Select Committee on BBC Charter Review Minutes of Evidence


Examination of Witnesses (Questions 1860 - 1871)

TUESDAY 17 JANUARY 2006

Mr Brian Barwick and Mr Simon Johnson

  Q1860  Baroness Howe of Idlicote: Do you think they did better, say, than Sky on the promotion of women and youth?

  Mr Barwick: On the promotion of women's football, I think one of the things that is critical to it is accessibility to the largest audience. This is where the BBC will score for us in this particular area because 3.5 million people, as I say, watched the women's international. That is a fantastic number.

  Q1861  Baroness Howe of Idlicote: Do you have specific arrangements with the BBC where you agree that they will aim specifically to promote football and encourage grassroots participation?

  Mr Barwick: I think whenever you are involved in negotiations, as I must have been involved in dozens of negotiations from the other side of the table, what a rights seller must do is maximise the opportunity. Sometimes that is beyond revenue; it is about how you want your product best distributed, best portrayed, best promoted. Certainly, when we go out in 2007 to re-sell the package in the market, the FA properties, one of the things we will want is an acknowledgement that the FA has a broad spectrum of football played in many ways and we will want it supported properly.

  Q1862  Bishop of Manchester: Could I ask another question in the grassroots area in the sense that the sports department of the BBC is coming to what some might term to be the grassroots, other than the headquarters, in Manchester? Do you have a view in the Football Association about that or is it really a matter of little importance to you where the BBC sports department is based?

  Mr Barwick: I have no view personally. I am from the north of England and I moved down to London to work for the BBC. It would have saved me a train fare or two, I suppose, if it had been in Manchester in the first place! I have no view, other than that I am interested to see how it will work on a day-by-day basis. They are four or five years away from this. They have to work the practicalities through. I see no reason why it should not move.

  Q1863  Baroness Gibson of Market Rasen: As you know, we have been taking evidence and one of the things that has been quite interesting is the views on a BBC sports channel. What are your views? Do you feel that the BBC at the moment can really give you the coverage you require and need and would you be better with a BBC sports channel?

  Mr Barwick: I will allow myself a personal comment here. I have always thought that if any free to air broadcaster has the facility and ability to put a sports channel on the air, it probably is the BBC. I do not mean a premium sports channel. I think it has two genuine assets: one is its range and depth and the divergence of its portfolio. The year I left the BBC, it had 56 sports; I defy anybody to name 56 sports, but we had them. I moved to ITV and in a week we had three sports. That was the difference. In ITV the criterion was commercial return with good product in a mixed schedule. With the BBC, their responsibility I think is basically to play across the whole field. That means that they do have lot of product. Secondly, I think they probably have the best sports archive in the world. I cannot possibly tell the BBC how to run their business. I did not do it when I was at the BBC.

  Q1864  Chairman: Did you ever put this up when you were there?

  Mr Barwick: It was always discussed. Some of it was pre multi channel. It has never got there. It seems to be an idea they did not want to pursue yet. It is an interesting point for me as to who could possibly achieve that. Just on the amount of material they have, it must be them.

  Chairman: Thank you for that bit of your memoir. That is great.

  Q1865  Lord Kalms: Our job is to look at the role of the BBC rather than inside out. What we are trying to get are perceptions of the BBC. You are a very interesting man, having been on both sides of the fence. What we are trying to understand is the process and the thinking process of the BBC when it has to go out and bid for whatever product they want at any one time, bearing in mind that they have a limited budget, or not so much that but the other side have an unlimited budget, so you are not on a level playing field. What we are trying to understand is the process of the BBC when it wants a premium product, how it will play out its bid and the considerations it makes, bearing in mind that it knows that it may well be out-bid. Arising from that question, we are wondering about the role of Ofcom. Ofcom does regulate, to some degree, the other bids. It does not have any influence over the way you bid. Do you have any thoughts about this? The third question which these two questions lead to is this. Do you see any case for an independent review of the way the BBC bids for sports rights? That question has been raised quite a lot. Should the whole thing be exposed as a particular exercise for others to see how transparent the whole process is on both sides?

  Mr Barwick: Why does the BBC buy sport? That would be the first question you asked, broadly speaking. I think it does that because it is a licence-funded organisation which has a responsibility to provide a mix of programming that reflects the mix of interests in the country. I think also it recognises that sport is exciting television; it is dramatic and variable in its life and it is guaranteed to have a different ending every time. That is what sports television gives you. By its nature, it can be the glue between the bricks in the nation. If you, as we hope, this summer, see England doing well in the World Cup, then millions upon millions of people will watch it. When the games are on the BBC, they will watch it on the BBC. It embodies a diverging television industry. Sport has almost a unique capacity to draw a collective audience together in remarkable numbers. I cannot think of anything else that achieves that. It can also attract a variety of demographics to a channel which makes it appeal. Certainly when I was at ITV, one of the issues we looked at when we were buying sport was the demographic appeal of those who watch it. Undoubtedly, that was the same for the BBC, albeit in a non-commercial way. It is also part of the rich heritage of the BBC; certainly it was before I arrived at the BBC, while I was at the BBC, and subsequent to me leaving the BBC, although it had to learn to live in a modern television economy where it cannot have everything, cannot afford everything, and probably has not the room to fit everything in. The sports rights market has changed; it has exploded. I think I have answered your first point.

