Examination of Witnesses (Questions 880
- 899)
WEDNESDAY 14 NOVEMBER 2007
Mr Ed Richards and Mr Peter Phillips
Q880 Chairman:
No, but it is pretty clear what that was.
Mr Richards: I think that sort of thing is very
difficult to stop in an internet age because, even if you could
deliver that on UK-based sites and UK-controlled networks, a site
somewhere, somewhere else in the world, would put the name up
and would almost definitely be beyond the reach of the UK authorities.
I may be proven wrong about that but I suspect that, in those
circumstances, the world has changed and it is very difficult
to control that kind of information in this day and age.
Q881 Chairman:
Therefore we will be, or we can be, subject to two rules?
Mr Richards: I think that is possible. Pornography
is no different. You can get hung up, in a sense, by saying, "If
we can't control it all, then we shouldn't control any of it".
The perfect becomes the enemy of the good. I think that it is
a mistake to conclude, because someone, if they really want to
put something up, can do so and, if they want to hide, they can—and
if someone really wants to find it on the open internet, they
will be able to—that any form of regulation or any sort
of—
Q882 Chairman:
No, that is not the argument, is it? That is certainly not the
argument I am using. My argument would not be that. My question
would be—not even an argument -whether there was anything
one could do about it, and your answer appears to be no.
Mr Richards: There probably is something you
could do about it technically; whether it is in any way proportionate
or worthwhile or practical, I have severe doubts.
Chairman: We may come back to this. Perhaps
it is something we could look at it in more detail.
Q883 Baroness Eccles of Moulton:
A lot has been said about quality in news, and I think that we
have pretty well covered the question. However, there was one
thing you said which I thought was interesting. In the States,
where we found that there was a lot of commercial pressure on
the various news outputs, one of the areas that they were having
to cut back on or had decided to cut back on was foreign coverage.
I think you said a little earlier that you had not found any such
pressure here yet, but do you think that, as commercial pressures
increase, this could be an area that will begin to suffer?
Mr Phillips: I think that there is a difference
here between the coverage of stories using agency material and
original reporting on international stories. What has been seen
right around the world from commercial broadcasters is an increasing
reliance on material from the news agencies to report international
stories. I think that the thing which has been under pressure
has been specific deployments of journalists by individual broadcasters
to cover particular international stories. That happens less now
and it tends to be focused on the most high-profile stories. It
is really in that respect: it is the reliance on pooled material
which has been the biggest trend in that area within the UK.
Q884 Baroness Eccles of Moulton:
Do you think that does affect quality?
Mr Phillips: I think that the quality of the
reporting from news agencies like Reuters and so on is extremely
good. They have very high standards. Clearly, though, it means
that there is less diversity of view on any given story if many
of the broadcasters are relying on the same material. To the extent
that there is an issue about quality, it is more about diversity
of view than it is about the journalistic standards which are
being exercised by highly reputable news agencies like the Associated
Press or like Reuters.
Q885 Baroness Eccles of Moulton:
I suppose you could say that there is a very strong link between
diversity and quality.
Mr Phillips: We have been consistent in our
view that plurality, particularly in news but actually right across
public service broadcasting, is a very important feature, and
that is something which we highlighted within our report.
Q886 Baroness Scott of Needham Market:
The other side of the coin to that which we have just discussed
is local and regional news and the pressure on those. I think
that it is generally accepted that there is not much of a commercial
case for the production of local and regional news. I wondered
whether you would want to comment as to your reaction to Michael
Grade's proposals for halving regional and local news budgets;
but, beyond that, to say whether you think there is a case for
regulation to ensure that there is such provision—for example,
to ensure diversity and plurality—and what form that regulation
ought to take.
Mr Richards: Perhaps we could do them in reverse
order. Do we think that there is a case for regulation for the
provision of regional and local news in the future, to sustain
plurality and a range of provision? The answer to that is yes,
we do. Will it necessarily be the same as the forms of intervention
that we see today? Not necessarily. It could be different post-switchover.
It will not automatically be, but it could be. It is a very significant
issue. People value regional news highly but it is costly, and
we will need to look in our public service broadcasting review
at the economics of it and its sustainability on the current model.
It may be that is the right way to carry on or it may not be.
In relation to the ITV position, as a matter of fact we have not
actually had a formal proposal from ITV on their regional news
proposition, which we have obviously seen reported and which they
have discussed with us verbally. As of now, however, we do not
have a formal proposal. We are expecting that later in the year.
We would rather not comment on the proposal, therefore, until
we have it in black and white. When we do have it, there will
be a full and proper consultation on it to allow everybody who
has an interest in or a view on it to express that interest or
view. Until then, no decision will be taken on whether we are
approving it or not. The only thing I would say in addition is
this. We do recognise its importance to people but we also have
to accept that the economic pressures are different and there
are changes taking place, which means that it is perfectly reasonable
to want to reassess this and to ask ourselves what is the best
way of delivering this and what is viable between now and switchover,
and indeed in the post-switchover world.
Q887 Baroness Scott of Needham Market:
As part of that wider reassessment, do you think that there would
be a case for relaxing the restrictions on local cross-media ownership,
if there is much less commercial activity in the television sector?
Mr Richards: Possibly, but I would not want
to go any further than that. My general view about these cross-media
ownership issues is that one should proceed with caution and care.
It is also important to say that it is a matter for Parliament.
It is classically a matter for Parliament, and so it should be.
