Examination of Witnesses (Questions 1100
- 1119)
WEDNESDAY 28 NOVEMBER 2007
Mr Malcolm Wall, Mr Paul Richmond, Mr Jon James and
Mr Scott Dresser
Q1100 Baroness Thornton:
What are your views on the hints they have given that they might
wish to dilute the impartiality?
Mr Wall: We do not see how relaxing impartiality
rules will provide any benefits. Already there is a concentration
of views and we should not rely solely on the public service broadcasters
for impartial coverage, because the suggestion as I understand
it was we have got a public service broadcasting requirement on
news for the BBC, ITV, Channel 4 and Five and therefore if that
impartiality is preserved we can allow other news providers not
to be governed in the same manner. Those public service broadcasters,
their viewing is declining and we believe that in practice if
you allow the impartiality regulations to go by the by we will
see them decline, because their overall viewing is declining,
and we will see a very major change in terms of the type of news
that is being introduced. I know that Rupert Murdoch recently
admitted that he would like to take Sky News, which today has
a good reputation and is impartial as we see it, to be more like
Fox News in the US which has a very different reputation. We therefore
do not welcome the suggestion made by Ofcom.
Q1101 Lord Inglewood:
Earlier in your remarks in response to my questions you explained
how you felt that ownership could affect the way news was presented
and you have contrasted this recently, very clearly, with the
relationship that you have as a platform provider for news services,
yet is not that distinction slightly over-simplifying it because
the very nature of being the delivery mechanism for something
means you have in fact in reality got a power of leverage, to
some extent at least, over the people whose news you are going
to deliver.
Mr Wall: We have a power in so much as if we
did not carry any of the providers, yes. In extremis if we were
to say we would only provide Al Jazeera and not provide the other
services—
Q1102 Lord Inglewood:
The real world does not quite work as simply as that, does it,
it is not so clear cut, but it is not a distinction that is perhaps
as absolute as you suggest.
Mr Wall: Up until the dropping of Sky News we
were providing the services that accounted for 90% of total news
channel viewing, and we were also then providing services for
a number of other channels which were the most popular in our
view or the most viewed of the minority news channels, but as
I explained before we are not in a position, because we have band
width constraints, to extend and offer band width and carriage
to every single news provider.
Q1103 Baroness Bonham-Carter of Yarnbury:
But you have decided not to provide Al Jazeera.
Mr Wall: At this stage.
Q1104 Baroness Bonham-Carter of Yarnbury:
And that is purely about popularity.
Mr Wall: It is about popularity, it is about
tenure—you know, as a service it is relatively new. We have
had conversations and we will review the position going forward.
Q1105 Bishop of Manchester:
Mr Wall, from what you have said this morning and from the written
evidence we have received, the lack of clarity in the Communications
Act about what is meant by sufficient plurality clearly remains
a problem for you, but then in that written evidence I suggest
that you have become over-optimistic in some of the solutions
about that. May I quote, the evidence says "for a healthy
news environment to exist, this plurality of ownership should
be present in each news genre, news media and geographic area."
In this Committee we have heard evidence on several occasions
about the financial pressures that, for example, local newspapers
face and indeed the difficulties in local radio and television
coverage, so I am just wondering if you could help us because,
on the face of it, what is being suggested there seems to lack
a certain level of feasibility or practicality.
Mr Wall: Your comments are valid. There is maybe
a triumph of idealism over commercial reality in that respect
and, indeed, I totally agree with you that it is pretty hard today
to sustain a truly regional plurality. However, that makes it
even more important that we retain a national plurality and, secondly,
in terms of the regionality there is a public service broadcasting
obligation today on both the BBC and ITV to provide an element
of plurality, but that is not across all media as you suggest.
The challenges of local publishers are well documented.
Q1106 Baroness Bonham-Carter of Yarnbury:
You have already answered the question I was going to come to
about your attitude to BSkyB's position as the largest shareholder
in ITV, but I will just ask one very specific. Is it your belief
that ITV's news output might be influenced by this shareholding
and, if so, in what way and are there not sufficient regulatory
safeguards to stop this?
Mr Wall: There are two things. It is not necessarily
whether they will be but whether they could be, and that is absolutely
critical for us in terms of any plurality test and indeed in terms
of the competition test, it is a threat. ITN is 40% owned by ITV
but they provide a distinct service to ITV and it is a service
that is editorially managed within ITV. They also provide a service
to Channel 4 and, as any viewer knows, they are very different
and both, in their way, very good services. ITN's infrastructure
is actually dependent upon the maintenance of both of those contracts—to
lose either one of those contracts would cause some very real
issues in terms of the economies of scale. Given that the editorial
process and the final delivery and the tone of the news is controlled
by ITV in an interface with ITN, anybody having material influence
over ITV could materially influence the tone and the content of
ITV's news, whoever the ultimate provider. That is the basis of
our argument. I have high regard for the team at ITN but in the
end they are providing a service to the broadcaster.
