Examination of Witnesses (Question Numbers
10 NOVEMBER 2009
Q340 Adam Price: It is quite extraordinary,
is it not, to see two major broadcasters with such a complicated
set of very clear disagreements. The overall figure that ITV is
suing for is massive, is it not: £38 million? Are they trying
to drive you out of business?
Mr Hain: I think that is a question
for ITV. All I can say is that we are very committed to launching
a rigorous defence and we are very confident that our position
will be upheld.
Q341 Adam Price: What about the impact
on viewers? Obviously, all of this is ramping up legal costs on
both sides. Is that going to have an effect on the viewing experience?
Mr Hain: No, I think that we continue
with our schedule. I have to say, we should remember that over
95% of our content still comes from the ITV network and that,
although we are intent on making a difference and creating a schedule
that is relevant, actually at the moment it represents a relatively
small percentage of the schedule overall. I think that viewers
are being kept well away from the detail of the legals and the
costs, and we are confident that our business continues to flourish
and grow despite this kind of action.
Q342 Adam Price: Is there a conciliation
service for broadcasters? Has there been any attempt to try and
find another route to solve this?
Mr Hain: As you may be aware,
Ofcom, our regulator, did offer in the spring to undertake and
preside over a process of binding arbitration to try and get to
the bottom of this, if you like. That was a process that we, as
STV, were very keen to sign up to and indicated our acceptance
to Ofcom. ITV had refused that offer of arbitration, and now we
find ourselves embroiled in a legal process. As I say, it is not
our desire to be here, it is not our choice. We are put in a position
where we have to defend ourselves and we will do that.
Q343 Rosemary McKenna: Can we move
on to the news now. You are proposing, some time in the future,
to have what has become a sort of strong political issue in Scotland,
a Scottish Six, to produce a programme which would be an hour
long programme from six until seven which would be directly against
the BBC's UK and then the BBC's Scotland programme. Are you confident
that you will be able to do that?
Mr MacMillan: Yes, I am. The Scottish
Six has been talked about for a fair number of years now. I would
characterise that as a BBC idea that really came about properly
about ten to 12 years ago. Our idea for the programme is quite
different. Yes, it will be an integrated programme which incorporates
Scottish, UK and international news, but, significantly, it has
a significant proportion of very local news that currently the
BBC does not provide in Scotland. As you know, we have four micro-regional
news services in Scotland. We would produce a dedicated five minutes
of regional news for viewing areas around Glasgow, Edinburgh,
Dundee and Aberdeen. As part of this proposal the integrated news
hour would include six micro-regions of ten minutes each. Within
Scotland, each day 60 minutes of unique local news produced within
Scotland for very local audiences, and that is a fundamental difference
to the idea put forward as part of the BBC Scottish Six proposals
some years ago. We would envisage that our programme would be
an hour long, it would be what I would call a wide mix of international,
national, Scottish and local news but, crucially, the news would
be presented in the order and way that suits the audience and
you would move away from a slightly artificial division between
UK and international news and then Scottish and local news in
separate programmes. A running order, and choice, and an ordering
of stories very much suited to the needs of the audience, and
a devolved Scotland, where so many issues that people are very
interested in and aware of are actually devolved. We need to be
able to portray stories, particularly in social policy, in the
context of a devolved UK, where, in fact, some of the stories
that appear on national news do not always have the proper context
of how they might apply in different parts of the UK.
Q344 Rosemary McKenna: I think that
was the case in the past, but I do not think it is the case any
more. Nationally, they are much more sensitised to the fact that
there is a devolution settlement, and I do not think that that
is necessarily the case, but what really concerns me is how you
are going to afford the journalists and the whole set-up to cover
UK news and international news compared to the resources of the
BBC and Sky. The main competitors for news are Sky and News 24.
How are you going to be able to provide that end of coverage in
Scotland: because people in Scotland are internationalists, they
are not just nationalists?
Mr MacMillan: Absolutely. I think
people in Scotland have always been interested in what goes on,
not just in their own back yard but over a wider field as well.
