Examination of Witnesses (Questions 320
- 334)
TUESDAY 6 JULY 2004
VIRGIN RADIO,
GRAMPIAN TV, SMG
Q320 Rosemary McKenna: You cannot
possibly compare the programmes that BBC Radios 1 and 2 produce
with the kind of pop programmes that the average commercial radio
station produces.
Mr Pearson: Yes, I would. If you
look at the audiences that they are chasing and the amount of
volume to music that they play, yes, I think we can.
Q321 Rosemary McKenna: You are suggesting
that BBC Radios 1 and 2 are simply chasing audiences, not producing
quality programmes that people want to listen to?
Mr Pearson: We need to go one
step back. We were talking about public service and I am not sure
again where the public service lies in competing, whether it is
television or radio, for the same audiences with the same product.
Q322 Rosemary McKenna: Let us talk
about Scotland and the west of Scotland in particular. There is
not a commercial radio station that produces anything like the
work that BBC Radio Scotland produces.
Mr Pearson: Probably it is a question
for my radio colleagues coming on later, especially the Scottish
radio colleagues.
Q323 Chairman: Is there not an argument
for saying, as Max Hastings has said, that the BBC does not need
to do everything? Just because it is there it does not need to
do everything. In the case of Radio 1 and Radio 2 that Rosemary
McKenna has been talking about, they were there first. It is one
thing to say that the BBC should not add to services that it does
not already provide and that the commercial sector is already
providing them and providing them well. In that sense it might
argue that it is gratuitous for the BBC to produce a BBC 3 digital
channel. On the other hand, when they were there first is it not
a bit much to ask them to close down services that they have been
producing for audiences—and I do not listen to Radio 1 but
Radio 2 is something that arouses great affection in audiences—just
because other radio stations provide some form of counterpart?
Mr Pearson: We are not asking
to close them down. What we are trying to do is contain the activities
that are competitive with the free market forces that the rest
of us are in. I will give you an example of Radio 2. There was
a leaked document from Radio 2 some four or five years ago which
said that Radio 2's intention was to reposition itself to a younger
audience and get rid of all the old people listening. It has done
so very successfully over the last four or five years by pricing
out talent, by changing its music policy, by getting lots of younger
DJs in. That is not serving a public service remit. That is just
competing with services that are there. If Radio 1 decides it
is going to move its market position tomorrow it can do so because
it is unregulated, whereas the rest of us cannot do that. By doing
that it is chasing commercial audiences. The fact that it was
there first might be one issue. When it has the freedom to go
and reposition itself I think that is not quite fair; it is not
quite the same thing. Also, it is not just the freedom to act;
it is the commercial activities as well. If you talk about Radio
2 and Radio 1, where we have things like sponsorship—the
Barclays Premier League Football, the Renault Proms in the Park,
the RBS Six Nations Championship—those are the commercial
activities and the promotion they enjoy, whereas on current Ofcom
rules the rest of us with ownership rules cannot get to that size
to enjoy that sort of performance.
Q324 Rosemary McKenna: During the
discussions on the Communications Act, when Ofcom was set up,
as a member of the All Party Music Group we campaigned quite heavily
to have a requirement for everyone to provide local music, not
just local news, which was on the Bill, but there was a reluctance
on the part of the commercial companies to do that. Can you explain
why because there does not seem to be a will to encourage young
local bands, whether it be folk, pop or whatever type of music
they play?
Mr Pearson: As a national radio
contractor I am not party to that argument.
Mr Thomson: If you want an answer
from television rights, in Gaelic it has always been our policy
to encourage young talent coming through, whatever musical background
they come from. Certainly Nochd Gun Chadeal, which is in our Gaelic-commissioned
programmes, has done extremely well, producing several new bands
who are now doing extremely well not just at home but abroad as
well. In terms of contemporary Scottish music we tried a programme
two years ago which we put on at peak and it quite clearly failed
in ratings terms compared to more factual documentary type of
material which the public currently seem to have an appetite for,
and that is regional factual documentary material. There are issues
with the audience but certainly if it is Scottish or Grampian
we try our best to involve those groups where possible.
Rosemary McKenna: I think you have just
illustrated exactly what is the difference between the demands
on commercial and the demands on BBC, in that they do not have
to worry about audience share. They have the pleasure of being
able to produce good quality programmes and you are market driven.
I agree with Alan that that balance is right and should be maintained.
Q325 Chris Bryant: Can I go back
to the Radio 1/Radio 2 argument briefly because it seems to me
that the BBC is sometimes in something of a double bind. If Chris
Moyles on the breakfast show on Radio 1 loses half a million listeners
every newspaper in the country screams that BBC is not serving
its young audience properly. If he puts on audience you lot all
scream that it is shocking because the BBC is competing where
it should not compete. How can the BBC win in this argument?
Mr Pearson: The way it is set
up it cannot. I think you are quite right to point that out. What
we need to do is find what is in the public's interest in Radio
1 and Radio 2. If you are going to judge it by ratings, which
is exactly what the public are doing, if the BBC itself in its
own statement starts off talking about audience share and ratings,
then they will be judged that way. We need to go back and see
what it is that the considerable sums of money going to these
two networks are trying to achieve with the public's money, especially
when you look at the dominance. Radio 1 is a good example where,
if you look at the dominance of commercial radio for 15-34s, it
merits a 65% regional reach. I can verify those figures later.
