3 Regional news on television|
98. 90% of adults consume some form of local media,
with local newspapers and ITV regional news the most popular forms.
Regional news on Channel 3 attracts an audience share of around
20% nationally, representing 4-5 million viewers per evening.
However, despite its popularity, regional television is currently
facing substantial economic difficulties. ITV has encountered
the same downturn in advertising and increased competition for
audiences, discussed in the previous chapter. It is seeking to
deal with these pressures by cutting costs in its business.
99. In this chapter we discuss regional news on ITV
and the proposed Independently Funded News Consortia (IFNCs) in
detail, along with proposals made by the BBC to make some of their
resources available to either ITV or the replacement news consortia.
We also discuss the proposed "top-slicing" of the television
licence fee as well as the situation with STV in Scotland who
are currently in a legal dispute with ITV over their programme
The future for regional news on
100. Channel 3 is a free-to-air, commercially funded
national television broadcast channel. Its coverage is divided
up into 15 regions which are historically determined by the location
of the transmitters.
101. However, in recent years separate ITV regional
companies in England and Wales have consolidated, so that now
licences for the Channel are held by only four companies: ITV
Broadcasting Ltd (ITV plc) (11 licences), STV group plc (two licences),
Ulster Television plc and Channel Television Ltd (one licence
'ITV1' is the brand name used by ITV plc in its licensed areas,
with STV and UTV using their own brands.
102. The provision of regional content on Channel
3, such as news and weather, that caters to the needs of audiences
in different geographical areas has been a traditional feature
of Channel 3 and of public service broadcasting (PSB) requirements.
Licensees are subject to regional programming quotas and, up until
recently, ITV1 was required to provide seven hours of regional
programming per week, of which at least 5.5 hours must be news
and 1.5 hours must be other regional programmes. The overwhelming
majority of programming on Channel 3, however, is of a non-regional
103. Licensees are mandated under section 39 of the
Broadcasting Act 1990 to conclude a set of arrangements known
as the ITV Networking Arrangements (NWA) intended to facilitate
the provision of a national television service across the Channel
3 licence regions, which is capable of competing effectively with
other television broadcasters in the UK. Channel 3 licensees are
also subject to a series of other public service obligations and
regulation in exchange for privileged access to scarce terrestrial
frequencies, due prominence on electronic programme guides and
'must-carry' status on cable networks.
ITV'S PUBLIC SERVICE BROADCASTING
104. In recent years, the economic pressures on ITV
have led it to argue that the costs of meeting its public service
obligations will soon outweigh the value of the benefits it enjoys.
105. In January 2009, ITV plc was fined £220,000
by Ofcom for failing in 2006 and 2007 to meet its out-of-London
programme production quota for ITV1 (that at least 50% of money
spent on ITV1 Network originated content each year is produced
outside the M25 area). ITV's then Executive Chairman, Michael
Grade, said that the fine was "yet more clear evidence that
the regulatory burden on ITV is 20 years out of date. Our duty
is to invest as efficiently as possible in UK production, not
to be an instrument of governmental industrial policy or social
106. ITV set out the cost-benefit analysis of their
PSB licences from 2008-2014 in the table below:
|PSB costs/benefits £m
|PSB costs to ITV||201.7
|PSB benefits to ITV
Source ITV; Ev 261
107. It is also reported that in Scotland and Northern
Ireland, STV and UTV respectively are facing deficits on their
108. In 2008, ITV applied to have its regional obligations
reduced, and a subsequent Ofcom review of public service broadcasting,
in January 2009, did reduce ITV's commitments for regional news
output, although not by as much as ITV had asked for. Ofcom reduced
the commitment for regional news to four hours a week and the
quota for non-news output in the English regions to 15 minutes
per week. Ofcom's
report also recommended the creation of independently funded news
consortia (IFNCs), which, although independent of Channel 3, would
produce and broadcast regional news in the slots currently in
the Channel 3 schedule. We discuss the case for IFNCs as a long-term
replacement for ITV news below at paragraphs 115 to 139.
109. ITV plc has told us that production of regional
news is no longer viable, and that it will not be able to deliver
these services to England and Wales beyond 2011.
