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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 316-i House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE CULTURE, MEDIA AND SPORT COMMITTEE
Tuesday 20 February 2007 LORD BURNS GCE, MR DAVID ELSTEIN, MR TIM GARDAM and MR JEREMY MAYHEW
MS JOCELYN HAY, MS KIRSTY YOUNG, PROFESSOR DAVID BUCKINGHAM and MR RICHARD NORTH Evidence heard in Public Questions 1 - 61
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Culture, Media and Sport Committee on Tuesday 20 February 2007 Members present Mr John Whittingdale, in the Chair Janet Anderson Philip Davies Mr Nigel Evans Alan Keen Mr Mike Hall Rosemary McKenna Adam Price Mr Adrian Sanders ________________ Witnesses: Lord Burns GCE, a Member of the House of Lords, Mr David Elstein, Mr Tim Gardam and Mr Jeremy Mayhew, gave evidence. Q1 Chairman: Good morning everybody. This is the first session that we are holding on the Committee's new inquiry which is into public service media content and its future provision. To begin the inquiry we have invited a panel of experts and consultants to give their own views, so can I welcome Lord Burns, who of course advised the Secretary of State on Charter Renewal; David Elstein, who is a familiar figure on the Committee; Tim Gardam; and Jeremy Mayhew. Perhaps I might begin by asking you to give a slightly philosophical view perhaps about public service content and how exactly you see it defined. Is it sensible to categorise it into particular genres or is it better to adopt, as Ofcom are, a more general definition, and is it simply confined to those areas which the market do not provide or should we look for a wider definition? Lord Burns: Could I begin by saying that it is a little while since I looked closely at these issues. It is two years now since I was involved really at the heart of this debate. Personally I am attracted by the Ofcom description of this that we should now be concentrating more upon content than broadcasting. To me the notion of public service broadcasting or public service content is high-quality material, probably originated in the UK, which the market itself does not provide - and we can debate about that because of course one of the uncertainties in all of this is what the market will provide. We have some idea of some of the pressures that are going to be upon some of the existing terrestrial broadcasters in terms of providing public service content. What we do not know is the extent to which the multi-channel world and other forms of media are going to generate new forms of what we might think of as public service content. We thought of them as public service broadcasters. Indeed, at one stage I think people thought of public service broadcasters as being all of the broadcasters who broadcast free-to-air and now, because of the changing nature of this market place, people are beginning to concentrate more upon which of the components that we might think of as public service content, and I am quite comfortable with that approach. Mr Elstein: Chairman, I am here as Chairman of the Broadcasting Policy Group which produced a report three years ago dealing with this, amongst other issues, and I have to say we welcome the focus of this Committee hearing on public service content rather than public service broadcasting or public service broadcasting institutions. Content is the nub of the issue ahead of us. The Broadcasting Policy Group was pretty clear that attempting to define public service content (PSC) by its nature, its category, its origin, its means of funding was always going to get you into trouble. You get a lot of high-quality content which is not generated from public funds; you get a lot of publicly funded content which is not high quality. Our view was the test should be: will the market provide or will it not. Our view was also that there was likely to be for a very long time a case for public funding of public service content. The exact quantum would need to be decided on a regular basis by Parliament but there was clearly a case for it. The issue was therefore how you could generate a sufficiency and a breadth and a plurality of public service content in a post analogue age, and we are already down the road of the old commercial public service broadcasters being either unable or unwilling to deliver on the trade-off between discounted or free spectrum and new public service content. We have got to grasp this nettle of how you deliver plurality of public service content supply in the digital age; that is the central issue. Mr Gardam: First, I might say I am speaking here entirely in an independent capacity although I should declare an interest as a non executive director of Scottish Media Group. I think there is some detachment from the front-line of television and I think the coming of the digital market has allowed us to think more clearly about public service content definitions because we have moved beyond a system of trade-offs which the old licensing system essentially enshrined, that mixture of obligations and incentives through institutions which allowed the analogue public service environments to exist. I think I have a slight difficulty with what David Elstein said because I agree it is uncertain what the market will provide, and it may well provide content which used to be entirely in the domain of what was seen as public service broadcasting, but I would not define the public service content solely in market terms, not least because I think the fact that television has been in the past 50 years the greatest force of intellectual emancipation that we have known means that we would be unwise to forget the social and cultural purposes of television over and beyond its market purposes. I would like us to think in terms of motivation of purposes when looking at public service content. The primary motivation of public service content is so that it is devised to be fit for whatever social and cultural purposes it sets out to achieve and not primarily there to profit maximise. I would suggest three areas which it is worth using as a framework to consider the most important aspects of public service content. The first is the provision of reliable information to an informed democracy in the digital age. We are living at a time when technology and markets are globalising but politics is not. I think asking what news and information is necessary for an informed democracy to function and what sort of public frameworks should there be for that, particularly in a multi-cultural, socially fragmented and multi-lingual society, is something that should be kept to the fore. The second area which I think one should consider is the need to promote individual authorship and voice because I think one of the greatest culturally emancipating forces of television in the past 50 years has been to ensure that the most interesting and imaginative voices of the age are connected to a wide audience for fresh ideas, and we have to think how that can be maintained. The third area, which I think is as fundamental, is to promote what I have described as "independent intelligence" - going back to my phrase of "intellectual emancipation" - and what does an engaged citizen need to know in order to take part in a society where traditional points of cultural reference are disappearing? I think one needs to stand back a bit from issues of the market and how the content is provided to think about those purposes because I think those purposes will be as valid and as relevant in the world across lots of platforms as they were in a world where there was only a television platform. Mr Mayhew: I should probably also start by saying I speak in a personal capacity although at various times I have had as my clients most of the public service broadcasters. I agree strongly with Tim that public service broadcasting content needs to be thought of, above all, in terms of its distinctive purposes in the market place - and I would certainly point you to the five or six (depending on how you count them) purposes that the BBC has been given in its new Charter, and in particular point out that essentially we do not have this, by contemporary standards, mammoth act of intervention in a particular sector for essentially economic or industrial reasons; we have it for non-economic reasons, for social, educational, and political reasons, and I think that should be the test. I find superficially the test "can the market provide?" attractive; however, the problem is that if you are going to have public service broadcasting and public service content which has impact, the balancing act which traditionally has been performed, and I think underwrites the sustainability of our public service broadcasters, in particular of the BBC, the balancing act between distinctiveness and reach, the proper balancing act seems to me to mean that it is more complicated than saying about any particular bit of content, "This bit of content could not have been provided by the market place." It certainly is the case, in my view, that if you found publicly supported or publicly funded services which could have been provided by the market place, you should be deeply sceptical and say, "Why are they being provided?" but I do not think it is a realistic test to ask about each bit whether it will be provided, and indeed the mix between distinctive and popular seems to me at the heart of creating a proposition that has impact and delivers on the purposes. Of course, there are some aspects once you have endeavoured to answer that question of public service content/public service broadcasting that can be specified and some that can be quantified - the proportion of original programming, the amount of local originations, et cetera, the sort of tier two type stuff within the Ofcom regulatory system, but that is a sort of base camp. The key things are about quality, innovation, experimentation, pushing the boundaries. These things are inherently subjective, nebulous, et cetera, and it seems to me - and this is I suspect going to be a quarrel between myself and David Elstein - that you need to understand that upfront because that is the reason why ensuring the delivery of satisfactory, high-quality public service content or broadcasting cannot be contractualised, cannot be specified very precisely, and that is why you get driven back to the importance of institutions in the delivery of public service content because in the end an ethos inside institutions which have distinctive purposes and remits is not some sideshow to the delivery of the proposition, it is absolutely fundamental to the characteristic of the proposition, which is inherently, I am contending, one which cannot often be wholly specified ahead of time. Mr Elstein: It is nice to know, Chairman, that when the Church of England is at odds as to where it should go that the priesthood of public service broadcasting wishes to retain the mysticism of purpose but justifies unlimited public funding with no accountability. It is reassuring! Q2 Chairman: It does seem to me this raises a problem though that if you are moving away from the traditional definitions of arts, religious broadcasting, children's programming, regional content into a much more general definition of what basically is good for you and desirable, how do you then determine whether or not remits are being delivered? How can you say to ITV, "Yes you are delivering on your obligations," or, "Yes the BBC is still a bastion of public service broadcasting," because it becomes entirely a matter of opinion, does it not? Lord Burns: There has been now set up a rather complex process but it has been done in some detail trying to specify the obligations of the BBC within this whole area and we look at the Charter, we look at the agreement, we look at the arrangements of the trusts that have put in place to try to deal with some of these issues on an on-going basis. What I assumed this debate was much more about was the issue about plurality, as David has said, which is what is going to happen to public service broadcasting or content in the non-BBC world. It seems to me that although it is attractive to think of this in terms of institutions, that is not the way the world is going to be because there are going to be a large number of people who are broadcasting and the question to me is: are they going to continue to produce competition in the world of public service broadcasting or are we going to be left with a world in which we have a rather elaborate, detailed issue which has been thought through for many months about the obligations on the BBC on the one side, and something which is much more difficult to specify, much more difficult to measure, and where there are no obligations for the rest of the broadcasting world, and that seems to me to be a big challenge. Having been myself through the process of trying to specify the obligations of the BBC and the governance arrangements of the BBC to get delivery of what we regard as public service content, now shifting the focus to the question of the rest of the broadcasting industry, which I think is a very worthwhile thing to do, I have to say I think is even more complicated. Q3 Mr Sanders: Looking at the new technological age that we live in and the advances, as the market provides more and more content, is there not a case for less government intervention? Mr Gardam: Up to a point. I think it goes back to definitions of what sort of content and the motivation for that content. What is clearly happening is that though the business models which will eventually connect television to the Internet are still being worked through, and I think it is uncertain exactly how they will turn out, it is undoubtedly a fact that at the moment the effect of the fragmentation of audiences across the different platforms is having a major impact on the traditional licensed broadcasters. I think one of the most telling points that I have heard recently was made by Ed Richards of Ofcom when he pointed out that if we are looking to the market to provide increasingly high level content, in the 20 years since satellite television we still have a position whereby £2 billion of content is provided by the so-called public service licensed broadcasters