The crucial part of the proposal we have put forward is that this
would be in partnership with ITN, one of the world's most respected
UK and international news gathering operations. ITN would be a
key partner in supporting the delivery of the UK and international
news service and we feel that that service, aligned with the very
strong service that we already provided Scotland and we propose
to enhance as part of the proposals, is a perfect combination
and would allow us to take the component parts and deliver a service
that is directly relevant to the audience in Scotland.
Q345 Rosemary McKenna: It would require
a change of legislation to allow you to do that.
Mr MacMillan: We have already
had some discussions with DCMS and Ofcom about that. Some of the
feedback is that some aspects of the Communications Act need to
be reviewed as part of this, but we think that is a proposal that
has some merit and we would be happy to talk about what the consequences
of that might be.
Mr Hain: In a digital world the
interesting prospect is that of all the news services that people
will be able to accessand everyone will be able to watch
Sky News once they have Freeview, DTT, satellite and so on and
so forthif you have satellite you have any number of news
providers, international as well as national. I think not to have
a single news bulletin which has national and international presence
as well as a Scottish interest, not to have a single bulletin
which is edited and produced anywhere outside of London, is a
missed opportunity. I think this is about viewer choice.
Q346 Rosemary McKenna: You do have
that. You have half an hour of that.
Mr Hain: Yes, but it does not
have an international or national demeanour.
Mr MacMillan: Also, if you look
at all other media in Scotland, be it the newspapers or radio,
they all make these choices day to day, hour to hour, minute to
minute, about how they take all of the world and Scottish news
together and order it. A radio station makes that decision every
hour when it does a radio bulletin; Scottish newspapers take that
choice every day when they do the front page and create the content
for the papers. What we are really suggesting is that, in this
one bulletin, television moves on to the same part of the playing
field and has an opportunity to cast its net as widely as it can
and to provide the whole news in a context that is appropriate
for our audience.
Q347 Chairman: You said earlier that
the cost of the news was £7 million. That, presumably, does
not include your proposals for a Scottish Six?
Mr MacMillan: We have confirmed
that our programme budget for news is £7 million. When you
look at all the infrastructure and overheads that we have as a
company to support that it comes to around about £10 million.
We pay a proportion of the ITV news costs and we think that, for
broadly the same amount of money, we can reconfigure our service
and deliver the type of programmes that we have outlined.
Q348 Chairman: How much do you get
in advertising revenue around the news?
Mr Hain: We get very little by
way of commercial return. There are a couple of reasons for that.
Our regional advertising base is very retail based and retail
advertisers tend to want a slightly different environment from
news (they want something more relaxed, whether it is soaps, drama
or entertainment) and, also, the Contract Rights Renewal mechanism
encourages optimisation of commercials (that means putting as
many commercials as possible where the biggest audiences are)
so the breaks themselves tend to be moved slightly later into
the peak area. We do run a localised break in the six o'clock
bulletin, but the actual demand which is based around news is
Q349 Chairman: Can you give any estimate
of how much revenue you do get from advertising around the news?
Mr Hain: For people who demand
news, it is a very small number. It would be less than half a
million pounds a year.
Q350 Chairman: If you are to proceed
with this plan, are you going to need public support to do so?
Mr Hain: Yes, I think our case
all the way through the Ofcom Review and the Digital Britain Report
has been that, absent public funding of some form, we would be
forced to scale back the £10 million investment that we make
in our existing news coverage because it is not commercially sustainable.
Q351 Chairman: If the Scottish Six
worked, would you envisage, in due course, moving to a Scottish
Ten on the same basis?
Mr Hain: I think we would walk
before we ran. I think the very interesting area that we are on
the brink of is a pilot scheme and, as such, this gives us an
opportunity to examine what has been (as Gordon said) a long held
idea, firstly, by the BBC and, subsequently, in a different form.
I stress ours is not just the Scottish Six, it is quite different,
because it has very localised news as well as the national and
international focus, and the pilot opportunity affords us the
perfect chance to put this on air and make it work. Thereafter,
I think you could potentially move beyond that but, first things
first, we would like to use this pilot opportunity to run the
integrated six o'clock.
Mr MacMillan: Certainly, in terms
of audience, the highest audience would be available at six o'clock,
far in excess of what you would expect to see at ten. In terms
of impact and the people who would see the service would be much
higher, in fact, at six.
