Examination of Witnesses (Questions 80-89)
MR ANDREW
HARRISON, MS
SLY BAILEY,
MR PAUL
VICKERS AND
MS SANTHA
RASAIAH
4 NOVEMBER 2008
Q80 Chairman: They have also said
there will not be more than a few stories. They have actually
said they will put a cap on the number of stories.
Ms Rasaiah: Those limits do not
actually work. If you look at the limits, yes, they are saying
there is a cap but, first of all, there are all kinds of exceptions,
whether it is the Welsh and English language services, whether
it is the London service. The BBC will also be allowed to update
stories constantly. There are also whole sections of the service
which are outside those caps; for example, user-generated content,
which is essentially news stories provided from the localities,
exactly what local and regional newspapers are doing. Those are
outside those caps. Also, of course, if you actually look at the
way those caps are going to be regulated, it is retrospective,
over a year. What kind of checks are there going to be to ensure
that they are kept within the limit? There are all kinds of loopholes
in terms of live streaming, emergencies, special events. We really
do doubt that even those caps are going to be at all effective.
Q81 Paul Farrelly: If we made a brave
assumption that those journalists the BBC are recruiting for these
new local services are not going to be chasing cats up trees or
chip pan fires in small villages, is there an argument to say
that actually competition drives quality and sets a challenge
in terms of quality for the regions that they, like the national
press, should rise to it?
Ms Bailey: We are inundated with
competition, quite frankly, online. We are absolutely inundated
with competition.
Q82 Alan Keen: We have had people
sit in front of us who have said the BBC should not be allowed
to have a website at all. They should stick to radio and TV. But
they have produced it and it is a wonderful service. I have always
looked at the local papers, and I still read them in my constituency
but to go down to the shop and buy it, and it is static, that
does not compare with the internet. Mirror Group have to move
into that very seriously. How long do you think local papers can
survive? They cannot survive for more than ten years, can they?
Ms Bailey: They can survive in
pursuing a multi-platform strategy where newspapers can then sit
effectively alongside online and mobile. In our company we now
publish over 300 websites and circa 150 newspapers. So look at
the investment already. In your own constituency we have an award-winning
online site, the website of the year in fact. This is a hugely
important part of what we are doing, and we should not underestimate
how important our ability to do this is in what is already a very
competitive environment. We understand that, we live with that
and that is the way of the world. What we are objecting to is
this level of unfair competition, which will squash what we are
attempting to do and therefore the future and the plurality of
local media.
Q83 Alan Keen: This is really interesting.
We are here to represent our constituents. We want to take a major
part in this debate. Give us a chance. Give us some advice. Without
saying to the BBC, "You can't do it any more. We're going
to regulate you. You can't have websites any more," tell
us how. Do we tell them to do it badly instead of in an excellent
way?
Ms Bailey: I think it is back
to purpose. It is back to intent. It is back to strategy. The
point is in a multimedia world the BBC can literally roar around
the world, it seems to me, as we have heard this morning, doing
pretty much anything they want to. Yesterday through the Newspaper
Society we launched a legal challenge to the Trust because we
feel also, not just in terms of looking at the potential outcome
but the process that they are going through is fundamentally flawed.
Ms Rasaiah: Yes. First of all,
the point that has been made before: on the one hand, you have
the BBC Trust encouraging the BBC to extend these local services
with taxpayers' money. On the other hand, it is supposed to be
acting as the independent regulator that is going to determine
whether there is a public value in, and the market impact of,
the service.
The Committee has been circulated the letters
from the Newspaper Society's lawyers to the BBC Trust and Ofcom
which are questioning the process. Information is being asked
of the BBC which regional newspaper companies consider imperative
that they have in order to assess its impact. That is not being
given. Ofcom's market impact assessment is expected to look at
the effect on the local markets—each individual local market—of
the service. That is not being done. There has been unilateral
change to the timetable, which prevents regional newspaper companies—and
others interested—from actually considering the market impact
assessment and the public value assessment before the BBC Trust's
provisional finding is published, in order to be able to make
comments on them, or to be able to comment on Ofcom's market impact
assessment and make those points to Ofcom before they are taken
into account by the BBC Trust. Finally, the point that has already
been made really, that the BBC Trust should be taking care that
there should be public confidence in the integrity of the Test
and that it does actually conduct an objective Public Value Test.
