Examination of Witnesses (Questions 35-39)
MR TONY
ELLIOTT, MS
CAROLYN MCCALL
AND MS
LYN HUGHES
4 NOVEMBER 2008
Chairman: For the second part of our
session, which roughly corresponds to the publishers, can I welcome
Tony Elliott, the Chairman of the Time Out Group, Carolyn McCall,
the Chief Executive of the Guardian Media Group, and Lyn Hughes,
the Editor-in-chief of Wanderlust publications.
Q35 Mr Sanders: Commercial success
achieved by BBC Worldwide obviously reduces the reliance on the
licence fee. Why, therefore, should we be concerned by the growth
of BBC Worldwide?
Ms McCall: Could I just say first
that the Guardian Media Group is a great supporter of the BBC,
of its concept, of the fact that it is licence fee funded, and
on its ability to raise additional funds through exploiting its
programming and its core content. In answer to your question,
we believe the rules surrounding BBC Worldwide's activities have
been loosened significantly since 2007, where the BBC Worldwide
is creating new brands and they are acquiring businesses; and
that is having a detrimental effect on commercial players and,
therefore, on commercial plurality. We have made some very specific
recommendations because we believe to address these problems the
Trust should tighten the rules governing BBC Worldwide; there
should be greater transparency about the oversight of Worldwide;
and there needs to be a greater separation between the strategic
role of the Trust and the regulatory role of the Trust, which
we believe is extremely confused and leads to some considerable
problems for the commercial sector but also to licence fee payers.
Specifically in our submission we have said that we believe BBC
Worldwide should go back to the pre-2007 fair trading rules, and
that this investment figure of £50 million should be reduced
quite considerably, and we can go into that. To your question—which
is: is it just about the success of Worldwide?—no, we want
Worldwide to be successful; it is simply about the boundaries
that are set for Worldwide's activities that we are concerned
about.
Ms Hughes: We have been absolutely
passionate about the BBC, and I myself have done a lot of work
for the BBC, for the radio in particular, and have always been
proud of the BBC around the world; but BBC Worldwide seems to
be an out of control juggernaut at the moment. BBC Magazines in
particular seems to be totally out of control. It is now the third
biggest magazine publisher in the country. It has something like
40% of the children's magazines market. Whereas it used to argue
that its magazines were in support of BBC programming, for instance,
say, Top Gear magazine, they do not have a Lonely Planet
television programme, so why therefore are they launching a Lonely
Planet magazine? It has no direct link to any BBC programming
at all. How on earth can that be justified?
Mr Elliott: I would also like
to stress my support for the BBC.
Q36 Chairman: I think in future we
will take it as read that everybody supports the BBC and move
straight on to the "But", if we may!
Mr Elliott: There are clearly
some real problems with the structure and the remit for Worldwide.
In very simple terms, I think where the external agency is exploiting
assets that come out of the broadcasting system, it is absolutely
straightforward. I think we would all applaud their exploitation
of the Top Gear magazine around the world, and they can
do whatever they like in terms of the number of programmes with
that all around the world; but when they take quantum leaps into
areas that have nothing to do with the BBC as a broadcasting entity
and a British brand et cetera you have to ask yourself: what is
going on here? One example which I would like to get on the record
is that they are the co-publishers through a joint venture of
Hello magazine, which they license in India. I just do
not understand what that has to do with the BBC. They will argue
that makes money, and it does; but it clearly is not what they
should be doing. I think if you follow that particular strand
down the line, they will defend it on the basis that they have
a joint venture with The Times of India and that that was
"a legitimate thing which the Indians were doing—not
us". If you do a joint venture with an Indian publishing
company and you want to make a success of it you pour money, resources,
talent, reputation et cetera into that; and I think that is a
good example of something that is way beyond what they should
be doing in the publishing field. I know we will come back to
the Lonely Planet question in due course, but that is clearly
a very big thing.
Q37 Paul Farrelly: It is Hello
and Grazia, is it?
Mr Elliott: They do Grazia
as well. There are a number of them. You do have to say to yourself:
why? I would also like to say, because I think this is important,
I do know a lot of people at the BBC and see them and most of
them say they do not know what is going on with Worldwide. They
all say they do not know what they are doing. There is not a clear
enough brief. They will all hasten to say, "But it's great.
They make money for us to make programmes with"; but there
is deep, deep concern culturally across the whole organisation
about the activities.
Paul Farrelly: I am a former employee
of the Guardian Media Group and, if there is any money left in
the pot, a pensioner as well!
Q38 Helen Southworth: I wanted to
ask if you could perhaps expand on the governance side of the
BBC Trust and on the reference up of the £50 million cut-off
point. How do you think that should be changed? What level of
scrutiny should the Trust be having, and what sort of mechanism
should they have in place to report through to them?
Ms McCall: I think for us it is
extremely confusing to see the Trust as regulator and having a
strategic role. I will give you one specific example of that—local
video—although I know this is not in the remit of this particular
Committee but it is a good example of where this gets very confused.
The Trust has made it clear to management that it is a strategic
imperative to enter local. They are not really in local video;
they are not in it at all, and they plan to spend £68 million
on this. When we then engage with the Trust and say, "We
have a real problem with local video", who are we talking
to, the regulator or someone championing the BBC in local? It
is a very difficult distinction to make. The Chairman of the Trust
has actually come out and dismissed regional press's issues with
this. £68 million is a lot of money; just as £50 million
is a lot of money. To give you an example: in local we spent £½
million on a website to do an entertainment website in the north-west,
so £68 million is a lot of money. I think the first issue
is, there have been lots of options discussed; the Burns Report
made an option about separating regulation from the Trust. I think
there are so many options that could be discussed, I think the
key thing for us is that a regulator should be unambiguously a
regulator; that is all they should do—regulate. That is
the first thing. On the £50 million, again to give you an
example, £50 million is a lot of money. Only the BBC could
say £50 million was not a lot of money, because if you are
a commercial player, for example, Guardian.co.uk, the leading
website in this country for quality newspapers, has probably in
eight years not spent £50 million of investment in that site.
I think £50 million is a ludicrously high figure for the
Trust to have to scrutinise. It needs to be considerably lower
than that. I would make the case that it should be benchmarked
against other boards, not just plc boards but media boards, because
a lot of media, as you know, is not in plc hands; some are and
some are not.
Q39 Helen Southworth: I am sure you
will not be at all surprised to know that the Guardian Series
newspaper, with its huge impact on Warrington, in my constituency,
has been quite keen to make clear to me that they are very anxious
to see that there should not be unfair competition. How much of
this process needs to be about the BBC guaranteeing that it plays
fair with licence fee payers' money and how big an impact could
it have if it does not play fair?
Ms McCall: I think it is a really
big issue. A lot of these nascent websites are new businesses,
embryonic businesses, that need the oxygen to survive. When the
BBC enters any market it enters aggressively; it has deep pockets,
it has a big brand, it therefore can decimate competition very
easily. The reason the Manchester Evening News in your
constituency will have been very vocal about this is that they
are fighting for their survival. That is not a dramatic phrase.
Margins in the regional press are being squeezed very, very hard
and therefore the issue for me is significant, not simply because
I am a publisher but because I think this plays to diversity,
to plurality and to democracy. I think it is about citizenship
in a democracy and I think if you start losing local newspapers,
local websites, you will end up having a very strong BBC and nothing
else.
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