Q1107 Baroness Bonham-Carter of Yarnbury:
As you know, they would vigorously counter that suggestion, they
say they are independent and they listen but they are not dictated
to.
Mr Wall: In last year's change of management
structures ITV made it very clear that in appointing Mark Sharman,
who is Head of Sport and News, he had editorial control in terms
of directing ITN to provide the type of service that ITV required.
Q1108 Baroness Howe of Idlicote:
A considerable amount of what I was going to comment on and ask
questions on has actually been covered and you have certainly
made it very clear that you do think that Sky could have an undue
influence as far as news is concerned, and you have explained
it from your viewpoint as to why you hold that position, although
as we have heard too there are differing views on this from different
people involved. Looking ahead, do you think that ITN will remain
as an independent provider of television news? That is my first
question. Perhaps putting it in the broader context, do you think
that BSkyB will be able, over these years, to use its position
to influence the next ITV news contract in 2012, because what
we have seen is clearly a change in the position over the years,
every time ITV has gone out to contract for the next period and
then did not go out to contract, and the value of the shares has
gone down, as we have heard. So we are in a moving position the
whole time and it would be interesting to have your answer to
that.
Mr Wall: As of now, the provision of news of
ITN and Channel 4 and the public service broadcast licensed channels
is a matter for Ofcom who nominate the news providers concerned,
so Ofcom have a responsibility and a role in this area in terms
of who they nominate in 2012 or whenever is the next time the
ITV contract comes up. There are two other dynamics, one which
is included in my answer to your colleague earlier, which is that
it is not ITN in isolation that matters, it is the editorial dictate
of the broadcaster as opposed to the news provider. The second
area is the long term financial viability of ITN which I believe
to be largely dependent upon both the Channel 4 and the ITV licence,
so one of the issues in terms of maintaining plurality that we
must be aware of is that if indeed ITN in any way became no longer
a commercial operation, who would be the provider of these services?
In the case of Channel Five, for example, they switched from ITN
to a BSkyB supply. There are therefore a number of dynamics there,
but the first one is that we must ensure that we have plurality
at the broadcaster end as well as on the news provisioning.
Q1109 Baroness Howe of Idlicote:
And in 10 years time or in 2012.
Mr Wall: In the world of broadcasting I wish
I could honestly say that our long range plans took us to 2012;
with the emergence of social networks and everything else I sometimes
feel like an alcoholic living day to day. By 2012 it is very hard
to call. I do believe that more news provision is likely to take
place on a broadband basis and what the BBC have done there has
been a credit to them in terms of moving forward and providing
a multi-platform news provision; ITN are following that route.
For me the ideal circumstances would be that we had vibrant—that
means at least two—news providers and we ensured that we
had a level of independence in the broadcasters so that we did
not see a consolidation of view and, therefore, the diminution
of plurality.
Q1110 Lord Maxton:
In a sense you are saying broadband, but the fact that you are
a major provider of supposedly the highest level of broadband
down high-speed cables as opposed to a copper wire, which is what
BT do and Sky do—Sky is entirely dependent upon BT for even
its television services. Do you therefore look at the future and
say it is the broadband and possibly linking broadband internet
services to the television service which is the future rather
than—you say you have a limited band width on your television
services but you would be able to provide many more channels.
Mr Wall: We do indeed. There are some general
dynamics in the television industry and, first of all, viewers
are doing what they did in the audio world, they are moving away
from linear radio stations towards iPods, personalisation, having
their own library material, and we are starting to see that emerge
in the video world, and so the first thing we are trying to do
is to provide that sort of functionality and form on our television
platform through the library which got such a great testimonial
over here. We will continue to develop that and what we want to
do is not just develop that in terms of traditional television,
but in terms of lifestyle, education and so on so that it has
a greater role than just pure entertainment and information. In
terms of our broadband provision, we are providing high speed
broadband with the benefits of the fibre optic network, and that
is an open platform so the viewer or the user of broadband, they
choose whether Google is their home page, Virgin Media is their
home page, BBC is their home page and what their favourites are
and they access them accordingly. We provide a service, we are
not able to have an editorial influence in the manner that we
have been covering here this morning. In terms of crossover, not
in the short term—our short term objectives are to improve
our high-speed broadband access, improve our customer care, improve
our television library, but we are doing some R&D work that
could well see the light of day in the medium term where you will
start to see broadband content delivered on the television and
vice versa, and I think that is a true convergence and there is
an inevitability of that happening.
