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Memorandum by the Newspaper Society
1.
- 1300 core newspapers - 1100 websites - 750 magazines - 36 radio stations - 2 TV stations
2. Publishers are harnessing a powerful combination of print and digital to layer their local markets, extend audience reach and deliver ever greater advertiser response.
3. Regional media companies have become increasingly concerned about the BBC's regional and local aspirations, especially as it develops its online ambitions. Despite the recommendations of both the Graf review and the BBC Trust's review of the bbc.co.uk service, the BBC replicates the services offered by the commercial media rather than develop distinctive content. Yet, unlike the commercial media, it can exploit the unique combination which it enjoys of discretion to pursue the broadest range of activities under its Charter, internal Governance arrangements, licence fee funding, the strength of the BBC brand and powerful cross-promotion opportunities.
4. The BBC's new ambitions to colonise the nations and regions, without regard to the long established independent commercial (multi-media) sector illustrate the problems created by the present system. The Charter, purpose remits and service licence are all deliberately broadly drawn so as to give the BBC unrivalled freedom of action. The governance structure has yet to prove that its lack of independent standing does not preclude independent decision-making. And the BBC Management has still to put forward publicly any new system of local controls, checks and balances which could convince the commercial sector that it will effectively police and enforce the restraints by which its commercial and licence fee funded operation are supposed to be bound. The regional media is particularly concerned by the effectiveness and efficiency of any new controls over bbc.co.uk and its regional focus.
5. Indeed, our members do find it rather extraordinary that the BBC can draw upon its public service obligations and turn the severe criticism of the standards of its current service into an argument for the same service's expansion, funded by the licence fee. They were also somewhat disconcerted by the way that the BBC Trust in announcing the launch of the PVT whereby it will decide whether or not the BBC should be allowed to develop its regional and local services, greeted the BBC's application as a response to their criticism and challenge to improve.
6. Our members are united in opposition to the BBC's proposal to develop its online regional and local activities in direct competition with the regional media. This is currently the subject of a Public Value Test. Companies have explained how the BBC would undermine their future business strategy by taking audience and the advertising revenue upon which the independent regional and local media depend. The BBC's licence fee funded activity will be in direct competition with the editorial, advertising and other commercial services offered by the regional and local media. It is jeopardising companies' future business strategies at the most critical time for the industry's digital development and diversification, (including monetising websites and online services), against the most difficult economic backdrop. Our members in their evidence to Ofcom and the BBC Trust have explained the devastating impact that this could have upon the independent regional media and local plurality.
7. The BBC has a history of commercial exploitation of the strength of its brand, cross promotion, and public service activities at regional and local level. It has launched services from swap shops to listings to publication of regional magazines which have competed for audience and third party advertising revenue with the commercial media. In the past, successive Director-Generals have had to intervene. The NS itself had to raise the possibility of service licences having express prohibitions against provision of advertising services, public assurances that the BBC would not be launching new advertising services, and express exclusion of direct provision of advertising services within the BBC's Local Video application. However, even such assurances were dependent upon the discretion of the BBC and its governance machinery.
8. There is a danger that the BBC will indeed be allowed to expand its services, with the advantages of licence fee funding and cross-promotion, precluding the regional commercial media from facing it on equal terms and in fair competition, entrench itself and further weaken its commercial rivals - and then be permitted to expand into commercial activities, whether sponsorship, advertising or other services, across all or any part of the multi-media platforms and services at its disposal. The BBC's Local Video proposals already demonstrate its interest in developing links which would undermine public sector advertising, sports relationships and other sources of revenue for the independent commercial media, which cannot compete against the strength of the BBC brand and cross-promotional activities. The industry fears that the current system will not prevent such damaging commercial expansion of the BBC.
9. The industry had hoped that the last Charter renewal would lead to independent oversight over the BBC's activities. It has yet to be convinced that the new system will deliver the rigorous controls necessary. We hope that the Committee will consider some of these wider issues in the course of its inquiry.
October 2008
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