although it is great to see that Still
Game and all the rest are going to get a showing on the network.
In Scotland, as I say, we fully support a strong BBC for commercial
reasons at times because it takes audience away from our competitors.
We can live together and we can certainly develop together but
it has to be a level playing field. As you will see from our statement,
essential to that is that they are governed under the same regulator
as ourselves, which is Ofcom.
Q315 Alan Keen: I have noticed, not
today but since we have started the inquiry into the BBC charter,
that there has been more acceptance from the commercial sector
that the BBC should be allowed to exist in the way that it does,
apart from maybe restricting some of its commercialism. Previously
we have had people arguing that it should be restricted almost
to weather forecasts and social security things. Why do you think
there seems to be a move this time towards accepting and welcoming
the continuation of the BBC's charter? Is it because the commercial
sector thinks that if it gets the balance right it will be listened
to more than if they were just unreasonable and said the BBC should
be shut down?
Mr Thomson: Nobody would suggest
that the BBC should be shut down. There has to be that balance
in British broadcasting. Nobody would deny that the BBC is a superb
organisation and long may that continue but there has to be that
balance, particularly at regional level. I would put on the table
that, particularly in the north of Scotland, I am not sure the
BBC is completely at the races. As far as what we do in the north
of Scotland I keep on using this phrase that we are the Heineken
of broadcasting because we reach the parts that others do not,
and that is not true of the BBC. The BBC should be applying a
lot more resources to developing talent and skill in the north
of Scotland from their base in the central belt, but improving
on the quality and the level of service they give to the viewers
in the far north.
Q316 Chairman: The argument which
has been put forward, that people are moving to accept the BBC
and the BBC are in a charter in a way that they were not ten years
ago, seems to me to be accurate. If I could put this to our guests,
could it not be argued that that is because what we have got now
is a known quantity and it is safe, that although there are certain
areas in which the BBC has been moving over the ground between
public service and commercial and has been perhaps using the licence
fee in order to do so, nevertheless it is a known quantity, it
is safe, it is better from your point of view, even if you argue
for subscription, that it be funded by a licence, that if it were
to take commercials, because it still has the largest analogue
audience and because it is, whatever you think, much more innovative
in its digital services than ITV is, that if the BBC were really
to be let loose then it could be a huge danger to commercial television
in particular, whereas in a sense, despite concerns expressed
by you and others about it exceeding, or allegedly exceeding,
the remit, it is penned in now, as was shown by the Secretary
of State's instructions to them yesterday on on-line services,
and if it stopped being penned in it might go marauding around
greatly to your disadvantage.
Mr Pearson: We are talking about
television. From the radio point of view there is an issue to
be made in that the BBC already has too dominant a position in
radio. It has 70% of the spectrum which it uses to deliver to
50% of the audience. It has five out of six national FM channels.
It acts in a very commercial way. I do not think there is any
acceptance from the commercial radio standpoint that the BBC is
contained or that we would be comfortable with its actions at
all. From the radio point of view I would seek to disagree with
those statements.
Q317 Alan Keen: As one who before
politics worked in the private sector all my life, I was less
pessimistic when I heard that it was to accept the market, but
we have seen tremendous expansion and I accept that the private
sector is the way to drive it. Why should we restrict the BBC
too much? It is restricting its income because government cannot
go out next week and say, "Let's charge people not £121
but £175". It is restricted in that way by how much
money it can get in the market. Why do we not say, "Let it
go out and compete"? I am annoyed sometimes if two clubs
I want to watch do clash but that is competition, is it not? Why
should we restrict that?
Mr Thomson: I think it comes back
to the fact that they are a public service broadcaster and they
should champion the niche issues put forward for the public. The
commercial sector is there, it exists, there is a good co-existence
at the moment. I disagree. I think the BBC should be a public
service broadcaster and be contained in that way.
Q318 Alan Keen: So much of the stuff
you produce is, you would say, a public service. You have introduced
yourselves as a public service broadcaster. What is the difference
between you and the BBC?
Mr Thomson: At the end of the
day we do other kinds of programming which are totally commercially
orientated. The BBC exists to produce quality programmes that
are for a wide range of the public which the commercial sector
television would not produce. If I give you an example, Blue
Planet, Walking with Dinosaurs, versus programmes that
we produce like I'm a Celebrity, Get Me Out of Here—they
are at different ends of the scale but that is effectively what
is in place and we think it works. Given the fact that every member
of the public has paid a licence fee that is what the BBC are
there to do and I think that to let them become a commercial animal
in any other way is daft.
