Examination of Witnesses (Questions 257-259)
FIVE
6 DECEMBER 2005
Q257 Chairman: Can I welcome Jane Lighting,
Chief Executive of Channel Five, Grant Murray and Sue Robertson
also of Five, and to apologise to you for having kept you waiting
for some time. Perhaps you would like to begin, as the previous
speakers have done, by giving us an overview of Five's perspective
of analogue switch-off.
Ms Lighting: Absolutely. I would
be delighted to. One of the benefits perhaps of going last is
that of course I have been able to hear a number of the opinions
of my colleagues and it is interesting, of course, just how many
issues we do share in common. But some are different and perhaps
it would be useful for me to start with some of the slight differences
in Five's position to some of the opinions that you heard earlier.
I think the first one to start with, and possibly the most obvious,
but just to remind you, is clearly that the rollout of digital
for Five certainly has a benefit which helps mitigate, if you
like, against some of the challenges that also come from the rollout
of digital and the fragmentation of our market. Clearly what we
are looking forward to is the first time that Five will actually
be received in all homes on a par with our competitors. Clearly,
up until this point that has not been the case with Five, despite
the fact that we have welcomed digital rollout to this point and
the fact that that has helped our coverage enormously. I think
it is also worth noting that Five has actually been seen as a
real benefit for those people who have gone out and bought Freeview,
that for many it has been the first time they have been able to
receive Five and to benefit from Five's programmes. I think the
other point that is certainly worth pointing out as a difference
is that Five is very different because we are much younger than
our competitors, so a number of our competitors have already started
to respond to the challenge of fragmentation by launching their
multi-channel strategies, by starting to launch the diginets that
they have. Five is only eight years old. We have grown very fast
in that time and very well, but we have only just in the last
two years become profitable as a company and therefore have had
to focus very much on our core business and getting that right
before we were able to start looking at our digital strategy.
What I can say, and what I am delighted to say, is that a few
weeks ago we announced that we have taken a strategic investment
in Top-Up TV, and whilst unfortunately it is commercially sensitive
so I am not going to be able to answer questions on that directly
today, what I can say to you is that this is a part of and an
important step in us moving into a multi-channel mode and for
us actually to look forward to launching our own diginets in the
near future. In terms of other points that I would briefly, if
I may, comment upon, I think there is a significant challenge.
Whilst, as I say, we look forward to digital rollout we also absolutely
acknowledge the challenge that this is to our business. We would,
however, probably take a slightly different view in terms of some
of the things I have heard said today around PSB because our view
is that we are extremely committed to PSB and that we see it as
a really important differentiator for Five in a totally multi-channel
environment. In a world of 400 channels how do you stand out from
the crowd? Actually having a PSB brand attached to you, we think,
brings a number of positive elements, not just in the case of
diversity and the range of programmes but also in terms of certain
quality thresholds, and I think that if looked at positively that
has a real positive aspect to your brand as well. I think quite
clearly one of the issues is how do we continue to invest in our
PSB programming. I would take a slight issue with one comment
that was made earlier, when I think ITV and Channel 5 were put
in the same basket as reducing their commitment to PSB recently.
Nothing could be further from the truth. Five over the last two,
three years, has increased the amount of original programming
that we make, quite considerably, and also has really increased
the range and diversity of programmes that we have across the
arts, philosophy, poetry, across history and science, and for
next year one of our big pushes is actually into original drama
and comedy programming. I think one of the other points I would
like to make is that in terms of part of the solutions to these
challenges, one thing that Five has been very upfront in terms
of what it does not support is that we are not looking for some
kind of top slicing formula here; that is not what we feel would
be the right solution. Actually we feel, as Clive said earlier,
one of the first places we absolutely need to look at is the self-help
and how we are going to rise to the challenge to move our businesses
into a new era and into a new digital environment. There are things
that I think we should focus on in helping us to do that. One,
which was also mentioned, is around advertising regulations, ways
in which we can perhaps have some more flexibility to be able
to be commercial in certain ways in the schedule. The other one,
which is really very important, which Andy also touched on and
which we see as being absolutely crucial to our ability to continue
to fund PSB, is actually over the rights issue because we are
clearly funding 100% of the cost of PSB programming. At the moment
we have the right to broadcast that on Five; what we need to be
able to do is develop other ways of benefiting from revenue streams
that will come from broadband, from downloading, from all these
other new media. If in fact there is a disintegration of these
rights and those rights are being exploited even before we have
had a chance to show a repeat of our original PSB programme we
will really be undermined in terms of our ability to earn our
revenue on those programmes. So I think that is one of the really
key issues that are currently being debated. There is a consultation
going on with Ofcom, and the outcome of that we think is really
going to feed into the ability of PSBs to be self-supportive in
the future.
Chairman: Thank you. Rosemary McKenna.
Q258 Rosemary McKenna: Good afternoon.
You have already said that you appreciate your larger audience
share because of digital, DTT, so how important then is Freeview
to Five's funding streams, from advertising in particular?
Ms Lighting: It has been really
important to us. It is true to say that obviously the benefit
that we have from all digital, even where Five is carried in pay-digital
environments, whether that is Sky or analogue, have clearly added
to our coverage. So for many people it has been the only way to
receive Five. Clearly Freeview, certainly in my view, has the
benefit not only of providing access to Five but access to Five
on the basis that is intended, which is free, with no strings
attached and the ability to enjoy public service television as
people have the other four analogue broadcasters.
Q259 Rosemary McKenna: So are you
concerned about the modern methods of recording, et cetera, that
are going to make a difference to how people view television?
They are going to create their own programmes, are they not? They
are going to create their own timescale and timeframe in which
they want to watch programmes, and the ability to skip the adverts?
Ms Lighting: Absolutely. That
issue, plus others which are clearly going to be raised as challenges
for us in terms of what broadband will allow and the ability to
have video on demand, even free downloads and so on, you sort
of feel that we are sitting in perhaps a similar place to the
music companies a few years ago, and I think one of the really
important things that we need to absolutely engage with is the
fact that we cannot sit here and hold back the tide. Technology
is happening; this is a choice of consumers; this is what consumers
want, and I think what we need to do is look at how we can adapt
our business models to be part of that process, and one of the
key parts of that for us, through the investment in content, is
then to be able to look at all of these different methods of distribution,
all of these different methods of usage and see how we can actually
try to build business models that will allow us to earn revenues
wherever it is used.
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