Examination of Witnesses (Questions 1220
WEDNESDAY 7 DECEMBER 2005
Mr Charles Allen and Mr Clive Jones
Q1220 Lord Maxton:
It seems to me that the one advantage in sport that you and the
BBC have over Channel 4, Channel Five and Sky, is regional. In
other words, you ought to have the ability to show regional sport
within the regions where you operate and the BBC should be doing
the same thing. I come from Scotland and I know you have no direct
. . . It seems to me, if anything, certainly STV are retreating
from that position. They used to do rugby; they do not do rugby
any more on a Saturday afternoon. Where do the regions stand on
this? Are they providing that level of sport?
Mr Allen: We cannot speak for Scotland but Clive
manages this for England and Wales.
Mr Jones: We provide regular regional sports
programmes every Thursday night throughout England and Wales and
certainly within our regional news magazines we still provide
the deepest and broadest regional news and sports coverage of
any UK broadcaster. We are providing 27 regional and sub-regional
news services. Whether it is rugby, whether it is athletics, whether
it is the Premier League clubs or the championship, we are already
providing detailed information and match coverage.
Q1221 Lord Maxton:
Do you cover rugby in Wales along with BBC and S4C?
Mr Jones: We bid for the rugby in Wales. The
rights are currently held by S4C and the BBC.
Q1222 Lord Maxton:
You did bid for them.
Mr Jones: We did bid for them. It is quite a
small market. You are talking about 2.5 million people, so the
rights went for quite a high sum of money.
Q1223 Baroness O'Neill of Bengarve:
Do you find the current system of listing adequate for the listed
events which do come free-to-air and which are guaranteed free-to-air?
Do you like the list? Do you like the criteria the list is based
on? Do you think there is a case for reviewing it?
Mr Jones: In general terms we are happy with
the listed event structure. I was somewhat surprised that test
cricket came off the listed events list and it is somewhat ironic
that after the Ashes victory probably more people were watching
test cricket on terrestrial television than had done for many,
many years. It is now going to disappear for quite a long period
of time, apart from the highlights on Channel Five. One does not
blame Channel 4 or the BBC for that; it was a direct result of
lobbying by the England and Wales Cricket Board. They wanted them
removed and as a result they were removed. If there is an issue
around that it should be raised with the England and Wales Cricket
Board. Largely what the list does is identify and protect the
crown jewel events going forward, the world cups, the European
cups, the rugby world cups, the Olympics and ensure that these
are generally available to the mass of viewers because they are
great big landmark events which unite and excite the country as
Mr Allen: You need to have a more public and
robust process when you are delisting events. That just passed
us by; nobody picked up on it until it was too late. There needs
to be a far more public process which says when an event is being
considered for delisting. The public then are able to comment
on it and there is a more robust process. I just do not feel the
profile is high enough.
Q1224 Baroness O'Neill of Bengarve:
And the other way round, given that test cricket is lost from
it at the moment. Do you think there should be a public process
for considering listing events not currently listed?
Mr Allen: Yes, I should be happy with that.
That would be an interesting way to look at it and would work
well. Reflecting on why we ended up where we are and why this
is an issue, I am a great believer in public consultation, because
you will get everybody's view through that process and nobody
can then say that they did not know or did not understand. If
it is behind closed doors and lobbied, you would not get it all
out in the public domain. I do think your suggestion would also
be a good one.
It is quite difficult, is it not, to define these crown jewels?
You are the second witness today who has actually referred to
them as the crown jewels. Wimbledon tennis finals and the Derby
are in the crown jewels category, but you find that the Commonwealth
Games are not in the crown jewels category and test cricket as
well of course. Are the difficulties of definition so great that
it is really not worth pursuing this?
Mr Allen: That could be overcome with public
debate. If the debate were to say that the Commonwealth Games
should become a listed event, then that is how you should approach
it. From a purely commercial perspective the Commonwealth Games
are very valuable if they are in a decent time zone and they are
not very valuable if they are not in a decent time zone. I know
that. The Commonwealth Games in Britain was fantastic for the
BBC because they were held in Manchester. They will be much less
valuable now they are going to be in Melbourne next year. That
is why it can be great. What is interesting is that if that were
the debate which was being had, a number of you wanted to do it,
you would have the debate and then all parties, all interest groups
would be able to comment upon it and flush through exactly the
point we have just made to you.
Q1226 Bishop of Manchester:
I was just looking at what Mr Allen was saying on our last occasion
with you. You referred to the BBC's proposals and said that it
was a great opportunity, a fantastic idea and you passionately
believed in it. Since then we have all had the cold shower of
financial details, or seeming details. Do you feel that the BBC
is playing a bit of a game over this in terms of negotiations
for licence fee, or, to put it in another way, what would you,
as a proven operator in this sphere, reckon the costs ought to
be for the move by the BBC to Manchester?
