Future for local and regional media - Culture, Media and Sport Committee Contents


Examination of Witnesses (Question Numbers 320-339)

MR GORDON MACMILLAN AND MR BOBBY HAIN

10 NOVEMBER 2009

  Q320  Mr Sanders: Just on a point of information: DTT, what fills the ITV slots in your regions then?

  Mr Hain: The DTT capacity contains STV and the further digital capacity which was awarded as part of the digital replacement licences is, through a commercial arrangement, sub-leased to ITV plc. Viewers in Scotland have the same collection or the same line-up of ITV channels (ITV2, 3 and so on) as they would have elsewhere in the country.

  Q321  Mr Sanders: So somebody living in north or central Scotland can see ITV2 and 3, they cannot see ITV1 on Freeview?

  Mr Hain: Correct; yes.

  Q322  Rosemary McKenna: On this particular section, another question. I understand you had a successful meeting with the Secretary of State last week. You know I have supported your plea for being regarded as an independent producer in terms of how the BBC uses the independents. I believe he gave you a fairly positive response.

  Mr Hain: I was not present at that particular meeting, it was meeting between Rob Woodward, our Chief Executive, and the Secretary of State, but we are very pleased that DCMS has now issued a consultation on the question of independent status for Channel 3 licences in general, and, as I understand it, it would apply only to ourselves, to UTV and to Channel TV, but it certainly reflects what we feel is appropriate in that it recognises our status as being completely outside any influence or control in the commissioning and scheduling of programmes within the ITV network.

  Q323  Rosemary McKenna: It is a consultation that has been issued. This Committee has said in the past that it was worth looking at. So it is a consultation that is being issued.

  Mr Hain: Yes, the consultation runs until 10 February, and we feel that the method which has been brought forward by DCMS recognises our status whereby we would be able to pitch for the UK domestic incremental quota. In other words, there is a European statutory minimum of 10% of independent quota and, beyond that, the UK runs with a higher level for public service broadcasters of 25%. The difference between 10 and 25 would be an area that STV would qualify as an independent.

  Q324  Rosemary McKenna: Are you making some programmes for the BBC at the moment.

  Mr Hain: We have achieved our first commission for the BBC. The BBC runs the window of creative competition whereby people who do not have independent status and who are not in-house BBC producers can bid for this 25% notional part of the cake, and I am delighted that we have won a commission called The Antiques Road Trip, which starts on BBC Two in January.

  Q325  Janet Anderson: Could you tell us how much you have saved by opting out of programmes like Miss Marple, Midsomer Murders, and so on? What has been the saving to you of opting out of these programmes?

  Mr Hain: We expect the full year effect of that to be in the order of three to five million for 2009.

  Q326  Janet Anderson: What makes you think that people do not want to watch these programmes?

  Mr Hain: I have no doubt that these are popular programmes, but, equally, I believe in our ability to produce programmes which are relevant, entertaining and attractive to viewers. Also, I think it is very important that we have a mix of programmes. I think it is very, very sad that in other ITV regions there is scarcely a single programme made for those regions in those regions any more, and I think it is vital that our licences continue to serve our audiences and that Scotland continues to build a television business and have a television sector which is growing and aspirational to create new content.

  Q327  Janet Anderson: I have to tell you, I have family in Scotland and they do not agree with you. They are very angry. I think you said earlier that you broadcast a programme called Scotland Revealed and that, in terms of audience share, it had outdone The Bill. Is that what you said?

  Mr Hain: That is correct.

  Q328  Janet Anderson: Yet the figure I have got for 1 October is that The Bill's audience share was 19.1% on that day and Scotland Revealed was 14%.

  Mr Hain: I think that is the night that Celtic was showing on Channel 5, which won the slot. I think, on that particular occasion, it would not have mattered whether we had The Bill or anything else, STV would have been beaten by the Celtic game. For the two weeks where we were in straightforward competition, with no additional offering for football fans, we came top.

  Q329  Janet Anderson: What kind of complaints have you had from viewers?

  Mr Hain: It has died away. We started with a number of people who were confused by the changes to the schedule, and we have run several campaigns and we have taken great time to explain what our schedule is. We have had people coming forward and expressing the kind of sentiment that you have just mentioned, but, largely, when people understand what we are doing, I think we have had great support and, I think, latterly, when people have seen the programmes that we have come forward with. I think one of issues we had to start with is there is a very long lead time in production, so that when we started opting out of programmes we did not have a strong pipeline of new material that was ready to go into the schedule. We are now in a position where we are feeding in new programmes almost every month, and that new variety of programmes is assuaging people's concerns that they will be missing out and there will be nothing to replace them. Actually, we are proving that we are coming up with the goods and that we have a very healthy schedule.

