Examination of Witnesses (Questions 640-659)|
MONDAY 24 JUNE 2002
640. You say "by and large": can you
give us a more detailed breakdown in writing so that we have some
clear evidence on that?
(Mr Gallagher) We would be happy to do that. In areas
such as news and sports, even with the handicap of many programmes
being excluded, Sky has a majority of European content under the
official definitions. Take the channel Sky One: that does not
have an absolute majority of European content on it, but last
year we provided 50 per cent of that channel's budget for original
first-run UK content. That is a very respectable figure for a
channel that has less than 2 per cent of all UK viewing.
(Mr Ball) The exclusion of sport and
news is a bit of a nonsense. We probably make about 33,000 hours
of sports programming per year. Twelve years ago, I doubt there
was 500 hours. There is lots of work for various production companies
that employ people and so on and so forth, yet none of that counts
towards the quotas, whereas you can put up a pretty cheap soap
opera for the afternoon and that would count.
641. In your memorandum you say, "a clear
analysis and understanding of the role, purpose and scope of public
service broadcasting in the wider communications landscape is
still needed". Quite a lot of people think that this Bill
gives that definition. What more do you want to know about public
(Mr Ball) I do not even know what it is.
642. Not at all?
(Mr Ball) Well, I have some idea. I think public service
broadcasting is related to the BBC; it is there to address a failure
in the market, where certain programmes may not get made. If you
look at the BBC's television schedules, whether the content they
produceor, more importantly, the content they buy inis
really serving the public, I think is pretty hard to argue. Whether
the BBC is bidding several million dollars to buy a heavyweight
fight coming in the middle of the night is a public service; or
bidding up content that would otherwise find its way on to other
free-to-air outlets, like a Friday night movieit is not
a question about content going to pay television, because it would
possibly still go to other free-to-airsso that is not really
public service. I think there is some confusion about that.
643. Do you think if we left it to the laws
of competition and the market, we would have, to use the "in"
term, a broadcasting ecology that would satisfy our needs?
(Mr Ball) I do not know if you would. What needs to
be doneand nobody is going to be brave enough to do itis
a bottom-up review of what we are getting for our money in public
service broadcasting. The BBC has £2.4 billion a year coming
in and they spend a lot of it very well and there is some terrific
content, but is that really a good use of those funds, and do
you need to collect that tax? There should be a bottom-up review.
I have not seen anyone with the courage to put their head above
the parapet and say let's do that. It is probably very difficult
to do, unless you have a pretty strong lobby next to the BBC before
ever beginning to approach it. In fact, the BBC is very deft at
keeping itself out of the firing line.
644. Part of the exercise is to retain for this
country certain cultural, democratic values, as well as a certain
quality of our television. Do you think that Sky has contributed
(Mr Ball) I am not putting Sky up as a substitute
to public service broadcasting at alland that was not the
question. I agree that there are a number of things that one would
expect public service broadcasting to bring. My point is, is it
funded in a way that is correct? I think we should re-examine
if we are getting enough bang for our pound. Are they doing more
than they need to do?
645. You almost said somewhere, but nobody can
find it for me, that Mr Rupert Murdoch defined public service
broadcasting as a euphemism for market failure. That is a pretty
narrow definition, even if it was not his. Have you used that
(Mr Ball) No, I have not seen that. I was thinking
in terms of, for example, of channels, before a secretary of state
agrees to the BBC launching a new channel in a new areawhat
is the market failure? Is it necessary from the public service
point of view to create a channel in an area that is already being
served by the free market?
646. You objected pretty fiercely to BBC 24-hour
news. Would you not see it as logical, in terms of choice, that
the BBC should have a 24-hour news channel?
(Mr Ball) I think it is very difficult on the news.
Firstly, the ship has sailed now and that channel is well established.
The BBC have huge news-covering resources. Whether it was right
for them to move into thatthe issue as a commercial broadcaster
was that they distorted the market, and it cost the company I
run several million pounds because we could no longer compete
against a channel that was just given away. I think that news
is a bit of a special case. As I say, it is two or three years
old. The arts, going to certain segments of drama, sportare
these things already served by the marketthere, the BBC
has a more difficult argument to make.
647. Have you any fear that when OFCOM is established
we will have a kind of "whinge of the week" against
the BBC from yourselves or other commercials, that the whole purpose
will be to chip away, chip away, chip away? You mentioned drama
and the arts. When you ask what bangs people get for their buck,
that is exactly why the BBC has immense support in this country:
people do think that those are the very areasnews, current
affairs, arts, indeed sportwhere they are getting value
for their money.
