Examination of Witnesses (Questions 1160
- 1179)
WEDNESDAY 7 DECEMBER 2005
Mr Andy Duncan and Mr David Scott
Q1160 Lord Kalms:
A slight twist on the same question. The BBC has an obligation,
does it not, to bid against everybody for certain sporting events?
Do you think it is compatible with its obligation that it is always
high competitive against people like yourselves? Does the BBC
fulfil its public service obligation by being very competitive
in its bidding? Can it get around the problem of its obligation
to bid?
Mr Duncan: My own sense is that it is valid
for the BBC to do sport and to bid competitively to try to secure
sports. That seems to me a perfectly reasonable thing for them
to do. They are in a privileged position. They are able to put
a lot more money in than might necessarily be economically justified.
Where they perhaps need to be careful and where it can have an
impact, radio is probably quite a good example of this, is where
the funding of BBC Radio is at such a vast level compared to any
other radio anywhere else in the world. BBC Radio is very good
quality but there is very little public service competition for
that and it would be almost impossible for somebody to come in
and perhaps secure the sports rights on radio given the amount
that the BBC will pay for football or cricket and, regardless
of how well you think they might do it, if you take the television
equivalent with cricket, the competition there really stimulates
them to do a better job than for some of the rest of their sports.
They need to be careful there, but I am not sure that you can
prescribe that the BBC should keep out of something just because
Channel 4 is trying to go for it, for example.
Q1161 Lord Kalms:
Could you twist this around? Could you say that as long as those
sporting events are in the public domain on free-to-air or some
of the other media such as Channel 4, why should the BBC artificially
compete? Is it because the BBC feel they have to have it on their
channel? In other words, they are creating a market for a product
which they might not necessarily need but it might mean the consumer,
the listener or the viewer, can have their product. Is it a slightly
artificial pressure on that sports event?
Mr Duncan: There is an element of truth to that.
To be very specific, if the BBC got there and I do not think they
are quite there but they almost got to the point, if the BBC were
of the mindset that says "We must get sport no matter what
and we are prepared to pay whatever it takes to get it",
that would have an impact in artificially inflating the price;
that is definitely true. Probably the move they made over the
last few years to strengthen their sports portfolio was appropriate,
but they probably have adequate sport now and if they were suddenly
to decide they wanted to do even more, that would probably be
quite distorting in terms of the market.
Q1162 Lord Maxton:
I am a bit confused about this public obligation to show sport.
If you do have and the BBC do have it, it is to encourage people
to take part in sport for the general health of the nation. Otherwise,
if you are just putting on football matches between two bunches
of foreigners, it is as much an entertainment as putting on a
play or putting a film on really. You are not necessarily encouraging
anything. If that is the public obligation on you to encourage
people to take part, have you looked at minor sports? Probably
as many people play badminton and squash and sports like that
throughout the country as play cricket. Do you ever think about
putting these minor sports on? It is relatively cheap to purchase
the rights, in fact some sports may even pay you to put them on.
Mr Duncan: We have had a tradition over time
of trying some rather unusual and interesting sports. There was
clearly a period when we did the American Football quite successfully.
We actually do a very interesting range of sports that run overnight,
extreme skateboarding amongst others. There are some quite niche
and minority sports. We had a serious go at covering the World
Rally Championships two or three years ago, a big investment which
did not particularly work; audiences did not come to it. You get
back into some of the same kind of economic problem.
Q1163 Lord Maxton:
American football and rallying is hardly high participation sport
in Britain.
Mr Duncan: No, not particularly, but you are
back to some of the same economic issues, to take your badminton
example, because you would find audiences were extremely low.
This is the truth.
Q1164 Lord Armstrong of Ilminster:
I was wondering whether the European Commission's reform of the
sale of Premier League broadcasting rights was going to present
a genuine opportunity for terrestrial broadcasters to acquire
live rights.
Mr Duncan: The decision that was made was rather
disappointing. The situation where effectively five out of six
packages can still be bought by one broadcaster has not forced
the extent of sharing that one might have anticipated or hoped
for. We shall look at it. It is very unlikely that we should be
able to justify paying the sort of money that will be needed to
secure one of those packages. Most people think that Sky will
bid very heavily to get the five packages. They even said to you
yesterday and it was reported in the papers today that they would
be prepared to pay virtually the same for five of the six packages.
I am sure others will look at it, including the BBC and ITV. If
you are only able to get 23 games, it is hard to do much with
that in terms of really promoting it or driving a business. Presumably,
somebody will pick up at least one of the packages, but it is
quite difficult.
