Memorandum by ITN
SECOND CALL FOR EVIDENCE
INTRODUCTION
ITN welcomes the opportunity to respond to the
second phase of the Lords Communication Committee's inquiry into
media ownership. ITN believes that high quality, independent news
from different sources is essential to an informed democracy and
is the stimulus for political and cultural debate.
Plurality of television news in the UK is currently
provided by competition between the publicly-funded BBC, ITN and
Sky News. ITN produces news programming for ITV plc, including
network and local London news for ITV1, and new media content
for ITV's multimedia outlets. ITN also produces news programming
for Channel 4 and More 4 as well as supplying news to commercial
radio stations (IRN). ITN does not supply regional news for ITV
outside London but its close relationship with the ITV regions
enables ITV's and Channel 4's national news operations to draw
on regional stories, and vice versa. This business model delivers
shared efficiencies of newsgathering to the benefit of both ITV
plc and Channel 4.
ITN has recently agreed a new six-year contract
with ITV plc for the production of ITV News until the end of 2012.
The contract covers both ITV's network and London regional news
programming. ITN's current contract with Channel 4 began in 2006
and runs until the end of 2010. This is good news however, there
can be no guarantee of public service provision on commercial
television in the UK after digital switchover (DSO) when public
service broadcasters (PSBs) will find their advantages and audiences
in decline, and advertising revenues come under even greater pressure
than at present.
Are the requirements in the Communications Act
2003 relating to the quality, quantity, scheduling and impartiality
of national and regional broadcast news appropriate? Are they
sufficient? Will they be appropriate and sufficient after digital
switchover?
ITN believes that more than one source of news
is important for delivering viewers choice and for delivering
alternative view points that form part of the democratic process.
Television has a unique position in terms of its ability to influence
viewers—this is recognised in legislation such as the Broadcasting
Act 1990 (requiring impartiality). Broadcast news has stood apart
from print (and internet-based) journalism because of the existing
PSB system that guarantees impartiality, independence, high quality
and accountability.
ITN believes that it is in the public interest
to have plural sources of high quality, television news and that
the requirements of the Communications Act in news—quality,
quantity, scheduling and impartiality—remain as important,
if not more important, in today's and tomorrow's world of the
internet and media fragmentation, than ever before. The Communications
Act also ensures that broadcast news services of high quality
are available to all and there is evidence that the public continue
to place considerable value in this type of news coverage.
Ofcom's 2007 study New News, Future News
concluded that TV channels remain overwhelmingly the main
source of news for most people[3]
and the value viewers place on television news is virtually unchanged.
Of course different forms of news are emerging and will continue
to grow in the digital environment however, according to Ofcom's
research, the internet is currently used by most users as a supplementary
source of news rather than their main source. While these circumstances
may change over time, this does not eliminate the distinct role
that PSB television news has of providing a collective experience
as opposed to the individual viewing or reading experience, that
characterises news consumption on the internet.
This fact distinguishes ITN's news from most
news on the internet, which is commoditised. That is to say internet
news is frequently alike, often little more than repackaged newswire
coverage. Some of the sources from which it is derived can be
unknown and to date most sites have been overwhelmingly text based.
Web-based news services have not led to either greater pluralism
in broadcast news provision or greater provision of original journalism.
Consequently one can envisage a world where more and more websites
emerge offering different opinions for different audiences but
where the content is often the same.
So while the existence and difference between
PSB news and what the market is providing should be acknowledged,
reaching all audiences in an inclusive and universal way and an
accurate, impartial way remains of great significance and value.
In an on demand world, big brands with their heritages and reputations
for delivering high quality, investigative news (in themselves
indicators of high standards) become more, not less important.
With regard to scheduling, for the foreseeable
future, ITN's customers—ITV and Channel 4—have committed
to providing national and international news. Both have signed
long contracts with ITN and invested in a digital infrastructure
that will allow ITN to make innovative and highly efficient news
services for them in some of the most advanced newsrooms in the
UK.
For ITV, while we believe there are good reasons
for commercial PSB channels to continue to deliver national and
international news post DSO, with or without regulatory obligation,
(respectable viewing figures, anchor points for viewing, status
and credibility, lower production costs)[4]
there is also a risk that a future ITV management might seek to
marginalise news in favour of cheaply produced, cash generative
programming such as quiz shows. This would clearly be damaging
to plurality of news in the UK as ITV News continues to reach
mass news audiences of c 8 million a day, to compete head-on with
BBC1. While Channel 4 is a strong contender to deliver pluralism
with the BBC after DSO, on its own it is not enough.
