Examination of Witnesses (Questions 260-277)
FIVE
6 DECEMBER 2005
Q260 Rosemary McKenna: I am glad
to hear you say, "Do not hold back the tide."
Ms Lighting: You cannot.
Q261 Rosemary McKenna: Because I
think the music business did try to do that and very unsuccessfully,
so you have learned from them. Thank you, Chairman.
Ms Lighting: Absolutely. I am
not sure we know all the solutions yet but I think we know that
we need to understand them.
Q262 Adam Price: There have been
some very impressive recent additions to your arts and factual
output.
Ms Lighting: Thank you.
Q263 Adam Price: I think you have
already hinted that you would take issue with Channel 4. For instance,
their written evidence has styled Five's contribution to public
service broadcasting as "small scale" and "declining".
Do you think you will be able to maintain the current levels of
provision of public service broadcasting post switchover?
Ms Lighting: I think this is really
part of the debate I was just starting to raise, that if all the
world stood still then I think I would be able to say to you,
yes, if it were just digital rollout then I do believe there would
be absolutely a way of managing through that process. I feel that
some of the almost larger unknowns are around the areas of other
digital usage—it is PVRs, it is around the downloads, it
is where those rights sit and actually therefore how we are able
to build our business models around those new uses. I think that
really is the crux of it for me. We all have to face fragmentation;
it is where we learn to make our brand stronger; it is where the
good product will shine through; it is, quite frankly, one of
our biggest tests and if we sit here and do not react to it we
will fail. We need to rise to this challenge.
Q264 Chairman: This is very encouraging
in a way.
Ms Lighting: I am glad you think
so, Chairman. It feels quite hot over here!
Q265 Chairman: A week ago we took
evidence from a variety of witnesses on cricket rights, where
we had the BBC, ITV and Channel 4 all saying, "No, we did
not put in a bid for the highlights", but you put in a bid
for the highlights.
Ms Lighting: We did.
Q266 Chairman: And you are going
to put them on prime time.
Ms Lighting: We are.
Q267 Chairman: You have also heard
the previous witnesses talking about funding gaps and the dire
financial consequences, but you seem to think that actually you
have a good future financially in a multi-channel world and that
you can maintain your public service broadcasting, and indeed
increase it, and you do not feel you are going to have to need
any recourse to public funding to do so.
Ms Lighting: I think as long as
we have the flexibility around some of the advertising; and, as
I say, we really need to address this rights issue because I feel
that really is important. If I can amplify that a little more
to show you the way in which that could become so significant?
There is a connection between rights and advertising. We currently
have restrictions on how we can carry advertising in a broadcast
environment. There is debate that possibly these new media rights
could within a very short period of time be made available via
broadband and so via a PC you could either have streaming or you
could have download. That could be on a pay basis; it could also
be on a free basis funded by advertising. So we face an environment
where possibly we are putting up 100% of the cost of this content
of this original programming to find that it actually goes into
a new media environment not owned by us because we have lost the
ownership of those rights, and that advertisers are being lured
into that environment where there are no restrictions on advertising.
So suddenly we look rather old and staid and it is limited and
restricted around us as a broadcaster, and yet actually we are
putting up 100% of the funding of this programming. So this new
media is really a big debate that sounds as if it is a new world
but actually it is a debate that fundamentally could undermine
the structure and substance of the model that we are used to as
being the main funder in the commercial environment for public
service programming.
Q268 Chairman: In actual fact that
will relate very much to the next inquiry of the Committee, which
is into new media and creative industries and I hope you will
perhaps elaborate on that argument to us.
Ms Lighting: You can be sure I
will be very vocal.
Q269 Chairman: I would have to say
that the arguments we have had so far have mainly come from the
creative industries that take a slightly different view, as you
would anticipate.
Ms Lighting: Absolutely, and also
to be clear that when these debates have come up previously this
has not been the position that Five has taken before because the
rights that have been in discussion before have either been those
of international rights and how they should be exploited and who
should benefit from that revenue, or it may have been around book
rights and very different new merchandising rights. Five has been
very clear that that has not been something we felt we would argue
over in terms of ownership and that indeed we see a real benefit
of having a strong independent sector because they are our suppliers
of our content—we are as good as our independent suppliers.
But this is the first time that the debate has actually entered
into an arena where it will fundamentally have a very detrimental
effect on our own business model and therefore we cannot afford
to be as generous as we have been in the past.
Q270 Chairman: We will look at that
in some detail; but putting that to one side and just going back
to your overall approach, would you say that you think your competitors
might be being a bit feeble in painting such a bleak picture?
Ms Lighting: You are trying to
put me on the spot, as if I would dare to say such things! Perhaps
I can put it this way? Five is only eight years old; we launched
into an environment which was already multi-channel, multi-channel
had already launched therefore there was already a very competitive
environment. Five has never had an easy environment in which to
work. We are perhaps more used to competition than some of our
competitors have been, might be a better way of putting it. We
became profitable two years ago and we are very excited about
our levels of profit because they are increasing and we are working
hard to push that forward, but we are still envious of our competitors'
levels of profit.
Mr Murray: It is also worth saying,
notwithstanding our profitability, we have also used those profits
and that success to reinvest in our programme budget so that over
the last few years we have substantially increased that and that
is what has allowed some of the programmes that you talked about
earlier and has helped to boost the brand of Five within that
competitive environment.
