Select Committee on BBC Charter Review Minutes of Evidence

Examination of Witnesses (Questions 360 - 379)


Mr Paul Vaughan, Mr Allan Munro and Mr David Moffett

  Q360  Chairman: Would it be fair to say that the spur of competition did not do the BBC any harm in terms of competition?

  Mr Vaughan: Absolutely. At the end of the day, if they want the rights, they ought to earn the rights rather than just expect to be given them—which I think was probably the problem pre-1997, if you take the Six Nations, where complacency can set in. There is no challenge to them. In fact, the quality of the production and coverage has dramatically improved since Sky came onto the scene. I think that covers all sport, not just rugby.

  Q361  Lord Holme of Cheltenham: It is difficult for the rugby enthusiast to understand why the Six Nations is a group B listed event, when, for instance, the Rugby League Challenge Cup Final is a group A listed event. What would be your attitude if, in the aftermath of the World Cup and the much higher levels of interest and enthusiasm about rugby, the Six Nations became a group A event?

  Mr Vaughan: Our view is very much that if you list and protect events, the broadcaster has to be given the right funds to be able to buy them at a relatively economic price. Otherwise, it just cuts away the lifeblood, in terms of the investment that we need to make, because we would have no revenue, because there would be no need to bid any relative sum of money.

  Mr Moffett: I do not think we would have a problem with the Six Nations being an A-listed event, provided that they pay the market rate for what it is. It happens in Australia. In Australia, they have anti-siphoning laws (as they call them there) where they have lots of events that are listed, but the sports that are listed get paid substantial sums of money still by free-to-air television. It is really more the view, I think, that if you can get more people to watch the event then that is a good thing, but they still have to bear the market price for that event. I think what you are then protecting is the ability for as many people as possible to watch an event that they want to watch. As long as it is not seen as some way of getting something for nothing or at a very reduced rate, I cannot see us having a problem with that. It is just that still market forces have to prevail.

  Q362  Lord King of Bridgwater:You have talked about the Six Nations and then we have this autumn series which is happening. I am not quite clear who runs that. Who runs these other areas? Is it the International Rugby Football Union?

  Mr Moffett: Yes. They do not run it. They have a fixture schedule which comes out, archaically, about once every 12 years. Everybody agrees who they are going to play in the autumn, and who we are going to play down in the southern hemisphere in their autumn, our spring. Those games are scheduled, as I have said, up to 12 years in advance, so this is part of the scheduling. We run, own and control all that. The actual scheduling of it is done through the IRB.

  Q363  Lord King of Bridgwater: That is my question. They do not have the negotiating rights.

  Mr Moffett: No.

  Q364  Lord King of Bridgwater: If you were to play Australia, it would be for Australia to negotiate their broadcasting rights and Wales would get a cut of it.

  Mr Moffett: No, we do not. They keep their broadcasting rights and all their gate money and then we keep ours.

  Q365  Lord King of Bridgwater: One hundred per cent.

  Mr Moffett: Yes.

  Q366  Lord Maxton: I am interested in this idea of the commercial rate and balancing what you can get from television rights against having a broadcaster which gives you exposure, and therefore—which concerns someone like myself most—getting people to play the game or join clubs and take part in club activities. Because I think it is worthwhile remembering that, although you get all this income, each club itself has to generate income as well, and that is part and parcel of what happens in rugby. How do you do that? Your income is almost entirely from the Six Nations, is it not, in broadcast terms?

  Mr Munro: No. Gate receipts—

  Q367  Lord Maxton: I meant in broadcasting terms.

  Mr Munro: In terms of broadcasting, yes, entirely from that. It is no real surprise that we have been going through a tough time over the last few years. We are on the road to recovery but it is going to be a long haul to get us out of the mire. Inevitably one of the things that has suffered has been the amount that we have been able to distribute down through into the club game. Many clubs like my own, still involved in the club game, have to go about earning money the way most clubs do anyway, through subscriptions from the players and former players and so on, through gate receipts—which, quite frankly, are not great—and sponsorship and other functions like fund-raising dinners and so forth. But quite often you find that these functions tend to bring the community closer together.

  Q368  Lord Maxton: For some time you did have a deal where they sold the club game to ITV/STV.

  Mr Munro: Yes—and also to the BBC before that.

  Q369  Lord Maxton: The BBC you do not even try.

  Mr Munro: We no longer have that.

  Q370  Lord Maxton: They are not interested or you are not interested.

  Mr Munro: No, they are not interested.

  Q371  Chairman: If rugby had more exposure on the BBC in Scotland, would that have an impact on the game?

  Mr Munro: I believe so, yes.

  Q372  Chairman: In the quality and the whole thing coming through?

