Select Committee on Culture, Media and Sport Minutes of Evidence


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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