We have an advisory capacity but it is a matter for Parliament,
and so in due course it may come back. The rules on cross-media
ownership in local and regional form mirror those at national
level. It is a 20:20 rule. My own view is that one should proceed
with caution in relation to that. It is very difficult to put
those sorts of things back in once you have taken them away and,
occasionally, the consequences for the control of media can be
very significant.
Q888 Chairman:
Lady Scott's question is a rather important one, because I think
you have said in reply to it that no application has yet been
made by Michael Grade. We have rather been given the impression
that it is a fait accompli. You are both nodding your heads.
However, it needs your approval?
Mr Richards: It absolutely needs our approval.
We have not even begun a consultation process. When we begin the
consultation process, it will be—as ever with us, I hope—rigorous
and thorough; it will allow adequate time for people to express
a view; and we will consider all of those views fully and properly
before any decision is made.
Q889 Lord Maxton:
Does that include BBC proposals for more local news?
Mr Richards: We would look at the ITV proposition,
as we would with any proposition, as a whole. Again, it is not
yet absolutely clear what the BBC proposal on local news is. That
is also an area where we have yet to see what the flesh on the
bones is.
Q890 Chairman:
Regarding the regulation of media ownership and ITV and ITN, you
have concerns, do you, about the potential clash of ITV owning
the stake that it does in ITN?
Mr Richards: I do not think that we have concerns
about the ITV ownership in ITN. In a sense that horse has bolted.
That was discussed during the passage of the Bill, and we are
where we are on that. ITV has a substantial ownership—I
think it is 40%—and has the freedom to increase that stake
legally, if it wished to do so and if there were willing sellers.
That is where we are and I think that is fine. ITV is in a powerful
position in relation to ITN by virtue, first, of that 40% shareholding
and, second, of being its biggest customer. It is in a powerful
position and that is something we have to accept and recognise.
So far, we have had no reason to find anything problematic with
that.
Q891 Chairman:
There is no clash as far as ITN's relationship with ITV's other
commercial rivals?
Mr Richards: No, I do not think so, so far.
ITN supplies a range of other providers and those are contracts.
They are specified contracts; there is scope to go somewhere else
at the conclusion of those contracts and, from what we know—and
I think it is one of those things that, if there were a problem,
it would be reported to us with some haste—we are reasonably
satisfied that they work well.
Q892 Chairman:
Would you therefore believe it would be against the public interest
for ITV to buy the whole of ITN?
Mr Richards: I think that legally they can,
and I do not think that we are particularly concerned about that.
The question only becomes a significant or serious one in relation
to the connected question of who owns ITV. There are circumstances
in which the control of ITV changed, such that, because of its
powerful position in relation to ITN, it became a matter of concern.
That is where the real issue lies here.
Q893 Chairman:
That is something which is current at the moment, of course, about
who actually has shareholdings. How did you get involved in judging
the BSkyB stake in ITV? Was that something which you did off your
own bat or was it the secretary of state who referred it to you?
Mr Richards: We were asked to provide the secretary
of state with a report on the public interest issues arising and
whether we were concerned about it.
Q894 Chairman:
So you responded?
Mr Richards: Yes, we did.
Q895 Chairman:
You would not have done it off your own bat?
Mr Richards: We may well have done it off our
own bat, but the fact of the matter was that the request came
through and so we were very happy to respond. I think that we
did a thorough piece of work as a first-stage authority. This
was not a definitive answer, therefore; this was a piece of work,
asking ourselves whether there was any reason for it to warrant
second-stage consideration by the Competition Commission. That
is what we did and we said that in our view there was very clearly
a reason for it to be considered in greater depth by the Competition
Commission, for all the reasons that everyone is familiar with:
the relationship between Sky and News International and News International's
ownership of a very significant proportion of the newspaper market
in this country—all well-established facts.
Q896 Chairman:
Under competition law as it stands, I think I am right in saying
that a company can take an under-20% stake in ITV. That is in
the Competition Act, is it not?
Mr Richards: It is in the Communications Act.
Q897 Chairman:
Yes, the Communications Act.
Mr Richards: The 20% rule restricts a company
that controls more than 20% of the newspaper market to a maximum
of 20% of ITV. The question which arose here was whether or not
a shareholding of 17.9% also raised issues of public interest.
The Act is also very clear that, even though there is a ceiling—of
nothing above 20%—in other circumstances, for example a
lower shareholding, the public interest consideration could be
looked at and therefore a judgment made. There was therefore a
ceiling and a general option to consider whether other issues
were raised in other circumstances. It was under the latter that
we looked at the 17.9% shareholding of BSkyB in ITV.
Q898 Chairman:
Would that be the same had there been a 10% shareholding?
Mr Richards: It may not have been. It all turns
upon your level of potential concern over what the particular
shareholding is. Clearly, at 0.1% it would not have done; at 17.9%
it did. Anywhere in between is a matter of judgment.
Q899 Chairman:
That judgment will not be exercised by you now, will it?
Mr Richards: What has happened is that our recommendation
that it should be thoroughly looked at by the Competition Commission
was accepted; it has gone to the Competition Commission. The Competition
Commission's findings, having looked at it in their own way, are
that they are not concerned about the plurality issue but they
are concerned about the competition issue. As a result of that,
they have signalled that they will expect there to be some level
of divestment of the shareholding, or some change to the circumstances
and conditions surrounding that shareholding. That is the position
at the moment, and we wait to see what the Competition Commission
conclude in relation to that question.
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