Select Committee on BBC Charter Review Minutes of Evidence


Examination of Witnesses (Questions 1220 - 1238)

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 a whole.

  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.

  Q1225  Chairman: 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 than Manchester?

  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.

  Q1229  Chairman: Presumably the proposal you would put forward uses your site in Manchester.

  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.

  Q1230  Chairman: So there are two other sites.

  Mr Allen: We are looking at other options.

  Q1231  Chairman: 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.

  Q1232  Chairman: 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.

  Q1233  Chairman: 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 over time.

  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 teleport thing?

  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 Coronation Street.

  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 them all.

  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 regulatory change.

  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 briefly—because it is always briefly where technology is involved—probably 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 astonishes me.

  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.

  Q1238  Chairman: 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.



 
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