and only £100 million of original content is provided by the other channels. It could be argued that that is the case because the direct intervention of the BBC licence fee has been a disincentive for that, but all the evidence that I can see is that there is not the same incentive, particularly in a world of fragmented attention, to invest in new, original content which will not have the guarantee of similar returns on investment as there has been in the past and therefore the level of intervention that there needs to be, I think, is to act as a catalyst to incentivise that sort of programming to be made, and the criteria that I laid out at the beginning is a framework which will prioritise where we need to ensure the money is invested because I think those are the areas most likely to show what one might describe as a market shortfall. Q4 Mr Sanders: So less government intervention would not necessarily lead to more content? Mr Gardam: It is a question of volume versus range, is it not, there is going to be unlimited content available in the world of new media. Q5 Mr Sanders: Maybe I should have said new content. Mr Gardam: The question is whether there will be a similar range of content with the social and cultural purposes that we have had in the past and what will the impact be from the view of government on civic society if that content is not available for people to use although it will be available in very many different forms. Mr Elstein: You have to differentiate between what happens within a certain set of circumstances where you have got spectrum scarcity and restricted analogue spectrum and what happens when all of that goes. The evidence is pretty clear that even after the analogue system is switched off, the likes of ITV, Channel 4 and Five will have revenues north of £2 billion a year and by far the biggest item of expenditure for them will be new, original UK-commissioned content because that is what works for them commercially. From the viewers' point of view it is virtually irrelevant whether there is new content on Living 3 or Sky Sports 7; they still have the same volume of content because they have all the original channels as well. They do not spend their time ticking boxes as to under which heading did that new programme come, so what you have got to think through is what does the evidence of sophisticated broadcast market places like ours tell us if we look elsewhere. If you look in somewhere like the United States, even faster fragmentation of audiences than we have experienced in the UK has led to a significant increase in the volume of investment and new production of high-quality content, not a very broad range of content but still very high quality. If you look at news investment and particularly local and regional news investment in the US, where there is no regulatory requirement to spend, there is still an overwhelming commercial pressure to spend at high levels. I cannot imagine that ITV after analogue switch-off and after its analogue spectrum had ceased to have any value or price, would give up its news services. Why would it? It is a highly distinctive part of what it provides to the audience. It is not going to cede that territory to the BBC. We will not have any leverage to require ITV to do that, but they will just do it because it is in their economic interest to do it, so you have got to accept that as the years move forward the way in which we intervene is likely to change, the mechanism, and what exactly we generate out of public funding is likely to change as well. There will be times when we just say we need something very focused. Teachers TV is an example. It is funded out of the DfES with a lump of money, £15 million a year, for a particular purpose, allocated to be spent on production, broadcasting and Internet transmission. It is made for profit by the contractor but still very much defined as are we getting value for money for the DfES. That contract will come up for retendering in the very near future and even though it has been very successful, we need transparency, we need contestability and we need accountability in how we spend public money on new public service content. We have got plenty of examples of how you can mix institutional spend and non-institutional spend already. The issue is how will that balance change going forward. I will give you a very obvious example: Channel 4 News - very highly valued by viewers, by regulators and by Channel 4 itself - and Channel 4 is basically telling us all that the increasingly competitive market place is making it harder and harder for them to generate enough profit from Big Brother to carry on making Channel 4 News in the way it should be. Tim will give you a much clearer, deeper understanding of this having been responsible for Channel 4 News. The issue for us going forward will be should we just pour more money into the Channel 4 pot and hope that what comes out of the spout will be Channel 4 News or should we say to Channel 4, "Here you are, you are making £700 million a year; in order to keep making £700 million a year you have to commission a lot of a very popular programming. We cannot be certain you will deliver Channel 4 News the way we would like it and therefore if you wish to bid for a chunk of money that will be clearly dedicated to Channel 4 News, that is another way of delivering it. Whether you internalise it or externalise it, we will still have similar types of assessments to make and decisions to make, but what we need to think about is as Channel 4, ITV and Five reduce their obligations to make these kind of programmes, for good economic reasons, how do we avoid a situation where the BBC is effectively the 90%, 95%, 98% supplier of public service content, because in a democracy that cannot be right. Nice as it is to have other ideas floating around for the public service partnership and Ofcom and so forth, it is not getting to the heart of the issue and all of us who admire and respect the BBC and think it does tremendous work still have to face up to a situation where if one person in an editorial position in the BBC says this cannot be mentioned on any BBC service about a particular government Minister, that is obeyed all the way through the Corporation; that is not how democracy works and so we need to address this and I hope this Committee will address it. Q6 Mr Sanders: That is an argument for decentralisation of management of the BBC. These are issues that we could be here all day discussing. It was a fascinating answer, David, and thank you for it. I also wanted to look at the new media outlets and whether it is possible for government to intervene and make sure that public service content is provided. Do you have a view on that? Lord Burns: Could I first of all say that I agree very much with David that this is an issue in terms of your first question about the method of intervention. I am quite satisfied that the method of intervention is going to have to change. The means by which we are able to get public service content through the licence agreements and the offset to the licence to print money is going to come to an end in that form. If we wish to intervene in the non BBC world - and that is a question that I think does have to be faced up to, first of all whether we need to - then it is going to have to be done by different means. I think the same applies to the new media. There is going to be an issue of BBC content on the new media and some of the same issues will emerge as to how dominant they should be, whether or not the market place will provide alternative forms of that content into the new media, and to what extent there needs to be some public sector intervention of a very different type to that which there has been previously. What I would however counsel, and I agree entirely with David, is we do not want the BBC to be the only force in this area, but I would not write off too quickly that which will be provided by other parts of the broadcasting industry or the media industry because they think that it is a worthwhile thing to do, they think that it is good for their branding, they think that it is good for their image, they think that it will actually make money in terms of the way they can finance it. It is very easy to reach the conclusion that what we think of as public service content will only be from the BBC and that everyone else will be doing various versions of Big Brother. That is not what is likely to happen to my mind. When you get the proliferation of channels and you get the proliferation of media, you do get alternative suppliers. If news is what you are interested in, on the Internet there are thousands of sources of news all over the world that are readily available. There is a much greater supply of news content on a worldwide basis than there ever was. Q7 Mr Sanders: That comes back to my point; can a government, given that a government will be a nation state based entity, actually intervene in some of these new media outlets given that they are not necessarily based within the boundaries of that nation state? Mr Gardam: Let's consider the position whereby public service intervention is seen to be only within the bounds of old media and that new media is seen to be beyond that. What we are talking about here is the use of public money to act as a catalyst to ensure a certain set of motivations and purposes come to the fore in the production of certain material. I am not quite as optimistic as Lord Burns as to the ease with which public service material will be provided by shareholder-maximising, profit-maximising companies in the medium term because I think the disruptive effect of the migration of advertising from television towards the Internet is going to put considerable pressure on traditional commercial broadcasters trying to defend a share price where the levels and margins of profitability are going to be squeezed, and we have seen how unattractive the media sector has become in recent years, and so I think there will be pressure to ensure maximum profit per slot in the broadcasting world. If however you say that public service content should not extend into the world of new media, you are essentially saying that the public service imperatives that have actually shaped civic society in the past 50 years become part of a heritage industry. I think one of the mistakes that Channel 4 made between 2000 and 2004 when I was there was that it saw new media as a commercial opportunity solely in order to drive new revenue streams to subsidise old media, which was the core channel. I think in retrospect - and I was involved at the time - that was a mistake because in the end if you are going to have, in this case, a public sector public service corporation such as Channel 4, it needs to have those same motivations feeding their way through all platforms. I think that has been recognised by Channel 4 and turned around but I think it would be very dangerous for us to believe that we are going to be able to make those same contacts into society which have been made in the past through television if we just restrict those motivations to television. Mr Mayhew: In case anybody has got a different impression, can I start by saying that I am definitely with David in believing that it is critical, it is absolutely essential to public policy, and indeed should be the priority post Charter Review to think about the way in which the BBC is not allowed to be a monopoly in public service provision. The danger is that as the old compact breaks down in terms of an exchange of obligations for access to scarce analogue spectrum that the BBC becomes a monopoly and that would be, in my view, as in most circumstances in the public and private sector, bad for the BBC, bad for British citizens, et cetera, so far from being complacent about that or endeavouring to argue a case which maybe David thought I was trying to argue for protecting a BBC monopoly, I am certainly in favour of thinking very hard about how one creates competition in the public service space to the BBC. I also agree that the methods of intervention are likely to have to change in relation to ensuring the delivery of public service content beyond the BBC and to some extent beyond Channel 4 and, to put it crudely, negative regulation saying "thou shalt not do things" will not deliver the goods. It will involve an active act of political will and positive intervention, involving I suspect money as well, directly or indirectly, in order to get people to do what they otherwise would not do, which of course is not to imply, as in all sorts of other sectors of society, that private sector institutions whose primary obligation is to maximise shareholder value do not also deliver public value. It is not to suggest that public benefit does not flow from the activities of the commercial sector; it is just there may be certain non-economic purposes that are not sufficiently delivered. It seems to me that it is perfectly possible to be a free marketeer believing that the market is the best engine for delivering economic growth and GDP without believing that the market is a particularly reliable way of delivering those non-economic purposes. I do not think there is a contradiction between being a free marketer, broadly speaking, in the economic arena and believing that the state has a role in delivering some of those non-economic purposes. I want to go back to the two questions you asked about the case for intervention in old and new media. It is clearly the case that the public service broadcasters represent already a much smaller proportion of the broadcasting or the media cake than in the past. If the question is "Is the relative case for intervention versus the interplay of the commercial sector in decline?" the answer is undoubtedly yes, I would say, and the market will provide more, relatively speaking. I am far from convinced and I am not going to proffer an answer on whether the absolute level of intervention in terms of financial support - for example the £400 million that Ofcom has estimated was the value of the spectrum made available to the non BBC PSBs - needs to be maintained. I think that is a different issue, but in relative terms clearly the PSBs represent a