Q1111 Lord Maxton:
Is there not a danger that you are going to lose out because people
are already into this and they are already providing—I do
not know what sort of service because I have never really looked
at it, but they are now increasingly providing that service.
Mr Wall: We are a commercial organisation that
has a foot in both camps in as much as we are in broadband and
we also have some broadband content as well as the other areas.
We think there is a threat but we also think there is an opportunity
by using our broadband pipe to provide more and more services,
and we are better able to do so than those using a BT wholesale
basis. The issue really is the economic model. Today, so much
of the content on internet is free compared to the pay television
area and it is that that we are exploring, and we are very often
exploring it with the content owners.
Q1112 Lord Maxton:
Just to get back to news, it opens up news services.
Mr Wall: It does open up news services. The
early evidence suggests though that the trust placed upon television
news is as high as ever and I am very wary about people saying
plurality is preserved because broadband gives us a huge degree
of suppliers. People still turn to their tried and trusted and
they still turn to the tried and trusted brands on broadband,
so BBC is a supplier. In many ways it is a mirror image in terms
of trust and therefore must be a mirror image in terms of impartiality
and structure, which brings us back to plurality of course.
Q1113 Baroness Eccles of Moulton:
You have, Mr Wall, very clearly told us your views on the BSkyB
involvement with ITV, ITN et cetera et cetera. What I wanted to
ask you is at the moment the current legal framework is being
tested and, during this, the fact is that the Competition Commission's
provisional findings have shown a different interpretation of
media public interest rules from that reached by Ofcom. Why do
you think this has been the case?
Mr Wall: I am not qualified to comment on that
but I have a lawyer with me who I will ask to do so.
Mr Dresser: As I said earlier we certainly agree
with the Ofcom stance there and it is unclear as to why the Competition
Commission interpreted the provision that I mentioned earlier,
this deeming provision, which in our view very clearly states
that once there is a merger situation there is deemed to be a
reduction in plurality. They took a very different view and we
have gone back to them on that. As for their rationale behind
that, I cannot comment, it is hard for us to say.
Q1114 Baroness Eccles of Moulton:
But the Ofcom interpretation you find more comprehensible.
Mr Dresser: Correct. In our view the relevant
provision which is section 58A (iv) and (v) of the Enterprise
Act is quite clear.
Q1115 Baroness Eccles of Moulton:
Oh, good.
Mr Wall: I just want to apologise to the whole
Committee because I did say that whatever we do this morning we
must not make reference to 58A. I will be taking the necessary
action.
Q1116 Chairman:
On the other hand, 58A and all that and its inter-relationship
with the Communications Act is actually really very integral to
what we are looking at,
Mr Wall: Absolutely. It is often called the
Puttnam clause because it was introduced at a later stage in the
process and I find it hard to believe where it could be used,
if not in this case.
Q1117 Baroness Scott of Needham Market:
The question is for you and not your pathological lawyer. Ultimately
the findings of the Competition Commission are going to be signed
off by the secretary of state. How comfortable are you with that
and, to be provocative, you made some quite strong assertions
in your evidence to us about political influence being exerted
by News Corp and Rupert Murdoch in particular. How confident are
you about getting a politically independent judgment from the
secretary of state?
Mr Wall: In the end we have to trust our elected
leaders. The issue for me is not that there should be a structural
change, that the competition authority should not be wedded to
an elected government, but who is influencing the government,
and I think that has rather come straight back to questions of
plurality and media ownership and influence. We constantly have
to address that subject and if any one party in any country controls
such a large section of the media they can be in a position where
they can influence the public and therefore, potentially, have
a hold on elected leaders. We are not, in our submission, calling
for an independent competition authority, indeed there is a real
logic to competition authorities being linked to the DTI because
indeed much of what happens there is about competition regulation
and industrial structure, which is what we elect our leaders for.
Q1118 Chairman:
You are happy, are you, therefore, that the final decision should
be taken by a politician? I am not talking about any particular
government but in any government it is the secretary of state
under different names who finally takes the decision. We were
hearing previously from Michael Grade—I think I do not misquote
him—that in fact he did not quite understand why one needed
a further stage after the Competition Commission.
Mr Richmond: Just on a point of clarity, it
is our understanding that on the recommendation on competition
there is actually no discretion, the discretion only applies to
the finding on plurality.
Q1119 Chairman:
By that you mean the remedy.
Mr Richmond: Yes, I beg your pardon, the remedy.
We broadly feel comfortable that there is a degree of political
jurisdiction over this. We were very encouraged in the case that
is immediately before us that the secretary of state did actually
make the original decision to refer to the Competition Commission
where he also had some jurisdiction and could easily have exercised
that. Longer term I would agree with Michael Grade's comments
that it is essentially a question for public policy, for Parliament,
and we are happy that broadly the balance seems right.
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