  Q1866  Lord Kalms: I made the slight mistake in asking you to speak as if you were still a member of the BBC. Once you are a member of the BBC, you can never stop thinking BBC. Let us reverse the position and look at it from the outside looking in. We want to know what happens when the BBC goes into the process of bidding, knowing that it reports to the market.

  Mr Barwick: I think it has to reflect the market. It certainly has to reflect whether there is going to be competition for the rights. If you are asking me the question "how do they come to the position where it is a specific rights game?" I think they have to go through the same process of value to the licence payer as ITV does, which is the value of return on investment through commercials.

  Mr Johnson: I think they do. Our experience when we were competing with the BBC and now when we are preparing to go out in the market and negotiate with them is that they do look at it as a two-stage process. I think they work out the genuine cost to the BBC according to their own economic model, which I think is something called "cost per viewer hour". I think they then also try to work out what this is worth to other broadcasters. I am interested in what you said, Lord Kalms, because you said that others have unlimited budgets. I do not think that is the case. I think everybody has a finite amount of money. The decision the broadcasters have to make is how they choose to allocate their resources.

  Q1867  Lord Kalms: I should have said "larger budgets".

  Mr Johnson: The BBC would make choices, just as all broadcasters would. The first question they would ask is how much they wish to win these particular rights if somebody else is after them. From our perspective as a seller, what we are entitled to ask of the BBC, and the same I suppose with ITV and Sky, is that people would come and make offers for our rights that reflect the value of those rights to them in the marketplace. I have to say that all my experience of seeing the BBC bidding for the FA's rights and then for the one or two events when ITV and BBC bid together, they do bid in an open market. They do not try to rely on regulation. They do not keep one eye on listed events and say, "Do you know what, we have to have that anyway, and so we will put in a low bid and require the Government or the regulator to help us". I think they do value their rights.

  Mr Barwick: One other important point to make is that there is a misconception that the BBC spends less money on sport. In all my time both at the BBC and at ITV, certainly when Sky came on board, only Sky spent more money on sport in the United Kingdom than the BBC.

  Q1868  Lord Kalms: That is what we are talking about.

  Mr Barwick: It would be fair to assume that perhaps ITV spend the same amount on sport; they do not.

  Q1869  Baroness O'Neill of Bargarve: I want to ask you a little bit more about the listing system. You wrote to us that as long as the free to air broadcasters continue to offer a fair market price reflecting the value of those events to those broadcasters, there is no reason why the listed events regime should distort the market. If I may say so, that is rather standing on both sides of the fence, which is generally reputed to be an uncomfortable position. I wonder whether you are really with the free market or for the listed events system, or you are with the listed events system providing it turns out to be entirely compatible with the free market?

  Mr Johnson: If I could answer that, maybe I was trying to sit on both sides of the fence. The listed events regime in the UK is a fact of life. We have had it since 1956. In fact, the broadcast market has matured around it, funnily enough. What is interesting is that if you look at other countries where they have not had a listed events system and then have introduced one, it has had a number of effects. Firstly, it has distorted the market; secondly, it has created legal problems; thirdly it has created huge political controversy. It has had a really distorting impact, whereas here in the UK it has been rather more genteel and gradual. There has been a listed regime. I think the FA Cup Final has been on the list right from the beginning. The broadcasting market has grown up around it. The broadcasters are used to operating within it. The BBC, ITV, Channel 4 and Channel 5 are used to the protection that it gives them. Sky is used to competing, if they choose, on those particular events and people are comfortable with that. Therefore, I think that it would distort the market to remove the list now and just to make it a complete free-for-all because the market has become accustomed to it. You can argue around the edges: is it right that these particular events are listed? A matter for debate has surrounded the World Cup. I think we are the only country that lists all 64 matches in the World Cup. This summer Mexico versus Angola deemed is worthy of protection in the United Kingdom. It will not be anywhere else in the world, probably not in Mexico or Angola. You can have those sorts of debates. I remember that the House of Commons got themselves very worked up in 1997 when England had to play a qualifying match against Italy and they needed to get a particular result to qualify for World Cup `98, that match was on Sky. That was the nature of the deal at that time between the FA and the broadcasters. A lot of politicians got quite heated about this. There was an argument that key England qualifying games should be listed. I think even then at ITV I felt, and I still feel this now, that if you start listing particular events to suit the market at that particular time, you are creating a distortion that is unnecessary. As I say, I believe this is a mature market that can deal with the fact that a number of events are listed.

  Q1870  Baroness O'Neill of Bargarve: So the listing is just seen as part of the framework for the market at this stage?

  Mr Johnson: I believe so.

  Q1871  Baroness O'Neill of Bargarve: It is accepted that changing it would have costs?

  Mr Johnson: If you were to remove it, it would distort the market.

  Chairman: You have been extremely patient. Thank you very much for coming and giving us very clear evidence. Thank you for your clear paper. Perhaps if we have any other points we can come back to you. For this afternoon, thank you very much for coming.





 
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