Michael Grade stated that it costs ITV around £50 million
to produce all of its regional news programming, but that ITV
receives very little advertising revenue from time slots around
110. Ofcom's response to the Government's consultation
on delivering TV news in the nations and regions states does not
agree entirely with the picture painted by ITV, but does state
that it believes that by 2012 the benefit to Channel 3 of its
licences will be outweighed by the costs:
The costs of the Channel 3 licences to provide
ITV television programmes across the UK will outweigh the benefits
by 2012. [...] the Channel 3 regional network licences could be
in deficit to the tune of £38-£64 million by 2012.
111. We asked the then Executive Chairman of ITV,
Michael Grade, whether ITV could carry on providing its current
level of regional news until a full replacement was in force.
He told us:
I do not think I can answer that directly at
the moment because we do not know what the numbers will be. There
is also a review going on presently on the cash costs of our licence
which Ofcom has undertaken; so you have to look at all the elements
of the PSB requirements, including the cash costs of the licence,
see where that comes out, look at the value of the licence and
then decide what cuts you are going to have to make to get it
back into line. I certainly would not rule out further cost-cutting
in regional news but I do not think it is a foregone conclusion,
depending on the outcome of those other deliberations.
112. In January 2010 Archie Norman took over from
Michael Grade as Chairman of ITV. In March 2010, news reports
suggested that Mr Norman was reconsidering Michael Grade's decision
to end ITV's regional news production due to growing concern from
ITV executives about IFNCs.
An article in Guardian Media stated:
[...] ITV executives are concerned about keeping
control of advertising airtime around the regional news slots
on ITV1, the quality of the proposed replacement services, and
the longer-term implications of losing control of parts of the
schedule on its flagship network.
In the English regions, the main ITV1 regional
bulletin goes out between 6pm and 6.30pm, with other shorter local
updates in the morning and at the end of the 1.30pm and 10pm network
Another concern within ITV is said to be that
the consortiums cut across Norman's attempts to boost the broadcaster's
standing with the City, potentially grooming it for a sale or
takeover, which could be hampered by a series of messy, publicly
funded regional news partnerships.
113. At the time of writing this Report there have
been no official statements from ITV regarding a change in their
plans for regional news provision.
114. Existing, and potential further, reductions
in regional news on channel 3 have serious implications for the
maintenance of plurality of regional news on television. We are
deeply concerned that ITV is already running into deficit with
its PSB obligations for regional news production, and has suggested
that, if left unaddressed, ITV may walk away from these. We welcome
reports that the new Chairman of ITV may be reconsidering this
strategy, but believe that, to support this, the PSB obligations
and other regulatory burdens on ITV need to be reduced, if not
INDEPENDENTLY FUNDED NEWS CONSORTIA
115. Ofcom and the Government have proposed that
the solution to the withdrawal of ITV plc as a regional news provider
is to launch independently funded news consortia that would supply
the content for the regional news slots on Channel 3 and are described
by Ofcom as "the most suitable way to secure sustainable
plurality in regional television news."
IFNC participation would be open, but not be limited to, existing
television news providers, newspaper groups or other newsgathering
agencies who would
bid for the Channel 3 news contract in each region. The winner
would be decided by an independent panel.
116. Ofcom has outlined what it sees as the benefits
to the public of the introduction of IFNC's as follows:
the creation of independent news consortia, funded
by competitive tender, [...] [would] deliver a choice of regional
news across the UK on the Channel 3 schedule. These could offer
greater localness and cross-media news provision.
The consortia could be made up of existing television
news providers, newspaper groups or other newsgathering agencies.
They could be chosen against a range of public criteria, including
the ability to achieve the reach, editorial standards and overall
quality of current Channel 3 regional productions.
117. The schedule initially proposed for the IFNC
roll-out was outlined in the final Digital Britain report:
The Government is minded to mount three pilot
IFNCs before 2012, aiming to begin in 2010 - one in Scotland,
one in Wales (where S4C have already done work to develop a related
initiative) and one in an English region which would be the most
likely to demonstrate true contestability, without involving the
current Channel 3 incumbent licensee. One of the objectives of
the pilots will be to test the scope and scale of commercial funding.
118. On 26 November 2009, DCMS announced
that the Tyne Tees and Borders region would be the location of
the pilot IFNC in England. It also launched the tender process
for all the pilot IFNCs. DCMS gave late March 2010 as the date
for announcement of successful bidders, with the service starting
in summer 2010.