smaller proportion of the cake. Moreover, the traditional historic economic case for intervention, which in a sense was based upon the characteristics of the market place, scarce spectrum, high barriers to entry, the characteristics of public goods et cetera, could be argued to be in decline and therefore I think an appropriate scepticism not about whether the historic purposes of the intervention have gone away, I do not think they have, but about the appropriate scale and scope of the intervention is appropriate I think that is probably the challenge for the next period and I would proffer that perhaps that question was not asked as rigorously as it might have been over the last two or three years. You asked about new media. First of all, the historic case in terms of the character of the goods and the character of the market place, namely barriers to entry and public goods, seems to me initially less strong than in the historic broadcasting space. This is not a market characterised by high barriers to entry. However, if one were to confine the traditional public service institutions to old media they will increasingly look anachronistic. Let me briefly unbundle what is meant by new media. First of all, we are talking about alternative means of distributing the same linear content and people use the term both to apply to that, ie distributing content over different distribution systems, and to new sorts of content - user-generated content, et cetera. It seems to be that the case for delivering the old content over multiple platforms is pretty strong in order to have the same impact historically. I think the case for public support for such things as user-generated content needs to be made. One caveat: if public service content is to continue to have universal appeal and deliver universally it needs to reach young people, and we know already the consumption of traditional media is in decline among young people and is often being displaced by consumption of new media, and therefore to get to those people you may need to use new media vehicles. Q8 Rosemary McKenna: Good morning, gentlemen. The Government is committed to plurality and we have all agreed, I think, this morning that it is absolutely crucial. Ofcom have identified three areas where they think it is most important - production, commissioning and the outlets (who distributes, how the programmes get to the consumer). What would you say of those three is the most important in terms of plurality - production, commissioning, or the outlets? Mr Elstein: The outlets are, hopefully, all interchangeable in terms of their collective impact. Jeremy Mayhew mentioned the word "impact" and it is an important issue when you do commission public service content how much reach will it have and what are the arrangements for distribution, but I do not think they are a defining characteristic of pluralism. I think the source of content, the supplier, is very important and I think the commissioning process is at the same time very important. If you only have one commissioning body which is also a broadcaster, you are inevitably narrowing the process whereby the multiplicity of ideas can compete. If you track back to when Channel 4 was created it was deliberately created to be a light commissioning structure with nil or virtually nil in-house production which would commission from hundreds of suppliers - I think it is probably less than hundreds these days - but that was a way of generating a multiplicity of voices and also having competition for what was in effect public funding. Originally it was money diverted from ITV which therefore never got to the Treasury. Later it was money that might have been paid for spectrum but as the spectrum was given for free it was another way of delivering public money, so the fact that there was a Channel 4 as well as a BBC gave you at least some extension of the commissioning plurality that you need and the fact that there were many other suppliers and now the BBC is also commissioning from independents gave you plurality of supply. I do not think there is any problem in having plurality of supply in the modern age - there is a huge number of would-be suppliers - even if the BBC were the only commissioning body. I think the real difficulty is if the BBC becomes overwhelmingly the core commissioning body. The one thing I would just say is that the BBC is in receipt of well over £3 billion a year of public money, but I think it is realistic to acknowledge (sophistry to one side) a great chunk of that money is spent on very good quality entertainment. You do not have to apply the label "public service content" to Strictly Come Dancing or even Dr Who. Great, we all need high-quality entertainment but if you try to nail down the stuff that BC delivers, and BBC Television delivers in particular, that could not be supplied by the market (and, by the way, Blue Planet could be supplied by the market, it is a highly marketable production) it is probably £500 million to £1 billion out of that £3 billion, so if we look at how to replicate the £300 million to £400 million a year that Ofcom has historically looked at as coming from the commercial sector, which is the trade-off between reduced-cost spectrum and the programmes they generate, how would we find £300 to £400 million of non-BBC cash to be spent on public service content? That in a nutshell is the challenge. I have suggested in my note to you one mechanism for doing that, which is something we have anticipated might be the case, but the value of the DTT spectrum that is being created inside the UK which will not be needed by the BBC clearly has a cash value. There may be other mechanisms. I would have strongly endorsed the Burns Committee's Public Service Broadcasting Commission idea which is very similar to the PPG Public Broadcasting Authority, which is something which only focuses on public service content, has no other interest in the world, does not have a stake in a broadcaster, does not have a stake in new businesses or anything, just wants to look at the world of content supply and say, "What is missing? What is not there? What is not good enough? If we had £300 or £400 million a year what are our highest priorities? How do we deliver it?" Maybe one day the BBC will not be wholly funded by the licence fee, which was another recommendation of Lord Burns' Committee, and it too will be able to participate in this central funding and be part of the contestable, transparent, accountable version of public service funding for content that we are looking at. If you want a quick intervention decision it is how do we find the money and how do we allocate the money in the future, the point I was making about the difference between internalising and externalising, putting it into institutions or putting it into a stand-alone body, and how do you make sure that you have enough non BBC commissioning and distribution of public service content to keep a democracy healthy. I do not think you would find any disagreement amongst the four of us as to why you should do it. Tim has expressed it extremely elegantly but you do not have to be an Oxford head of college to adopt those principles in terms of nurturing our intellectual and public life. For good reasons that is what our broadcasting system has managed to do and we would be nuts to let that go. What this Committee and governments have to think their way through is what are the mechanisms, how do you lay hands on the funding, how do you put the two together. Lord Burns: I very much agree with that. I stand by the recommendations that we made in the report (and of course Tim was also a member of that group) which is that we do need to identify which is the content which is missing, that which we would like to see more of on BBC outlets, and then to have a body which has some funds which is then able to commission programmes in a contestable way so that alternative people have to bid for that money to fill what has been judged to be the gap between that which we would like to see and that which we think the market place will deliver. It is not an easy job and it will have to be approached over a period, but it seems to me that that is the best mechanism that I can think of which will give us the basis of being able to make some of these judgments and being able to generate the necessary competition in the non BBC space to provide that type of programme. Mr Gardam: You will not be surprised to find that I very much agree with that, being a member of Lord Burns' Committee. In direct answer to your question, clearly what matters most is the plurality of ideas and plurality of ideas will be most likely to happen through plurality of commissioning. We have also to think of the impact of the ideas and there the issue of trusted brands is quite important when we come to outlets. Ofcom have identified two areas at the moment in very practical terms where the issue of plurality has to be addressed. One is the future funding of Channel 4 and the other is public service publishing. To my mind the issue of Channel 4 is a prior question to that of public service publishing because the Channel 4 issue which is within the wider framework that nobody else seems to be talking about of ensuring that there is true contestability for public service content. Channel 4 has identified a £100 million gap at the time of digital switchover between where it is now and where it will be then. It may be hard looking at Channel 4's apparent profitability and riding high as a brand to believe it, however, I think one of the interesting things looking at Channel 4 from when I began my association with it in 1998 is ever since that moment when we saw the impact of fragmentation coming, we were looking at that time to find other sources of income beyond that of spot advertising revenue. Try as it has today still 95% of its income comes from selling advertising into the main channel, and indeed as the shift from television advertising to Internet advertising has taken place, the impact on Channel 4 in terms of its creative endeavours has been that although it has increased its number of channels, it is reducing its investment in original content on its digital channels because it can sell its advertising at a higher premium on its original channel, so Channel 4 is still caught in a funding gap. That is why Channel 4 has taken the quite risky decision to say, "We will need public money." I think that is an immediate focus for contestability. I think it will also have impacts on Channel 4 because I think it would lead to much more rigorous questions being asked about Channel 4's governance than have been asked in the past because in the past Channel 4's governance was seen almost to be innately enshrined in its means of production, its use of independents, its commitment to innovation and fresh ideas. The opening of the market in production companies and the fact that production companies are allowed to keep their rights to build their businesses has changed the motivation it all sorts of ways. It has been a good thing for production companies that they have consolidated but I think there will be an issue if Channel 4 does take public money about how it will account for the uses of that public money so that it is not seen as just a manoeuvre, and I think that is something which is yet to be addressed. I think though that the assurance of a public sector, public service competitor to the BBC as a trusted brand (and Channel 4 is a comparable brand name with the BBC in this country) is the first order issue. The issue of whether you need a new catalyst into the new media world of public intervention which is what a public service publisher is meant to be, is a secondary issue. I think there are lots of pros and cons about that that we may discuss but I think we should not lose sight of the key issue of Channel 4's role in public funding and hence I think the inexorable drive towards contestability. Q9 Alan Keen: Obviously this session is of great advantage to us to set the scene really. We could not have had anyone better. I am sure you would agree! It would be good if each of you in a couple of sentences were to define what public service broadcasting is. Is it what the market cannot produce? The market could produce Blue Planet but many would not be happy to make that size of investment and would want a more short-term return. Is public service broadcasting what is good for us that we would not watch purely for enjoyment? Could you give us a brief definition. Lord Burns: I think it is about high-quality material. I think it is probably about being originated in the UK; I think that it does have to have a good reach (n other words, it is not a question of putting on this material at 3.30 in the morning on some minority channel) and it should be reasonably modestly priced, but, above all, I do think in the age that we are moving into, where there is going to be this huge multiplicity of channels, it has to be defined in terms of those things which the market place is not going to provide, otherwise we are into a long and very complicated issue about what it is that these things are. Ofcom have identified some categories which I think is a starting point - news and current affairs, some issues about arts, some to do with science, to do with history, to do with the whole issue of democratic accountability, which may fall to some degree into these categories but, as we know, quite a lot of this material is going to appear anyway. I think it has to become a judgment as to whether it is of sufficiently high quality and whether there is enough that is generated and originated within the UK. Here of course the US market and the UK market are quite different in terms of their audience sizes and therefore some of the economics of this. The other thing I would say about this notion of public service content is that because of that type of definition, which I am supporting, it is inevitably going to be a shifting target because you will only discover over time how things are going to emerge. I would stress the uncertainty. At the moment we are in this halfway house between the analogue world and the digital world, between some people who have a restricted number of