Examination of Witnesses (Questions 340
- 347)
TUESDAY 6 JULY 2004
VIRGIN RADIO,
GRAMPIAN TV, SMG
Q340 Rosemary McKenna: Can I explore
further the concerns that were discussed earlier on, that commercial
radio does not really have a public service broadcast remit and
does not reflect the kind of anything other than pop music industry,
and without the BBC how would we do that?
Mr Brown: Actually we do have
something in the region of 270 public service remits; they are
just not described that way. We have 270 formats which include
all sorts of things, including popular music, news, current affairs
and various other bits and pieces. I run a trade association.
With me are two people who actually broadcast who may like to
pick up that question.
Ms Schwarz: By way of illustration
Capital Radio has Xfm and Xfm is a champion of new music in the
UK and has won numerous critical awards. I guess you could say
that Xfm would be more akin to Radio 1 in terms of its aspirations.
It is well recognised in the music industry as being the place
to bring great new acts and if I want to listen to Xfm's output
for material it has a large number of driver sessions, it has
a very deep role in the music industry and it really champions
all sorts of new forms of music. Similarly, we now own Choice
and Choice is very much a champion of urban contemporary formats.
Again, we do operate quite a diverse portfolio, not just around
the pop music format. Coming back to the point our colleague John
Pearson made, we are heavily regulated and we have formats which
prescribe the sort of music we can play. When you hear commercial
radio playing certain types of music, such as pop music, by and
large it is because we are regulatorily obliged to play that sort
of music. There are other formats, such as Xfm, such as Choice,
such as Gold forecasts, and David will outline some formats that
his group own. In digital radio that goes even further, so, for
example, Capital Radio owns Capital Disney, which is a format
specifically dedicated to children, but to a certain extent we
are victims of the licensing process because our regulatory format
prescribes the sort of music we can play.
Q341 Chairman: Could I just interrupt
a moment? I do not know whether you were present at the end of
the session with the BBC when I was commenting on the existence
of the BBC Scottish Symphony Orchestra and the BBC Philharmonic
Orchestra, and I could have said the BBC Symphony Orchestra as
well but we were dealing with regional matters. I was on the Standing
Committee of the Broadcasting Bill which set up commercial radio
and I remember asking Capital Radio—it was not an interrogatory
session and we did not know that Classic FM was going to exist
then—whether it could justify its creation and the profits
it was going to earn by creating an orchestra akin to some of
the orchestras that the BBC has. Classic FM does not do that.
Classic FM sponsors a concert here or there and that is the limit
of its commitment to classical music. Do you not think that the
commercial sector, which makes a lot of money—and I do not
begrudge it that—would be taken more seriously if it put
more into the communities that the BBC does? People like myself,
who do not exactly issue continual panegyrics for the BBC do nevertheless
contrast the lack of such contribution by the commercial sector
with what the BBC does.
Ms Schwarz: Capital over the course
of its history has been and still is very proud of its community
involvement. Going back 20 years Capital was involved with an
orchestra. In today's manifestation—and next week is a very
good example—we are doing a live concert in front of 100,000
people in Hyde Park purely for charity in conjunction with the
Prince's Trust. Red Dragon in Wales has its own concert, as does
Fox FM in Oxford, and we do that in every local community in which
we operate. We are very proud, within the format of what that
radio station stands for and the sort of music that we know will
attract our audiences, to put on live concerts. These are charitable
community activities and with them we have our own charities.
In London it is called Help a London Child; in Birmingham it is
Cash for Kids; in Wales it is called Help a South Wales Child
and so on, which really get into the roots of the community and
give something back. What we do is evolve over time as music tastes
evolve over time and as our target audiences differ. Xfm's manifestation
of that is that it goes round to a number of gigs in London and
it will itself put on live music events, as will Choice for the
urban ethnic community it targets. Capital Radio right from its
inception 30 years ago to where it stands today raises millions
of pounds a year for charity and we believe that we do provide
a public service.