119. Currently the Tyne Tees and Borders area incorporates
two ITV licence regions. They form a cross border region serving
part of the north west, south and south west of Scotland as well
as north east England. DCMS states that this pilot could allow
those in Scotland to receive Scottish (rather than English) news,
though "some technical engineering to existing transmitters"
would be required.
The then Minister for the Creative Industries, Si¼n Simon,
told us that the budget for the three IFNC pilots was £20
million per annum for a minimum of two years, with an option to
extend that to three years.
120. The provisions for IFNCs are set out in the
Digital Economy Bill. The Bill states that "Ofcom must publish
the criteria that they intend to use in making an appointment
[of a regional news provider]"
and those criteria may include the definition of the "relevant
media content." The Bill defines "relevant media content"
material, other than advertisements, which is
included, or is capable of being included, in any of the following
services that are available to members of the public in all or
part of the United Kingdom
(a) television programme services, additional
television services or digital additional television services,
(b) on-demand programme services, or
(c) other services provided by means of the internet
where there is a person who exercises editorial control over the
material included in the service.
In other words, Ofcom will stipulate which media
platforms and services are deemed to be relevant for IFNCs.
121. These criteria do not mention radio services,
and, when we asked Si¼n Simon for clarity on what he thought
the make-up of IFNCs would be, he told us:
We will want to send very clear signals that
plurality of consortia member, of platforms, of provision, will
be the watchword of what we are looking for. So it is unlikely
that the procurement specifications will include an absolute requirement
for radio but I would expect the documents to make it clear that
bids that included, for instance, radio and community radio were
much more likely to be stronger bids than those that did not.
122. The bill also provides that the regulatory regime
for the regional Channel 3 service should include conditions relating
to the "form, character and quality of the relevant media
although the Minister was unable to elaborate on what requirements
Ofcom would impose to determine quality.
DCMS told us they anticipated IFNCs being formed of multiple media
organisations, who form consortia by way of a commercial process,
and expected that there will be multiple bids in each of the regions.
123. ITV have already said that they will not be
participating in any of the IFNCs, which means that regional journalists
currently employed by ITV will have to seek employment with the
new IFNCs. A DCMS
press release in January 2010 gave details of the successful bidders
in the first stage of the selection process for the pilot IFNCs,
who will go through to the next stage of the procurement. They
ITN with Newsquest, Northcliffe Media, Tindle, Boomerang and ITV Wales news staff;
UTV with NWN Media Ltd.
Johnston Press with the Herald and Times Group, Tinopolis, and D C Thomson;
STV with ITN and Bauer Radio
ITN with Johnston Press, Newsquest, Metro Radio, University of Sunderland and ITV Tyne Tees and Borders news staff;
Trinity Mirror with the Press Association and Ten Alps;
Source: DCMS press release 002/10; 13/01/2010
124. There is considerable support for IFNCs from
within the media industry. The Press Association, which "strongly
the proposal to establish IFNCs, believes that it could play an
important role in supporting the development of multimedia newsrooms
in the nations and regions, "helping local and regional news
providers to invest in newsgathering and journalism," and
that it would be "ideally positioned to play a key role in
video newsgathering for the consortia."
125. ITV plc is also supportive of IFNCs, and describes
them as an "imaginative, ground breaking policy proposal
to bring a new approach to local and regional news."
However, ITV only extends full support to IFNCs in Scotland and
Wales, whereas for consortia in England its support has caveats:
the current piecemeal implementation plan for
IFNCs in the English regions is unlikely to deliver an efficient,
high quality service to compete effectively with that of the BBC
and will not balance ITV's PSB licences in the short to medium
term. Ultimately, if it is not possible to expedite the full introduction
of the IFNC proposal in the English regions with one contest for
a Master Contractor in 2010, some other route will need to be
found to ensure the survival of regional news in the English regions
more rapidly than is currently proposed. In this context ITV is
keen to continue a constructive dialogue with Ofcom and Government
in relation to potential solutions.
126. In response to these concerns, the Minister
told us that ITV would get some financial relief when the IFNC
pilots that were launching in 2010 started running a regional
He also described a provision in the Digital Economy Bill that
would allow the Secretary of State to "vary or suspend the
different bits of any broadcasters public service licence obligations"
so in the eventuality that ITV was unable to meet its PSB obligations,
there is provision for Government intervention to ensure a plurality
of regional news on television until the IFNCs are fully functioning.