channels, and some people who have a lot of channels, and it is quite difficult to think yourself forward as to what it is going to be like when everybody is in the position of having this large number of channels and where there is going to be quite a lot of content on offer, and at that stage issues about quality, variety and UK origination, may become a bigger issue than simply whether or not there is enough news on television or on the radio. Mr Elstein: We have got to recognise where we are sitting between the past which was driven by public service broadcasters, who have wrapped up all their content (and there are only four of them because of course we had limited spectrum and that is all we could do) and therefore they had to deliver a wide range of content, whether it would have been delivered by market mechanisms or not, and therefore we got into the habit that everything the BBC produced was a public service broadcasting. In the future, after analogue switch-off, we are much more focused on public service content (ie stuff that otherwise might not happen if we did not intervene), and I think that is the key differentiator. It does not mean that you do not want public service broadcasters. Having public sector broadcasters like the BBC and Channel 4 is probably quite good for our broadcast ecology and for our citizenship, making sure that they keep to the mark is one of the things that Ofcom is charged with, but I just think that we can fall into a category error if we drive too far down the road of, "Anything the BBC produces is public service content", even The Weakest Link, and it is not really an argument worth having. That is a function of funding, not a function of anything else. Once we get to a stage where the key differentiator is between what we know the market can or will deliver and the huge range of content the market delivers --- Artsworld delivers a whole package of arts content - actually I think it is going to be renamed Sky Arts soon - not a lot of it original, but brought in from around the world. It is excellent to have it there. Nobody funds that other than Sky's own subscribers and the advertising market, and so, looking forward, I think Terry Burns is absolutely spot on. We have got to be cognisant of the fact that what will be defined as public service content will change over time and we should not intervene unless we need to. We should not officiously strive to keep alive that which is about to be consigned to the past by analogue switch-off, which is a wonderful, limited spectrum, broadcasting system, many of whose characteristics we want to carry into the new age but whose fundamental structure is utterly different from what we will be facing in the future. Mr Gardam: I think that is very true. However, I would add that the market continues to go through huge disruptions as a result of fragmentation and convergence, and one of the principal drivers of what we have seen as public service content in the past has been a preparedness to invest in ideas over and above maximising the return on that investment, and that, at the same time, has led in the past to a diversity of ideas and a widely available range of ideas. I think if you talk to people working in the sort of positions I used to work in as the directors of content, there is no doubt that the ability to maintain the funding at the same sorts of levels of assumptions and what is fit for purpose of a range of content is increasingly pressured. If you look at what is happening to television at the moment, the established channels are increasingly reliant on particular brands getting bigger and bigger which are increasingly priced higher and higher and, in terms of the public sector broadcasters (and I am speaking here from a Channel 4 perspective) the need to pay the market price for those brands is curtailing freedom to invest in other types of programming which probably will not make money at all. Channel 4, until the coming of multi-channel television, and a very simple model really, very cheap and variable programmes made it lots of money and that money was used to make interesting programmes in the UK market which were not very widely watched. Then, in the first five years of this century that changed, Channel 4 started to have to pay close to the market price for American programming because of the multi-channel competition, but it changed the types of programmes it made in the UK market to make those more competitive. Now there is a market in UK content, Channel 4 is finding it is having to pay higher and higher to maintain its rights and its ownership of UK content. All this is creating value, but at the same time it does mean that the money available (as it was under the old system) to ensure that you had a well-funded range of other programming is year by year being diminished, and that is certainly the experience of the people who are commissioning at the moment. Mr Mayhew: I would endorse what Lord Burns said that financial support beyond the BBC should be focused, insofar as one can discern it, on what the market will not provide. Given what I said about institutions earlier, I would reinforce what Tim said about the priority being Channel 4. It would be nice to have public service competitors beyond the BBC and Channel 4, but it would be mad to pursue new institutions, it seems to me, while letting Channel 4 give up on public service content. That will not happen in a Big Bang way but salami-like as it becomes more and more dependent on the big brands that Tim referred to - you can see them slipping away - and I think that what I would say is that the more public service players is not necessarily the better. In this fragmented world, you need intervention which has impact. There is some danger in spreading the non BBC money too thinly and actually getting lost in the crowd. Therefore, I would argue that the first priority, very strongly, must be to find ways in which Channel 4 can be an effective public service broadcaster content provider with impact when competing with the BBC. Over and above that, it is nice to have and an absolute priority keeping Channel 4 at the public service table. Chairman: We are already over-running and a number of my colleagues still want to come in. Can I appeal for brief answers, if possible. Q10 Janet Anderson: Sky's acquisition of a stake in ITV was not mentioned in evidence to us by either Sky or ITV, but other evidence did suggest that it would result in a reduction in plurality. Would you agree with that? Mr Elstein: Bear in mind that I am a director of Virgin Media, though I have in the past also been Head of Programming at Sky. I think the issue largely centres round news provision and whether Sky News and ITN are going to cease to compete with each other under these new conditions where by far the largest single shareholder in ITV is Sky. Bear in mind they had previously competed with each other for the Five News contract, for the Channel 4 News contract, so the only issue for me that substantially arises here in terms of plurality is whether we are going to end up with two national news suppliers rather than three. Therefore, you might look at this in terms of specific remedies rather than broad remedies if you are imagining what intervention might be needed. Q11 Janet Anderson: Do you think that would be a good thing or a bad thing for the viewing public? Mr Elstein: I have heard a former Head of Sky News years ago at dinner with the Secretary of State saying that actually it would be good for the UK to merge Sky News and ITN because they are both sub-optimal competitors to the BBC and better to have one strong one than two weak ones. There are a number of different ways you can approach this. I do not think there is an absolute rule of thumb which says: "Intervene to make sure that X does not happen." You have got to take a rounded view. Mr Gardam: I was going to say that of course ITN does not just make news for ITV, it also makes Channel 4 News, and I think the impact of Channel 4 News over the years has been very important to the overall use of ecology in the UK and I think one would have to think hard about whether one would want just to see two news providers providing news across all our public service channels. Equally, it would be Channel 4's decision, if it so wished, to look for other means of providing its news, through Reuters or someone, but I think it is not just, in terms of news provision, an ITV/Sky issue. Q12 Mike Hall: Can we can deal with this with quite brief answers because we have touched on funding in a lot of the other answers that we have had this morning, but just to start off, the BBC licence fee produces just over three billion pounds. I guess the vast majority of licence fee payers are more interested in entertainment than public service broadcasting. Would that be anathema to you, gentlemen? Lord Burns: What people want from the BBC is outstanding television and they want outstanding radio. I think, as I said earlier, we have been through a long and elaborate process of consultation and deliberation as to what the remit should be of the BBC and how we make sure that that remit is implemented, but my view is that people enjoy the BBC for a range of reasons. They want to see variety of programmes; they do not want to see the same programming that they can see on other stations. Nevertheless, it is patently obvious that the programmes which are most watched are the ones that are most similar to the programmes that you see on the other channels. In my definition, along with David, I would argue that not all of what is produced by the BBC is what I would describe as public service content; it is a much broader service than that. It is providing a wide range of programmes and it is important that there is a good offering which has a big reaching that attracts quite a substantial range of people to watch it on a systematic basis. Q13 Mike Hall: To put a direct question to you, we have got the licence fee that brings in money? Lord Burns: Yes. Q14 Mike Hall: We have also got the in subsidy of free spectrum? Lord Burns: Yes. Q15 Mike Hall: Should we also be looking possibly at subscription instead of those two exclusively? Lord Burns: Part of the BBC? Q16 Mike Hall: Yes. Lord Burns: The argument that Tim and I and others made in the report that we put out during the process was that over time we are probably going to have to move to a mixed funding model. My personal view is that this is probably the last Charter period when we will have a licence fee in this form which is the sole source of funding of the BBC and, as we move into the multi-channel world and we get past digital switchover, there is going to have to be quite a significant change in the balance of funding. Q17 Mike Hall: If public funding should be extended beyond the BBC, should the Government now bring forward their review to see whether that can be done at this moment in time rather than waiting for digital switchover? Lord Burns: There is an issue about just how quickly you need to start again on that. I did have some concern that we spend our entire life looking at the BBC. It is like building the Forth Bridge: you just finish one process and you start on another one. I think it would be a bit of a mercy if there actually was a period when we stood back from this, as long as it is done in time to be able to get in place a workable system for the future beyond digital switchover. I can see what will happen. Some people would like to push the whole thing further and further on so that the amount of time available for looking at alternatives would be restricted. I think it is important to have the time, to have the investigation, to have the inquiry, to think about alternative means of doing this in good time, but not over hastily. Q18 Mike Hall: Surely the case is pressing now, because if we want plurality and we want to make sure that Channel 4 continues to be a public service broadcaster (and they are all crying out for funds now), they cannot wait for us to have another review at some time in the future. Lord Burns: The licence fee has now been set for--- Q19 Mike Hall: Too long! Lord Burns: ---several years ahead. That is a decision that has been made. We are going through a period where some of the licence fee, of course, is going to be diverted towards more general public expenditure purposes, if I can describe it as that, in the form of supporting digital switchover costs. I think that, at that point, serious consideration will have to be given as to whether or not some of the licence fee, or public funding, should be used to support public service content elsewhere. As David has said, the proposals we made were to have a body that would be in a position to be able to move in that direction as time went on. It is now going to have to happen as a result of a mid-term review, and that is where we are headed. I think it is very valuable that you as a committee are starting to get this ball rolling now and are beginning to get people to think about these issues? Mr Gardam: I think what we have to consider is, if the BBC were less influential in our society would our public life be better? Q20 Mike Hall: I think the answer to that would be "Yes". Mr Gardam: I think that is an interesting question. How many people would agree with that? You would have to be very bold to say public life would undoubtedly be better if the BBC were less influential in our society. You are then left with three options as to the way forward. The first is: the BBC is good value for money and maintains its monopoly of the licence fee, which is where we are for the next six years. The second is: the BBC Trust repositions itself to become the custodian of the licence fee to ensure a level of contestability. The third option would be that the BBC moves towards subscription and there will be a smaller fund for public service intervention. Maybe we will get to three at some stage, but I think one has to go through two before you can consider three and see what happens if two works. Lord Burns: I agree with that. Q21 Chairman: It is probably an unfair question, but, Lord Burns, am I correct that you are not one of the ones on the long list of people who have ruled themselves