Memorandum submitted by the Newspaper
Society
1. Britain's local media is a £4 billion
sector delivering trusted, relevant news and information to over
40 million people a week across its print, online and broadcast
channels:
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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