Q1165 Chairman:
Do you regard it as a sort of victory for Sky?
Mr Duncan: I should have thought, given some
of the possibilities that have been talked about, they would have
been very satisfied with the eventual outcome.
Q1166 Chairman:
We talked to Sky yesterday and I am not sure they were particularly
informative on this point. Did you do any lobbying yourself on
this issue?
Mr Duncan: No. We did not have a serious interest
in bidding for the football. It is something we shall look at,
but other broadcasters made various noises along the way. Obviously
ITV and NTL put forward a suggestion of wanting to bid for up
to half the matches. But no, this was not something we were lobbying
behind the scenes on.
Q1167 Lord Peston:
It looks as though the Commission, having talked very loudly on
the desirability of competition, suddenly lost their nerve on
the six packages. I was astounded that they would allow that;
to be able to sell five just makes no economic sense at all. Would
there be any possibility of more than one terrestrial channel
jointly bidding for one of the remaining packages? Would that
make any economic sense to you or to the BBC?
Mr Duncan: Back to the point, even having only
one of six packages is quite hard to properly utilise as one broadcaster,
so the idea of further splitting that and sharing would make it
even more problematic. Football is quite complicated because you
have also got the FA Cup, the Champions' League, international
matches, big tournament events like the World Cup and the European
Cup, so if you are ITV and you are showing some other football
anyway or if you are the BBC and you are showing some other football
anyway, I cannot speak on their behalf but I can imagine that
you could think about how it is part of a wider football proposition.
For Channel 4, we do not show any football now. We used to show
Italian football.
Q1168 Lord Peston:
It was a marvellous way of showing it, if I may say so. Bravo
are nowhere near your league.
Mr Duncan: We are looking at it, but it is hard
to see that with just 23 games you can really do enough.
Q1169 Lord Peston:
You were talking in terms of a kind of halo effect, when you were
going back to the test cricket: it created a vision or view of
you and that was part of the pay-off. Do you not think that might
happen with one of the Premier League packages or something like
that? Obviously you have thought about it.
Mr Duncan: We are looking at it. We are yet
to conclude whether we are going to bid and if so, on what basis
we bid. It is less enticing than it might have been, given the
decision that was taken by the Commission.
Q1170 Chairman:
If the Commission had given half and half or some other proportion,
you would have been more persuaded, would you?
Mr Duncan: It would have opened up many more
options including partnership options and really given ourselves
and other people more opportunities to do something very imaginative.
Q1171 Baroness O'Neill of Bengarve:
May I turn to the system of listing events? Do you think the present
lists are reasonable? Do you think the criteria for compiling
those lists are reasonable, or would you like to see them change?
Mr Duncan: DCMS have said they are going to
review listing over the next two or three years. Our view is that
would be a sensible thing to do. We have not particularly spent
a lot of time thinking through what changes, if any, are necessary.
Particularly given the recent controversy over the cricket, it
would be a good time to dust them off and take a view. The listing
of some crown jewels is very important.
Q1172 Baroness O'Neill of Bengarve:
But you do not have a wish list.
Mr Duncan: No, not that we have formulated at
this stage.
Q1173 Chairman:
Do you have criteria? Do you have a sort of definition of the
crown jewels?
Mr Duncan: To be absolutely honest with you,
no. Ultimately, it is an issue for Government to work out, but
the basic principle of having some listed events is a good thing.
A serious piece of work has not been done on it for a number of
years and, given how much technology has changed and the whole
digital environment has changed, a debate back to first principles
would be a very good idea, but we literally have not spent any
time on it whatsoever.
Q1174 Bishop of Manchester:
May I take up a point you made earlier this morning when you were
enthusing about regional development and you mentioned several
places, some of them relatively small. You did also mention Manchester.
Forget I am the Bishop of Manchester, because I want to be absolutely
fair on this one. When the BBC came to us, on several occasions
they emphasised their commitment to the move to Manchester. They
have also emphasised how that will depend upon the appropriate
licence fee being agreed. At various stages during our meetings,
it is fair to say we have all expressed some concern about aspects
of the proposed Manchester move, for example, there have been
some real worries over the cost, particularly the early figures
that we were given and whether or not that is actually an appropriate
use of the licence fee and whether we ought to be protecting the
interests of the fee payers by saying that is too much. Then there
are the fears that if you move departments up to a region, you
also move them away from what, rightly or wrongly, could be regarded
as some of the corridors of power in London. Then there are all
the domestic upheavals of people, with all their fears about what
it must be like living near the North Pole and all these sorts
of things. It would be interesting first of all to find out from
your viewpoint as Channel 4 what you feel about that proposal
by the BBC. Just forgetting for the moment how that might fit
in with you, as a professional company, what do you think about
this move?
