Examination of Witnesses (Questions 1040
- 1060)
WEDNESDAY 28 NOVEMBER 2007
Mr Michael Grade CBE, Mr John Cresswell and Mr Michael
Jermey
Q1040 Chairman:
Five per cent would be acceptable?
Mr Grade: That is a matter for the Competition
Commission, Chairman. I am happy to negotiate with you later.
Q1041 Baroness Eccles of Moulton:
Mr Grade, could we talk a bit about it impartiality because it
has been Ofcom's view that maybe the impartiality rules outside
the PSB requirement are perhaps a bit too tight and are beginning
to affect diversity of news. What would your view be?
Mr Grade: I would welcome it. I would welcome
more editorial freedom for people to use the plentiful airwaves
these days in the same way that newspapers use their newspapers
to take an editorial line. I do not have a problem, provided always
that there is a plurality of provision of impartial, high-quality
news, in plurality, and that is to say at least two major providers—better
three, but two is okay. I can understand why the rules of impartiality
were introduced early on because of the power of the medium and
the shortage of the medium and the information gate-keeping role
that the BBC, later ITV, carried. That seems to me perfectly proper
and that is a good tradition, and I think it serves the democratic
process in the UK extremely well. We must preserve that. If somebody
wants to run a right wing, left wing, pro this, anti that, news
on a digital channel, good luck. If they think they can make it
pay, why not? It is a free market.
Q1042 Baroness Eccles of Moulton:
Could you see a situation where, if the rules were relaxed and
there were a predominance of partial views being expressed out
there across the spectrum, there would be a sense that the big
channels that were responsible for impartiality might have to
tilt what they were doing in order to counteract the overall impression
that was being given universally?
Mr Grade: I think we have to resist that and
I think that is where statute and regulation comes in. I think
there is a wider public interest in the continued provision of
high-quality news, impartial news, across a number of broadcasters.
I think that is easily covered. If there is commercial pressure,
let us say, National Front News—I am just trying to characterise,
fairly extreme—was suddenly attracting huge advertising
and huge support and was getting—very unlikely—millions
and millions of viewers, that would be a commercial concern but
there are other responses one can make. You would move your news,
you would do different things but to lose the principle of plurality
of supply of impartial news I think would be a retrograde step.
Q1043 Baroness Thornton:
Could we just return to something that you and your colleagues
have referred to already, Mr Grade, which is about the digital
switch-over. What we would like to explore is how news provision
might fare after the digital switch-over and whether the current
quotas are applicable, enforceable, desirable for news provision
after the digital switch-over. What is your take on that?
Mr Grade: We are at 80% digital now; there is
only 20% to go. What remains to be done is the switch-off of the
analogue signal. A lot of the implications of that are on second
sets and third sets and so on. Regulation is important but regulation
in the end in a free market and in a very competitive market of
broadcasting, as it is becoming, becomes powerless in the face
of the lack of viability. That is something that I do not think
we are going to have to face for many, many years to come but
it is a possibility in the far distant future and policy makers
will have to decide what to do about it at the time. Do I foresee
that happening in the aftermath of switch-off? Absolutely not,
no. There will be very little change. We are fighting to create
a model of regional news provision which will see us through to
digital switch-over and beyond. We are trying to think far ahead.
I would not be pessimistic. If you want to work in a 20-year time
frame, we might have another conversation but I think it is dangerous
to think too far ahead, given where the market is today.
Q1044 Lord Maxton:
You expressed a concern about plurality to the Competition Commission
of control of media enterprises in this country, and the Competition
Commission basically said there is no clear definition of what
"plurality" means. In fact, at the moment—I emphasise
at the moment—there are three media enterprises that control
90% of the UK's news output. That is, BBC, ITN and BSkyB. Is that
sufficient plurality?
Mr Grade: There is no barrier to entry, as there
was in the days of spectrum scarcity. There is nothing to stop
Associated Newspapers or New York Times or anybody entering
the market. The Financial Times could enter the market.
There is no barrier to entry. If you can find the backers, if
you have a business plan and you think you can make it work, there
is nothing to stop you. In the old days you could not get in.
Now there is no barrier to entry at all.
Q1045 Lord Maxton:
Do you agree with me that the next barrier which will go down
is the link between the internet and your television? I was offered
through an e-mail recently from I cannot remember which software
company it was to pay £250 and get 9,000 channels for the
rest of my life, which I could then beam wirelessly from my computer
on to my television set.
Mr Grade: It may well be.
Q1046 Lord Maxton:
That will not be a 20-year time frame.
Mr Grade: I gave up a long time ago trying to
predict how consumers are going to adopt exciting new technologies
that come through. Nobody predicted SMS. It was a function that
was put into mobile phones and it was more expensive to take it
out than it was to leave it in. Nobody thought it had any value.
It is now a global phenomenon. Trying to predict how consumers
are going to behave—the only thing I would say about the
way consumers are dealing with technology is that they deal with
technology ... they change their habits much more slowly than
the technology develops. Much, much more slowly.
Q1047 Lord Maxton:
Not all of us.
Mr Grade: I think the evidence is that most
do, and they will follow the content. They will certainly want
the content on whatever device, whenever and wherever they wish
to consume it, rather than at the mercy of the scheduler. That
they are demanding, but they will follow the content. That is
how the consumer will behave, in my view.