(Mr Ball) I do not know if everybody thinks that,
if you were to put it
to the vote. I am not sure you would necessarily get a majority
in favour of that.
648. I have a good deal of sympathy, as a former
chairman of HTV and a public service broadcaster, and I understand
what you are saying. Incidentally, there is one channel that I
can now receive in the remote valley in Wales in which I live
because I do it over your Sky digital system, which I could not
do before, and I am grateful. You talk about wanting a clear analysis
and understanding of the role and so on, but what we are concerned
with is an actual Bill. An attempt has now been made in Clause
181 to define pretty tightly what is meant by "public service
broadcasting". I said I have a certain sympathy with you
because I questioned the Chairman of the BBC the other night on
this subject, and I tried to get him to tell me what percentage
of his output he thought was public service broadcasting. I think
he tried to tell me that really everything they produced was public
service broadcasting, including all their entertainment. As a
former Channel 3 producer, I am not sure that I agree with that.
However, I come back to the Bill, and in particular the definition
in Clause 181(5) which tries to pin it down, because we as a committee
are concerned with the Bill and not a general commentary. Are
you, on the whole, happy with the definition in the Bill, or are
you looking for changes in the Bill that will benefit the public
as a whole and tighten up what is meant by "public service
(Mr Ball) We have made our choice with the BBC and
we have a somewhat unique television market here in Britain. If
you look at other public service broadcasters, for example the
ABC in Australia or PBS in the US, they are really about market
failure, and they are very niche. They each have very good news
services and people turn to them and trust them for that sort
of content, but they do not go out and make huge costume dramas
or acquire expensive sports rights. The area where I am concerned
about public service broadcasting and the BBC is deciding how
the BBC expands, going forward. Let us say that nothing is going
to change with the BBC now and that terrestrial channels will
remain, requiring the kind of content that they currently schedule;
but going forward, putting new channels outand there is
the BBC news exampleand moving into new areas is something
that OFCOM should have a say on. They should look at that as it
relates to the rest of the television marketand that is
649. Are you making the point that it is because
of the competitive nature of its offering as far as other broadcasters
(Mr Ball) It is, yes. For example, BBC4, the arts-based
television channel, is a market that is already served, and one
will have to see how the commercial channels in that area are
able to compete against something that is effectively a free-to-air
channel with similar content. My point is that instead of leaving
it is up to the Secretary of State, it should be part of what
OFCOM considers in terms of the whole competitive landscape, where
the BBC should go next. I accept where it has got to now, and
I am not arguing that we should go back and change things; but
it is how the market develops.
650. Would you be concerned if the BBC, as it
seems to be doing at present, was to put all its arts programmes
into BBC 4 and there was a dumbing-down on other channels in competition;
or are there other aspects?
(Mr Ball) It goes back to your point and the question
you asked the Chairman of the BBC: "What is public service
broadcasting, and how much of your schedule is it?" I have
looked at the notes on that, and I do not think you got an answer.
651. Will you come back? I have finished with
that, because I keep having to remind witnesses and ourselves
that we are dealing with not general views, but a Bill. If you
have a view that the Bill in any way needs tightening or amendment,
that is what we would like to hear.
652. One of the tasks charged to the BBC as
the premier public service broadcaster, is to benchmark and set
standards. Therefore, it is likely to go into new areas. It seems
to me that in some ways you are trying to tie down Gulliver; that
you want to fossilise the BBC; and that is the death knell for
any organisation. I just do not understand why such a successful
organisation as Sky does not get on with being competitive in
the part of the competitive market that is set out for it.
(Mr Ball) I think we do get on with being competitive
and trying to turn as much value as we can for our shareholders;
but the BBC does not distort the market.
Lord McNally: That is the will of Parliament.
You quoted Australia and Canada: those are roads that have been
considered many times over the last fifty years, and Parliament
has decided that we do not want a ghettoised public service broadcaster;
we want one that is contemporary and innovative, which sets benchmarks.
That will distort the market.
653. Perhaps I can ask the question in another
(Mr Ball) I would like to respond to that.
654. Let me ask this, because I think this is
what you are saying. We have got what we have got. I do not think
you are suggesting that if the BBC's funding was significantly
reduced, either we would have a better ecology of broadcasting
in terms of the individual viewer, or a better service for citizens
in terms of the information they receive. Therefore, I am suggesting
that the market, in its own odd wayand you are quite right
to say it is not a free markethas resulted in something
that is highly defensible and relatively successful.
