Examination of Witnesses (Questions 80-94)
SIR MICHAEL
LYONS, MR
MARK THOMPSON
AND MS
ZARIN PATEL
3 JULY 2007
Q80 Paul Farrelly: 18% in the polls
means the Liberal Democrats do rather well out of the BBC on a
PR basis at the moment. Usually also before these sessions we
are inundated by people who are very partial who want to put their
point of view over, from the national voice of a viewer and listener
to the independent producers, but this time round it has been
radio silence. That suggests to me that the BBC is doing something
right. If I look at page 75 of your annual report and accounts
and your independent and regional programme quotas, the figures
all exceed the quotas. The only gripe can be that in terms of
over performance the only point you under perform on is that your
spend on qualifying programmes from the region is just 2% above
30%. Is there an argument, because you are over performing, to
say to Ofcom, "Look, we do not want to backslide at all.
We want to maintain this performance so lift the quota, for instance,
of independent programming or hours or spend on qualifying regional
programming from 25 to, say, 30%"? Is that something you
would engage in?
Mr Thompson: Our commitment throughout
this charter period through to 2016 is in terms of our spend and
our presence in the rest of the UK to increase it. Long before
this charter, the majority of public service employees in the
BBC will be based outside London and the south of England. We
are moving investment and spend out to the rest of England, into
Scotland, Wales and Northern Ireland. In that matter and in the
matter of production, we do not need regulatory quotas to do this
any more. We regard it as a core part of our mission. We will
report repeatedly. We recognise that it is in the BBC's interest
because we will get better programmes and we will reflect the
whole of the UK better and build support for the BBC across the
UK. It may be that other broadcasters need quotas. We do not need
a quota to do this any more.
Sir Michael Lyons: I do not want
to speak for Ofcom other than to acknowledge that of course it
is significantly diluting the requirements of other broadcasters
in terms of regional content. The BBC has further to go in this
direction, so I follow the drift of your question. You have heard
from Mark that that is his intention as well. The Trust will continue
to pursue this both in terms of the better value that can be achieved
by looking for lower costs elsewhere in the country and, even
more importantly, a continuing requirement and an area where the
BBC must do better to reflect the different voices in the regions
and nations of this country.
Q81 Paul Farrelly: In terms of the
classification of regional programming, when you move to Salford
will that unfairly distort the statistics to the detriment of
the rest of the country? How will you handle that?
Mr Thompson: Clearly it is going
to increase the out of London number and reduce the London number
because large parts of our London operation are going to move
to Salford. I see Salford very much as something we are doing
as well as our other commitments rather than instead of, so I
would expect the increase to be a net increase.
Q82 Paul Farrelly: We can expect
the Trust to look at the figures in a reclassified way?
Sir Michael Lyons: We need to
be very clear next year. It is the distinction between decentralisation
and devolution, so that we are clear here what is associated with
the move to Salford as a new base for national programming and
what is achieved in terms of regional impact.
Q83 Alan Keen: Now you have the licence
fee fixed, why do you not keep all the ministers, shadow ministers
and even official spokespersons from the Liberal Democrats and
put back benchers on for an entertaining programme? Before the
next licence fee you could go back to giving the ministers—
Mr Thompson: We are starring on
BBC Parliament right now anyway.
Sir Michael Lyons: I can see a
new impartiality study coming.
Q84 Alan Keen: A while ago this Committee
brought up the fact that John Humphrys was starting to write newspaper
columns. One person that affected me was Nick Ferrari on the Commercial
Programme. He is absolutely appallingly biased but the BBC were
still employing him at the same time on BBC radio, where we tended
to trust the BBC more.
Mr Thompson: He never appears
on BBC programmes.
Q85 Alan Keen: Which way is radio
going to go now? What are the next trends?
Mr Thompson: At the moment BBC
radio is really playing at the top of its game. Radio 1 and Radio
2 have become more distinctive from their commercial competitors
in the last few years and as an unintended consequence have become
more popular. Radio 4 is very strong at the moment. Radio 5 Live
is offering a real alternative in tone and flavour to Radio 4.