Q1048 Baroness Scott of Needham Market:
I wanted to explore the relationship between regulation through
the Competition Commission and regulation through Ofcom to the
extent whether you think it is appropriate that the Competition
Commission appear to be saying that plurality is almost better
dealt with under the Ofcom regime than it is under its own. I
wonder if you want to comment on that. Certainly, Ed Richards
from Ofcom, when he gave evidence, expressed some surprise that
the Competition Commission did not find that the BSkyB stake was
a plurality issue.
Mr Grade: I do not have a view, honestly. I
am trying to manage the alphabet soup of regulators that I have
to deal with across the piece, which I do happily and with a good
heart. If there are turf wars between regulators, I am happy to
watch that from the touchline, to be honest. I do not see any
glaring flaw presently. A lot of this is new legislation that
is untested and we have to see how it pans out but at the moment
my only complaint is that everything seems to take so long.
Q1049 Chairman:
Including the present case.
Mr Grade: We have a review of the CRR mechanism,
which is the merger remedy over advertising sales, which we are
delighted that the OFT is now going to review. It has taken them
a year to decide that they are going to review it and they are
now telling us it might take up to 18 months to complete the review.
There is nothing about I can do about it other than go with it.
Q1050 Baroness Scott of Needham Market:
From your point of view, if you think, as I assume you do, that
safeguarding plurality is important, would there not be dangers
in what you call the turf war with one or the other side gaining
the upper hand?
Mr Grade: These are matters of public policy
that are best debated by Parliament and decided as matters of
public policy. The regime that we are under presently is the result
of many hours of debate in both Houses and that is where we are.
If there is a need for a change, I am sure the case will be made
and parliamentary time found to correct any problems. I have to
say, sitting here, I do not have any evidence on which to make
a case for a change.
Q1051 Chairman:
The need for change, delay, you have just made the point, your
major complaint.
Mr Grade: Yes, it just takes for ever. I understand
that regulators have limited resources; of course I understand
that but when you are in a business that is moving as fast and
as dynamically as the media sector is, it is agony waiting, going
through these processes over this length of time. I feel sorry
for the regulators because they have a huge workload and they
just do not have the resources that commerce needs for them to
get to quicker decisions.
Q1052 Chairman:
I suppose on ownership changes the final decision rests with the
secretary of state.
Mr Grade: As I understand it, the Competition
Commission, having consulted widely and had a very thorough process,
will make its final recommendation on the remedy to the secretary
of state, then a statutory clock starts to tick and the secretary
of state will decide whether or not to accept the Competition
Commission's decision.
Q1053 Chairman:
Does that worry you in any way, that a politician is being brought
in to the final stage?
Mr Grade: Whether I worry about it or not, I
cannot do anything about it.
Q1054 Chairman:
If you were asked your own personal view with all your experience
behind you, would you wish to change that?
Mr Grade: I am not quite sure I fully understand
why it is necessary for the government of the day to be involved
in signing off the decision of an independent body like the Competition
Commission. There may well be good reason; I am not sure I am
fully conversant enough to make a judgment, but it seems to me
the onus is on the government of the day to make the case as to
why it needs to have that power. I am not quite sure, I did not
follow the debate at the time.
Q1055 Chairman:
It would be perfectly possible for the Competition Commission
simply to make the decision at the end of the day as an independent
body.
Mr Grade: Yes.
Q1056 Chairman:
The danger, it might be said, is that if you bring a government
minister into it then politics can get involved—any government.
Mr Grade: It is possible, My Lord Chairman.
Q1057 Chairman:
You have seen it?
Mr Grade: No.
Q1058 Baroness Bonham-Carter of Yarnbury:
Just going back to the challenges you face post the final digital
switchover, what is your attitude to the suggestion that Ofcom
are likely to charge PSB channels for spectrum?
Mr Grade: As I understand it the big issue presently
on the table is the provision of high definition spectrum for
the Freeview platform, which is a very important platform because
it provides real competition for Sky as a digital gateway into
people's homes. It has been decided that the analogue spectrum
freed up by the digital switchover should be auctioned for the
benefit of the nation, which seems to me perfectly sensible.
Q1059 Baroness Bonham-Carter of Yarnbury:
Including the PSB channels.
Mr Grade: The difficulty for us is that if we
were required to bid for HD spectrum we have no ability, unlike
telephony operators and so on, to pass the costs of that on to
the customers because we are free to air and we cannot pass it
on to the advertisers, so it is very difficult for us, but we
think there is a solution. Ofcom has been working hard with us
and it looks for the first time as if there is a real possibility
that four streams for HD can be created out of nothing, out of
a reconfiguration of the present arrangements so that BBC, ITV,
4 and Five will have access to an HD stream on Freeview, which
is very, very important from the public's point of view. They
are buying HD-enabled sets and they will expect to see Coronation
Street in HD if they have bought an HD set, and it is wrong that
Sky should end up, through the economics of the auction, with
a monopoly of HD provision; that cannot be right.
Q1060 Chairman:
I am afraid we are going to have to bring it to an end. It has
been a very fascinating session; thank you, Mr Grade, thank you
to your colleagues as well and perhaps if you have any other issues
we might write to you.
Mr Grade: Indeed. Thank you, My Lord Chairman.
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