Supplementary written evidence from the BBC (FLM 59)

 

Q447 Paul Farrelly: Finally with respect to plurality there were lots of people vociferously saying as part of our last report that it was not best served by paying an enormous price for Lonely Planet. Recently we have read that the option that the founders had to sell the remaining stake to the BBC had not been exercised and had been extended. Can you just shed some light on that situation as well?

 

The Wheelers and BBC Worldwide have jointly agreed to defer the exercise period of their 25% put option. The Wheelers continue to play an active role as directors and shareholders in the Lonely Planet business, and BBC Worldwide is delighted that they have agreed to retain their interest at this stage as it strongly believes that this is in the best interests of the business, the BBC and consequently BBC licence fee payers.

 

As the Committee may have noted, on 24 November 2009 the BBC Trust published its conclusions following a review of the corporation's commercial activity. As a specific point, the Trust stated that it would not expect to consider a commercial deal of the scale and nature of the Lonely Planet acquisition in future. The Trust will want to ensure that BBC Worldwide's plans for Lonely Planet secure the best value for licence fee payers and will keep its long-term future under review.

 

 

Q450 Mr Watson: Before I ask my question can I say there are a number of BBC lovers who quite like the fact that you clash with X Factor because it means that the family only have to watch one of them rather than both of them, but let me stretch the plurality question a bit further. It is about citizens having to change their Freeview box to receive HD content going forward and there was a recent very quick Ofcom review that is actually to review your approach on the way that people can access that content because there was a form of digital rights management within the boxes. Have you responded to Ofcom on that? It might not be your area, Mark.

 

The new Freeview HD service, bringing HD content to the Freeview platform, launched on 2nd December 2009. The complicated new technology required to launch the service in the limited amount of radio spectrum available, means that, regrettably, consumers will need to buy a new receiver to get the new Freeview HD service. These receivers (both set top boxes and integrated digital TVs) will become available in the shops in early 2010 (they will have a clearly marked Freeview HD logo). It is important to stress that none of this makes exiting Freeview kit obsolete - consumers can carry on watching standard definition services on Freeview receivers. But to watch the new HD services consumers will either need to buy a new Freeview HD set top box to work with existing HD Ready displays or buy a new display with Freeview HD built in.

 

On content management, the BBC has recently submitted a response to Ofcom's request for further information on the benefits to consumers on the use of content management technologies (the primary one being that free-to-air public service broadcasters can offer a wider range of HD content that would otherwise only be available on Pay TV platforms). We expect Ofcom to initiate a public consultation following our submission.

 

 

UK Broadcast Pool

We offered to provide clarification on the operation of the UK broadcast pool. There are two separate issues:

 

- The operation and membership of the broadcast pool

- Access to the material that is generated

 

The UK broadcast pool is operated by BBC, ITN and Sky. It is an informal working arrangement which has existed for many years, and works on an ad hoc basis where Sky, ITN and the BBC combine resources to cover events on a pooled basis in a cost, and resource, effective way. Each broadcaster either contributes some equipment or takes a turn doing an event for the other members of the pool.

 

The Press Association have previously raised concerns with us about the operation of the pool. Their principal argument has been that they should be part of the pool operation or have consistent access to the content. The view of the BBC - and ITN and Sky - has so far been that the PA should be able to contribute infrastructure and TV-quality pictures on a similar basis to the others if they want to be part of the pool - we are not convinced that the PA is currently in a position to do this.

 

However, following discussions, the BBC has agreed with Sky & ITN that all news organisations including the PA should be given access to broadcast pool material and be able to purchase the footage. We communicated this position to PA several months ago and are operating in line with it. We have asked the PA to update the Committee.

 

 

Information the Committee may find useful for its inquiry

 

A sustainable funding model for the provision of Local and regional news

 

Since the BBC submitted its written evidence to this Committee's inquiry into Regional News, the BBC Trust has published its response to the Digital Economy Bill, which includes two alternatives to top slicing the licence fee as a means of funding IFNCs.

 

First, it is possible that a new model of local and regional news can evolve without any need for new public funding. There are risks in fixing levels of subsidy or in picking winners now, in the midst of significant changes for the industry. We believe there is a more evolutionary, deregulatory approach worth examining that could deliver the same or similar results. As a starting point the BBC has proposed sharing its facilities and infrastructure with other providers of regional news. The Government should look at the value of this offer to local news providers in combination with Ofcom proposals for content deregulation and the relaxation of media ownership rules that could reduce costs and increase investment in local services. Following Digital Switchover, spectrum that is currently used for national television services could potentially be released to the market for television at a local and regional level. This should be considered alongside the future opportunities offered by Internet Protocol Television, which could enable new companies to provide local content to people's televisions at much lower cost, and potential changes to the rules around advertising minutage. The Government should assess whether a combination of all these changes will make alternative commercial models viable.

 

If Government believes that additional public funding is required to support its preferred regional/local news model, then there are better alternatives to the licence fee. The options tabled by Ofcom include the suggestion that the way in which broadcasters are charged for access to spectrum, which is being changed at the end of the current licences, could generate new funding for the Government's public policy goals. The Trust asked the BBC Executive to examine this alternative and they commissioned an independent report authored by Kip Meek and Robin Foster. Their report suggests that this option (known as Administered Incentive Pricing) when introduced in 2014, could raise up to 130 million per year and so fund regional news in its entirety. This would be more consistent with the existing UK model, where the value of spectrum is used to fund PSB and create public value, and would maintain a variety of PSBs with different incentives and funding models. The full report is available on request.

 

 

Allegations of BBC 'poaching' news stories from Local news providers

 

We note that in an earlier evidence session to this Committee there was an allegation made that the BBC and other large news agencies sometimes 'poach' their content from smaller, local news providers.

 

The BBC is a strong and consistent contributor of original local journalism, adding to the mix and diversity of stories available to audiences on television, radio and the web.

 

This is achieved first through our broadcast programmes where interviews and items first broadcast on the BBC often lead the local news agenda. Interviews on the Politics Show and investigations mounted by the BBC1 current affairs programme Inside Out are common examples. In recent weeks the West Midlands edition of The Politics Show revealed that 800 jobs were to be lost at Birmingham council, which became the lead story in the regional morning paper the following day.

In London Inside Out revealed that tower blocks had not been properly assessed for safety - followed up by a range of local newspapers.

 

Our reporters and correspondents also originate many stories, both in specialist areas and the general daily news environment. A recent BBC snapshot showed many examples over a one month period of these stories being followed up and used prominently by local newspapers and websites. For example, in Leicester a police recruitment freeze revealed on the BBC Local Radio station was followed up by the local paper 2 days later. Radio Merseyside's phone in programme revealed that 11 people had been taken to hospital in a poisoning scare at the local swimming baths - again followed up by local papers. We'd be happy to make more of this evidence available if required.

 

We recognise that local newspapers originate more stories than we ever could. There are many more newspapers, more than a thousand in the UK, and they include more stories per edition than a BBC radio station or website would offer in either a day or a week.

 

The BBC is developing ways of offering web users external links to offer them the opportunity to find these stories. This is achieved at present through external links, but we also intend to start offering RSS feeds from other local news providers on our websites.

 

The nature of journalism is that stories will cross from one medium to another, or be followed up or further developed by competing journalists. When a story is a genuine "exclusive" we encourage our journalists to credit the original provider if following up a story.

 

December 2009