ITN can therefore envisage a world where regulated
and unregulated news, partial and impartial news, TV and internet
news, are accessed and exist side by side. If, as ITN and public
opinion support, it is a key priority after DSO to ensure that
PSB content, which includes high quality broadcast news, is still
delivered by competing providers, via new media, as well as traditional
broadcast means, and since there are no guarantees that the market
can deliver this, public policy measures, considering incentives
for broadcasters, such as cheaper spectrum or multiplex access
or more prominent positioning on the EPG, to guarantee future
delivery of PSB news, are put in place before DSO.
Provisions in the Communications Act do not
guarantee actual level of supply of news services nor the finite
quantity of news supply. A good example of the flexibility in
the system is that channel Five has scaled back the amount of
news it supplies and ITV is currently looking to reduce its regional
news services.
ITV's regional news provides plurality of provision—an
alternative to the BBC in the UK. Ofcom's findings in New News,
Future News demonstrate that viewers value the service and turn
to it when they need to, for example in the floods across the
UK in the summer of 2007 and want to see more rather than less
news on television about their nation/region or locality:
"Around 45% of all consumers say they get
news about current events in their region/nation from television,
second to newspapers. 46% get local news from newspapers and 22%
from radio (both of these figures are higher than for UK national
news)".
"29% of people who access news for the nations/regions/localities
say they want to see more such news on television, compared with
only 3% who say they want less. Consumers in the nations appear
to value plurality in these services—even when it is pointed
out that the wider network might be showing entertainment or drama
instead".
The Committee may wish to consider whether or
not more robust legislation is needed to ensure consistent and
timely delivery of PSB news.
Are the public interest considerations for media
mergers set down in section 58 of the Enterprise Act 2002 strong
and clear enough to protect a diverse and high quality news media?
Are the conditions under which the Secretary of State can order
a public interest investigation appropriate?
The most recent example of the application of
the public interest considerations for media mergers, set down
in section 58 of the Enterprise Act 2002 came about for the first
time following the referral of BSkyB's acquisition of 17.9% shareholding
in ITV plc to the Competition Commission.
In this instance, while the Secretary of State
ruled that BSkyB should be required to sell down its shareholding
to below 7.5% as the acquisition of the shares in ITV represented
a lessening of competition, it concluded that that the shareholding
did not present public interest concerns in terms of plurality.
ITN gave evidence to the inquiry that while
ITN saw no evidence that BSkyB used its shareholder influence
during the 2007 news contract negotiations between ITN and ITV
plc, ITN remained concerned that at some point in the future BSkyB
could influence how the ITV news contract was awarded. ITN welcomes
healthy competition, nevertheless, BSkyB is ITN's main commercial
competitor and any influence on the way the news contract is handled
would be anti-competitive and could reduce the plurality of news
provision. In addition BSkyB has a history of competing with ITN
for contracts. BSkyB tendered for the ITV news contract during
the previous two processes, which resulted in ITN substantially
reducing its price, and in 2004 they won the contract to produce
news for channel Five.
ITN subsequently said that as one of the largest
shareholders in ITV, it was feasible that if BSkyB were granted
a seat on the ITV Board, it could have access to commercial information
about ITN, as ITN made such details available to ITV because of
the transparent nature of the contract. This could be to BSkyB's
advantage in any future negotiations for the ITV contract and
it could fundamentally impact ITN's ability to do business.
ITN said that the risk to the future broadcasting
environment would arise if BSkyB were able to influence ITV to
change its news supply arrangements to Sky, thereby undermining
ITN and in turn its provision of news to Channel 4. This might
then create a situation in which the only large-scale competitor
to BBC news was Sky News, a situation which would be exacerbated
if Sky News itself were to have moved towards a politicised style
of news.
As noted above, the Competition Commission did
not find that the case raised public interest concerns in terms
of plurality of news. This was based on their belief in the robustness
of the requirements relating to impartiality, quality and scheduling
in the Communications Act. The Communications Act appears to have
reassured the Competition Commission that in this instance plurality
of high quality and independent news suppliers would be maintained.
This demonstrates the ongoing importance of
the requirements of the Communications Act in maintaining a plurality
of high quality news providers in the UK—a welcome outcome
in light of the continued public value attached to television
news, as outlines above (New News, Future News; Ofcom 2007).
