Select Committee on BBC Charter Review Written Evidence

Memorandum by The Newspaper Society

  1.  Thank you for inviting the Newspaper Society to make a further submission to the extended inquiry of the House of Lords Select Committee on the BBC Charter Review.

  2.  The Newspaper Society represents the regional newspaper industry and has a particular interest in your request for comment relating to Broadcasting in the Nations and Regions: "Should the BBC move towards ultra-local services? If so, what form should said services take? Should the BBC provide stand-alone local services or work in partnership with other non-profit distributing organisations?"

  3.  The Newspaper Society's members publish around 1,300 newspaper titles, serving regions, cities, towns, villages and neighbourhoods throughout the United Kingdom. The regional press is the most read media, most trusted by its readers, who number around 85 per cent of the adult population. It has a long tradition of providing essential news and information, leading campaigns, stimulating opinion, debate and action and enabling businesses to reach their customers in the local community. The regional press has a long heritage of building substantial public value in the communities in which it is based, independently of state support and public funding.

  4.  Regional newspaper companies face fierce competition for those readers and advertisers. They are investing and innovating to complement their traditional portfolio of print, text and pictures with broadcast, audio, video and interactivity online. The underlying migration from printed page alone to print alongside TV, PC, mobile phone or other screen is a fundamental trend for the local press and vital for its long term future. This is threatened by the freedom that the Government's Green Paper would continue to permit the BBC to enjoy and the adverse impact upon its commercial competitors that the Government apparently intends to encourage the BBC to exploit.

  5.  The regional newspaper industry's ability to sustain its crucial role in its communities is at risk from the BBC's planned expansion in the local and regional media. The BBC wants to use the freedoms given by its existing Charter to expand its existing services, claiming justification through its nations and regions remit for its plans for ultra local television, expansion of its Where I Live and local websites. Far from remedying an instance of market failure, this expansion is likely to precipitate one, condoned and encouraged by Government through the Charter Review Green Paper. Commercial competitors could be pushed out by a licence fee funded BBC, unrestrained by the commercial demands of the market, taking advantage of cross-promotion, branding, scale economies and privileged distribution. At a stage when local online or TV services are starting to become commercially viable, a large scale BBC roll out could undermine the business case for commercial innovation and distort investment. In the long term, local digital media could effectively be restricted to effective monopoly provision by the BBC.

  6.  There is even uncertainty as to the form of the regulatory regime for the BBC's West Midland ultra-local television pilot service through which the BBC intends to "expand links between the BBC's Where I Live websites, local radio and television" and hopes will lead to 60 similar services across the UK:

    —  it is uncertain whether the pilot will be reviewed under the new or existing Charter, given the BBC's timing of its launch and its evaluation;

    —  if it is to be reviewed under the existing Charter, that raises questions about the appropriateness of the BBC undertaking its own review so close to January 2007 and what the role if any the Secretary of State will have;

    —  we have no assurances that the review will examine the interaction between the pilot service and other local BBC services and publications that the BBC envisages of such significance;

    —  we do not know whether the public value and market impact tests under the new Charter will be applied to the proposed 60 separate local services on an individual basis. We consider that this is very important as public value and market impact considerations will vary from area to area;

    —  we do not know whether the services' operation will be subject to review and whether revision or withdrawal could result.

  7.  The industry is very concerned about the proposed supremacy of the BBC Trust under the new regime and in particular its ability to override OFCOM's market impact assessments. The proposals would allow the BBC Trust to authorise new BBC services on public value grounds, despite the independent assessment that they will have adverse market impact. As the BBC Trust is specifically to be given this power, it is clear that improved transparency and accountability in the way that the BBC functions are not expected to preclude any such situation arising. Improvements in BBC openness are not sufficient to address the industry's objection to the BBC Trust override.

  8.  Under the Green Paper proposals, the BBC Charter remains as broad as ever; the BBC's existing services remain unchecked and free for development, in any way across any media that the BBC chooses; new commercial services will be freed from any prior consent requirements; fair trading commitments will be opaque; and the BBC Trust, not the Government, will be able to decide whether new licence fee funded services should be authorised, even if OFCOM has independently decided that they have an adverse market impact.

  9.  The Newspaper Society has produced a full report examining the impact of the BBC's regional activities permitted under the Green Paper proposals upon the regional press. As a result, the Newspaper Society considers that the Government should revise its proposals and:

    —  reject the BBC's proposed model of large-scale rollout of "ultra-local" TV/ broadband internet to 50-60 cities at this stage of the market's development;

    —  deny additional licence-fee funding for either "ultra-local" TV or for further development of the BBC's Where I Live sites;

    —  ensure greater transparency in the BBC's investments in local services through publication of detailed accounts for these services;

    —  deploy public funding to research/pilot programmes of local commercial media services on digital platforms—and publish the findings in the public domain;

    —  where publicly-funded pilot programmes are conducted by the BBC—such as the Midlands local TV trials—ensure that the BBC both involves local media groups in the design and execution of the pilot, and publishes all findings in the public domain;

    —  ensure that any future decisions on extending local BBC services be contingent not only on a public value/market impact test, but also on the completion of OFCOM's review of local TV post-switchover and on a public consultation of the role for commercial media in light of its findings;

    —  confirm that public value/market impact tests be undertaken by OFCOM and not the BBC Trust, and that the process for conducting these assessments be open to public consultation;

    —  reframe the BBC's eventual remit in local communities as a cautious and selective intervention in certain areas—be they specific localities, types of service or audience segments—where there is clear evidence that commercial models will not be sustainable;

    —  define a clear "exit plan" for any new BBC services that are approved—namely a set of measurable and transparent criteria under which the original justification for BBC intervention ceases to be valid, and at which point the BBC is compelled to withdraw from the provision of these services;

    —  define specific areas where the BBC should offer assistance to local commercial media in their migration from traditional to digital media platforms. This might include facilitating distribution, providing access to the BBC's output and archive on favourable commercial terms, or promoting emerging commercial ventures.

  10.  Furthermore, contrary to the Green Paper's suggestions, the industry contends that:

    —  the BBC Charter should no longer allow the BBC to pursue any public service or commercial activity, by means of any technology available, by reference to widely defined core public purposes;

    —  the proposed scope and regulation of the BBC's publicly funded services and commercial services, the proposed roles of the BBC Trust, OFCOM and Secretary of State and proposals for transparency will not provide adequate safeguards for the commercial sector;

    —  existing services, new services and changes or proposals for extensions to any service should all be subject to consent and licence, with the decision made by an assessor wholly independent of the BBC. The consent and licence procedures should require strict definition of the scope of the services licensed, consultation of commercial competitors, an independent assessment of the impact of the service or the proposed change upon commercial competitors, refusal of consent if there is an adverse market impact, continuous review of the operation of the services, assisted by financial transparency, and mechanisms to enable swift changes to service licences, including withdrawal of licences. There should also be appropriate procedures for independent review of the services in operation; effective enforcement procedures to ensure compliance with the terms of any licence; appeal of decisions and remedies including confirmation, variation or revocation of consent and licences. Third parties, including commercial competitors, should be able to initiate and be party to review, enforcement and appeal procedures.

  11.  The regional press also considers that the Government must consult on the proposed review of the BBC's licence fee funding and in the course of any review of public funding for a wider system of public service broadcasting.

  12.  The Newspaper Society would be very happy to provide further detailed comment upon the important issues at stake for the regional press, if this would be helpful.

7 October 2005

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