out of the position of Chairman of the BBC? Lord Burns: I have not applied for the post of Chairman of the BBC either this time or on any other occasion. Q22 Mr Evans: So you have not ruled yourself out! Lord Burns: I have ruled myself out. Q23 Mr Evans: You have ruled yourself out? Lord Burns: Of course. By not applying for the post I have ruled myself out, because it is a process that requires application. Q24 Chairman: We do seem to be running out of candidates very fast! Lord Burns: It is not because I think there is anything wrong with the job, although it is not the one we proposed, but I do have a lot of other things to do. I am quite heavily committed. Q25 Adam Price: Remaining with funding for the time being and how we raise it, you mentioned some of the possibilities: the DTT spectrum and, David, you mentioned some people have canvassed the possibility of a new turnover tax on broadcasters in general, including Sky. Has that got any traction whatsoever, do you think? Mr Elstein: I do think it is mildly perverse to say we should tax Artsworld in order to fund Channel 4, which is what that means. Special taxes are, on the whole, pretty unwelcome in society. They tend to have effects which are not what one originally intended, and they are highly distortive. I worked in ITV during the days when there was a levy on ITV, with the net result that 82% of every pound earned went to the government, in which case, on the whole, why bother to make profits? Let us spend it on parties or programmes that do not need to be made or, indeed, trade union members being flown first-class to Australia, and it was somebody else's money, so let us not worry about it. On the whole I am not very keen on that to, but to pick up the point that Mike Hall was making, in the past, although I have been a strong advocate of subscription funding for the BBC entertainment services, it has not been technically possible. We are rapidly moving to a point where every household that has a television will be able to exercise subscription options. Ten million households already do - the Sky households, the cable households - so we are much more used to it, but Panorama did a survey a year or so ago on funding options. Actually subscription proved to be most popular, ahead of advertising and the licence fee, so how you get to a mechanism for differentiating between what the BBC could easily fund through very normal mechanisms and what you have to fund through direct public intervention, that is a process. I do not think there is a moral issue here. I do recognise what Tim has been saying, which is that you do not lightly discard the non-financial benefits of having the BBC simply for the sake of economic theory, and there is a whole range of welfare economists who will argue the toss one way or the other I just think that we have got to look at this argument in the round, and one of the problems of coming up with a viable pluralistic public service content policy is that virtually all the public money in the future will be going to the BBC to pay for, not just public service content, but the whole bunch of entertainment which does not need that mechanism to deliver it. We need to take a step back. I thoroughly agree with Lord Burns that an early review (what Ofcom was recommending) in 2009 rather than 2011 or 2012 must be appropriate, and now that we actually have the last two years of this particular licence fee deal kind of a bit vague (the first four are much clearer), that is an indication that even this Government will acknowledge what Ofcom has been urging, which is that you have got to examine these issues early. Both Tim and Jeremy have adequately argued, not least for the purposes of deciding what you do about Channel 4, you are going to have to address this thing early, and it would be a real dog's breakfast if we left the BBC over here, dealt with Channel 4 over there, put up the PSB as a straw man here and never got to grips with what actually it is that we are trying to achieve in terms of generating and funding public service content, and that is why I so much welcome this Committee's entry into the argument in the terms that it has chosen. Q26 Mr Evans: Can I ask David and Lord Burns this question? The way things are going, am I right in saying that you are both in favour of public service content, we need public service content to elevate us, but we do not need the BBC post 2012? Mr Elstein: No, no, no. I am strongly in favour of keeping what you have got. Q27 Mr Evans: You are going to savage it, David. To look at what you have said this morning, basically it is that they get £3 billion worth of money, it should not necessarily all go to the BBC, so we want to top-slice it. None of you have actually said how much you want to top-slice. You cannot. Otherwise you are going to have to be forever mugging the poor viewer out there to say, "Let us have more and more money." If you are going to damage any part of that £3 billion, you heard the BBC cry out the other day when they did not get their increase, the one that they wanted, it was awful. Mr Elstein: But did they cry out when £100 million a year was peeled off to fund digital switchover? I did not hear a peep out of the BBC. Obviously there are some things that do close down Radio 4 and some things that do not. Let us acknowledge the politics that are at work here. I am strongly in favour of keeping your broadcasting institutions, the strong brands that work, and also, by the way, keeping them in the public sector. I have no wish to denationalise BBC broadcasting. I think BBC production is a different matter, but we have got to have a continuity of thought here. Here we are, February 2007. Some time probably in the 2012, 2014 timescale, if we actually manage it (and that was the subject of another inquiry by this Committee) we may well have analogue switch-off. There is a clearly linkage between funding mechanisms, technology, public service content funding and delivery which we need to pull together. So beating up the BBC is no part of this. Personally I am not strongly in favour of top-slicing the licence fee as it is, because you put too much pressure on the BBC overtly to reduce its own public service content delivery. If you take £100 million out of the BBC and hand it over to Channel 4 to make public service content or Channel 4 News, whatever it might be, and the BBC says, "Well, in that case we are not going to reduce the amount of Strictly Come Dancing, we are going to reduce the amount of peak time arts documentaries" - a natural response, because the BBC has to maintain its weight in terms of viewing share, reach, et cetera, otherwise the whole licence fee mechanism comes tumbling down --- Q28 Mr Evans: Yes, but where you put the money you have just top-sliced means that the programme that the BBC have just sliced will go to another channel. Maybe on ITV, instead of that rubbish they put on after midnight, you might actually see some good quality programming. Mr Elstein: You might, but in the end that intervention is likely to lead to a zero sum benefit. If you take money and quality out of X and deliver it to Y, is the viewer any better off? I think we need more joined up thinking about what is the destination we are trying to get to and when, how do we get there, what are the steps on the way and what do we have to have to pay attention to on route? If we wait to make all our decisions until 2012, Channel 4 may have descended into Big Brother 19 to 24 hours a day with the opportunity to phone in and apply to be there and pay a pound to do so. Who knows? It is a great shame; but John Snow as the presenter, I am sure, will be great! Q29 Mr Evans: Indeed, and I am looking forward to a right-wing version of Channel 4 News at some stage too. Maybe that could be a public service remit. Can I ask Lord Burns for his response as well? Do you think, for instance, looking at what the BBC does with the money, and with the new digital age, that perhaps if we shelved BBC Three and Four, which nobody watches, a load of those radio stations that nobody listens to, that money could be going up for bid for somebody else in order that a good public service content can be provided on channels that people watch? Lord Burns: I do not agree with that. I belong to the camp that believes that it is important to have a strong BBC. I think we get a wonderful array of programmes, both on radio and on television. I think, however, the present method of funding is not sustainable beyond digital switchover. I think it will become extremely difficult to use the policing method that we use to put people in court for not paying a licence fee when it is possible to simply turn off the programmes that they do not wish to pay for. I am afraid that does take you into subscription. I believe there should be a continuing amount of public money that is available, whether it is in the form of the reduced licence fee or the same licence fee, but which would then be used for ensuring that we have an adequate amount of public service content, which I would like to see bid for by alternative providers, including the BBC, and that is the picture that I see beyond 2015 when the new arrangements have settled down. As David says, there is then an issue of how we get to that kind of world where the BBC is funded by a mixture of subscription, possibly advertising on some of its overseas websites, or whatever, and by some public money which would be allocated by a body that was looking across the alternative providers of public service content; but it is no part of my agenda to weaken the BBC; I think that we are extremely fortunate. Q30 Mr Evans: Post 2012, do you think that the BBC, even with some of the money taken away, will still be a strong public service provider and it does not matter how much they bleat, and they will, the BBC will still be there and the public should not be scared to think that they are going to lose all of this good quality service television? Lord Burns: Providing this whole process is managed in a sensitive way, I think we can get through the whole digital switchover period, I do believe we can move to a mixed funding model for the BBC and retain a strong BBC but, similarly, have some public service content which comes via some other providers, and that is the outcome that I would like to see in ten years time. If one goes after the BBC with too much of a blunderbuss here, one could always cause quite a lot of damage and, as something that has been built up over the period that it has, I would be very reluctant to see that happen. In a lot of areas, I notice, it continues to play extremely well in the new content world; so there is no suggestion that people's appetite for the BBC in the new content world is at all diminished. Just look at the success of the website. Most of the podcasts that people listen to are dominated by the BBC offering, but the present method of funding, I do believe, is not sustainable beyond digital. Q31 Mr Evans: You say it is dominated by the BBC, but maybe to the exclusion of commercial people coming in, because they cannot afford to compete? Lord Burns: Some people are in. If you look, some of the newspapers figure in the list of the top 50 podcasts. There are a variety of things, but it just happens there are some very good BBC programmes, and I am not at all surprised. Chairman: We are going to have to move on to the next session. Philip and Adam. Q32 Adam Price: I just wanted to ask briefly, if Ofcom has scaled back the projected cost of the public service publisher from £300 million to between £50 and £100 million, is that going to be enough? Mr Gardam: I think the idea behind the public service publisher is that it should have a catalytic effect. I think it is very sensible of Ofcom to decide that it should not become an extra brand in its own right, but if it can become a partner in particular projects, new media projects that otherwise would not happen (so opening up really interesting ideas of public import to wider access that otherwise it would not be there), then that is a very good idea. I think if you see that money as essentially partnership money, leveraging extra investment, then I think it would be quite an interesting intervention, but I think it is a minor one. Q33 Philip Davies: Can I briefly follow on that? They have reduced the obligations of public service broadcasters in some areas and maintained others, such as children's TV. Can you say whether you think those actions have been the right ones, are they proportionate and how much faith do you have in Ofcom as a regulator in this area? Mr Gardam: I think Ofcom was doing a very important thing when it was created, which was that it took the debate about public service broadcasting and public service content beyond the realm of anecdote. When it arrived it became quite clear there was not the data about what the level of public service provision investment was in the United Kingdom. So its first report on public service content was incredibly valuable and led to a new perspective whereby we could get an accurate idea of the nature of public service broadcasting in this country. I think from there it is opening into a new phase where it has got to join up its thinking as to what the shape of public service provision will be, and there has been a series of interesting initiatives - Channel 4, the news, children's television, the PSB that we have mentioned. The challenge for Ofcom now and its new chief executive, who I think is much more content-minded than his predecessor, is to think overall about what public service provision will look like. In the first phase of Ofcom's development it was trying to establish exactly what was the case out there; it is now moving into a new phase. Chairman: Thank you very much for your help. Memorandum submitted by Voice of the Listener and Viewer Examination of Witnesses
Witnesses: Ms Jocelyn Hay, Voice of the Listener and Viewer, Ms Kirsty Young, Classic FM Consumer Panel, Professor David Buckingham and Mr Richard North, gave evidence