Mr Allen: I absolutely stand by what I said
last time; it is in Britain's interest for there to be a centre
of excellence which would host the BBC, ideally ITV, we should
like to work with them, the independent sector which services
Channel 4 and Channel Five, in what I would call a creative hub
in the North West. If the BBC have enough money, will they want
to do it together? I would question that. I do think, however,
that it is still the right thing to be done and it would be a
great move for the North West as such. The second thing is that
I also believe that the BBC should be asked to do as much production
in the region as we do. We do 50 per cent of our production outside
London. It is not all about having the facility, it is about having
a code of practice or something which could be reviewed either
by Ofcom or by the Trustees and that would also make it real and
make it happen and make sure production is actually coming from
the regions as such. I cannot reconcile the figure of £600
million which is being quoted. I do not understand how it works.
I should like to see a detailed breakdown of that to be able to
answer your question in a lot more detail. I do not see any of
the £50 million which I know has been offered by the North-West
Development Agency and Manchester City Council in the funding
model. I should like to see a detailed breakdown, because I genuinely
believe that if we were working together, then we, ITV and the
BBC, could be sharing the costs and I do not see how you could
get anywhere near those figures. It would be inappropriate for
me to comment on what the figures should be, but it would be great
to see how the BBC gets to the £600 million and analyse it
in full. To go back to your final point on whether it is a tactic
of the BBC, I believe it is. We have had so many false dawns at
the BBC, trying to find the M25 up to Manchester and getting onto
the M6. This time round they cannot use the shoot-the-puppy strategy,
"If you don't give us that amount of money we shoot the puppy
and we don't go to Manchester". That is unacceptable and
I feel passionately that that is exactly what is happening. If
you talk to colleagues in the North West and people you know well,
there is a real fear that is what is happening this time around.
Q1227 Bishop of Manchester:
One of the worrying things which has come up this morning in both
the sessions that we have had in relation to the shared hub proposal
is the reputation the BBC seems to have for not being able to
share. Channel 4 said to us earlier that there were not many good
examples of the BBC sharing. Earlier on you raised precisely the
same point. What realistically are the opportunities as you see
them for sharing in this shared hub, or will it in fact end up
just as a BBC hub?
Mr Allen: We have put a joint proposal together
and put it to the BBC. We have very detailed plans for this hub
where we, the BBC and the independents share a common facility.
While we are investing in new studios, while we are investing
in new kit, surely we should be investing in a common infrastructure
which we can all use. There are detailed plans there which demonstrate
that we can work together and how we should work together as a
common facilities operation. I genuinely do not believe that the
BBC need to be in the facilities business. I am very happy for
a facilities company to operate that site, provide us with the
facilities we need, but we are all there together, it becomes
a creative honey pot. If you have young creatives and they do
not have a job in Manchester, they come to London. If you then
have us, the BBC and independents all working together, they stay
in that area, young writers, young producers and directors, and
then it works. I have not heard anything from the BBC which says
they cannot make it work. Yes, it would be unique, but it would
be a blueprint for the future.
Q1228 Bishop of Manchester:
What opportunities do you see for this kind of thing, not necessarily
in a brand new building, being developed in regional cities other
Mr Allen: There is an opportunity to do it.
You cannot have the same scale, because there is not the opportunity
to create super units. You can probably have three or four at
maximum outside London which are major production centres. A good
example would be to look at Bristol. The BBC based their wildlife
operation in Bristol. We closed our wildlife operation in Anglia
and moved it to Bristol, because that was then advantageous because
the people in this industry who knew about wildlife were then
in a central hub. There are models which demonstrate that we can
do it. This would take it one stage further and I absolutely think
that it is going to work. If the BBC have too much money, they
will not share, they will do it on their own.
Presumably the proposal you would put forward uses your site in
Mr Allen: The proposal we have put forward uses
our site, but we have also said that we would be happy to go to
other sites. They have not said it is a condition.
So there are two other sites.
Mr Allen: We are looking at other options.
It would not be a bar if they chose another site.
Mr Allen: No; absolutely not.
Mr Jones: One of the things I find quite baffling
is that ever since ITV began in the regions our major soaps, our
major dramas have always been made outside London. Obviously that
is an historical tradition with us, but also one of the reasons
we make so many of our programmes outside London is that it is
cheaper; it is cheaper to make programmes in Manchester, it is
cheaper to make programmes in Leeds and in Bristol and in Cardiff
than it is in London because of high transport costs, high housing
costs, so many other reasons. I cannot understand why moving to
Manchester is going to cost the BBC so much money and why we do
not see a discount there for them coming in.
To be fair, the cost is coming down almost as we are speaking;
certainly when we went there, there was no question that the cost
would come down, but we take the point. There is also your idea
of a regional production partnership fund. Is there scope for
a joint regional production and development fund with the BBC?
Mr Allen: We believe something is possible.
If they were given the same levels that we have, the 50 per cent
outside London, then there would be a reason for us to do things
together and you could see why that would work for them as well.
Whether it is a joint or two separate funds, we could certainly
look at that.
How would this operate in practice?