Q271 Alan Keen: May I say first of
all that I am a great fan of Five so this first question is slightly
facetious. When a letter comes through the post from Five it has
a big "Five" on the top of it. If you went out in the
street and said to somebody, "I am the Chief Executive of
Five" they would say, "What is that, give us a clue?"
And if you said, "Channel Five" they would begin to
realise it was TV. When there are going to be 555 channels have
you not thought about having a name that is more recognisable?
BBC already has Five Live so you cannot have that one, on the
wonderful sports programming.
Ms Lighting: No. Certainly one
of the debates we are having at the moment is around what we are
going to call our new channels as we launch those, and we have
obviously been looking at our competitors and seeing what sort
of formulas they have been following, and we have had some interesting
conversations internally. I think the move to the name "Five"
was a very deliberate one at the time in that we were making a
very positive statement that we were repositioning our channel
from what it had been at the time of its launch and for the early
part of its life to the new channel or, if you like, the evolving
channel that Five is now becoming. We rather fondly look at the
channel almost as a teenager that is growing up. When we came
on to the scene, as I say, we came into a very, very competitive
landscape; we did not have a soft landing as some of the other
PSB broadcasters did. Therefore, Channel 5 then was quite a noisy,
brash infant that needed to shout to be heard and after a period
of time we recognised that we needed to evolve that brand, that
the channel itself needed, if you like, to mature, to have a different
variety and depth of programming, and that we needed really to
make a statement that we had moved from where we were to where
we intended to be. So it is a bit of a tricky one. When you say
it to a taxi driver, yes, it does get confusing, but we are living
with it and with the improved brand and brand association that
I think the channel has.
Q272 Alan Keen: Can I come on to
the question you heard me ask the others before? The people with
three sets, four sets, they only need to be given proper warning
of the switch-off date in their area and they will pay the money,
but how do we tackle the problem of the people who are going to
be extremely reluctant or will know nothing about it, even if
it is published time and again? What are your ideas on helping
them to understand?
Ms Lighting: I do think there
are different stages to this and clearly we do see that we have—as
I think has been voiced by others before me today—an important
and serious job to do in terms of how we can, through our existing
services, through our main channel services, meet the benefits
of digital and the options and the number of choices. We need
to educate on that process, and I think that we will be able to
start as soon as we are in a position to actually have some of
our new services. We have also been doing in some areas—because,
like Four, we do not have the regional flexibility to be able
to target areas and say, "Did you know Freeview is now in
your local area?"—some very targeted off-air marketing.
So when, for example, we have launched some new initiatives, whether
it has been in the entertainment area or in the arts area with
the work we have done with the Arts Council, we have done things
as basic as organising events around supermarkets, popping things
through people's letter boxes to say, "Did you know there
are new programmes coming on Five and actually it is available
through Freeview in your area?" So we have been doing some
of that over the last couple of years because, frankly, as people
who are sitting there without Five go and get Freeview it is a
net gain for us. So it is absolutely in our interests to do it.
Mr Murray: It is also worth saying
that we have been very big supporters of the plans that Digital
UK have for targeting communication towards some of these groups
that you are talking about, and they have been working with Help
the Aged, with RNIB and also from a regional basis planning to
set up Regional Advisory Councils and therefore getting the information
out there and available, reaching out to the groups that I think
you are talking about in terms of doing that, and in trying to
make the process as easy and as pain free as possible. I think
that DTT, as part of the overall switchover process, is essentially
a plug-and-play type technology, again makes it easier for some
of those people to do that as opposed to the complexities of some
of the other platforms.
Q273 Chairman: You are not part of
the consortium that owns Freeview. Has that proved disadvantageous
to you at all, or have you considered trying to go in there?
Mr Murray: I understand that we
are not eligible under the current rules of Freeview, given that
to be a member of the Freeview group you must either be a multiplex
operator, which we are not by virtue of our historic position,
or you must have a number of channels. Once we have the requisite
number of channels I think that is something that we would potentially
look to review.
Q274 Chairman: And are you going
to be available on Freesat?
Ms Lighting: I think Freesat is
very interesting and it is something that we would like to look
at. We have a different issue from Channel 4, who I think were
talking about their contract with Sky. What we would need to look
at is our rights situation because of the programmes that we acquire,
to ensure that we would not be in breach of rights that we had
acquired. We also would have a transponder issue in that we do
not have the capacity on the right transponder to be able to do
that at the moment. So that would need to be sorted out.
Q275 Chairman: But that is something
about which you are having discussions?
Ms Lighting: We have just started
having those discussions, yes.
Q276 Chairman: Is there anything
else that you would like to tell us about the switchover process
and any particular problems?
Mr Murray: Our issues in terms
of the process are slightly different from the other ones from
a technical point of view, in that we are not, in the way of ITV
and Channel 4, multiplex operators as well. Our position going
forward is that we will be carried by the BBC and clearly there
is a process to go through, I think as Iona referred to in the
case of S4C, in coming to our commercial arrangements with the
BBC in terms of costs and timing, but that is a process that we
are working through and clearly we would like to get the benefits
of that as quickly as possible.
Q277 Chairman: Can I thank the three
of you very much?
Ms Lighting: Thank you very much.
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