Q326 Chairman: There is no doubt
in my mind that what you are saying took place under Greg Dyke,
but Mr Grade says he is going to change all of that and that chasing
ratings is not going to be the BBC that he is going to be Chairman
of. If that were to turn out to be so, and I think all of us hope
it will, then a bit of the rug will have been pulled out from
the argument that you were putting to Chris Bryant.
Mr Pearson: I would very much
welcome that and we did welcome the introduction of service licences
that they were talking about in Michael's speech last week. What
we would call for within the service licence, apart from the things
that are going into it, is some form of very specific format control
so that we know what they are trying to achieve with the money.
Q327 Chris Bryant: I am still perplexed
about this because of course the BBC should not be chasing ratings;
that should not be its primary aim in life, but it also should
not be so careless about whether anybody is bothering to listen
to or watch it that it ends up not producing anything that anybody
wants, and that seems to me the complex double-bind they are in.
On Radio 2 it is probably not in their interest to have so much
talk in the Jeremy Vine Show if they really want to go as commercial
as they can; it is probably not in their interest to have DJs
who choose their own music rather than go to play lists.
Ms Arnot: Ofcom introduced the
definition of "public service broadcasting", or it was
the Communications Act which introduced it, but Ofcom has developed
a "high-fallutin" definition of what is to be public
service broadcasting, be it on radio or television. It is to be
innovative, it is to have great reach, it is to capture all these
diverse audiences and so it is the BBC which is to be charged
to still capture those audiences with a type of programming which
serves their public.
Q328 Chris Bryant: I just have this
picture of the government saying that the BBC must have format
control pressed upon it and I cannot see that that is going to
be an open government process. Let me just go on to one of your
other proposals which is about subscription. You say that a future
BBC model might be partly licence fee and partly subscription.
How do you see that working? Do you mean that some channels would
be sold off or would become subscription channels?
Mr Thomson: Yes, is the answer
to that.
Q329 Chris Bryant: Which ones?
Mr Thomson: The lesser viewed
ones.
Q330 Chris Bryant: Which ones?
Mr Thomson: Three, four.
Q331 Chris Bryant: Nowhere else?
Mr Thomson: In terms of the BBC?
Q332 Chris Bryant: Yes, I understand,
but why those? What is your rationale for those? Because nobody
is watching them they should become subscription?
Ms Arnot: The rationale would
be for the next tenure. We are not advocating subscription now.
We are advocating that that should be a potential form of funding
in the future.
Q333 Chris Bryant: So at the moment
you think that the funding of the BBC should be the licence fee,
end of story?
Mr Thomson: Absolutely.
Chris Bryant: All the broadcasters have
said that so far. Thanks.
Chairman: When it comes to the question
of the BBC's digital services and what they are providing, it
is clear—and you are experts in radio—that the big
breakthrough on digital radio has not happened, has it? We are
now seeing advertisements in the press for digital radio sets
which are really quite inexpensive and yet people are not taking
that up. You cannot get them in cars. I bought a new car and wanted
a digital radio in the car and I could not get one. It was a very
expensive car.
Chris Bryant: It would have been even
more expensive with a digital radio!
Q334 Chairman: A marginal addition,
Chris! The first digital radio I heard was when I went to an experiment
in a commercial station. Is this not where a public sector organisation
and the commercial stations can supplement each other very usefully,
assuming that people actually want digital radio? They are going
to have to have digital television because at some time there
will be an analogue switch-off.
Mr Pearson: I think the public
will want digital radio if digital radio gives them more choice
and more diversity of output. The one thing that digital radio
has brought is the unlocking of new spectrum and new services.
For any new technology to survive it needs a clear consumer benefit.
There is a clear consumer benefit in these services. The trouble
is that digital radio amplifies the resources gap we have seen
over the last few years, where the BBC have had a secure inflation-busting
income and the commercial sector, both television and particularly
radio, have suffered one of the worst downturns that we have seen
in 25-30 years. We have been piling money into digital radio now
for the last six years. My station, Virgin Radio, was one of the
first to broadcast on the digital one multiplex and we own two
other stations in London. The commercial radio sector has now
put nearly £40 million into DAB. When we talk to the City
we still cannot give them a business plan that makes any viable
sense for our shareholders, so this is becoming a very expensive
thing. There are about half a million sets around. We do welcome
the BBC's promotion of digital radio. It has gone some way to
kick-starting the medium but I think it needs to go further. What
we have got now again is this resources gap where Radio 6, I gather,
has six million pounds going into it every year and that is £12
per radio, not even per household. In the digital world the radio
stations have some format control, so we are very happy with that,
as I suppose you know. Digital radio is still very worrying because
of the commercial sector's inability to fund it and, of course,
to keep piling money into resources for us in the commercial sector
in current circumstances is very difficult.
Chairman: Thank you very much indeed.
It has been extremely helpful. Your perspectives have been very
valuable to us.
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