(Mr Ball) The BBC is uniquely British, yes, and we
have a unique television market because of it. There are several
points. Firstly, I do not agree that the ABC in Australia is ghettoised.
It does what it says on the tin; it is a public service broadcaster
and provides news and arts programming that would not get made
by the market. We have chosen to have something different here,
but it is very different and let us not kid ourselves. It is a
ferociously competitive organisation. It does not affect what
Sky does hugely, but certainly it supports the free-to-air television
market in this country and it is crazy to say it does not. Is
that a good use of a tax being raised? I do not know. My earlier
point was that if you went back from ground up, to work out what
kind of public service broadcaster we should have in this country,
I do not think you would have the BBC the way it is now. You would
have something that would cost a lot less.
Lord Pilkington of Oxenford
655. I have some sympathy with your view, but
I am a little puzzled that every time I open the papers, that
you and the BBC are going to enter into an alliance to take ITV
with you both. Is this not a monopoly? You are talking about free
competition and taxpayers' money, and the two big men in the market
are tying it up. Is that not a contradiction of every word you
have just uttered to us?
(Mr Ball) I do not think so. I was asked that earlier
this morning. We have a small part to play in a bid that the BBC
and Crown Castle are makingI am trying to think of a term
that a starlet would use, but we are not necessarily in an exclusive
656. An ongoing partnership, dare I say?
657. You have argued that all controls on media
ownership should be lifted and that Competition Act powers would
suffice to ensure plurality. Others have argued that a loosening
of media ownership controls increases potential for anti-competitive
practices, for example perhaps shared buying between pay channels
and free-to-air channels, and that those would require specific
controls. Do you accept that consolidation of ownership within
television has the potential to make the market for advertising,
programming and rights less competitive rather than more competitive?
(Mr Ball) I think on the advertising side that would
be decided by the competition authorities, if there was too much
market power, if for example ITV consolidated and there was too
much power in advertising. On the buying of rights, I read with
interest the comments that were made about that. The market for
free and pay rights, which is what we are talking about, if Sky
owned the terrestrial broadcasterwould we have some special
market power because we could buy those rights for both windows?
Anyone who knows anything about buying rights knows that they
always get full value, whether they sell them individually, pay
and free, or sell them collectively. If you look at the way the
market works now, I can give you several examples. ITV has a deal
with MGM for the Bond movies. They have all rightsthey
have pay and they have free TV, but they choose to keep them for
free only. Similarly with Champions' Leaguethey bought
pay and free rights. Channel 4 has based its pay channel, E4,
on the idea that they can buy both windows, and they do that at
the moment; they buy windows for Hollywood product both for pay
and free. Should the two things be separated? I do not think it
is a show-stopper. If we owned distribution free-to-air and, as
we do now, pay, would that be a big problem for us? No. I think
the market decides. The right seller will always get full value
whether he separates those rights or not. Currently, the market
is such that you can buy them, and ITV and Channel 4 buy rights
like that now.
(Ms Cassells) Can I add: the Competition Commission
looked at the Vivendi investment in Sky, and the European Commission
looked at Sky's investment in Kirsch, looking at this particular
issue, and concluded that there was no problem for joint bidding
for particular rights.
658. One of the things that concerns me about
the way that OFCOM will operate is that there are at the moment
about a million people in this country who are deaf, and BT are
just withdrawing special services for the deaf. Oftel have said
they are not prepared to look at the issue because they are preparing
for OFCOM and it is a minor issue. You promised about 18 months
ago that within a year or so, 80 per cent of Sky News would be
sub-titled, and you targeted 50 per cent by the end of this year.
Will there not be a danger with OFCOM that you will be talking
about the big issues about competition with the BBC, and that
the issues that affect a minority group will either get ignored
by OFCOM, or you will be able to play OFCOM off against it and
not provide those kind of public service broadcasting standards?
(Mr Ball) I do not agree. On sub-titling, there is
no requirement for us to do that on Sky News, but we do volunteer
to do just that. We are on what we said we would do, and in the
time we said we would do it.
659. I thought you said you would do it within
a year or so.
(Mr Ball) I think we said in 18 months we would have
75 per cent.
(Mr Gallagher) It is 50 per cent this year and 80
per cent next year. In total, Sky is sub-titling 45,000 hours
a year in programming on an entirely voluntary basis. We started
this several years ago. Sky One, for instance, has 60 per cent
of the channel sub-titled. Again, that is a channel that has only
1.7 per cent of total UK audience.
6 Note by witness: And none of the privileges
or subsidies of other broadcasters. Back
Note by witness: ie the licence fee. Back