Chairman: Can I welcome our second panel and apologise for keeping you waiting. The second panel is designed to give us the viewpoints mainly of the consumer, and can I particularly welcome Jocelyn Hay, who runs the Voice of the Listener and Viewer, Kirsty Young, the Classic FM Consumer Panel, Professor David Buckingham, who I think is here to particularly give us views from the point of view of children, since he is the Director of the Centre for the Study of Children, Youth and Media, and we will be joined, very shortly I hope, by Richard North, who is from Social Affairs Unit and the author of a new book entitled, unprovocatively, "Scrap the BBC!" Can I invite Nigel Evans to begin? Q34 Mr Evans: Good afternoon. Do not feel as if each of you have got to answer the questions that we are putting forward, but could those of you who have got an interest in it say something about how you think that new technology has changed the way that people access media, and particularly young people, people in, let us say, the 12 to 18 year age group? Who would like to tackle that? Professor Buckingham: Perhaps I should start. On one level, it has led to a massive proliferation of media. We have been talking this morning mainly about our television, in fact, but increasingly for young people television is just part of a much wider media landscape - so we are talking about the Internet, computer games, et cetera - and so television has a place, but within that wider landscape. I think, though, it is important not to overstate that. There is a kind rhetoric around, when people talk about young people as a so-called "digital generation", that somehow they are all wired up, they are all automatically, instantly comfortable with new media. I think that is to overstate the case, partly because the change is happening but it is not happening quite as fast as many people suggest and as some people fear. I think it is also the case that there is a digital divide here. Some young people have access to very high levels of technology, others do not, and we should not forget the fact that they do not and that that will continue to be the case. So, yes, on one level young people who are not so well provided for in terms of technology will catch up, but then the early adopters will have moved on. So, a digital divide, I suspect, is always going to be with us, and that is the public policy issue we need to take account of. I think in relation to broadcasting, on one level, yes, we have moved to a situation where there is much more out there in terms of television, particularly for young people. There are 23 specialist children's channels in this country, which is an extraordinary level of provision in terms of quantity. I think the question, though, is does that necessarily translate into quality and also diversity and range? I could say some more about that, but I would say more quantity does not necessarily mean more diversity, certainly when it comes to children. The questions that people were talking about earlier this morning about what the market can provide, I think children are a very interesting test-case in terms of what the market can and cannot provide, and I think that certainly our experience of multi-channel television so far would suggest that there are certain things that the market does not provide, basically for economic reasons. Q35 Mr Evans: Does anybody else want to come in on that? Ms Hay: Yes, I would be very glad to come in. First, on the question of technology, I agree exactly with David. The new technology is here, and younger people have been quicker at taking it up, but there is still a place for traditional television and, indeed, now radio as people are listening to radio over the Internet, and I am delighted that you have got radio and have now added it to your Terms of Reference - it is most important - but when we came into being over 20 years ago, the sexy thing was satellite and cable and everybody, again, was predicting that it would transform the market immediately. It is impacting and transforming the market, but it has been much slower, as David has said, than was predicted and there is still a place for the traditional television and radio programmes, many of which are being transmitted by new media methods, if you like. I would like to echo what was said in the previous session: I am glad that you are focusing on content because, as far as viewers and listeners are concerned, it is content they are looking for. Q36 Mr Evans: Jocelyn, Ofcom has done a report that shows that younger people are getting less and less access to public service content. Does that disturb you and, secondly, do you think that somehow or other we should do something about that, making sure that public service content is provided on all these new mediums that the younger people are tending to watch, maybe not as quickly as David is saying, but there is definitely a divide building up there? Ms Hay: There is a divide, and it is not just amongst young people, there is a digital divide amongst older people as well, and I think that is most important because it is probably greater. On the question of content, I think it is most important that young people continue to have access to what we consider is public service content, and that includes high quality, a great diversity of programmes and particularly programmes that are made in this country. As David said, there is huge provision now in the multi-channel world, but the majority of the content that is being broadcast by the foreign owned satellite and cable channels is foreign content, and at the moment it is very much American content which is made for a global market. There is nothing wrong with that in small amounts and as entertainment, or whatever, but if that is the sole diet for children, then they are imbibing a different value system, a different language, and they are not getting access to the original indigenous programmes that nurture their cultural identity, their values, their language and, indeed, which help them to grow up to be informed citizens of this democracy. That is most important. Ms Young: I am, by the way, on the consumer panel for Classic FM. It is the only consumer panel for commercial radio. We were brought in by Classic FM voluntarily - they wanted to create the panel - and I am one of six lay people who have the delightful job of sitting every three months in Classic FM's boardroom and telling them what do with their radio station. We have six objectives, and one of them is to encourage a younger audience, especially at early ages, including pre-school, and this is a very important remit to get people to enjoy classical music from an early age. To me, and I am also an arts professional here, I do not mind where they get it, if they get it on the radio, if they get it on the Internet, however they find it - live, or whatever - and that is something else: to take something out of media and expand it out so you are not just finding it on traditional channels which are recorded, you are finding it live as well. So, when you are talking about new media, I think beyond that slightly as well is what happens beyond the boxes, whether the box be a digital radio, or a digital TV, or a computer, and I think it is vital that we get people to enjoy music or whatever - my interest is music - through a multiple of channels, which includes live performance. That is something perhaps to pop in the back of your minds. Q37 Mr Evans: Do you know how much of Classic FM is listened to on the Internet? Ms Young: I do not have the figures, but there is a lady here who will be able to help you afterwards, I am sure, with the figures. Charlotte is sitting over there. Q38 Mr Evans: When you are on the panel, have you told them that their advertising is very repetitive? Ms Young: Oh, yes. We get a selection of listeners' letters sent to us every month, and I think if we had to do a body count of the word "advert" and "hate", it would be very high indeed. In fact, you have to say: this is a commercial organisation; they have to make money; they have to put out adverts. One of the other objectives on my list of six here is the quality of adverts. The most interesting thing is that people always start their letters, "We know you have to have adverts but ...", and it is that "but" that we are trying to deal with. Q39 Mr Evans: I am glad to see you received my letter! Ms Young: Many times, sir, many times. Q40 Chairman: Since we are on radio, which Jocelyn rightly said is equally important, are you concerned about the extent to which the BBC is now becoming dominant in its market share and the problems that is causing for commercial radio? Is there more of a problem in radio about maintaining plurality than there is in television at the moment? Ms Hay: Not particularly. One is blaming the BBC, if you like, but also I think some of the problems of the commercial radio stations actually stem from their own programme policies, which are not nearly as imaginative as they might be. Some are doing extremely well, including Classic FM, but some of the others are not and there is a tendency very much to do away with the localness of local stations as, again, the ownership has become much more concentrated and to focus on automated play lists, and so on. Coming back to the BBC, I think Kirsty has identified, one of the reasons why listeners are favouring BBC stations is that they simply loathe the intrusion of adverts, and many people are prepared to pay the licence fee simply in order to get BBC radio because of that and also because of the quality. Kirsty has identified another huge difference between the BBC and most, if not all, Classic FM excepted, which is the question of live music and what BBC radio actually does for the rest of the cultural life of the nation by investing in live music and commissioning a wide range of music from Radio 1 to Radio 3, and that enriches life all over the country, and its maintenance of the orchestras and festivals like the Proms, which bring the whole of the UK together, which is beyond most of the commercial radio stations' capacity. So, I think you need to look at other areas than simply blaming the BBC for being dominant at the moment and perhaps getting it right. It is not so many years, it is only five or six years ago, that people were writing off the BBC when there was an advertising boom and, at that time, being on a fixed income which was linked to the rate of inflation people were saying was doom. That is not many years ago. Now, because we have gone through a different cycle and an advertising depression, the rhetoric has changed. It will probably change again in future. Q41 Chairman: Given the title of your book, Richard North, you probably would not agree with that? Mr North: I do suppose that the licence fee is an absurdity, a regressive tax of the silliest kind, and I do believe that regulating broadcasters, either cosseting them or corseting them, is redundant in our time. What strikes me as interesting and problematic is the way that dislike of, let us say, the licence fee is not a water cooler issue for, let us call it, the masses in the way that, say, speed cameras are. So the conundrum is that the mass of consumers are cheerfully paying for content which most of them (PSB I mean) practically by definition are not consuming; and my answer to the conundrum is a kind of nuclear option compared to, say, the good sense of Elstein and Burns, which is to say that we should be absolutely not particularly in love with our current institution and we should say that there are, let us say, at least 10 million affluent and literate consumers in this country who, by definition, see themselves as citizens - that is practically the definition of what you might call the middle class value - and that, therefore, we should simply scrap what we think is absurd and redundant and rely on the good sense and the market power and the citizenly activism of these ten or 20 million people who we can assume love PSB, either through the market, or through something like, let us say, a National Trust of the airwaves, to find a way through the conundrum and simply be able to buy, to sponsor, the sort of content that the market does not bring forth. Just to finish that, I would say that the market, I think, will bring forth quite extraordinary things, good things as well as bad, and that, therefore, you can allow a kind of creative vacuum or creative chaos because there is so much strength, let us say, in the print media, there is so much strength that the market will bring forth in the broadcast media and we have yet to see the activism of the 10 million affluent, literate and public-spirited middle classes. Chairman: Alan Keen? Q42 Alan Keen: Would you stop subsidising the arts in all its forms as well? I made a speech last year on the floor of the House in which I said I was educated by the BBC, and I also think it is wonderful value for money. I pay a lot of money for Sky to watch football, because that is my obsession, but my education came from the BBC, apart from maths, which Tim Gardam's grandfather taught me at grammar school. The rest of the time I was educated by the BBC. Would you stop subsidising the arts full stop? Mr North: I thought I had bitten off enough when I said, "Let us scrap the BBC." If you ask me, I suppose I would, at the drop of a hat, scrap the Arts Council too. When you say you were educated by the BBC, I do not believe that what is good about the BBC (though I think there is much less that is good about it than is generally presumed) will wither. In fact, I was in a dilemma that much of what I thought was really wrong with the BBC - let us say the Humphrys/Paxman culture of contempt - is exactly what the market would rush in to support because it is so popular. It is the unpopular bit that troubles me, but it ceases to trouble me when I remember the market and citizen force of 10 million affluent, literate people spotting a gap in their culture. Professor Buckingham: I would like to say I think if you look at the market provision of children's television, it is a very good way of disproving the case that we have heard here. It may be partly that children are not affluent and literate, and so on, but if you look at what is there for children, provided commercially, what you find is quite narrow in range. There is a lot of it, but it is narrow in range. So, if we are talking