Examination of Witnesses (Question Numbers
10 NOVEMBER 2009
Q320 Mr Sanders: Just on a point
of information: DTT, what fills the ITV slots in your regions
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
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
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
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
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
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
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.