Select Committee on BBC Charter Review Minutes of Evidence


Examination of Witnesses (Questions 1080 - 1099)

TUESDAY 6 DECEMBER 2005

Mr Mike Darcey, Mr Vic Wakeling and Mr Martin Le Jeune

  Q1080  Lord Maxton: I can see with a World Championship boxing fight which you are showing live, probably on pay-per-view at three o'clock in the morning because it is coming from Los Angeles or somewhere in the middle of the States, you do not want highlights being shown at eight o'clock in the morning, would I be right, because that would be the first time most people would see it?

  Mr Wakeling: That is a very good example. We would not want highlights being shown.

  Q1081  Lord Maxton: So you would insist on exclusivity on that, would you?

  Mr Wakeling: If it was pay-per-view, certainly. With pay-per-view boxing from the US we insist on a seven-day window.

  Q1082  Lord Maxton: So nobody can show that fight on anything at all.

  Mr Wakeling: Under the code of agreement on user access people do tend to show the knockout.

  Q1083  Lord Maxton: This leads me to a question where I think mobile phones is only one of the new technologies, the other will be streaming down on broadband the internet services. Where do you stand on that? It is very difficult to insist on exclusive rights. If someone is sitting in the audience with a video camera and a mobile phone and is beaming it straight down onto his computer and then out to anybody who wants to pick it up, how do you stop that? You cannot.

  Mr Darcey: I do not think there is much we can do about that.

  Q1084  Lord Maxton: I presume so far it has not happened.

  Mr Darcey: It may have happened but it has not been so prevalent that we have had cause to worry about it a great deal. On streaming, I think the way the sports rights market is moving is towards a general understanding that it is not particularly meaningful to define live rights differentiating by technology.

  Q1085  Lord Maxton: The English Rugby Union witnesses last week were quite clear that that is what they were doing.

  Mr Darcey: I am saying that the general trend is to think about there being a live right and not to worry so much about what is the nature of the distribution technology and the nature of the screen upon which it would be displayed. Very few people today sell satellite rights distinct from cable rights distinct from DTT rights.

  Q1086  Chairman: What you are saying is that, if you take football as a simple example, it is really up to the league or whatever football body it happens to be whether they sell you exclusive rights or whether in their judgment they think it is better (for which they would not get such a high price) for them to sell you live rights and then the BBC could have Match of the Day in the evening, are you not?

  Mr Darcey: Yes. We do not particularly insist on anything. Very common would be, as Vic has said, two bids. If they want to weigh things up then we would say, "This is the amount we would pay if we had total exclusivity. We understand you might want to sell some highlights. This is the amount we would pay for just the live rights," with the highlights being elsewhere and the decision is left to them.

  Mr Wakeling: As far as all football contracts in this territory are concerned, with the Scottish FA, the English FA, the Premier League and the football league, they have all said there will be a highlights window.

  Q1087  Chairman: But that is their decision.

  Mr Wakeling: Yes.

  Q1088  Baroness Howe of Idlicote: Mr Wakeling, you gave a slight indication of surprise at something the BBC had done by way of bidding. Put yourself for a moment in the BBC's shoes, how would you evaluate your own way of bidding given that they have certain rights which mean people overwrite yours?

  Mr Wakeling: I think I said the BBC was surprised when they lost the cricket rights to Channel 4 six years ago. I think I said I was surprised that they had chosen not to bid for live matches and highlights this time round. I have been in business a long time as you can tell, but I am not sure I can put myself in the BBC's shoes because I do not know how they work. I have worked before Sky within commercial broadcasting. I do not know how they put a value on anything. I do know that they went public in advance of the last round of cricket bidding. Peter Salmon, who was head of sport at the time, gave an interview to the Guardian and said that—this was in advance of the ECB bidding—they envisaged having problems with the scheduling of cricket, and it is difficult. I make no criticism of the BBC whatsoever. It is extremely difficult to schedule cricket. You are never quite sure when it is going to finish or when they are going to play either. I have a lot of sympathy with them, but I am not quite sure how they can put a value on the rights.