about content, we are talking about particular genres of television that are there, that are globally easy to sell, and that is the kind of material that is coming through cable and satellite; and the kind of material that the BBC and the terrestrial broadcasters have traditionally been required to provide - factual programming, including news for children and also real live action drama - those kinds of things are not being provided by the market. So, I think there is a question there about whether leaving everything to the market, at least in the case of children, really addresses the issue. I think here what we have to have is a kind of distinction between wants and needs. So, in a sense, you could say the market is a way whereby people can register their wants, but actually there are also needs that people have, and I think, as we think about broadcasting in relation to children but also more generally, we need to make some normative judgments about what it is that people need within a society. The arguments that were being made earlier this morning about the social educational purposes, the need for broadcasting to provide information, and so on, are normative judgments about what it is that people need and we cannot simply step back from that and say, "Let us just have a mechanism whereby people can register what they want and they will get what they want." Ms Hay: I totally agree with David, and I also think that we need to recognise that neither the market nor the economics of broadcasting are the same as other goods. I think the first mistake that Mr North has made is to compare broadcasting to the press and printing. The economics are totally different in both cases. For instance, in broadcasting all your expenditure is up front. You have made your programme and, having made your programme, you can then broadcast it to one person or to roughly a million and your costs are not all that much different; they are very different in print. Again, if you are making a motor car or a can of beans, you make your product and you consume it, you have eaten your beans, and the fact that you have had one tin from one manufacturer, you are pretty sure of the next tin. That is totally unlike broadcasting. You cannot taste the thing and know your product until you have consumed the whole programme: the beginning might be awful, but the end might be brilliant. Again, you have not actually consumed it; it can be shown, as I say, to hundreds of millions of other people; and this is what often happens with the satellite channels because they are offshoots of American companies who have made their money in their own market, which is much larger than ours, and then broadcast it here. Similarly, the market is different because in broadcasting the actual cash transaction, apart from subscription, is between the advertiser and the broadcaster, and we, the viewers and listeners, are actually the commodities being traded or leased for that period of time, and some are much more attractive to advertisers than others, maybe that 10 million affluent, middle class, but that will mean that older people, children and others without the same spending power will not be served by the market unless there is some public intervention, and I do think we need to remember that. Q43 Chairman: Although to some extent, Kirsty Young, you are the proof that the market will supply high quality public service type broadcasting? Ms Young: Yes. In fact, one of the first live broadcasts on Classic FM in the days when they were in a basement in the Oval was by my good self singing into a microphone over the top of the computers, and people said, "Why are you going to Classic FM? Nobody needs Classic FM because there is Radio 4 and Radio 3", and I think, 5.8 million listeners later, it has been proved there is a want for classical music and, indeed, going back to our letters, a need for classical music and, therefore, a need for Classic FM. There would be a huge hole if Classic FM stopped broadcasting because popular classic music is not covered by Radio 4 and Radio 3. The listenership of Radio 3 is much less than Classic FM, and the reason I want to stay on the panel is to make sure that the quality of the delivery of that music to 5.8 million people stays high, even though they are a commercial station, and the want is definitely there. Ms Hay: I agree very much with that, but I think the two stations are doing different jobs, and that is what we need to recognise and that is where the value of plurality comes in. Q44 Janet Anderson: David, you mentioned just now about children's programming, but I was going to address this firstly to Jocelyn because your submission states that examples from abroad, including Australia and Canada, show that the quality and range of programming can be lost when a more market-led approach is used. PACT in their evidence said that, for children's output at least, these countries are good examples of the use of public intervention in Australia and Canada. Are there any lessons we can learn from Australia and Canada here? Ms Hay: I am sure there are, certainly in children's programmes, but in other ways as well. They both have public interventions of different kinds, and they have quite imaginative fiscal measures. Canada originally had very strong levies on satellite and cable channels going into Canada. They have also built up a public fund which helps the production of their children's programmes and teenage programmes. Australia has a public fund and an intervention there because the ABC funding has been cut back and they have not been able to do so much themselves, but they both resulted in continuing production of programmes, and I think if the Committee could look at some of those it would be very helpful indeed. There are systems, and virtually every other country in the world has some form. I have been looking at quite a number of them in Europe and in the Commonwealth. Q45 Janet Anderson: That is obviously something we need to look at. Can I ask you one other question? You did mention in your evidence Sky's stake in ITV. Ms Hay: Yes. Q46 Janet Anderson: You may have heard the previous witnesses say that they thought it would affect the provision of news but maybe nothing else. Would you agree with that? Ms Hay: I think it could certainly affect programming, because you need to remember that ITV has a very rich archive, for instance, of programmes and they are using those very imaginatively, or very wisely, shall one say, economically, to fund new channels which are approving very popular. Sky has made some original programmes but, by comparison with the other broadcasters, the range and value of those programmes is minute. It is the four existing principal public service broadcasters, and now five coming in, that actually have the huge manufacturing base and export market, and most of the satellite and cable channels actually have a deficit because they are importing foreign product. On the question of plurality, I think it could be extremely serious, the question of Sky's intervention in ITV, particularly on the news provision side. David Elstein mentioned possibly an amalgamation between ITV News and ITN, if you like, and Sky, but, again, if Sky became dominant, Sky is not governed by the positive public service obligations that ITV and ITN are. So, whilst Sky produces an excellent news service, which many people enjoy and which adds to the plurality of sources here, which is valuable, it has no obligation in regard to the range of news that it covers. It does on impartiality, but if it chooses not to continue to broadcast international news or national news (and do not let us forget that it does not include much regional news), then that area could be lost because there is no obligation on Sky to cover that range of news, which there is now on ITV. Q47 Janet Anderson: So, from the point of view of the consumer, this is something that worries you? Ms Hay: Very much indeed. Q48 Janet Anderson: Does anybody else want to add anything? Professor Buckingham: I would just go back to the children's programming thing. I think there is a more general point here, which is about the form that regulation takes. One of the issues that I am picking up when talking to people in Australia is that there is a danger of over regulation, restricted regulation. There is regulation that is about quotas, saying there should be X number of hours. There is also regulation which in a sense is much more positive about encouraging the production of particular kinds of programming, and it is also that kind of provision that enables national broadcasters to compete in global markets. So, I think, looking towards a situation where we have positive encouragement of production of particular kinds if programming, and children's programming in this would then be one example of public service content more generally, is a more positive way to go, whereas simply imposing quotas, the danger is that you run the risk of a rather cynical attitude on the part of the broadcasters where they have to fulfil the quota but they do it with the minimum possible effort and investment. Q49 Janet Anderson: So incentives are really the answer? Professor Buckingham: Positive incentives, yes. Mr North: I would just add that the public sector likes to worry about children as though children were defenceless. Most children have one, and quite a lot have two, advocates, namely their parents. I think when we come to saying where the power should reside and who should be accepting responsibility for driving the children's agenda, it is the parents, and the regulators (of course I love them but they are slightly inclined to look for roles) can back off, I think, a bit. Q50 Chairman: But there is a real problem with children's television which we will be addressing later in the inquiry that, by Government intervention restricting advertising on children's television, you are going to prevent the market from producing the revenue necessary to sustain children's production. Mr North: I used the same argument in the food context to say that we should not be obsessing about what children were seeing on television, because, after all, if their parents do not buy them the junk, the junk does not get bought; it does not really matter how much the child falls in love with it on the television screen. I was, I fear, to the right of Genghis Khan on that as well! Ms Hay: It is much more about making sure there is a choice of well produced programmes that meet their cultural, social and intellectual needs. It is not so much about preventing other channels, which will bring light relief and extra choice, but it is making sure that those programmes are made; it is positive support so that there is a choice of the whole, and not just a choice of one, range of programmes. Ms Young: One quick word about regulation. There was a move towards self-regulation on commercial radio stations, which is why the consumer panel was set up - it was not an enforced thing - and it was encouraged that it was a panel that was set up by the radio station to look at themselves, which is why we were brought into existence. So it is self-regulation rather than imposed. Q51 Rosemary McKenna: Can I move on to talk about plurality. Do you think it is important that consumers have the opportunity to get public service media content from a range of sources, or is it sufficient for them to have one provider, the BBC? Professor Buckingham: I think the former, if I may say so. Following on from what we were just talking about, we are in an interesting situation now in relation to children's broadcasting. I think the junk food ban, or the restriction of junk food advertising, is causing problems, particularly for ITV, but their commitment to children's television is something that has been reducing over time anyway. They are quite keen to get out of regulation or the requirement to provide children's programmes, and I think the danger is that we will then get to a situation where, with the honourable exception of Five, which does provide children's programmes but does it on a pretty low budget, the danger is that we only have the BBC providing public service programming for children. So we have a plethora of cable satellite channels providing lots of cartoons, lots of sitcoms, which are absolutely fine in their own terms, but if we want to find factual programming, if we want to find live drama, the danger is that it will only be the BBC providing it. The danger is there, obviously. You need the terrestrial commercial companies to be competing with the BBC to keep the BBC on its toes in relation to particular areas of programming. Mr North: I would say on plurality that one of the curses of PSB is that it becomes locked into the idea of impartiality as the only way of keeping a current perspective, and that locks it into the awfulness of a kind of authoritativeness, which I thinker is the antithesis of debate, it is the exact reverse of how we achieve a brilliant print media, and, therefore, I would say that in my much less regulated world plurality would flourish and so would bias and it is the competition of bias that produces as near as we can get to truthfulness an robust investigation and debate in this veil of tears. So, sure, plurality is crucial. Ms Hay: I think plurality is absolutely essential, and I think one of the miracles of the British broadcasting system is that until recently ITV has been able to compete in range and quality of its programmes with the BBC. It has done a fantastic job in the past, and that is why we wish to see it continue, but do not let us forget that we also have Channel 4 as a public service broadcaster. I think, again, Channel 4 was set up in an imaginative way to cater for audiences that were not well catered for by the existing broadcasters, so I think it is most important that we see that Channel 4 continues and, indeed, Five is now bringing on additional extra public service content, but I think in the name of democracy it is absolutely essential to have information and news from a plurality of sources in addition to a wide range of programmes, children's are most important, but also there is a range of other programming that we need plurality and