Radio 3 has been through quite a big series of schedule changes
recently and is also a very strong format. You can also see the
radio player which will soon be integrated into the iPlayer. In
November last year, just one month, there were a million people
downloading The Archers. The BBC radio audience is really
moving into new technology. In a way, it is part of the BBC where
current performance is very strong but in the future we hope that
we will be able to give radio listeners extraordinary choice in
what they listen to. We have the concept My BBC Radio, which is
the idea that radio listeners, initially on their computers but
ultimately on radios, will be able to adjust what they want to
listen to. If you like Baroque music, instead of the whole of
Radio 3 we can give you effectively your own Baroque channel or
you can start picking and choosing a play list of programmes of
different kinds of music and different kinds of speech which build
around your taste. The wonderful idea is of a kind of magical
bookshop where you open the door and the books rearrange themselves
so that the ones you like best are in the display in front of
you. That is what we want to be able to do with radio and ultimately
television. I hope there will be more choice, flexibility and
convenience but, in a sense, more personalisation. Radio is the
most personal medium and I think we can make it stronger by making
it feel more personal.
Sir Michael Lyons: We are within
the same organisation but with different roles and the Trust will
be challenging. We have included in our report the fact that during
the licence fee renewal period there was considerable concern
expressed by other radio operators about whether or not Radio
1 and Radio 2 were distinctive enough. That continues to be an
issue on which we will be pressing Mark and his colleagues and
it will be included in the debate about reprioritisation and when
we come back to look at those respective service licences.
Q86 Alan Keen: I have forgotten whether
it was Tchaikovsky or Beethoven that caused problems with a commercial.
Sir Michael Lyons: It was Beethoven
that was controversial.
Q87 Alan Keen: When people can pull
down this stuff, will that not cause greater problems?
Sir Michael Lyons: In the case
of orchestral music in particular, this was such a sensitive issue
that when my colleagues undertook the public value test for the
iPlayer one of the things they decided to change in terms of the
proposition coming out from the executive was that it was not
possible to include orchestral music in the programmes that can
be downloaded from the iPlayer, because it represented such a
threat to a very fragile industry in terms of recorded orchestral
music. That issue was taken directly into the public value test.
Mr Thompson: There was a bit of
disagreement and we said we thought that in a contained way, ten
minute episodes or perhaps single movements, making classical
music widely available to the public would have built public value
and ultimately broaden the opportunities for the public at large.
It is an interesting example but they are the boss not me so what
they say is what is going to happen and we are not going to do
that at the moment.
Q88 Alan Keen: You mentioned that
Radio 5 presented news in a different way from Radio 4. The top
programmes, The Today Programme, for example, are on when
we can get the news on Radio 5. Do you not think that Radio 5,
when it does that, should be more the same as Radio 4 so that
people can get that sort of news and not quick talking DJs that
tend to annoy people, like Radio 4?
Mr Thompson: It is a good example
of the choices we face. The other thing which interrupts the news
on 5 Live is live sports coverage. The combination of live sports
coverage and news has worked rather well on 5 Live. It is part
of the strength of the network. One way or another, particularly
if you throw BBC local radio and our national radio stations,
Radio Cymru, BBC Scotland and BBC Ulster, into the mix as well,
you are not far from BBC news at any hour of day or night if you
just move a dial. I take your point but if what you need particularly
are basic headlines they are very extensively available across
our complete portfolio.
Q89 Alan Keen: You already mentioned
the lack of distinctiveness between Radio 1 and Radio 2. Should
not 5 therefore be more like 4 because we already have 1 and 2
which are similar?
Mr Thompson: Many people say to
me they particularly like 5 Live because of its difference from
Radio 4, particularly at breakfast. We are trying to produce a
set of services on radio stations and television where, across
the portfolio, you are doing the best job you can matching what
different audiences want with different services. It is imperfect.
One of the reasons we are so interested in these on demand applications
like the iPlayer is that on demand offers an almost perfect match
of content to individuals because you can decide exactly what
you want to watch or listen to and you can get it. As a complement
to our broadcast services on demand helps us but the object is
to try to use this portfolio to give the best match we can with
our linear services.
Q90 Alan Keen: I still think that
radio alone is worth the licence fee.
Mr Thompson: We do accept donations,
by the way.
Q91 Chairman: Last week BBC Worldwide
announced an increase in profits of 24%. The chief executive has
said that he intends to go on a spending spree for over £400
million of acquisitions, of which £60 million is coming out
of the cash flow generated by the business. BBC Worldwide, I understood,
was there to exploit the value of the BBC brand and keep down
the licence fee. Why is £60 million going to be spent on
acquisitions which include, I understand, magazines in the US
and Australia, rather than keeping down the licence fee?
Sir Michael Lyons: In terms of
the role of BBC Worldwide, you are absolutely right. It is there
to exploit the BBC product, continue the BBC's mission and contribute
as it does to the costs of producing programmes, both directly
in terms of investing in some specific new programmes coming forward
which is increasingly important, but also as a contribution coming
out of the annual surplus that it generates. This is a self-standing
company and the chief executive's report very clearly indicates
that acquisitions may play a part in the future. Those will be
scrutinised very carefully, particularly in terms of the parent
company which is the executive board, and the Trust will be overseeing
that as well to make sure that any acquisition is in line with
the BBC's purposes and is likely to contribute rather than to
detract from that ambition of securing a continuing, growing flow
of money into the BBC.