Mr Goode: Could I just add, because
I think it would be wrong for me to let go the comment you made
about just playing popular music, that in Scotland, where we are
the major commercial broadcaster with commercial stations in all
of the major markets, I echo exactly what Nathalie was saying,
that we are somewhat constricted by the fact that our licence
says we have to play a certain kind of music, but we do take very
seriously our public service remit. In addition I would like to
say, again as Nathalie did, that in Scotland in a single year
we put well over a million pounds into our Cash for Kids charity,
which is not as high profile, I accept, as an orchestra but in
a way it contributes equally to the communities to which we broadcast.
We here in Scotland also take it seriously in that we work very
closely with the Scottish Executive. We currently are running
a series of lifestyle matters, which we do call Life Matters,
which are all about healthy eating, about exercise and so on,
to the extent that we have recently won a number of awards against
the BBC at Sony Awards, and indeed the NTL Awards, from the British
Heart Foundation for healthy eating, and we take on other activities,
such as lobbying the A77 campaign, by which one of our radio stations
here is reflecting the concerns of the local population about
the dangers of that particular road, with which you are probably
familiar.
Q342 Rosemary McKenna: I am much
more familiar with the A80.
Mr Goode: Maybe we will start
a campaign for that. These are very important. We take this public
service remit, if you like, very seriously and there are some
very clear and good examples of what we as a group are doing.
Ms Schwarz: On page four of Capital
Radio's submission[4]
we set out an excerpt from Xfm's format. This is what the radio
station must deliver in terms of our regulatory licence and it
illustrates as one example why it has to play music outside the
mainstream.
Q343 Alan Keen: As you have got such
a wealth of experience and knowledge of radio, and often it is
TV that gets the most air time on these inquiries, could I ask
each of you to say what changes you would like to see made if
there were to be another BBC charter in 2006?
Mr Brown: Can I just say that
we are very pleased to have read what the BBC is proposing. We
have said a number of things to this committee in writing, but
nonetheless the BBC seems to us to be going along the right lines.
You yourself, Chairman, have raised that on a couple of occasions
already this morning. Those licence conditions that they are saying
they wish to issue to their own radio services we would like to
see; we think it is a great idea, and we would also like to see
auditing of the BBC. We would also like to see the licence fee
being judged, not necessarily by Parliament, which is another
proposal that is being made by the BBC. All of those things populate
what we are thinking, that what you need is some form of independent
regulation of the BBC. The Board of Governors are stewards of
the BBC, champions of the BBC. When it comes to calling the BBC
to account it seems to us quite clearly that that should be done
outside the BBC. From what we have read so far we think the BBC
is moving in the right direction.
Mr Goode: There are a couple of
areas where we would like some sort of clarification. It is interesting
to talk about it here. Our colleagues from the BBC earlier were
saying that broadcasting used to be dominated from London but
equally someone was saying that in Northern Ireland it is dominated
by Belfast and so on. BBC Radio Scotland, of course, has come
from the central belt and we have a network of radio stations
that are run by independent managing directors and sales teams
and so on in each of the major markets. We cannot now, for example,
bring football to each of our individual market places because
the BBC have decided to tie up an exclusive deal with the SPL.
We have no worries in that historically we have competed with
the BBC in audience because the deal has been non-exclusive. We
just wonder whether it is right for the BBC, using taxpayers'
money, to tie up a commercial deal that specifically excludes
the ability of independent broadcasters to come in at some stage
and provide locally in Aberdeen, for example, a service to bring
football to that particular market. I only use that as an example
but it seems to us quite a valid case where the BBC is using commercial
muscle to do exclusive deals to the detriment of the commercial
sector and thus to the detriment of the listener.
Mr Buckley: Can I comment from
the community media perspective? We would very much like to see
the BBC come to grips with community media and understand how
to relate to it. That means moving beyond the paternalistic attitude
towards this sector or thinking that somehow it can do it itself.
There are certain things that the BBC cannot do as well as people
in communities themselves can do, taking their own control over
access to the airwaves and broadcasting, but the BBC has potentially
a role to play. First of all, it should allow access to frequencies
within its sub-bands. It has said in a recent response to the
Ofcom consultation on community broadcasting that it will do so.
However, we have also heard from a reliable source that the BBC
is proposing to use up some of those frequencies now for additional
transmitters, re-broadcasting existing services within local coverage
areas. Secondly, we do not think the BBC should be competing for
public funds other than the licence fee with community broadcasters.
