Select Committee on BBC Charter Review Minutes of Evidence


Memorandum by ITV

1.  INTRODUCTION

  1.2  ITV welcomes the opportunity to provide further evidence to the House of Lords Committee on BBC Charter Review. This paper follows our previous submission which focused primarily on the key issues concerning the BBC's scope, remit, market impact, funding and Governance.

  1.3  The particular issues that the Committee wishes to focus on are all important, and in response to these specific questions ITV has a particular interest in the future of regional broadcasting, as well as in sports rights and the BBC's relationship with the external production sector.

  1.4  Since the first call for evidence there have also been a number of announcements made by the BBC regarding its future plans for growth across the new media space. These announcements raise a number of serious questions reinforcing the importance of ensuring that the proposed BBC service licences and the new independent market impact assessments are effectively introduced and enforced. In addition, the Government's focus has now moved to setting the level of the licence fee. The BBC has tabled an aggressive pitch for a licence fee progressively increasing by twice the rate of inflation for a full seven year period. Yet, there has been relatively little debate about the amount of funding the BBC requires in order to fulfil its specific public service duties.

  1.5  Given the importance of these issues, ITV's comments on the Committee's specific questions should be seen in the context of the wider need for the BBC to be more accountable and transparent, its duty to compete fairly and for its funding to be matched to the BBC's needs.

2.  THE BROADCASTING OF SPORT

    —  Should the BBC have a duty to bid for certain sports events?

    —  Is the BBC too aggressive in the way it bids for sports rights? Should there be an independent review of the way the BBC bids for sports rights?

Free to air sport

  2.1  The broadcasting of sport in the UK is shared between a range of different broadcasters. The viewing public enjoys the availability of many sports events, across a wide range of channels and platforms and available free to air and on pay-TV. Certain "crown jewel" sporting events are "listed" with a view to securing their transmission on free to air television. This includes events such as the FIFA World Cup Finals, European Football Championship Finals, the Rugby World Cup Final and the Olympics.

  2.2  Sport has been a driving force behind the success of pay-TV, with Sky heavily dependent on its sports channels, and in particular on its exclusive coverage of Premier League football. However, there remains a significant proportion of the population who do not—and will never have—access to pay television, and even more without access to premium rate sports channels. Sports channels are not part of the basic channels of any pay-TV offering and the minimum cost of watching premier league football through Sky is now £28 per month. Free to air broadcasters including the BBC and ITV can therefore play an important role in making sports events available free and to all viewers.

  2.3  The European Commission is currently investigating the manner in which the FAPL sells its rights to broadcasters. They consider it detrimental to viewers and to competition for the FAPL to sell its rights exclusively to one broadcaster. Live Premier League football has been the preserve of pay television since the inception of the League in the early 1990s. Other broadcasters, including the BBC and ITV, have long wanted to bring live matches to their viewers and not simply highlights packages.

  2.4  We are hopeful that the EC investigation will result in a genuine opportunity for terrestrial broadcasters to acquire live rights. We think this will bring huge benefits to viewers and the wider game of football. After all, some 18m TV households in the UK do not have access to pay television sport.

The BBC Bidding for Sports Rights

  2.5  Many sports rights are negotiated on a purely commercial basis, with broadcasters prepared to invest significantly in acquiring rights which are likely to deliver large audiences and commercial benefit. Sky has built much of its business on its pay sports channels. ITV has the rights to sporting events such as UEFA Champions League, Formula One and boxing. ITV had the Premiership highlights package until 2004, when the BBC outbid all its commercial rivals, including ITV, by improving markedly on the market rate. In ITV's view it must be questionable whether it is appropriate for the publicly-funded BBC to outbid commercial free to air broadcasters for the rights to sports which—even without licence fee funding—would be provided free to air to all UK homes.

3.  BROADCASTING IN THE NATIONS AND REGIONS

    —  Does the BBC's proposed move to Manchester represent value for money for the licence payer? Should the BBC continue to de-centralise?

  3.1  ITV is the UK's leading regional public service broadcaster, providing more regional television services and sourcing more production from outside London than any other broadcaster. In its 50-year history ITV has developed a unique regional structure that works in two ways: through a regional infrastructure providing dedicated regional services; and by commissioning original network programming from across the UK.