  Mr Darcey: This is a general issue for all of the commercial broadcasters. We are all reasonably straightforward in the commercial world in that we are all trying to make a buck in a sense and we think about the amount we would bid for a set of rights according to the value we think it can add to the business. When we think about ITV and what we might have to bid to outbid them, we are reasonably comfortable that we can analyse their business, estimate how many viewers they will get, how much they would sell the advertising for and so on and reach a view, but when it comes to the BBC all that rather breaks down because they have quite a very complex set of objectives that they are trying to meet. We find it much harder to be able to predict what value they might end up putting on a particular event. I suppose that must lead to many commercial broadcasters sometimes being surprised at what they choose to bid, either high or low, but in a sense we are saying relative to the value a commercial broadcaster would put on that that is a bit odd, but I do not think it means it is wrong, it just means that they are applying a very different thought experiment to the whole equation.

  Q1089  Baroness Howe of Idlicote: Given that they have a duty to provide coverage for the licence fee payer, I think what one is trying to find out from you is whether the priority they give to sport is a high as it should be given that overall duty because there certainly was some criticism of their rather low bid under those circumstance.

  Mr Darcey: I think it is very hard for us to put ourselves in their shoes. They have a very complex set of things they are trying to achieve and different objectives. They have an extra one that we do not ever really have to think about that much and that is, if they want to assign some money to one idea, because they have a fixed income they really have to work out where the money is going to come from, so they have to work out what is going to lose out or what else they might have done and they are not going to do, whereas a commercial broadcaster tends to think of things incrementally. The Charter will set down what are the objectives that they should pursue and then I tend to think it is for the management of the BBC to think how they will allocate their money to deliver those objectives.

  Q1090  Baroness Howe of Idlicote: Let us put it the other way round. Supposing by your standards they bid ridiculously high with public money, do you think there ought to be some sort of independent review of how they go about their bidding processes?

  Mr Darcey: No, not particularly.

  Q1091  Baroness Howe of Idlicote: You mean you have never felt cross at the thought that they had bid far too high?

  Mr Wakeling: You might be disappointed to miss out on something but I do not think that necessarily means you are asking for an intervention. The Charter is really the period when people have a debate about what the BBC is for, what it should do, what are its priorities and then a licence fee settlement is reached, and they are given a degree of funding and then the management choose how to allocate that money to meet those objectives and I guess that is just part of the background of operating in the UK.

  Q1092  Chairman: You do not want them to put any more priority into sport, do you, otherwise they are going to end up outbidding you in a number of areas?

  Mr Darcey: Possibly, but that would probably leave some gaps somewhere else.

  Q1093  Baroness Bonham-Carter of Yarnbury: You talked earlier about ITV developing sports services. What would your response be to a BBC channel that was dedicated to sport?

  Mr Darcey: I suppose that would probably depend on what sort of sports channel it was. Are you thinking this is a channel that is going to a make a £1.2 billion bid for the Premier League or are you thinking it is going to show regional volleyball? There is quite a spectrum.

  Q1094  Baroness Bonham-Carter of Yarnbury: I would imagine it would be a channel that would cover the areas that you cover. What would its likely market impact be?

  Mr Darcey: I think we have a channel that covers the areas we cover; it is called BBC One and BBC Two. I am not clear how you think this would differ from the sports that they currently cover.

  Q1095  Baroness Bonham-Carter of Yarnbury: It would only show sport.

  Mr Darcey: Are you thinking sport is going to transfer from BBC One and BBC Two or is it just going to do more?

  Q1096  Baroness Bonham-Carter of Yarnbury: Both, I suspect. We are talking about the future where there is the opportunity for a BBC digital channel that dedicates the channel to sport. What is the likely effect that would have on your services?

