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

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.[103] Regional news on Channel 3 attracts an audience share of around 20% nationally, representing 4-5 million viewers per evening.[104] 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 schedule.

The future for regional news on Channel 3


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 each). [105] '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 nature.

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.


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 engineering."[106]

106. ITV set out the cost-benefit analysis of their PSB licences from 2008-2014 in the table below:

PSB costs/benefits £m 2008 2009 2010 2011 2012 2013 2014
PSB costs to ITV201.7 143.0129.4 120.8119.8 120.4123.1
PSB benefits to ITV 232.2155.5 123.276.5 42.638.8 40.3
PSB value30.5 12.5-6.2 -44.3-77.2 -81.6-82.9

Source ITV; Ev 261

107. It is also reported that in Scotland and Northern Ireland, STV and UTV respectively are facing deficits on their PSB licences.[107]

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.[108] 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.[109] 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 regional news.[110]

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]

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]

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.[113] 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 news programmes.

    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.[114]

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 removed.


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."[115] IFNC participation would be open, but not be limited to, existing television news providers, newspaper groups or other newsgathering agencies[116] 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]

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]

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]

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.[120] 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.[121]

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]"[122] and those criteria may include the definition of the "relevant media content." The Bill defines "relevant media content" as:

    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.[123]

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.[124]

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 content,"[125] although the Minister was unable to elaborate on what requirements Ofcom would impose to determine quality.[126] 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.[127]

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.[128] 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 are:

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

Tyne Tees/Borders

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 supports"[129] 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."[130]

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."[131] 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.[132]

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 news service.[133] 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"[134] 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.[135]

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."[136] DCMS have not decided whether to allow IFNCs to sell advertising slots in their regional news broadcasts.[137]

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 as well.[138]

130. Mr Hunt went on to outline Conservative proposals that would "sweep away the cross-media ownership rules at a local level."[139] He said:

    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.[140]

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."[141]

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 explained:

    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).[142]

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.[143]

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.


140. Ofcom has suggested that the IFNC replacement for Channel 3 regional news could cost in the region of £40-60 million per annum.[144] 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.[145]

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 IFNCs"[146] and that therefore "it is not clear that additional public funding is necessary."[147] 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 resources.[148]

143. The BBC Executive also explained to us that it had wider, overall objections to the top-slicing of the licence fee:

    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.[149]

144. In our previous Report, Public service content,[150] 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"[151] 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."[152] 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 Operations,[153] 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 media".[154] We 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".[155]

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 Gaelic stations;
  • 60 BBC local websites plus Welsh, Gaelic and Irish language websites.[156]

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."[157] 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 local level".[158]

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.[159]

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 itself […] go in partnership?"[160]

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.[161] 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'.[162]

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."[163]

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."[164] 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"[165] 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 research;
  • Sharing online usage data;
  • Developing solutions on technical infrastructure;
  • Developing common standards for metadata and tagging.[166]

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."[167] 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". [168]

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,"[169] and result in other media organisations being forced to carry BBC content on their websites.[170] 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 product.[171]

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.[172] 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 of.[173]

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.[174]

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."[175] Ed Richards, Chief Executive of Ofcom, confirmed this in evidence to us:

    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.[176]

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.[177]

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."[178] 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

104   Ev 179 Back

105   Ofcom, Review of ITV networking arrangements, September 2009 Back

106   "ITV fined £220,000 by Ofcom over regional quotas", Guardian Media, 16 January 2010  Back

107   Ev 179 Back

108   Ofcom, Putting Viewers First, January 2009 Back

109   Ev 260 Back

110   Q 516 Back

111   Ofcom, Response to Sustainable independent and impartial news in the Nations, locally and in the regions, September 2009 Back

112   Q 520 Back

113   "ITV's Archie Norman considers U-turn on dumping regional news", Guardian Media, 17 March 2010, guardian.co.uk Back

114   Ibid. Back

115   Ev 168 Back

116   Digital Britain, final report, p 156  Back

117   Ofcom, response to Sustainable independent and impartial news in the Nations, locally and in the regions, September 2009 Back

118   Digital Britain, final report, p 157 Back

119   Department for Culture, Media and Sport, Independently funded news consortia pilots: process for selection of providers, 26 November 2009 Back

120   "Regional news pilot for Tyne Tees and Borders", Department for Culture, Media and Sport press release 157-09, November 2009 Back

121   Q 623 Back

122   Digital Economy Bill [Lords], clause 28 (10) [Bill 44 (2009-10)] Back

123   Digital Economy Bill, clause 28 (10) Back

124   Q 626 Back

125   Digital Economy Bill, clause 28 (10) Back

126   Q 626 Back

127   Q 628 Back

128   Q 537 Back

129   Ev 240 Back

130   Ev 242 Back

131   Ev 260 Back

132   Ev 260 Back

133   Q 631 Back

134   Q 632 Back

135   Ibid. Back

136   Ev 260 Back

137   Q 635 Back

138   "Jeremy Hunt: Tories will kill broadcast news pilots", Press Gazette, 21 January 2010, pressgazette.co.uk Back

139   Ibid. Back

140   Ibid. Back

141   Q 521  Back

142   Ev 183 Back

143   "GMG to drop original programming and cut staff at channel M", Guardian online, 17 March 2010, guardian.co.uk  Back

144   Speech by Ed Richard, Ofcom Chief Executive, Government Local Media Summit, 28th April 2009, Ofcom.org.uk Back

145   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

146   Ev 197 Back

147   Ev 198 Back

148   Ibid. Back

149   Ibid. Back

150   Culture, Media and Sport Committee, First Report of Session 2007-08, Public service content, HC 36, para 107 Back

151   Government response to the consultation on Sustainable independent and impartial news in the Nations, locally and in the regions Back

152   BBC Executive, BBC Annual Report and Accounts 2008/09, p 5 Back

153   Culture, Media and Sport Committee, Seventh Report of Session 2008-09, BBC commercial operations, HC 24  Back

154   "Upholding licence fee payers interests", BBC Trust Press Release, 21 November 2008. Back

155   Culture, Media and Sport Committee, BBC Commercial operations  Back

156   BBC Executive, BBC Annual Report and Accounts 2008/09 Part One, July 2009  Back

157   Ev 192 Back

158   Ev 226 Back

159   Ev 182 Back

160   Digital Britain, final report, Cm 7650, June 2009, p 142 Back

161   Q 549 Back

162   Ev 182 Back

163   Ev 183 Back

164   Ev 242 Back

165   Ibid. Back

166   Ibid. Back

167   Ibid. Back

168   Ibid. Back

169   Q 42 Back

170   Ibid. Back

171   Ev 160 Back

172   "STV says cost savings were major reason for axing ITV drama", Broadcast magazine, 1 October 2009 Back

173   Ibid. Back

174   Q 339 Back

175   Q 342 Back

176   Q 408 Back

177   Q 571 Back

178   Ev 275 Back

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