127. ITV plc's support of IFNCs in England is also
contingent on "additional advertising minutage on ITV not
forming part of the solution to the future funding of regional
news since it would reduce the existing advertising revenues of
ITV1 (and all commercial broadcasters) and the regional press."
DCMS have not decided whether to allow IFNCs to sell advertising
slots in their regional news broadcasts.
128. An additional problem is that the contracts
for the IFNC pilots will not be finalised until May 2010, and
full coverage will not be reached until the summer of 2010. If
the pilot is a success, IFNCs will be rolled out but the process
will not be completed until 2013, leaving the prospect of a worrying
gap in regional news coverage.
129. It is also worth noting that IFNCs do not have
cross-party support, so the outcome of the General Election will
have a bearing on their future. Speaking at the Oxford Media Convention,
Jeremy Hunt, the Shadow Secretary for Culture, Media and Sport,
explained Conservative opposition to IFNCs:
Using the licence fee to prop up regional news
simply casts a failed regional TV model in aspic. It would actively
prevent the emergence of new, local media models, making broadcasters
focus their energies on satisfying politicians not reaching viewers.
[...]we want to see the emergence of a radically
different, improved and forward-looking local media sector. Not
just local TV, where we are about the only major developed country
not to have proper city-based TV franchises. But profitable, hungry
and ambitious local radio, local newspapers and local websites
130. Mr Hunt went on to outline Conservative proposals
that would "sweep away the cross-media ownership rules at
a local level."
This will allow local media operators to follow
viewers, as they increasingly switch platform at a moment's notice,
whether from TV to radio to mobile or to online. It will allow
a consistent and strong new offering to advertisers: go with us
and we will reach consumers in a defined geographical area whichever
platform they use.
131. We asked Michael Grade what he thought would
happen in the eventuality that the next Government did not support
IFNCs. He told us:"so far as ITV is concerned, if a future
Conservative Government decided to abandon the IFNC issue, the
quid pro quo is that we would have to be relieved of those PSB
obligations which brought our licences into deficit."
132. During our inquiry we have focused mainly on
regional content offered on Channel 3. However there are other
local television stations in the UK that cater solely for their
local audience and, it has been argued, might fill the gap created
by the withdrawal of ITV from regional news programming.
133. Ofcom has suggested to us that the digital switchover
could provide an opportunity for further development of local
television services in the UK. This could provide a better solution
in the long term, as their services would be tailored for specific
local communities, rather than defined by artificial regions determined
by transmission areas. However, given the current scale of local
television it is extremely unlikely that such channels would offer
a credible solution to the problem in the near future. As Ofcom
There is currently little local TV in the UK,
in contrast to a range of other European countries, in part due
to the uncertainties surrounding the economics of commercial local
television. Recent analysis conducted during Phase 3 our Second
PSB Review shows that even city-based local television may not
be profitable outside the major markets of London and Manchester.
There are currently only four local TV stations broadcasting on
terrestrial TV (Channel M in Manchester; MATV in Leicester; Northern
Visions in Belfast; and York TV).
134. On 17 March 2010 GMG, owners of Channel M, announced
that it was no longer going to produce original content for Channel
M, and that it was going to cut staff and only air archive material.
135. The situation with regional news on Channel
3 is in danger of reaching a crisis point that could jeopardise
the plurality of regional television news. To protect this, a
way of ensuring the continuation of a regional news service on
Channel 3 needs to be found, offering an additional and alternative
service to that provided by the BBC. It is unacceptable for there
to be any situation in which the public is reliant on only one
provider, the BBC, for regional television news.
136. We therefore welcome the launch of the IFNC
pilots. However, given the lack of cross-party support for IFNCs,
their future is highly uncertain.
137. It is vital that there is a continuation
of a regional news service on Channel 3 until the introduction
of IFNCs, and we are concerned that the time lag until IFNCs become
fully functioning in 2013 may lead to a worrying deficit. If it
is not financially viable for existing Channel 3 licensees to
provide this service because the cost of doing so exceeds the
value of their licences then other, non-regional, obligations
of those licensees should be partially or completely suspended,
in order to alleviate the financial burden and to ensure the continuation
of regional news by existing Channel 3 licensees.