  Mr Darcey: I would go back to my previous answer and say that we have a Charter that will say what the BBC is for, what it is trying to achieve, it will have an allocation of money and it will decide how best to allocate that money to deliver the objectives. If the management decides that the one thing they should do is bring forth a new channel then I am sure they will do that. I suppose all we would really say is, as for other new services that the BBC might propose, it would go through a market impact assessment and, as we have said in our earlier evidence, we would urge that that would be carried out by Ofcom, so there would be an independent review of the impact on them, but if it then passed through that and operated according to a tightly defined licence then that too would become part of the backdrop of operating in the UK.

  Q1097  Baroness Gibson of Market Rasen: I want to be absolutely sure what you are saying because I am finding it very, very strange. You are actually saying to us that it is only at the time when the BBC Charter is under review that you are thinking about the possibility of the BBC having a dedicated sports channel, are you? It is not part and parcel of your marketing of Sky because Sky is associated with sport. You are giving me the impression that you do not think the BBC would do it but, in any case, you only think about it at the time the BBC Charter is being considered.

  Mr Darcey: No, I do not think that is quite what I am saying. I am saying that the main point at which we have a major debate about what is the general scope of what the BBC should do is at Charter time and then in the meantime they tend to discharge that. I tend to think it is for the management to take a decision day-to-day on how to spend the money and discharge their obligations and meet their objectives. There are provisions for what should happen if the BBC want to propose the introduction of a new service and that would have to have a service licence. We think it should have a market impact assessment and we think that should be carried out by Ofcom. It should then have a very tightly defined service licence and it should stick to that, but a proposal, whether it be for sport or whatever, passes those tests so I guess that is part of the framework.

  Q1098  Lord Peston: In the end you provide very good sports channels and certainly people with my type of income could not remotely call them expensive. Whether you are talking about Test cricket in the last couple of weeks and our ludicrous performance or some of the other things, it did not cost very much for me to suffer! Could you not argue that it should not be the BBC's highest priority, being a public service broadcaster by definition, if you are doing a reasonably good job, to be doing your job? We are not pressing you too strongly. Although one would like to see more sport on the BBC, no one could say you are not doing a fair job.

  Mr Darcey: In the scenario we are talking about here that would come in in a market impact assessment and I think part of that would be what public value would be created by such a channel given the framework and the background of what other people are doing and a view would be reached as to that and a view would then be taken as to the impact on the rest of the market and whether there were negatives there that might flow from that. I think we would like it to be Ofcom who would weigh those up and decide whether that should go ahead. Within that process we would make our views known and we would make observations about whether such a service was wanted and whether it would deliver public value given what was already available and so on. I would distinguish that from just a decision day-to-day of the BBC as to what to spend on particular sports rights to put on BBC One.

  Q1099  Lord Peston: I want to take us on to what you call minor sports and we have called minority sports, which I think is the wrong expression because I am pretty sure every sport is a minority sport in the sense that no one has ever had more than half the population to watch anything. I think your term minor sports and what you include are right. You say 30 per cent of your coverage is dedicated to minor sports. I take it that means time rather than audience.

  Mr Wakeling: I am never comfortable with minor or minority because if you are a badminton player it is a very important sport to you. Badminton is one of those sports that the BBC walked away from in the All England Championships which they covered for years and that are now on Sky and we cover it live wall to wall for three or four days. In our submission we say it is something like 100 minor sports in the year. A lot of those we are covering live but others will be in sports magazine programmes which are scheduled. I think there is some sailing on tonight and some powerboat racing on tomorrow morning, half-hour programmes and half-hour signals. You will then get various other hour programmes, for example Transworld Sport, which is also on Channel 4, which will have reports of various sports around the world. You will have features on sportsmen and on taking part whether it be in BMX or croquet. We actually cover bridge. Last year we did six one-hour recorded programmes covering a bridge tournament. I am not quite sure if you can classify bridge a sport. There are people who are interested in it as a past time and we thought in the middle of the afternoon or in the morning—because we repeated it three times in a 24-hour window—there would be people interested in that. We do try and cover as many sports as possible because there is huge interest.


 
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