  3.2  ITV is committed to moving to commission at least 50 per cent of original ITV1 network commissions from outside London, in terms of hours and spend. ITV will also invest £9 million over the next three years in a Regional Production Partnership Fund, which will fund commissions from new-to-network regional producers and development in the regions. By contrast, the BBC's commitment to network commissions from outside London stands at just 25 per cent by volume and 30 per cent by value. ITV believes the BBC's commitment to original production outside London should move in line with ITV's. After all, with well over 50 per cent of licence payers living outside London it would be reasonable for at least 50 per cent of production to take place outside the capital.

  3.3  ITV's ability to support production in the regions is, in part, underpinned by our strong regional presence. ITV has strong network production centres around the UK, including Manchester, Leeds, Bristol and Norwich, as well as London. The value of ITV Plc in the regions to the country's economy is put at 1.4 billion pounds, employing directly and indirectly some 50,000 people.

  3.4  The North-West has been a major production base since the early days of ITV 50 years ago. Today Manchester produces some of ITV's biggest programmes, including Coronation Street and other major drama, entertainment and factual programmes. If the BBC is to maintain—and increase—its support of production from around the UK it would benefit from having a stronger regional presence, with an established centre outside London. ITV is supportive of the BBC's plans to move part of its operations to Manchester and believes it can do so most effectively by working in partnership with ITV and other media organisations in the area. The creation of strong creative hubs outside London, starting with the Northwest, would be good for the sector; for the commissioning and production process for in-house and independent producers; for competition and for UK viewers.

  3.5  ITV does, however, question the costs that the BBC has cited for the move to Manchester—some £600 million. This seems extremely high and the BBC has not published any breakdown of how it has reached this figure. The BBC should be encouraged as part of its assessment of the move to justify those costs and look at cost saving measures that might be achieved by working in conjunction with other organisations based in the region. Where possible the BBC should seek to find synergies and work in partnership to make the move as cost effective as possible.

  3.6  The figures cited by the BBC for the move should also been seen in the context of the licence fee settlement. The BBC has repeatedly cited the Manchester move as part of its plea for a licence fee rising by twice the rate of inflation for seven straight years. ITV firmly believes that in reaching a decision about how much licence fee funding the BBC will need to fulfil its purposes, it should be absolutely transparent about what it needs the money for and how much it will need for each activity in which it is engaged, whether through individual service licences or other projects.

Should the BBC move towards "ultra local" services? If so, what form should such services take? Should the BBC provide stand-alone local services or work in partnership with other non-profit distributing organisations?

  3.7  ITV provides more dedicated regional programming than any other broadcaster, including the BBC. ITV provides news and current affairs across the 15 main ITV regions, and within 27 regional sub-regions. Even following recent BBC commitments to improve its regional services, ITV still offers three times the volume of regional non-news programming in English regions than the BBC. And with 27 sub-regions, ITV also offers more regional news services.

  3.8  Regional news remains the most valued aspect of regional broadcasting, as demonstrated by Ofcom's public service television review. The review also showed that viewers would value more local services. Technical limitations and cost have previously made it extremely difficult for local and ultra local services to be rolled out. However, the internet, broadband and access to digital spectrum mean that it is now possible to provide services at a much more local level. ITV is trialling its own broadband local service at present in Brighton and Hastings. As part of the trial users will be offered a local television interface for viewers, including local news and weather, community activities, travel and property advertising and ITV entertainment content. As a commercial service we are also trialling advertising for local businesses as well as local classified ads.

  3.9  The BBC is also engaged in a number of trials for local services. ITV welcomes competition in this area. Just as competition in news and regional services was important in the analogue world, plurality of supply should be supported as far as possible in the digital world. But in launching new local services the BBC should have regard to competition with other providers. This further supports the need for market impact assessments of all new BBC services to ensure that the BBC will not be encroaching on services already offered by the commercial sector, but rather that commercial and BBC services can co-exist.

  3.10  Ofcom's public service television review also identified the potential threat posed to regional broadcasting on ITV in the coming years. Unlike the BBC, ITV relies entirely on commercial funding for its regional services, the cost of which outweighs the total of Channel 4 and Five's public service obligations combined. Regional broadcasting is hugely expensive as, by its very nature, it entails the duplication of regional and sub-regional production for each single network slot. ITV invests around £150 million in regional broadcasting every year. Ofcom has identified the risk that with switchover the benefits of public service broadcasting, and most starkly regional broadcasting, will be outweighed by the costs. If plurality of high quality regional supply is to be maintained in the digital world, ITV believes consideration should be given to public funding being made available to commercial regional suppliers to compete with the BBC, preventing it becoming a monopoly regional supplier.