138. Given the importance, of regional television
news, we recommend that the final regulatory provisions for IFNCs
make clear the priority that must be accorded to the replacement
of the regional television news service within the respective
Channel 3 regions, with provision via internet services and other
outlets provided on an additional and complementary basis, although
we recommend that the IFNC selection panel favour bids that also
contain radio provision.
139. We are sceptical about ITV plc's support
for IFNCs being contingent on their retaining the advertising
in regional news slots as they also argue that there is little
revenue to be gained from advertising around news. If the cost
of fulfilling regional news vastly exceeds the revenue involved,
we can see no reason why this small advertising revenue should
not be allowed to help fund replacement for Channel 3 news providers.
We recommend Ofcom and the OFT conduct more research on this.
TOP-SLICING AND THE FUNDING OF IFNCS
140. Ofcom has suggested that the IFNC replacement
for Channel 3 regional news could cost in the region of £40-60
million per annum.
In response to the consultation on Sustainable independent
and impartial news in the Nations, locally and in the regions,
DCMS outlined the proposed funding of IFNCs:
The Government remains convinced that sustaining
plurality of voices in news in the Nations, locally and in the
regions will require public funding. Following the findings of
the public consultation and BMRB's independent market research,
the Government's preference for the long-term remains to maintain,
in the next Television Licence Fee settlement, the contained element
of the television licence fee that is currently not used for BBC
content and services, in order to support plurality of news sources
in the Nations, locally and in the regions, as laid out in the
Digital Britain White Paper. This is supported by both
audiences and industry.
141. This use of the contained element of the television
licence fee that is currently not used for BBC content and service
is a highly contentious measure. Perhaps unsurprisingly the BBC
Executive and Trust, who, on the whole support the principle of
IFNCs, do not support the use of the television licence fee.
142. The BBC Executive told us that Ofcom had "underestimated
the likely revenues and public assets that are available to support
that therefore "it is not clear that additional public funding
The 'likely revenues and public assets' that the BBC Executive
refer to are: advertising revenues which, the BBC argues, could
be generated from the Channel 3 news slots and also sold across
multiple media platforms within an IFNC; the re-arrangement of
the PSB obligations or 'regulatory assets' (such as spectrum);
and cost efficiency savings made from economies of scale when
the organisations within an IFNC consolidate their news gathering
143. The BBC Executive also explained to us that
it had wider, overall objections to the top-slicing of the licence
A decision to use licence fee funding to support
commercial organizations raises significant risks that the BBC
has previously outlined. First, it would risk breaking the unique
link between licence fee payers and the BBC. BBC research suggests
that the public understand what they are paying for under the
current model: 70% of the public spontaneously mention the BBC
when asked which broadcasters are funded by the licence fee; prompted
awareness rises further, to 86%. Second, it would require that
strong accountability mechanisms be put in place for new recipients
of public money. Third, it would mix public funding and advertising
revenue within commercial organisations, potentially weakening
commercial incentives and advantaging some commercially funded
news operators over others.
144. In our previous Report, Public service content,
we recommended that if a shortfall in news provision on Channel
3 was envisaged, part of the television licence fee could be used
to support regional television news.
145. The Government has said that "the television
licence fee is not the BBC licence fee"
and that, in principle, the BBC has no exclusive right to it.
Although there is no statutory obligation for the BBC to help
other broadcasters, the Chairman of the BBC Trust, Sir Michael
Lyons, has said that "the BBC also has a duty to help other
public service broadcasters whose funding is now under strain."
However the assistance which Sir Michael Lyons refers to is unlikely
to be part of the licence fee, but rather the BBC's proposals
for partnerships with commercial media groups.
146. The television licence fee is collected in
order to fund public service television, which is not confined
to the output of the BBC. Plurality of regional news provision
is vital in a democracy, therefore we restate our support for
the principle of public funding, and note the Government's existing
suggestion that this could be met from that part of the income
of the licence fee that is currently allocated to the digital
switchover help scheme.
BBC partnership proposals
147. The role of the BBC in the local media landscape
is not a new topic for us. In our recent Report BBC Commercial
we considered the BBC's plan for a new on-demand local video service
(a separate proposal that was not in fact a commercial activity).