There has been a number of occasions now where the BBC, in addition
to receiving the licence fee, is making applications to organisations
like the Learning and Skills Councils to purchase pieces of equipment
for community purposes. If the BBC is going to engage in community
work it should do so with the licence fee and not place itself
in a situation where it is potentially competing for other sorts
of public finance with the community sector. Finally, in terms
of the role the BBC may have to play, as we heard from Pat Loughrey
this morning, certainly it potentially does have a role in terms
of providing access to equipment, providing training, possibly
providing news, but this needs to be not a paternalistic relationship;
it needs to be understood that the community sector also can potentially
provide training to people in the BBC, indeed is doing so in some
instances for free. It has skills in community development which
are not present in many parts of the BBC. It could potentially
provide a news-gathering function which could be of use to the
BBC. We want to see much more of a partnership-based approach.
We believe that within the framework of a partnership based approach
it is not unreasonable for some of the BBC licence fee to be used
for activities which are not appropriately under the control editorially
or under the ownership of the BBC.
Ms Schwarz: We believe that there
is a role for the BBC and the commercial radio industry to contribute
to a very flourishing radio industry. What we would like from
the BBC is essentially three-fold. We would like the role and
the purpose of the BBC in each of its services to be clearly defined,
so essentially welcoming proposals in Michael Grade's document
that was published last week about the licence and with that a
formula for how we will measure the effectiveness of that service,
so building public value, and then what does it contribute to
society, to cultural and social development. We would like it
to be more independently regulated. We believe that it is very
difficult for a governing board, which is not a reflection of
the quality of the individuals on that board, to act as judge
and jury and, in certain cases, counsel for the defence at the
same time. We believe as well that Ofcom's ex ante competition
powers should be extended to the BBC, so the Competition Act will
allow, for example, the OFT to investigate the BBC but for that
it relies on looking at the market and abuse of an over-dominant
position within a market. It has always been very difficult to
define the market that the BBC is in. We therefore would like
Ofcom to have the same powers as it does for the whole of the
commercial industry which is essentially to look at the BBC and
ensure that it acts fairly and effectively when carrying out its
public service remit in the same way that we are all duty bound
to act fairly and effectively.
Q344 Alan Keen: You may have heard
me ask the BBC a point about having an executive chairman who
works closely with the Director-General and a separate Chairman
of the Governors to act as backstop, and I gave an example of
the problem we all know about which fairly recently brought about
the changes. The answer the BBC gave was what we would have expected
to get from them. In your experience do you think there is some
relevance to what I was trying to get them to say or not?
Mr Brown: We think that there
is clearly a case for a board in the BBC and a chairman of the
BBC and a chief executive of the BBC and they should have the
same kind of relationship that any other chairman of a board in
a commercial company and its chief executive should have. We do
not think it is possible to have that relationship and at the
same time expect that person and those persons—who are admirable
people; it is not a criticism of the governors, as Nathalie has
said—to regulate the BBC. We think it is an impossible remit
for them to undertake. If you genuinely want to have the BBC regulated
in the public interest, if you want it to be accountable, then
independent regulation of many aspects of what the BBC does is
the way to proceed. Can I quickly say adjacent to that point that
we are in an interesting time. The BBC has not come out for the
last eight years with the kinds of positive proposals and understanding
of its place in the market that it has over the past two to three
weeks. What that means, of course, is that charter renewal (and
I have been through a few of them) is a wonderful process but
it does take place every 10 years. If you have an independent
regulator who is able to take an overview, over whatever period
of time, that means that the BBC can be stimulated into being
more competitive, more understanding, understanding of their place
in the broadcasting universe and we can have greater certainty
without having to wait every 10 years to establish it.
Q345 Alan Keen: I was invited recently
to my local hospital radio. They rebuilt the hospital studio completely
and they have got wonderful facilities there. I was so impressed
by the skill and commitment of some of their graduates who are
now working in commercial radio and the BBC, and we went there
to celebrate the new equipment. A hospital is such a small place.
Is there not a way of that equipment being used over a slightly
wider area than purely the hospital itself? It seems a waste of
resources and experience to restrict it to the hospital patients.