4.  RELIGIOUS BROADCASTING

Do different faiths (including no faith beliefs) figure sufficiently in BBC programmes and services?

How should faiths be represented in BBC programmes, services and governance?

  4.1  Religious programming has always featured in the schedules of public service broadcasters. Programming includes coverage of religious acts of worship and programmes about faith and inspiration and moral and ethical issues. Faith and religion are also reflected in news and current affairs output, and at times is incorporated in mainstream factual and drama programming. ITV is currently committed to broadcasting 52 hours of religious programming a year, which includes four acts of worship. In its Statement of Programme Policy for 2005 ITV said it would seek to make its religious programming more accessible, topical and relevant. ITV is also looking to make its output more ecumenical, reflecting Britain's multi-faith society and those of no faith. To that end ITV has established an ecumenical revisions advisory panel. This year programming has moved away from traditional Christian worship to programmes like Rageh Omaar's Tsunami Journey in which he travelled to Tsunami-hit countries to talk to people affected about how the experience affected their beliefs; an in depth interview with the Archbishop of Canterbury; Mosque, a series about Islam; and Parish in the Sun about the work of the Anglican priest in Mallorca.

  4.2  As the leading public service broadcaster the BBC should be the leading broadcaster of religious and faith based programming. Religious programming—particularly traditional worship based coverage—is difficult to sustain on commercial channels, as they tend to attract relatively low audiences of little appeal to advertisers. Commercial broadcasters like ITV should provide complementary and more mainstream programmes containing religious themes alongside the BBC's more traditional output. The BBC should also seek to provide religious programmes to as wide an audience as possible, including at peak time and covering a range of formats and faiths and beliefs.

  4.3  The BBC has not put enough focus on religious programming, and should take steps to increase the profile and broaden the range of religious output in the BBC's schedules, including on BBC One. The BBC Governors conducted a review of the BBC's religious output in 2004, measuring the BBC's performance against a strategy set out in 2002, with a focus on BBC One. The strategy set out a commitment to putting more religious in peak time, achieving higher impact and broadcasting more "landmark" programmes. ITV fully supported the BBC's strategy. However, the Governors' review found that the BBC had failed to deliver against these key objectives: in 2003-04 only one hour of religious programming was broadcast in peak time on BBC One. The review also found that no steps had been taken to provide landmark programmes or more impact. ITV believes the BBC should take immediate steps to make improvements in these areas to ensure that the public service broadcasting system continues to provide religious programming that is available in peak time to those who wish to watch it. The natural home for this kind of programming, away from commercial pressures and as part of a mixed schedule, is the BBC.

  4.4  This further underlines the need for Service Licences to include specific commitments to key PSB genres—including religion—for each BBC channel. Service Licences should be more akin to commercial PSB licences, which contain explicit programme requirements, and coupled with the annual Statement of Programme Policy which gives additional commitments to output in other PSB genres such as Arts, Religion or children's programmes.

  4.5  In terms of Governance, ITV believes that the Trust should represent a range of backgrounds and specialist interests. However, the Trustees should together be representative to all licence payers rather than seeking to be made up of representatives of specific interest groups. There should therefore be scope to include someone with broad knowledge of religion and faith issues to provide advice and expertise to the Trust.

5.  THE BBC AS COMMISSIONER VERSUS BROADCASTER

In the context of the digital revolution is the future of the BBC principally as a producer and commissioner of high quality programming or as a broadcaster?

  5.1  The BBC and ITV both have a long heritage of producing programmes in-house, as well as commissioning programmes from the independent sector. Channel 4 and Five source almost all their content externally. Some digital channels have in-house production capability (such as Sky and Flextech) but the value of their programming is very small compared to that of the main public service broadcasters.

  5.2  ITV commissions programmes centrally, through the ITV Network Centre. This ensures that programmes are commissioned on a meritocratic basis so that the best programmes reach the screen, whether produced by ITV producers or by the independent sector.

  5.3  ITV benefits from a number of ITV owned production companies competing for commissions. But the independent sector has also provided diversity of ideas and production formats. ITV recognises the important role that public service broadcasters (including ITV and the BBC) have to play in supporting an independent production sector. ITV—like the BBC—is required to commission at least 25 per cent of qualifying programmes from the independent sector. ITV has consistently exceeded this target, sourcing around 30 per cent of qualifying programme from independent producers. The BBC has, on the other hand, regularly failed to meet the 25 per cent target. The Window of Creative Competition (WoCC) is an interesting potential solution to the specific issues about the openness of the BBC's commissioning system and should be welcomed if it will improve the balance between BBC in-house and external programme making.