The proposal would have provided local news and video content
on 65 existing local BBC websites in England and Wales, at a cost
of £68 million over four years. However, the proposal was
rejected by the BBC Trust in November 2008 "because it would
not improve services for the public enough to justify either the
investment of licence fee funds or the negative impact on commercial
welcomed this decision, and recommended that the BBC should instead
be looking to help, rather than hinder, local newspapers and radio
stations. We also recognised that "it is apparent that this
decision does not necessarily spell the end of the BBC's ambitions
in this area, and the Trust must continue to exercise caution
when reviewing any revised plans".
148. As things currently stand, the BBC's investment
in the nations and regions across the UK means that it supports
a comprehensive range of multi-platform services:
- Dedicated news, current affairs
and political programming for the nations and English regions.
On TV, the BBC's nations and regional news bulletin at 6.30pm
is the UK's most watched news programme;
- 40 local radio services in England;
- 6 nations radio services including Welsh and
- 60 BBC local websites plus Welsh, Gaelic and
Irish language websites.
149. The BBC has told us that "it is important
that the BBC's approach is sensitive to the wider market while
delivering strong public value."
However, the BBC has faced some strong criticism in the past for
its expansion into new areas of the media, and the resultant adverse
impact on existing commercial operators. Local newspaper publishers
DC Thomson, reiterated this point in their written submission
to our inquiry, arguing that it was "better able to compete
in the absence of an expansion or strengthening of the BBC at
150. The BBC outlined to us a series of partnership
proposals designed to benefit the wider creative economy:
The BBC has formulated a partnership offer whereby
it would make available a range of services (including access
to the BBC's infrastructure and technology) to either ITV or a
replacement set of news consortia on Channel 3;
The BBC proposes sharing a sub-set of the BBC's
UK video news content with newspaper websites;
The BBC's College of Journalism may be opened
to public in the summer;
The BBC will consider acquiring video footage
of local news stories from third parties such as the Press Association,
rather than generating the content itself.
151. The Government's Digital Britain report
welcomed the BBC's partnership proposals, but did qualify this
by posing an (unanswered) question: "if journalistic and
editorial plurality is a key objective, how far [can] the BBC
] go in partnership?"
152. It is currently unclear how these partnership
proposals could be enacted, especially given that ITV has categorically
stated that the proposed partnerships would not be of sufficient
benefit to be a meaningful solution to ITV's PSB deficit.
Ofcom suggested to us that, given this, the partnership proposal
was unlikely to get off the ground:
The proposed BBC/ITV partnership in relation
to TV regional news provision is unlikely to be put into practice
given that ITV does not see it delivering enough benefits to secure
ongoing regional TV news. In January 2009, Michael Grade wrote
an article in the Telegraph discussing regulation and the
commercial pressures the industry was facing. In relation to possible
partnerships with the BBC, he wrote that 'ITV and the BBC would
share facilities, buildings and technologies across the UK - making
commercially funded regional news much more cost efficient'.
153. Ofcom went on to say that there could be benefits
from BBC partnerships with local and community radio, which we
discuss in more detail in paragraphs 185 to 190, but in general
Ofcom was "currently in dialogue with the BBC and the BBC
Trust regarding the BBC's role in the local media ecology."
154. The Press Association has expressed concern
that free content sharing, or "dumping", by the BBC
could distort the market and have very damaging implications for
commercial news provision. It felt that the BBC's partnership
proposals would in fact result in "a reduction in diversity,
with providers only having access to BBC content which they are
unable to monetise."
Perhaps more tellingly, the Press Association observed that "content
sharing will set the BBC up as an agency provider of video news,
a role currently fulfilled by the Press Association"
which would ultimately present a threat to their business model.
155. The Press Association instead suggested an alternative
range of other proposals where it felt the BBC could help the
industry by way of knowledge sharing and collaborative working:
- Sharing audience and usability
- Sharing online usage data;
- Developing solutions on technical infrastructure;
- Developing common standards for metadata and
156. The Press Association told us that the BBC had
already conceded that some types of content did not need to be
gathered by more than one news organisation. The Press Association
agreed that duplication of newsgathering around such content "soaks
up previous resources that could be applied elsewhere to help
differentiate news output."
It went on to say that the BBC "could support plurality by
outsourcing a percentage of its newsgathering operation to commercial
providers. This model could see the BBC contributing to core video
newsgathering by an agency, which also supplies video content
to local and regional news companies". 