Mr Duncan: I went to university in Manchester,
so I am quite proud of Manchester. I was also involved in the
Manchester project when I was at the BBC. From a Channel 4 point
of view, our perspective is that it is actually a good thing that
the BBC are looking to invest significantly outside London and,
being party to the debates which took place two or three years
ago, I think that having one strong centre does make more sense
than trying to spread it too thinly. The broad thrust of the Manchester
proposal is a very good thing. I should say that there are two
very significant points. One is that it should not be a Manchester-only
solution, going back to the earlier WOCC debate. If Manchester
is part of a broader strategy to help the BBC really broaden out
from its over-London-centric approach, then that would be very
good; if it is a Manchester only thing, then it is a big opportunity
missed. Given that all licence fee payers across the whole of
the UK pay for the BBC, to have a broader spread like that does
make sense. In particular, the North of England is a real weak
point. The second thing is, being very blunt about it, that the
costs are far too high. I think the BBC are involved in some licence
fee negotiation tactics. You could be much smarter and much more
sensible about how you could really build, creatively and imaginatively,
the sort of centre of gravity around Manchester, perhaps in conjunction
with the independent sector, perhaps opportunities for cooperation
with the likes of ITV who have a centre there. Certainly compared
with some of the figures I saw before, they look very high indeed
and it is a classic BBC Rolls-Royce, "We'll have a completely
spanking brand new office and we'll ship thousands of people up
there". From a commercial perspective, if you were Channel
4, you could probably pull off something more creative, more imaginative
at a fraction of the price. They should be supported in doing
it, but they should be pushed very hard on how much it really
costs and they should be encouraged to do it in a way which really
tests their commitment to partnership.
Q1175 Bishop of Manchester:
May I now take up something you said in providing that answer.
You were referring to "sharing" and of course having
this shared hub is meant to be one of the key features of the
move. You did say earlier this morning that the BBC are not really
very good at cooperating. You said in fact that there are not
many good examples of sharing activities. That does not sound
hugely hopefully prophetic given their plans. Could you comment
on what you feel their ability is, given past evidence, to produce
the hub that will really work and would Channel 4 in any way benefit
from that?
Mr Duncan: On the first point, my sense is,
particularly given the amount of money that they are requesting
against it, that they have had several years of debating and discussing
it and very tangible concrete plans should be put on the table
now and they should demonstrate very clearly and very vividly
how the partnerships would potentially work. It is a very, very
good test case to see whether this commitment to partnership is
something they really mean or whether it was just fine words during
the Charter renewal process. Before any licence fee is set next
summer, whenever the time period is, the BBC should get that money
subject to putting a very clear plan together illustrating that.
As far as Channel 4 are concerned, we are a kind of very lean
mean organisation. There are only 900 people; less than the old
BBC HR department. We do not have regional bases as such; we source
our programmes from all over the country. Our prime interest would
be how this could be used to help nurture the independent production
sector in the North generally, not just in Manchester. Certainly
indirectly we benefit from that: whether there are any direct
cooperation benefits is less likely. ITV have just walked into
the room, but I can imagine that there are more opportunities
for them because they have a physical base there.
Q1176 Bishop of Manchester:
On the whole do you think it is a workable idea?
Mr Duncan: It is a really good idea. It is one
of the most important ideas in the Charter. It is an incredibly
important opportunity. To repeat myself, it should be part of
a broader strategy to broaden outside London, including the WOCC
point from earlier, and it should be done more cost effectively.
Q1177 Chairman:
We need to get the costs right. The costs are changing almost
as we speak, but at one stage there was going to be a 25-year
payback. How many investments do you do on a 25 year payback?
Mr Duncan: None.
Q1178 Baroness Bonham-Carter of Yarnbury:
I just want to go back to our WOCC conversation. You were saying
you thought the BBC needed mandated targets for sourcing from
regional companies, but I did not quite get who you thought would
oversee that?
Mr Duncan: You have a number of options and
it depends a bit on the Government's whole debate which is still
going on in terms of the Charter. Clearly, it could be something
the Trust manages or it could be something that Ofcom manage.
I suspect they are the two options.
Q1179 Baroness Bonham-Carter of Yarnbury:
Would you have a preference?
Mr Duncan: As long as they actually stuck to
the target and were given a target, then no, it would not matter.
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