  5.4  If the WoCC is introduced as currently outlined, the BBC should ensure that it is a genuine move to diversify commissioning and support external producers. Therefore the BBC should seek to commission from a wide range of producers, including in the Nations and regions, and from smaller producers who have not had the opportunity to produce for the BBC before. It is interesting to note that ITV not only has a much higher commitment to original network commissioning from outside London, but is also committed to bringing on board new-to-network producers for ITV over the next three years through the Regional Production Partnership Fund.

6.  CONNECTING TO THE LICENCE FEE PAYER

What more can the BBC do to better involve the public in its decision making process?

  6.1  The Green Paper places the Public Value Test (PVT) at the heart of the decision making framework for proposals to launch new services or make a significant change to an existing service. The intention is to ensure that licence payers' considerations are always taken into account, by demonstrating that the proposal delivers public value and has licence payers' support. However, it remains unclear how the BBC plans to make the PVT objective. In the past the public has been invited to respond to BBC proposals, on which the BBC has made decisions to launch new services. However, the way in which public opinion has been measured in the past is questionable, as proposals have tended to be presented in an entirely positive light. In future, the canvassing of public opinion should be conducted in a more objective and rigorous way, with more emphasis on the impact of the proposal on the wider market.

  6.2  The Green Paper places a greater emphasis on the assessment of the market impact of proposed new BBC services or changes to existing services. ITV fully supports this. The BBC has the capacity to damage competition and stifle innovation in the commercial sector. This is not only potentially damaging to commercial operators, but to the public if plurality and choice are limited. The White Paper is expected to provide further details on how the public value test and market impact assessments would work. The BBC has also outlined its own vision of how the model will work, but at this stage has provided very little detail about the role of the market impact assessment and how it will weigh its findings into the decision making process.

  6.3  It is vital that the process for assessing BBC proposals is a properly balanced and objective judgement that takes into account both the interest of licence payers and the impact on competition and the market. While licence fee payers should be consulted on BBC proposals, the view of the BBC's competitors and an independent assessment should be equally influential parts of the process.

  6.4  As part of the drive to make the BBC more accountable, ITV welcomes moves to make the Trust more transparent, by publishing more detailed minutes and holding its AGM in public. However, these exercises must be more than just window-dressing and must represent a genuine attempt to make the BBC more transparent and reactive to the views and interests of licence payers, taking into account the BBC's impact with respect to pluralism and commercial competition.

7.  CONCLUSION

  7.1  Whether considering the BBC's role in regional or sports broadcasting, its public service broadcasting commitments or its relationship with the independent production sector, it is critically important that the BBC does not abuse the licence fee and that it competes fairly with the commercial sector. The issues raised by the Committee's specific areas of interest underline the need for the BBC to be much clearer in its purposes in the next Charter period. Every BBC service must be subject to a Service Licence, setting out the remit for each activity. Any proposal for a new service or a significant change to the Service Licence should be consulted on and subject to an independent market impact assessment.

  7.2  ITV is concerned that there is still some uncertainty about how the Service Licences and new approvals process will work in practice. The BBC has said that it intends to publish draft Service Licences for existing services: these are yet to materialise. The BBC has also suggested that the Trust should have some involvement in the market impact assessment: this would be very worrying as they would not be objective or independent. It would be unreasonable for the BBC's competitors to disclose the requisite commercial information to the Trust—the "sovereign body" of the BBC; this would reduce the effectiveness for the assessment.

  7.3  Through the Service Licences and agreement on other specific duties placed on the BBC under the Charter, it should be possible to set the level of the licence fee according to the BBC's needs, rather than its wants. The BBC has just published its first "pitch" for the licence fee for the seven years from 2007 to 2013.  To fulfil its duties it claims to need an above inflation settlement of RPI + 2.3 per cent, providing an additional £5.5 billion of funding over the period. The BBC has broken down the areas where it requires more funding into broad headings—quality content; digital services; digital infrastructure; local relevance and base costs. However, despite promises of greater openness and transparency, the BBC has provided very little detail about how it justifies the figures. Many of the bigger costs have yet to be agreed, for example whether the BBC should be spending large sums of public money on "navigation and search". Before the licence fee level is settled, there should be more public discussion and consultation about the BBC's exact scope and remit and a more detailed breakdown of how the BBC intends to spend the money. ITV believes that this would lead to a far more modest funding settlement than that proposed by the BBC.

2 November 2005





 
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