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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