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


Examination of Witnesses (Question Numbers 340-359)

MR GORDON MACMILLAN AND MR BOBBY HAIN

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 access—and everyone will be able to watch Sky News once they have Freeview, DTT, satellite and so on and so forth—if 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 not huge.

  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 the money.

  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.


 
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