Q352 Chairman: It is an interesting
comparison but ITV are arguing the obligation to provide regional
news is becoming unsustainable and, therefore, are trying to withdraw
from it; you are arguing that, equally, it is costing you a huge
amount of money for very little return, and yet your plan is to
increase the amount of regional news. How do you explain the difference?
Mr Hain: I can only speak for
STV, we acknowledge and absolutely see the value and the benefit
of news coverage. In fact, our six o'clock bulletin is often the
most watched news bulletin of any on television that day, and
I think that is something that we see enormous viewer benefit
for. Having prepared it, produced it and broadcast it for 50 years,
our preference would be to continue to do that, but we face the
same structural issues that the other Channel 3 licensees do,
and that is where our ground is common that it is difficult to
sustain on a commercial basis. In our case, we see the benefit
of it and we think we are well placed to move it forward, either
on its existing terms or we think the introduction of public money
should be a catalyst for creativity and innovation, which is why
we have tabled this new vision.
Mr MacMillan: It is worth saying
that STV News is much more highly valued than regional news in
other parts of the UK. It is among the most highly valued anywhere
in the UK. If you look at our audience share average for our six
o'clock news programme, it is 25%. That is 6% above the ITV network
average. Also, if you look at the performance against, not only,
as Bobby said, the six o'clock news, but reporting Scotland within
Scotland the gap between STV and the BBC's regional service is
only 1%, and that is the lowest for differential in any part of
the UK. There is a strong local interest in news, a strong loyalty
to STV News, and STV punches its weight very well and as well
as the BBC in many cases. That is a strong indication of how highly
valued our regional service is by the audience.
Q353 Mr Ainsworth: I am genuinely
puzzled by this direction that you seem to want to take. You are
a commercial broadcaster. You have said that the news service
you can provide is highly valued and commands great loyalty, but
it does not seem to command high value from the people who keep
your business going, your advertisers. It is clear that you envisage
this thing being supported by what you euphemistically call public
support. What form do you think that public support should take,
where do you think it should come from geographically, as well
as in terms of whose account should pay for it, and why should
the public be asked to fund a commercial broadcaster who is taking
an uncommercial decision?
Mr Hain: I think that our role
in this is as a broadcaster and as a producer of news. We see
the value in that, in terms of the audience, but I think the economics
of it have been analysed and fairly forensically looked at by
a number of people, including Ofcom and Digital Britain. The fact
is you cannot expect the holder of a Channel 3 licence, whether
it is STV or ITV or anybody else, to go on investing the kind
of sums that we are in return for holding that licence. The benefit
is not in excess of the cost.
Q354 Mr Ainsworth: Because the Chairman
has said in ITV's case they want to shed themselves of what they
consider to be an uncommercial burden. That is a logical response.
There are all sorts of public policy issues around that approach,
but it is a logical commercial response, whereas this strikes
me as profoundly illogical.
Mr Hain: I think our view is much
more logical on the side of viewers, which is that we believe
that there is a need to have an alternative to the BBC (and actually
not even the BBC suggest that they should be the sole provider
of impartial, high quality news for Scotland or anywhere else)
and, on that basis, we think that there is no alternative, given
the economics of our licences, than to look to some form of public
funding to support regional news going forward. I think the difference
is that we are committed to working to make sure that viewers
are in no way disadvantaged, that they continue to enjoy the service
that they have got used to, that they value and that they watch
in great numbers. Two million people a week in Scotland watch
our news. We think it is fundamental that Channel 3 news continues
in some shape or form going forward, and that is why we have taken
the position that we have.
Q355 Mr Ainsworth: This is an altruistic/political
decision that you are taking rather than anything to do with the
viability of your business?
Mr Hain: In all honesty, the course
of regional news going forward has very little impact on our business
given that there seems widespread acceptance that you cannot expect
us to spend £7 million pounds on it going forward. You then
have three choices. Either we do not spend any money on it, and
it reduces from the level where it is currently funded to a very
different service on a very different footing and does not provide
any proper plurality or any alternative to the BBC (which is the
first suggestion); the second suggestion is that we make the programme
and that we continue to broadcast that programme if funding is
made available; and the third suggestion is that somebody else
comes forward and makes the programme and we broadcast the programme.