competition as well. Q52 Rosemary McKenna: But is there not evidence that in children's programming parents are opting for BBC programmes because they is no advertising contained within the broadcast? Ms Hay: It is partly lack of advertising. A lot of people dislike advertising, and that appeals particularly to those who watch the BBC, but also the BBC has been producing a much wider range of programmes and very high quality programmes. They are made with care, they are not necessarily made to sell related merchandise, and they are not necessarily targeted at an audience simply in order to sell advertising or necessarily to make overseas sales; some of the most important children's programmes actually are ephemeral ones, they are live programmes that you cannot export: programmes like Blue Peter, like Newsround, which is the only television news service for children now both the commercially funded ones have gone, even the Channel 4 one, and it is very sad. So, I think we need to be looking at that, and that is why the BBC is so important, but it also needs competition and we need a plurality of sources. Q53 Chairman: I tend to agree with you that there is a problem, particularly with children's programming, although I think Nickelodeon probably would not accept David Buckingham's complete exclusion that all commercial children's specialist channels--- Professor Buckingham: I am by no means excluding, and I am by no means saying that what is on there is poor quality. What I am saying is that the issue is about diversity and range. Q54 Chairman: Leaving aside children, where I think there are particular arguments, Jocelyn Hay, you have focused on ITV, Channel 4 and Five. Is there not an argument that once we move into a switched over world with everybody having access to a huge range, the fact that consumers can find educational programmes on the Biography Channel, the History Channel, we have got arts programmes on Artsworld, the performance channel. You may have to look quite hard to find them (they are niche channels), but as long as they do exist there is plurality. Ms Hay: Yes, most of those are subscription channels, of course, they are bundled in with others, and so, first of all, they are not free-to-air. The other point about having a fund, if you are talking about having a fund to fund particular programmes, is that if there is no obligation, if there is no continuing ethos of public service, it comes back, as I think was mentioned in the previous session, to motivation. Yes, one of these channels might make an excellent programme. There are lots of very good programmes on different channels, but if it suits their book commercially, if there is no obligation to continue or no continuing ethos, they could be dropped tomorrow, and that is one of the big differences. The other fascinating thing to see is that on many of the channels that are, in fact, the most popular channels the vast majority of the programmes that are shown were originally made by one of the terrestrial broadcasters and shown free-to-air. Q55 Mike Hall: This might be a very simplified way of looking at it, but up until now we have a reasonably strong set of competition across all genres in the provision of public service broadcasting. From the evidence that we have heard today and from the submissions we have received, quite clearly there is a huge fear that that is not going to continue. What is it that the Government or Ofcom should be doing to ensure that the competition continues in the digital age? Ms Hay: As I have said this morning, the objectives are there, the need is there, the actual means is the $64,000 question. We would certainly not support top-slicing the BBC licence fee or putting a levy on top of it, because, again, as was said, the end result could be zero economic benefit. Certainly ITV is still a highly profitable channel, and it has already negotiated quite a lot of favourable rebates, for instance, on the price that it is paying for spectrum, and so on. So I think certainly for the foreseeable future, up to switchover, ITV could still be fulfilling some of its licence fee remit, which it actually promised to do. After digital switchover, we will be into a different area, but surely there is a case there for continuing public intervention of one sort or another. As regards the licence fee, I would not write it off too quickly. Even Mr North has recognised that there is no great antipathy to it. Yes, some people object to it, but not everybody, and most people are prepared to pay for something that is a public good. Lots of us pay for parks or libraries or other services, even for the Arts Council, that we may not make use of personally, but we recognise that it is a public good, so it is partly a question of perception and political will. Q56 Mike Hall: As an aside, I think we do that through general taxation rather than through aggressive taxation of the licence fee. If I have understood your contribution this afternoon, you would say that you do not want the BBC licence fee top-sliced but you want the additional public funds to go into public service broadcasting. In your written submission you mention incentives. Would you like to say a little bit more about what it is that you mean and how the incentives would work? Ms Hay: There are a number of fiscal incentives that have been used by other countries. In fact some have been used here in the past to fund things like the Film Council, for instance, and to disperse public money in that way to support good things. Other countries have used fiscal measures - one that was existing here was free spectrum - but things like tax rebates, free loans, other fiscal systems, for instance, the Alternative Investment Market. If you have some input of equity, you can get tax reductions, both personal and the company, on corporation tax. I have been looking actually at quite a number that are existing already in countries like France, in Germany, in Canada, in Australia. There is quite a wide range, quite a lot to go through here at the moment, but there are some very imaginative schemes, particularly for funding film, and some of those could well be transferred to broadcasting, I think. Q57 Chairman: You have told us that you are not in favour of any top-slicing of the licence fee, but you do think there is a role for intervention and the creation of positive incentives. So, essentially, you want the Government to spend more on broadcasting than it is presently spending? Ms Hay: Not necessarily spending. Some these could actually be forfeiting a bit of tax income. Q58 Chairman: I think the Treasury do not see a difference. Ms Hay: Do they not? Well, maybe they should be persuaded in the public good! Q59 Chairman: I think that may be beyond this Committee actually! Ms Hay: I think one of the things that needs to be recognised is the huge industry and the economic benefit to the whole of the country, not only within the country but also in export trade. British broadcasting is recognised as being some of the best in the world, and we really ought to be capitalising on that, and it would be in the Treasury's interest to make some imaginative moves and maybe forfeit a bit of income in order to gain it elsewhere. Q60 Chairman: My colleague says, "Imagination is not a word often associated with the Treasury"! If we do not have any more questions, perhaps finally, because we have cut you rather short, you have heard a lot of the evidence which came in our previous session, you have also seen the remit of our inquiry. Are there any critical thoughts that you would like to leave us with at the end of this session in terms of this inquiry? Mr North: I would only say that we should be much bolder about this whole kind of idea of the current broadcast ecology. What we have got is okay and it has got great faults and some strengths. It would not matter if there were less of it, it would not matter if it was different, we can survive all that. It is this timidity that afflicted the last Charter Review whereby people were terrified that civilisation would fall in if broadcasting changed, and possibly really dramatically, and I do not think it will. Professor Buckingham: I just want to make a couple of points around new media, because we started with that and veered off. I have a couple of issues that I would like to flag up: one is about the fact that far and away the majority of new media provision is commercial, and I think there is a real issue then about public space on the Internet and how that might be provided and preserved. There is a particular issue when it comes to children, because there is quite a lot of evidence that, while children can be very savvy about advertising on television, they are often much less aware of the commercial intent behind the way in which the Internet works. So forms of sponsorship, forms of covert advertising, ways of gathering information about consumers that are going on through the Internet, children may be much less aware of. There is a case, it is partly a case, not so much for protection, but more a case for media literacy there, but an issue about public space on the Internet and how that is to be preserved. The other thing to look at this more positively is to say that new media also has lots of potential in terms of participation, but we are talking about media that creates opportunities - I am thinking here of blogging, I am thinking of My Space and YouTube and all those possibilities for ordinary people to become involved in producing media content - and, again, I think there is a question there about how that kind of creativity can be harnessed and developed, and I think that is not just something that can be left to the market, I think that is also potentially a public policy issue. Ms Young: I would agree with that whole-heartedly. Let us face it, a lot of what is on the Internet is utter twaddle, it is complete rubbish. There is a big vacuum for quality information and not only commercial broadcasters, but the BBC have a role in this, but where do you go for your information? For example, if you are looking up composers, where would you end up looking for that information? You would look at Wikipedia, or something like that, which is totally different. You would not necessarily go to the BBC. So, my plea is to let there be room for commercial people to put good quality content on alongside the BBC, which has a huge Internet presence, and to build the quality of it up: because the problem at the moment, and my mother would echo this as an ex-teacher, is that for young people to find the difference between the good and the bad or, more often, the accurate and the totally inaccurate, is difficult. If government wants to do something positive on line, it is to make sure that the information provided is good and right and that, if people then find it, they know it is right. Ms Hay: I would echo that, but I also think that they need a trusted guide sometimes. I think part of the role that the BBC has played in new media is to be that trusted guide, and I do not think that the take-up, or the development, of the web would be anything like it is at the moment in this country had it not been for the BBC's presence both on the web and as a trusted guide. I think what is also important and what is the main reason for public intervention is that we are moving into a more globalised market in the media of all kinds, and that will provide a sort of mid-Atlantic culture, but it is most important for young people, and for adult who want it also, to have access to programmes that are made that give children, particularly, access to their own rich cultural heritage of language, literature, music, speech and values. For the future generations I think that is essential, and it is quite clear at the moment that the most popular programmes on whatever means of delivery are those that are made to meet those demands. I think this is a case for public intervention and, if you took look around at some of the imaginative schemes that have been used by other countries, not least by Ireland (Eire), which is very close to us, as well as countries like Canada, Australia and various countries in Europe, there are ways of supporting those kinds of programmes. It is not about negative regulation; it is about providing the support. Again, I think we need to remember what a valuable job channels like Channel 4 are doing, as well as the BBC, and have a look at their remit and see whether maybe that remit could be enriched or enlarged a little to cover some of the areas that they are not now obliged to do in meeting the needs of people who are not well covered by the present broadcasting ecology, and that might apply to children, for instance. Chairman: Thank you. We have one minute left. Q61 Philip Davies: I was interested that Richard North has been arguing that the free market delivers what the listener and the viewer really want - that that is the way it happens - whereas the Voice of the Listener and Viewer seems to have come to a diametrically opposed view. I was wondering, Jocelyn, if you could perhaps tell us how representative you think your organisation is of the listener and viewer at large? I was just looking down the list of patrons and directors, which seem to be stacked with worthy people and professors. I just wondered whether this was representative of what the public at large think or whether it was merely representative of what the people on the board think. Ms Hay: Well, we do not have many children in membership and we do not have many young people in membership, so we are probably more representative of the middle aged and older people. On the other hand, we do take an enormous amount of trouble to canvas public opinion. We hold a wide range of public events at affordable prices throughout the UK. We get a wide range of comments, verbal and by post and by email, and we try and engage with as wide a range of people as we possibly can and we say that we represent the interests of listeners and viewers, not necessarily every single listener and viewer in the population of 60 million, but we do try to keep very open minds and to be in contact with as many people as we can. Chairman: Can I thank all four of you very much. |