Mr Thompson: If I take the example
of Top Gear, a well known UK public service programme,
potentially the underlying intellectual property relating to Top
Gear is very valuable in many markets in the world. Top
Gear is already the biggest car magazine in many parts of
the world and is the top selling car magazine in India, for example.
Versions of the television programme are used extensively on BBC
World. The Top Gear website is very significant in the
commercial website of BBC Worldwide in the UK and so on. The magazine
business is a business in which we have focused in the last few
years very closely on the intellectual property which is associated
with the licence fee. We sold Eve Magazine, which had very
little to do with the BBC's content. The whole of Worldwide but
magazines in particular we have tried to focus on intellectual
property created by the BBC. Worldwide believes—and I think
they are right—that there is a potential for exploiting
the Top Gear intellectual property in north America, in
the United States, with the potential of an American version of
the programme and with the potential launch of a Top Gear
magazine in the United States. What we are looking to do with
Worldwide as a whole is to focus it more clearly around the four
criteria laid out in the charter, fit it with the original public
service intellectual property and public purpose activities, commercial
efficiency, protection of the brand and of course compliance with
fair trading. Where we can get global exploitation of our intellectual
property we should do that. Worldwide was not delivering great
returns three years ago. Now our margin and return on sales and
all of the life signs look very good—indeed, better than
most commercial broadcasters in this country. We believe that
the global value of the BBC brand itself and of some of the subsidiary
brands like Top Gear is very considerable. All of this
of course must be approved by the Trust but my belief is it is
our duty to make sure we exploit it thoroughly.
Q92 Chairman: There is a difference
between exploiting it thoroughly by selling the rights to use
programmes like Top Gear or licensing it and by moving
into the magazine publishing business of Australia. Why is a British,
state owned institution going to become a major magazine publisher
in Australia?
Mr Thompson: The idea of franchising
BBC titles and the right to exploit BBC intellectual property
is absolutely part of the strategy. For example, with BBC Books,
that is exactly the road. We have divested ourselves effectively
of our books business. In magazines we have a very strong track
record in running effective magazine businesses in different markets.
In many ways there are economies of scale in the magazine business
and continuing to develop that business absolutely only on the
basis of proven financial and economic efficiency and absolutely
congruent with our brand and what it stands for is legitimate.
As long as it ultimately creates more value for the licence payer,
I think it is a legitimate thing for us to do.
Q93 Chairman: You can use that argument
on anything. With Ready, Steady, Cook, you could open up
a chain of restaurants using that as a brand which is trusted
by the consumer. Where is the limit?
Sir Michael Lyons: I absolutely
accept the key tenet of your proposition that it cannot possibly
be the case that anything the BBC chooses to do in terms of commercial
endeavour is justified because the BBC chooses to do it. The principles
of the public value test are the way that we will seek to explore
whether this is an appropriate way forward. If there clearly is
an opportunity whereby, with the BBC doing it itself, we are likely
to secure better public value in terms of the return for the investment
made historically by the licence fee payer, whether it is in intellectual
property rights or anything else, but balancing that against a
sense of who else might do it and whether indeed the BBC is in
danger of damaging either innovation or investment by other organisations.
That has guided us so far and I think it can be a proper set of
questions to ask as we evaluate any proposition coming out from
BBC Worldwide.
Q94 Chairman: BBC Worldwide is going
to be subject to a public value test?
Sir Michael Lyons: No, it is not.
I did not want to suggest that at all. It is a commercial organisation
within the structure which is provided with considerable operating
freedoms and that is absolutely right if we are to get the best
from it. It is overseen by the BBC executive and I am confident
that that will be a testing oversight. It seems to me that these
are the sorts of questions that might properly be asked as we
seek to understand whether it is a publishing proposition or a
joint venture or whatever. We ought to be looking to see a clear
demonstration of public value against the BBC's corporate entities.
Mr Thompson: We are moving from
a Worldwide which had lots and lots of different, disparate businesses
to a commercial arm which has a smaller number of businesses,
where we see the potential for significant growth to drive more
value for licence fee payers and magazines. Our magazine business
started in 1924, three years before the creation of the British
Broadcasting Corporation, so this is not a new area for the BBC.
Magazines are a successful area which we think we can drive more
value out of.
Chairman: We have no more questions.
Thank you.
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