Mr Jones: We have committed £9 million
to new to network producers outside London. That can apply to
in-house producers, people who have made regional programmes for
ITV but never made a network programme, but it is equally applicable
to independent producers around the country. It only began this
year. It began through a process of commissioning editors for
this particular fund going around the whole of the UK with a caravanserai
of presentations explaining the forms of programmes that we are
interested in, the slots which are available in the various parts
of the schedule. Basically it splits into two forms: it is either
money for commissions, new programmes, or it is sums of money
for development, for training, for seed corn. It might be a new
writer who may have made a short, 10-minute film but now has ambitions
to do more and that might be money which we would put out as a
script development fee, to see whether we can move them from being
a shorts writer to a major writer. That is the way it is evolving
Q1234 Lord Maxton:
I do not know whether you heard the question I asked about teleports
and also linked that in with PVR, SkyPlus and all the other things
which are coming along. This makes your work even more difficult,
does it not? Are you negotiating with the cable companies on the
Mr Allen: Basically PVR and teleport actually
make our life much more difficult as we go forward because viewers
can choose to skip the ads, viewers can choose to go back and
look at programmes they have seen before and when they do that
they tend to skip the ads. We are quite fortunate in that we have
a high proportion of original programming and we have high volumes
of live and as-live programming. From the data we are looking
at, we are less affected than some of the couple of hundred small
channels. If you really want to watch Fools and Horses
again, it is probably on your hard drive, so we are not as disadvantaged
as some of them, but nevertheless it does have a direct impact.
Picking up the Channel 4 point, we too have a similar issue on
rights because we pay for our content in full; we give them 100
per cent cost plus a margin and the big debate coming up with
the independent sector is on how those rights are used. We are
fortunate in that we actually make a lot of our own programmes
and most of them in the regions, therefore it is not as big an
issue. Those are both issues for us but not quite as big as they
might be for others.
Q1235 Lord Maxton:
So while I, if I wanted to, and I do not, go home on Friday and
watch every episode of EastEnders I cannot do that with
Mr Allen: No, you could not, unless we got regulatory
change. Because we are currently managed on a process called contract
rights renewal, for every viewer who does not watch it on ITV1
I get penalised. Until we actually change the regulation, there
is a disincentive for me to provide that service, because I need
you to watch ITV1.
Q1236 Lord Maxton:
If I had SkyPlus I could have recorded every programme and watched
Mr Allen: That gets counted, but the other way
does not and we are arguing that what gets counted in terms of
our viewership needs to be changed and at the moment that needs
Q1237 Lord Peston:
I do not know whether you have seen the evidence we took in Manchester
from the BBC but when we put it to them that one of the whole
points of this was to save money, they flatly told us that we
did not understand them at all and that it had nothing to do with
money. Did you see that? Were you as astonished as we were?
Mr Jones: I was struck dumb. We are in the midst
of spending £45 million on completely upgrading our whole
regional news infrastructure and we are in the process of building
what will be brieflybecause it is always briefly where
technology is involvedprobably the most modern newsroom
infrastructure anywhere in the world. We have invested that money
for two reasons: one is that we think it will markedly improve
quality because it improves our ability to move pictures all around
the country; 15 seconds after pictures are ingested in any part
of the system, they will be available all around the system in
different newsrooms. Two is that it saves us money. Once we move
to a file server technology our ability to edit pictures, to move
pictures around is much, much quicker, therefore we can have fewer
people. How they could argue that it does not save them money
Mr Allen: That is why, to reiterate, it would
be fantastic to see that £600 million, or whatever the figure
is, broken down. I think we are only looking at one side of the
equation; we are looking at cost and not looking at the benefit.
What are the properties they are vacating in London? Are the BBC
able to sell them? Even if they rented properties, I can assure
you that the cost of rents is a lot less in Manchester than it
would be in London, particularly because you actually have the
North West looking to subsidise that to bring the BBC there. The
cost of labour is substantially less. We have the facts, because
we actually operate there. We were completely astounded. Our managing
director came and presented to you. When we heard that we just
could not reconcile it with the facts we have.
Without putting words in your mouth, you would be moderately in
favour of our proposal that the National Audit Office should look
at the licence bid which the BBC makes.
Mr Allen: Absolutely; I do think we need to
go through that, not only with the move to Manchester but every
aspect of these claims. We just do not understand. With the limited
information which has been put in the public domain we are not
able to get access and get a real review. It needs to go further;
it needs to go back to the existing services and review the value
for money aspect. That is why the policy of having the RPI minus
structure in place which may be reviewed in five years' time might
be a more appropriate way than an RPI plus, plus. One point I
did not make earlier was that there is always an inherent benefit
for the BBC to be based on licence fees from homes. In fixing
the current licence fee they got £300 million of benefit
because there were more homes than there were at the beginning
of the previous licence fee. That £300 million is also built-in
going forward because it is calculated as something like £380
million because there will be more homes, more single parents,
in the next 10 years than there were in the last. I do not see
any benefit; they are pretty heavy on costs and pretty light on
any form of efficiency. We should want to be as helpful as possible
and the National Audit Office have already been to see my finance
people with this in mind, actually looking at comparing and contrasting,
and we should be very happy to help to compare and contrast our
cost base with the cost base of the BBC.
Chairman: We end on a point of agreement,
which is a good point on which to end. Thank you very much indeed
for the evidence today, the evidence you gave before and the way
in which you have answered our questions. If we have any other
issues, perhaps we might write to you. Thank you very much.