Q84 Chairman: You have also criticised
Sir Michael Lyons for making public comments in support of the
service before the Trust has completed its review.
Ms Bailey: In a speech he made
an astonishing attack. It was an absolutely astonishing attack
from someone who is supposed to be regulating, not championing
the BBC. He actually said, "Nobody can be satisfied with
the quality of local news in most parts of the UK." It sounds
to me as if his mind is already made up in terms of going through
that process, and that the public value test is a sham.
Mr Harrison: May I come back to
Mr Farrelly's original question? You asked why almost from a licence
fee perspective or from the public's perspective, the consumer
perspective, should we not be pleased about this potential intervention
because of the benefits of plurality. I think the case I would
make from the commercial radio perspective is just to highlight
the very real dangers that I think this could lead to from plurality,
because I think it could lead directly to the closure of a number
of radio stations which are designed to reinforce that plurality.
Remember that local radio is quite heavily regulated. In each
local area there are regulations around the provision of two local
services plus the BBC. So in your constituency Signal in Stoke
and there are a number of other services round about.
Q85 Paul Farrelly: It is a great
station, Signal.
Mr Harrison: I am delighted to
hear it. There are, I think, three reasons that this is very concerning
to the commercial radio sector and I think are very germane to
this debate. The first is the size and scale of the intervention.
It has been talked about quite clearly and vociferously and elegantly
from the newspaper perspective but it touches on something I said
earlier on. Commercial radio is a small sector. The total turnover
of commercial radio is smaller than Trinity Mirror Group. As a
result, when you have an intervention of £68 million, £23
million ongoing, that is huge in scale compared to local radio.
Q86 Paul Farrelly: It will be spread
fairly thinly, will it not?
Mr Harrison: It is £1 million
across 60-plus different sites. To take the context, £23
million a year worth of investment is three times the market capitalisation
of The Local Radio Company which is the biggest local radio company
outside the major groups. The small local radio companies that
service local communities are either part of regional newspaper
groups, like Kent Messenger Group, like Tindle, like CN Group,
which are small, self-standing, independent groups. This absolutely
dwarfs the scale of investment those stations could make but it
has two critical knock-on effects, which is where I think there
is a real risk to ongoing plurality. The first is that the media
base for radio in the UK has been worked out over the last few
decades and exists in fairly close harmony. The BBC traditionally
has been licensed to have national services, Radios One, Two,
Three, Four and Five and so on. The commercial sector has only
ever, by and large, been licensed on a small local basis. Traditionally
BBC Local has targeted the over-fifties audience and left the
under-fifties, which is the audience that is attractive to the
commercial sector, pretty much alone in terms of the way the ecology
has evolved. This proposal, very clearly, in the BBC's submission,
is designed to tackle audiences under the age of 45. For the very
first time BBC local radio's footprint will start to go much lower.
Remember that the 65 services the BBC are proposing are based
on their local radio footprint. It brings the audience much younger
and it begins to offer a service directly designed to appeal to
younger people, directly designed to take audiences to BBC websites
as the initial portal rather than to the websites that we are
trying to take our own listeners to and on which, as Sly has touched
on, we depend for revenue. There is a real risk that the site
and the scale and the audience distortion will threaten the viability
of the fragile economy of local radio. The final point, however,
which I think is critical is also around plurality. This is an
extraordinary intervention in local markets to journalistic resource.