  Mr Munro: I think it gives those people playing the club game a lot more interest in watching themselves, if you like, or their direct opponents playing. It generates income lower down, because not everyone can play international rugby.

  Q373  Chairman: I was looking at the Green Paper, and, although it is obviously not a minority sport in a whole-UK way, it sounds as though it is veering into a minority sport in Scotland.

  Mr Munro: Its numbers have been declining in Scotland for some time. Our biggest challenge, quite frankly, apart from the financial problems that we have, is to grow the numbers of people we have playing the game.

  Mr Moffett: I think there are some issues that underline some of the significant differences between us, especially with a very powerful union like the RFU. We have a particular player development policy in Wales, in that we want to bring our own players through. We actually would like to see a time when we do not have any foreign players playing for our professional teams, because in Wales we are about three things: Wales, Wales and Wales. We need to have enough cash and enough money to be able to do that if we are going to do it successfully. It is how you use your money. I am very critical of football in this country, because the Premier League is a league played in England, it is not an English premier league. I think that is something that we are definitely trying to guard against. I know that in the RFU—although you can speak for yourself—from discussions I have had with Francis Baron and with Paul over the times, there is an issue to address there. If they are going to do that and we are going to do that, it is going to take money, to be able not only just to play the existing players at that level but also to bring up all the other players that you want to bring up through the academies. To do that, you need money. I did spend nine months in Sport England. Sport England provides the RFU with quite a lot of money for their academies, but we in Wales do not get much support at all, so we have to get it somewhere else. For us, because of the nature of our small country and what-have-you, it is largely BBC sponsorship and gate money.

  Q374  Lord King of Bridgwater: One of the interesting points is to do with devolution. One of the arguments for it was that things like sport would tend to do rather better in devolved administrations than they do under a national government, but you are saying it is not happening well. You do not have to answer that! It is a complete aside. One of the interesting things that came out of your evidence is that the broadcasting revenue you get does not represent quite such a disproportionate part of the income as it does in cricket. Was it 26 per cent?

  Mr Vaughan: Twenty per cent in England.

  Q375  Lord King of Bridgwater: Is that the sort of figure otherwise?

  Mr Moffett: About 33 per cent.

  Q376  Lord King of Bridgwater: Talking just about how the BBC approach their negotiating on this, they presumably have one ticket in their advantage, which is that they can make it possible for you to get higher sponsorship income than would come under the satellite range because they deliver to a bigger audience and therefore the sponsor is prepared to pay more for it.

  Mr Moffett: I do not think that is true for us. Certainly an ability to get a sponsor is enhanced by being on the BBC, because, as I said earlier in my evidence, we suffer from not having large companies in Wales that we can actually get into. We are competing with these guys for their sponsors, because we have to come into England to get a sponsor.

  Mr Vaughan: Certainly terrestrial coverage does enhance the value to a sponsor, but it is the relative value. That is where we are at the moment. If you take Guinness, who have come into the premiership—which is purely on Sky television currently—most of their value is derived through the written word and newsprint. That is quite interesting in terms of how you look at the relative value, because everywhere you look in terms of the papers it is always "the Guinness Premiership". It is on Sky, where they probably have an average of, say, 100,000 people watching per game, every live game, but there is a lot of it. If we were to take the Guinness premiership and put it on terrestrial television, I am pretty sure that the value of sponsorship that Guinness actually give to the premiership currently will not increase dramatically.

  Q377  Lord King of Bridgwater: We are getting a bit of a flavour here as to whether the BBC, in the bidding process and knowing what they really want to go for and how to go about it against competition, are finding that they have one or two problems. Are you prepared to talk about their impressions of their abilities and whether there needs to be some review? I am talking about television but radio as well, in which it is said that the people ought to review the ways in which the BBC goes about its bidding.

  Mr Moffett: From our point of view, radio does not really represent large sums of money. We just add it on to our total broadcasting contract. I think that there are lessons that the BBC have to learn about negotiating. That was never more evidenced than in the negotiations for the European Cup, when there was a deal to be done at one stage and there was perhaps a less than aggressive attitude taken. It was a competition that they should not have lost because of all the other benefits that they can give, but I think they perhaps set a figure in mind and they were not going to go past that. Normally, it is not an exact science, trying to get the money for television rights, it is completely inexact. It is a matter of what you can negotiate.

  Q378  Lord King of Bridgwater: You used the phrase "the market price" which I was interested in. I wondered if there really was one.

  Mr Moffett: Well, the market price for anything. I am trying to sell my house at the moment, and I have got it up at this level and nobody is coming to look at it, so I have got to see if I can—

  Q379  Lord King of Bridgwater: That is what you discover.

  Mr Moffett: Through negotiating, yes.

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