Do current national and local cross-media and
single sector media ownership rules set out in UK legislation
do enough to ensure a high quality and diverse news media? Or
now that most news organizations are moving towards multi-platform
operations, have these rules outlived their usefulness and relevance?
In this context are there effective actions that can be adopted
by news organizations to protect the public interest?
ITN was established 52 years ago as the network
news provider for the new ITV network. It was owned by some 15
ITV companies until privatisation under the Communications Act
1990 restricted maximum shareholdings to 20% and required owners
to be sought from outside the broadcasting sector. As a result,
ITN ownership changed in 1993 and under the last Communications
Act ownership ceilings were raised. ITN ownership is now ITV 40%;
Reuters, Daily Mail General Trust and UBM 20% each.
ITN's two main businesses are producing ITV
news (news for the ITV network and London Regional News for ITV)
and for Channel 4. As well as ITV News and Channel 4 News, ITN
has a radio news operation and produces news for IRN (for about
280 radio stations). It also has a programme-making unit (ITN
Factual), and has two growth businesses—a multimedia production
business, called ITN ON producing video news channels for mobile
phones and video content channels; and a video clip/video footage
sales business, ITN Source. Most recently ITN has begun to produce
a sports news channel, Setanta Sports News, for a joint venture
company owned by Virgin Media and Setanta.
ITN believes that this shareholder structure,
encapsulated in existing legislation, ensures diversity of news
provision to news customers, existing or potential. Separate editorial,
reporting and news teams work for ITV News and Channel 4 News.
The overarching nature of each broadcaster's news commitment is
set out in the respective Ofcom broadcasting licences eg Channel
4's licence states that its news programming should be of "high
quality and deal with both national and international matters.
Coverage shall be accurate, impartial, authoritative and comprehensive
in terms both of geography and subject matter", in line
with Channel 4's overall remit. On a day to day basis, news output
is determined by each broadcaster in terms of the character and
the shape of each programme to be produced.
Cross-company planning at ITN takes place only
on logistics. ITN is possibly the only company in the world producing
competing and distinctive network news programmes. ITN previously
produced news for channel Five under the same model so overall
the model and therefore the legislation has been demonstrated
to work and it delivers logistical and technical synergies to
core customers.
ITN also does not believe the adoption of multi-platform
models has any effect on the provision diverse, high quality news.
ITN delivers web-based news services for ITV and Channel 4, comprising
not only daily news programmes on ITV1, ITV London, Channel 4
and More 4, but also a daily email news bulletins eg Snowmail,
and news blogs. ITN's PSB news values are reflected throughout
these online services, drawing on the programmes' brand heritage,
journalistic expertise, presenters and infrastructure. This news
services sit alongside other internet news services.
In conclusion, ITN believes that the current
national and local cross-media and single sector media ownership
rules set out in UK legislation do enough to ensure a high quality
and diverse news media and this is demonstrated by ITN's successful
business model that essentially delivers diverse media to different
and competing broadcasters.
Do any problems arise from having four bodies
involved in the regulation of media markets (the OFT, Ofcom, the
Competition Commission and the Secretary of State)? Are there
any desirable reforms that would improve the effectiveness of
the regulatory regime?
There are some advantages in having a number
of bodies with different competences involved in the regulation
of media markets. For example, the investigation into BSkyB's
shareholding in ITV plc, put the public interest test under the
spotlight and was beneficial to the public. All aspects of existing,
relevant legislation were examined and the involvement of the
four bodies involved in regulation of the media market provided
ensured that all relevant issues were taken fully into account.
For ITN, in an ideal world the BBC would also have been brought
into this regulatory framework and be regulated by Ofcom, as originally
proposed by ITN. We remain to be convinced that the BBC Trust
is delivering the same level of transparency and independence
as an independent regulator would have done.
Has the lifting of all restrictions on foreign
ownership of UK media affected the quality and independence of
the UK news media, or will it affect it in the future? Has the
UK industry benefited, or does it stand to benefit in the future?
There has not yet been an occasion of the foreign
ownership rules being put to the test and consequently it is not
clear how any takeover would impact on the quality and independence
of news in the UK. If this were to happen, it would be essential
for the public interest test to be applied, in the same was as
it was applied in the case of BSkyB's shareholding in ITV, to
address any plurality concerns.
21 February 2008
3 Market analysis of the UK TV industry begins at p
17. Consumption data referred to is published in full in Annex
2 to this report. Back
4
Page 69 NN, FN. Back
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