All local radio stations, as part of their licence format, are
committed to provide local news. They are required to be based
in their local service area. They are required to employ local
journalists covering local stories. All of a sudden you have a
licence fee-funded intervention whereby up to ten stories a day
can be covered with local video. That is an extraordinary number
of stories. With 65 sites you are talking about 650 different
stories.[131]
Most local news, with the best will in the world—and we
have talked about cats up trees and chip pan fires—ten stories
is a different lead item on the news every hour between eight
in the morning and six at night. That is every story that will
ever have happen in a town covered with a local video link by
the BBC, with cross-promotion from the radio station directing
consumers to the website. In terms of a small local radio station's
ability over time to both attract journalistic talent, train and
develop that talent, and provide a competitive service to compete
with the BBC on an ongoing basis, that will quite clearly be impossible.
Q87 Paul Farrelly: Sly's point I understand.
It drives eyeballs away from the growing website activities of
the regional newspapers and by extension potentially away from
traditional print form. Is your argument that it is driving eyeballs
away from your websites or ears as well from your radio?
Mr Harrison: I think both are
true. Self-evidently, if you have this major investment in a new
local media form, the BBC is going to be driving licence fee payers
and consumers to want to interact with that site. Every minute
they are interacting with that site is a lost opportunity for
them to be consuming the local radio, particularly when a large
part of the reason to listen in and tune into local radio is what
is the latest news, what is it about school closures, what is
the traffic situation, the very stuff that is going to be pumped
through in real time on its website. So we will lose listeners
and the same argument then follows as Sly articulated, around
losing listeners means we will lose revenue but the longer-term
impact in many ways worries me most, which is around the plurality
and diversity of the journalistic base in a local market, in 60
local markets.[132]
If you are an aspiring young journalist just out of college, it
is pretty obvious: where are you going to apply for a job? Where
are you going to want to work? Are you going to work for the organisation
that has this guaranteed funding, the ability to cover ten new
local stories a day in video and post them online. The opportunity
for plurality and diversity of news coverage and journalistic
excellence I think will be completely swamped by such a huge intervention
in the marketplace so quickly, and particularly, of course, at
the present time. The chances of the commercial sector doing anything
to try and match this and replicate it right now is non-existent.
It genuinely risks putting a large number of small local commercial
radio stations out of business. It will have the complete opposite
effect on plurality that I think is potentially an unintended
consequence. One of the concepts that we have been trying to articulate
with the Trust and with Ofcom as we have talked about this is
considering the net public value that is the result of these proposals.
Whether or not you agree there is public value at all, and clearly
the newspaper groups have articulated their position, this is
clearly a proposal where there is a tension between some potential
public value on the one hand and some clear market impact on the
other. This will be a difficult decision. We understand that,
but the net public value that we would argue is going to be generated
by this proposal is clearly very negative. If the BBC ends up
spending a large amount of public money launching a new service
that in the end reduces plurality in local areas, reduces journalistic
competition, takes audiences away from local radio stations and
deprives local radio stations of the opportunity to build nascent
online businesses themselves, that net public value is severely
detrimental to the overall plurality of the media ecology in the
UK.
Q88 Chairman: In local markets, do you
accept there is any validity in the charge that newspapers have
been pretty slow off the mark, and actually in large part the
content available online is still pretty inadequate?
Ms Bailey: Newspaper website of
the year, 300 launches so far? No, I do not. Clearly, we do have
to make a commercial return, so we are not able to enter markets
in the same way that the BBC does because we have to make that
commercial return, but I would say that that is absolutely false.
Q89 Chairman: The assurances that
the BBC have given that they have no interest in getting into
the areas which generate your revenue, like classified advertising
and dating and selling cars and advertising jobs, do not make
it any better?
Ms Bailey: It is a red herring
because it is the eyeballs that generate the revenue and their
particular focus will be news and sport, and those are absolutely
the heartlands of regional media.
Chairman: You have given us plenty to
raise with the BBC in two weeks' time. Thank you very much.
131 Note by Witness: The BBC is proposing 65
sites in 60 areas. The 5 Welsh areas will have sites in both English
and Welsh. Back
132
Note by Witness: The BBC is proposing 65 sites in 60 areas.
The 5 Welsh areas will have sites in both English and Welsh. This
explains the disparity with the "65 sites" figure quoted
above. Back
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