157. DC Thomson also expressed concern at the potential
partnerships, suggesting that they "may in fact be a Trojan
horse undermining newspapers' development from within,"
and result in other media organisations being forced to carry
BBC content on their websites.
This opinion was echoed by the NUJ, who voiced concern about the
affect the BBC partnership proposals might have on plurality and
standards in local media:
The NUJ has a number of concerns about the way
in which partnerships between the BBC and other media operators
could damage plurality and undermine quality journalism. Any moves
in this direction must ensure that editorial integrity of different
operators is not damaged - that the news agenda does not become
merged by default. The current proposals are said to include the
idea of regular morning news meetings, which would seem to indicate
a danger of a single news agenda being set.
The availability of footage is clearly crucial
in determining what is covered, and therefore where footage is
shared, it is likely that difference between bulletins will be
reduced. There are also a number of practical aspects that must
be addressed. Some of these issues, such as space requirements,
could be dealt with through local negotiations, but broader issues,
such as systems for booking crews have wider implications for
editorial integrity and the quality of the finished journalistic
158. Whatever the outcome of the discussions with
Ofcom, plurality in local media must be the priority in any future
partnerships that are forged between the BBC and other media groups.
It would not be acceptable for a single news agenda to become
the norm in the UK, whether it is driven by the BBC or anyone
else. However the sharing of resources and experience in order
to make cost efficiencies should be encouraged. The BBC should
not expect extra funding in order to do this.
159. We welcome Sir Michael Lyons' acknowledgement
that the BBC has a duty to help other broadcasters although the
BBC needs to be clearer about what this means in practice. We
also believe that such a duty should be included in the BBC Charter.
However we would not support an expansion of public intervention
or funding of the BBC in order for it to help other broadcasters.
Scottish regional television
160. Both of the regionally allocated Channel 3 licences
in Scotland, one for the north of Scotland and one for central
Scotland are held by STV. The programme schedule on Channel 3
in Scotland has traditionally overlapped considerably with the
Channel 3 programmes aired by ITV in England. However, in 2009
STV "opted-out" of a large number of peak-time drama
programmes including The Bill, Agatha Christie's Marple,
Midsomer Murders and Doc Martin in order to release
airtime and save money (STV receives a rebate of 6% of the budget
of any programme it drops) to fund its own regional content.
161. Opting-out of the ITV network schedule is not
a new practice for STV. However the scale of opt-outs has increased
considerably. It is estimated that in 2008 £375,000 worth
of opt-outs were made by STV; by 2009 this had jumped to £4.5m.
According to Alan Clements, STV Director of Content, these savings
were a major consideration in the decision to drop the ITV drama
programmes. However, he added, many elements of the ITV schedule
would be retained such as: I'm a Celebrity
Get me Out
of Here, The X Factor, and soap operas as well as factual
programmes, whose budgets were too low to be worth opting out
162. These opt-outs have resulted in a legal dispute
between ITV and STV. In September 2009 ITV sued STV for a reported
£38 million claiming that by opting-out of so many programmes
STV were in breach of their network agreement. In November 2009
we asked Bobby Hain, Director of Broadcast Services and Regulatory
Affairs at STV, to outline the legal situation between ITV and
STV. He told us:
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.
163. STV subsequently launched a counter-claim and
as of March 2010 the court case is still ongoing.
164. In oral evidence Bobby Hain explained that ITV
had rejected an offer by Ofcom to "preside over a process
of binding arbitration."
Ed Richards, Chief Executive of Ofcom, confirmed this in evidence
We are obviously in contact with both companies
and we did make an offer to try and arbitrate in some form, both
for the existing disputes between the two companies and in relation
to future disputes. That offer was made but it obviously requires
both parties to accept it and that did not happen, so we have
not done it.
165. We questioned Michael Grade about ITV's reluctance
to settle the dispute. He told us:
I think the courts are the right place to resolve
a commercial issue of this kind. If there were to be any idea
of arbitration that should be through a judicial process and not
through the process of the industry regulator who has conflicting
statutory requirements to ensure the health of PSB and so on and
so on. I do not think Ofcom could possibly be regarded - for good
statutory reasons; it is not a criticism of Ofcom - as an honest
broker in that situation, because they are required by statute
to have regard for the delivery of PSB in the UK. This is a simple
matter of what is right and wrong commercially. Ofcom would have
to bring to it their statutory requirements: "Well, it would
be a bad thing for Scottish viewers if this decision went against
Scotland". It would not be an objective exercise.