From a commercial perspective, we are largely agnostic as to what
happens in those, because there is not a huge difference between
them. The difference is we would prefer to continue the way things
are and to continue making the programme, but I would also say
we are very open to the idea of partnership. We struck a very
successful partnership with the BBC, which is very smart self-help,
and we are also talking to several other partners about how any
public funding could have an impact wider than just sustaining
regional news in Scotland, be it other media or other services
who might also be able to produce public service content.
Q356 Mr Ainsworth: Can I bring you
back to one of my earlier questions. We are talking here about
funding a regional news service. Do you think the public support
should come from that region?
Mr Hain: It is not for us to say
where the money comes from.
Q357 Mr Ainsworth: You just want
Mr Hain: I think that is a matter
for politicians. The role that we can play in this is to provide
the service, it cannot be provided by anybody on a commercial
basis on the level it is already at, and we think there is a strong
case for some kind of public funding.
Q358 Philip Davies: The bit I do
not understand about what you have just said is that Gordon has
just given us a passionate defence of his news coverage and told
us how popular it is, and it is the most popular anywhere in the
UK. Why on earth do you want to change the format on something
that is so incredibly popular? Surely, if you have got a format
that is very popular, you keep that and you change the format
of things that are not popular. Why do you want to change the
format of something that is very popular?
Mr MacMillan: I think we have
always built on success. Our news service has never stood still
in the 50-odd years that we have been doing it and we have had
two regional news programmes for a number of years. We have now
introduced four micro-regions. It has been hugely successful,
the micro-regional news service. It is often the most watched
part of our six o'clock news programme. There is very strong support
from all the regions that get this service and there is room to
expand it and to change it. I also recognise that Scotland and
Britain are moving on and we want to build on the success of what
we are doing, not standing still, to come forward with something
that is innovative and new and has not been tried before.
Q359 Philip Davies: My suspicion
is that you are perfectly happy with your news coverage and it
is doing well, so you would not normally want to do anything to
interfere with that, because it is a triumph from what you have
just said, but you have seen this idea of top-slicing and some
potential public funding and you thought to yourself, "Hold
on a minute. There could be some money up for grabs here, but
we are not going to get any if we just do the same thing as we
are doing now. We are going to have to try and do something, we
are going to have to offer something, we are going to have to
try and come up with some new weird and wonderful scheme which
might attract some of this public money." This is not about
doing something for the viewers, is it? This is really trying
to find a novel innovative kind of trial in order to get your
grasping hands on some public funding, is it not? That is really
what you are trying to do here, is it not, to be honest?
Mr MacMillan: I think this is
absolutely about what works for the viewer and what is innovative
and new, and I think it is a very important proposal to come forward
with something that takes television news forward into the future.
If you look at how Scotland views national and Scottish news together,
I think there are some issues that are worth addressing at this
point. This gives us an opportunity to look at some of the ways
that news is portrayed at a UK level in Scotland and to begin
to deliver news in the context and the order and the manner that
best suits the audience. It is very much about an audience focus
and what we think does the best job to report Scotland, the UK
and the world to a Scottish audience.
Mr Hain: Can I make two other
very quick points in response to that allegation? The first is
that I would be just as confident about our ability to come forward
for some public funding with our existing offering given its strength,
quality, legacy and appeal to viewers, and I think that that is
one of the reasons that Ofcom, DCMS and Digital Britain have looked
so closely at the future of regional news. It is the performance
of services like ours which, I think, need sustaining. I think
that is more the horse before the cart analogy. The other thing
I would say is that this is not a scheme that we have dreamt up
in response to the idea of public funding. We first proposed in
2005, as part of Ofcom's first public service review, that there
ought to be such a bulletin, and it was based on our experience,
as Gordon says, of continual improvement, of change, which is
good for viewers, and of always wanting to innovate and move forward.
This is not something that we have just cooked up; actually it
has its roots in very good consumer research that we did at the
time, that we will be repeating and, at the point where we come
forward to say what our final plans are, we will have a very strong
case for it.