Ms Arnot: The markets cannot deliver
where there is abuse of dominance and regulation has to exist
to redress imbalance and produce a positive result. Building up
a critical mass of production in Scotland is a form of regulation
which we would welcome to redress the market where they are not
able to flourish.
Ms Partyka: Colleagues earlier
talked a lot about investment in regional programming within Scotland
and I think that is all to the good but regional programming is
only one aspect of the production sector within Scotland. What
we need from the BBC and from other broadcasters is more network
programming in Scotland. You have to understand people who work
in television. You start with working in regional programming
and you hone your skills and increase your talent but eventually
you want to work in network programming because you have bigger
audiences and bigger budgets. Historically when that has happened
you have had to move to London and if that continues then all
that that does is that Scotland trains talented people and eventually
they disappear. What we need is more network commissioning and
more network programming coming out of Scotland. At the moment
3% of the network budgets across the four broadcasters comes out
of Scotland. Proportionally that should be 9% and I think the
BBC and the other broadcasters have a role in trying to get us
from 3% to 9%. That is encouraging more network commissions to
come to Scotland and that eventually will be network commissioning
power coming to Scotland. A colleague said that if 100% of the
network commissioning power is based in London inevitably that
is where most of the commissions will originate. We need to move
that network commissioning power to the nations in order to encourage
that change in the programme scenario.
Q319 Rosemary McKenna: Can I go back
to something Mr Pearson said? You said that BBC Radio had 70%
of the spectrum and produced 50% of the content. If commercial
radio had more spectrum what kind of programmes would they produce?
Mr Pearson: It is 50% of the audience.
We have seen a huge increase in commercial radio's success over
the last ten years and it has come about by extra stations and
extra licensing. The Radio Authority were before Ofcom and Ofcom
are now carrying on licensing stations throughout the country.
What those stations are doing is, while the chance is there, providing
diversity. What we see now is that it is getting away from the
old first wave heritage stations model of having two stations
in every area owned by the same contractor. Now we are seeing
up to 10 or 20 stations being licensed in some metropolitan areas,
including digital stations. What those have added incrementally
is new audiences, new advertising opportunities, and over the
last decade radio has grown from 2% of expenditure up to nearly
7% of expenditure; commercial radio has grown itself very successfully
by new licences, new audiences and providing diversity. Our issue
with the BBC is that the BBC has vast resources in radio which
are far more dominant than in any other medium, especially television,
where there is a more balanced market against the BBC. It is the
way that it is using those public services. For instance, radio
in this country is dominated by Radios 1 and 2, two of the largest
radio stations we have. During peak time, which is breakfast,
and most of the day they are duplicating and competing for ratings
with people in the commercial sector. In last year's annual report
its first statement on radio was a statement about market share.
If the BBC is going to measure success in market share, therefore
it is measuring its value in market share, I am not sure that
is a very sensible use of public funding, and if all they are
doing is chasing the same ratings it is the same issue as television
has. I agree with Michael Grade's comment that once every ten
years the BBC gets religion. Very famously Radio 1, when it came
up to the 1996 renewal, had fired a lot of its old resident DJs
and re-formatted itself quite young, and going into the new charter
it promised all sorts of things. It promised far more documentaries,
more interviews, more cutting-edge music, more live music, but
all they seem to have been delivering is in off-peak segments
where audience numbers are quite small. There is another radio
saying, "Ratings during the day, reputation by night".
What we would welcome on the national stations especially is to
have far more format control. The commercial stations are very
much formatted. We have promises on performance and formats that
have to be agreed with Ofcom. Those run into audience delivery,
types of music, percentage of music and speech, different eras
of music. We are very much formatted. What that means is that
as commercial players we know our businesses are working within
a certain landscape, and in analogue radio the spectrum is still
quite scarce and therefore there has to be some sort of boundary.
The BBC and Radio 1 and 2 do not have any of those format boundaries.
What they are doing is taking and using resources in the wrong
way. We would call for those boundaries to be put on Radio 1 and
2.
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