  Q330  Janet Anderson: How much of this is actually about cutting costs? It is really about cutting costs, is it not?

  Mr Hain: We have said all along, it is about having a relevant and affordable schedule. Those are two important and very strong legs of our strategy. The schedule has to be relevant and it has to be affordable. As a commercial business we have had to take some very tough decisions and make sure that the business remains profitable, and, as I say, the saving is in the order of three to five million pounds, but the schedule has also benefited from programmes which would never have seen the light of day and would have been made by no-one had we not gone down this road.

  Q331  Janet Anderson: When you are putting together this alternative schedule, what priority do you give to it having a Scottish flavour?

  Mr Hain: I think that is a balance that we need to get right. I think our first foray into programming has been too much of a Scottish theme in the first three or four months, and I think people have the mistaken opinion that it is always going to be entirely Scottish programmes. Actually that is not the case: we are broadening out, as we go forward, with things that have relevance and things that are of interest to Scotland but which take us into all aspects of life. We would love to do some drama of some description; we will be doing more factual; we would love to do entertainment; we have plans for sport. I think, across the mix we want to reflect life in Scotland and not just Scottishness itself.

  Q332  Chairman: But buying an Australian drama production does not have a great deal to do with Scotland.

  Mr Hain: No, and I think neither did the RTE drama Proof, which we also bought. I think there are numerous channels on the dial which are using, very effectively, content that is acquired from other markets.

  Q333  Chairman: Have you got exclusive rights to the Australian drama?

  Mr Hain: We do indeed.

  Q334  Chairman: Anybody in England is not going to be able to see it.

  Mr Hain: Some of it has already been on the FX channel, but the material we have bought contains some material that has already been watched and material that has not been seen anywhere.

  Q335  Chairman: Were you bidding against other UK broadcasters?

  Mr Hain: We were.

  Q336  Chairman: But you think that having an exclusive right to be able to show that on STV is worth it?

  Mr Hain: To be honest, because our broadcasts do not go further than our own licence areas, the most important thing for us is to have a window where we can use the material in Scotland rather than to secure UK exclusivity. Actually, securing UK exclusivity is not a huge play for us, because we cannot exploit it across the UK on our terrestrial and Sky platforms. The most important thing for us is to buy our content for the audience it is intended; in other words, being able to use it in Scotland.

  Q337  Chairman: What slot are you showing it in?

  Mr Hain: We have not decided that yet, but we will be coming forward towards the end of the year when the network schedule is clearer.

  Q338  Chairman: In your view, will it be cheaper to have bought an Australian drama rather than show a programme which is going out on the main ITV at that time?

  Mr Hain: That depends exactly where the programme ends up. It would be cheaper than a UK drama, but it would be more expensive than a UK factual piece, for example.

  Q339  Adam Price: Many of us in Wales look on with a mixture of admiration and envy at what you are doing. Maybe, if ITV Wales handed the licence back, a Welsh company would be able to do the same. Looking at the legal dimension, could you give us an update of the current situation with the legal dispute with ITV?

  Mr Hain: We have been trying for over two years to reach a position with ITV going forward which reflects both of our business's needs and requirements, our objectives and also attempts to streamline the networking arrangements that underpin the Channel 3 network itself, and throughout that period we have become very frustrated that we have not managed to make progress. Going into a legal arena was never our first choice. We have been forced into that position by the action of ITV plc. I can say what was given to the City last week and reiterate that we are coming forward with a very robust defence on the question of the £38 million law suit. We will be filing a defence and a counterclaim for £35 million by the end of this week and, in addition, we will be coming forward with a claim around our advertising sales agreement which is about working practices within the role of ITV as our agent for advertising revenues. You may be aware that we audited that revenue stream and in the very small time period that we had access to, which represents a very small amount of our revenue, there is a £2 million shortfall that we have identified that we will be seeking clarification and seeking recompense for. We also expect to file further claims on ITV's abuse of our video-on-demand rights and significant prejudicial behaviour towards us as a minority player within the ITV network.


 
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