166. Following Michael Grade's evidence to us, Rob
Woodward, Chief Executive of STV, wrote us saying Michael Grade's
remarks about STV were "factually incorrect, misleading and
damaging to STV."
Mr Woodward told us that he believed STV had an "absolute
right" to opt-out of the network schedule within agreed parameters,
and that ITV were suing STV for opt-outs that had been agreed,
hence STV's counter-claim.
167. It is unfortunate that the agreement between
STV and ITV has deteriorated to the point where it has turned
into a legal dispute. This can only be damaging to Channel 3.
168. We regret that ITV did not take up the offer
made by Ofcom to arbitrate in these matters. This is now a matter
for the courts. Whatever the outcome we hope that it will clarify
the network agreement and prevent any legal dispute in the future
103 Ofcom, Putting Viewers First, January 2009 Back
Ev 179 Back
Ofcom, Review of ITV networking arrangements, September
"ITV fined £220,000 by Ofcom over regional quotas",
Guardian Media, 16 January 2010 Back
Ev 179 Back
Ofcom, Putting Viewers First, January 2009 Back
Ev 260 Back
Q 516 Back
Ofcom, Response to Sustainable independent and impartial
news in the Nations, locally and in the regions, September
Q 520 Back
"ITV's Archie Norman considers U-turn on dumping regional
news", Guardian Media, 17 March 2010, guardian.co.uk Back
Ev 168 Back
Digital Britain, final report, p 156 Back
Ofcom, response to Sustainable independent and impartial news
in the Nations, locally and in the regions, September 2009 Back
Digital Britain, final report, p 157 Back
Department for Culture, Media and Sport, Independently funded
news consortia pilots: process for selection of providers,
26 November 2009 Back
"Regional news pilot for Tyne Tees and Borders", Department
for Culture, Media and Sport press release 157-09, November 2009 Back
Q 623 Back
Digital Economy Bill [Lords], clause 28 (10) [Bill 44 (2009-10)] Back
Digital Economy Bill, clause 28 (10) Back
Q 626 Back
Digital Economy Bill, clause 28 (10) Back
Q 626 Back
Q 628 Back
Q 537 Back
Ev 240 Back
Ev 242 Back
Ev 260 Back
Ev 260 Back
Q 631 Back
Q 632 Back
Ev 260 Back
Q 635 Back
"Jeremy Hunt: Tories will kill broadcast news pilots",
Press Gazette, 21 January 2010, pressgazette.co.uk Back
Q 521 Back
Ev 183 Back
"GMG to drop original programming and cut staff at channel
M", Guardian online, 17 March 2010, guardian.co.uk
Speech by Ed Richard, Ofcom Chief Executive, Government Local
Media Summit, 28th April 2009, Ofcom.org.uk Back
Department for Culture, Media and Sport, Government response
to the consultation on Sustainable independent and impartial news
in the Nations, locally and in the regions, September 2009 Back
Ev 197 Back
Ev 198 Back
Culture, Media and Sport Committee, First Report of Session 2007-08,
Public service content, HC 36, para 107 Back
Government response to the consultation on Sustainable independent
and impartial news in the Nations, locally and in the regions Back
BBC Executive, BBC Annual Report and Accounts 2008/09, p 5 Back
Culture, Media and Sport Committee, Seventh Report of Session
2008-09, BBC commercial operations, HC 24 Back
"Upholding licence fee payers interests", BBC Trust
Press Release, 21 November 2008. Back
Culture, Media and Sport Committee, BBC Commercial operations
BBC Executive, BBC Annual Report and Accounts 2008/09 Part
One, July 2009 Back
Ev 192 Back
Ev 226 Back
Ev 182 Back
Digital Britain, final report, Cm 7650, June 2009, p 142 Back
Q 549 Back
Ev 182 Back
Ev 183 Back
Ev 242 Back
Q 42 Back
Ev 160 Back
"STV says cost savings were major reason for axing ITV drama",
Broadcast magazine, 1 October 2009 Back
Q 339 Back
Q 342 Back
Q 408 Back
Q 571 Back
Ev 275 Back