Mr Buckley: There are a number
of hospital broadcasting groups that do aspire to wider coverage
but there are others that we have spoken to that very strongly
see their remit as serving the hospital and not aspiring to do
something else and they need their equipment to broadcast to that
very particular audience, which in itself is a particular sort
of community. The cost of equipment is not very high in the radio
sector and that is the least of our obstacles in this environment.
I would certainly expect to see many people who gained their experience
in hospital broadcasting contributing to other forms of community
broadcasting covering geographical communities and communities
of interest. Also, we are very much aware that as community broadcasters
get established they are capable of mobilising large numbers of
new entrants into the radio sector to pick up radio skills.
Ms Schwarz: Certainly when we
recruit new talent a number of our current presenters started
off life in hospital radio, so it is a very good training ground
as well.
Q346 Mr Doran: I would just like
to ask one question but before I do that I would like to make
a facetious response to David Goode in his comment on the Scottish
football contract. Aberdeen have been playing so badly recently
that we are very grateful for that. You heard earlier the BBC
statement about the way in which commercial broadcasting is withdrawing
from the local content and the regions. Certainly it seems to
me that in television and in radio commercial broadcasting your
greatest strength is your local content. I suspect that you do
not accept the BBC's analysis, but the comment was made in the
context that the BBC is talking about spending a billion pounds
moving facilities out of London, which suggests that there will
be a much stronger contest in the future, much greater competition,
on local content. I am interested to hear your response to that.
Just one side point to that: would I be right in suggesting that
you may be being squeezed from both ends because at the other
end of the market you have got the potential rise of community
radio? I know that they are not allowed to compete directly with
commercial broadcasters but it is inevitable that there will be
a shift in listeners away there, is it not?
Mr Brown: Clearly clarity of remit
is very important for the BBC, for community radio and for ourselves,
and obviously there will be overlapping. For most of the radio
stations that I represent, which are our local radio stations
(there are only three national commercial analogue radio stations),
their localness and their relevance, either to the community of
interest or to the geographical community, are their stock-in-trade.
The more players you have in the market the more you have to compete
in order to be able to keep your local listeners and convert them
to revenues for your shareholders. To do that you have to be part
of a community; you have to interact. I was intrigued by a comment
made earlier on which reminded me of something I heard Anne Begg
say, talking about that part of Scotland, at a meeting I was at
recently. I was very encouraged because she did say that commercial
radio provides a far more relevant and deeply rooted local product
than the BBC, as far as she is concerned in her Aberdeen constituency.
I obviously would expect you to agree with that. I think that
is right.
Q347 Mr Doran: For the record I would
probably agree with that because all we have got at the moment
is a small BBC opt-out.
Mr Brown: I also think it is vital.
The answer to your question is, that is how we perform, that is
how we get our listeners, that is how we make our revenue.
Mr Goode: It is the suggestion
that the BBC are going to put more substantial opt-out in Aberdeen.
The question is, should they? The fact is that in Aberdeen you
have two commercial services—North Sound 1 and North Sound
2—with the potential of the community radio stations to
be put in there. North Sound 1 and North Sound 2, as you know,
reach 50% of the population. Combined they are the biggest broadcaster
in the area. As I have already indicated, they are working with
the Scottish Executive on public service, they are lobbying on
areas of road safety and so on. The question is, should the BBC
now be moving in there? It is not as if they got there first,
as, Chairman, I think you were saying about BBC Radio 1 and Radio
2 earlier. North Sound 1 and North Sound 2 are there. The history
is that they are providing a good service for the local community
and one wonders what the BBC could add in that situation.
Ms Schwarz: I am again echoing
most of my colleagues. The Capital Radio Group is a local commercial
radio group. We own and operate on local community licences with
the exception of one national digital licence. Our whole history
of success is based very much on its localness. We understand
and our listeners understand that the more rooted you are in your
community the more effective your radio station will be.
Chairman: Thank you very much indeed.
What we have managed to do today while looking at the issues in
Scotland is add to our inquiry by looking at the whole spectrum.
You have been very valuable contributors to that and much appreciated.
Could I take this opportunity once again of thanking Glasgow City
Council for the use of this wonderful building, with better acoustics,
as the Clerk points out, than in the House of Commons, and also
for the facilities here.
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