Select Committee on Culture, Media and Sport Minutes of Evidence

Examination of Witnesses (Questions 341 - 359)



  Chairman: Mr Ball and colleagues, I apologise for the delay in starting. I should explain that two colleagues who are also members of another Committee will join us later this morning.

Mr Fearn

  341. Would you support the Government handing out free set-top boxes to ensure early availability of digital television?
  (Mr Ball) BSkyB already hands out free boxes. There is no requirement to subscribe to our television services, unlike any other company which offers a free box. If the Government did subsidise the boxes perhaps the best way to do it would be by way of a voucher system where the consumer could decide which box to use in exchange for that voucher, whether he chose digital satellite or DTT.

  342. How many free boxes have you given out already?
  (Mr Ball) Approximately, 4 million.


  343. But they are linked to subscriptions, are they not?
  (Mr Ball) Not at all. Under the Sky model one does not have to be a subscriber; one can take the free-to-air channels that are available on digital satellite, which is all of them with the exception of ITV. However, one must pay for the antennae and satellite dish installation, which is about £100. If one subscribes to Sky that figure is reduced to £40.

  344. I do not query your sales acumen, or generosity, but the boxes are linked to a payment of some kind to Sky. Someone who does not want to subscribe to satellite, or anything like that, cannot just contact Sky and say that he wants one of your lovely free boxes?
  (Mr Ball) We give you the box which is yours to keep but we charge you to install the dish, just as if you had an analogue or DTT system where payment would be required for installation of the aerial. The difference is that the box belongs to the customer. If one is a Sky subscriber who decides to cease subscription one keeps the box.

Mr Fearn

  345. Given Parliament and government have taken a keen interest in who owns the nominated news provider for ITV, which has been translated into statute under the 20 per cent ownership rule, why have you put together a consortium which is about 60 per cent foreign-owned? Surely, that shows a distinct lack of political sensitivity, certainly in relation to restrictions on ownership?
  (Mr Gallagher) The news suppliers are all well established and have supplied news in one form or another to British television services for many years. They are also subject to the impartiality requirement and full regulation of the ITC, so there is no "content" aspect which would suggest a public interest problem.

  346. But is not one way to get round the ownership restrictions to bring in foreign companies, which we have not anticipated, as you appear to have done?
  (Mr Rhodes) I am not sure why you suggest that it gets round the foreign ownership restrictions; it is entirely consistent with them. Of the consortium members, only two are foreign companies (CBS and Bloomberg) and the other three are British companies.

  347. Which are the other three?
  (Mr Rhodes) Ourselves, Chrysalis and Ulster Television.

  348. Obviously, you hope that that will be successful?
  (Mr Rhodes) Indeed. It is a very strong consortium for which we have high hopes.

  349. Is that consortium presently in situ?
  (Mr Rhodes) Yes. We have established a company, Channel 3 News Limited, and intend to submit a bid for the ITV news provider contract in due course.

  350. When is that due?
  (Mr Rhodes) I believe that that is in the gift of ITV. The existing contract runs out some time during the next two years.
  (Mr Ball) It is not the first time that Sky News has bid for a terrestrial news provision. We bid for the Channel 5 news slot last year and lost out to ITN.

  351. To what extent will digital satellite television be able to provide regional and local television in future?
  (Mr Ball) It is a matter of increasing the number of transponders used for regionality. At present, the BBC regionalises its coverage on DSAT. If one looks to the United States, DIRECTV has regional output for all the major cities. It is a question of having additional transponder space and spot beams for those regional services. That is completely feasible, and we do it at present with the BBC.

  352. Therefore, that is not a problem?
  (Mr Ball) No.

Mr Keen

  353. I understand that your sub-titling for the deaf is not very prominent, particularly on Sky News. Presumably, you have plans to improve that dramatically?
  (Mr Ball) We have plans to do that. For the next 10 years we have undertaken that 80 per cent of all DTT programming will be subtitled. That is something that I want to bring forward particularly in the case of Sky News. In about a year or so I hope we shall reach about 80 per cent subtitling on Sky News.

  354. Perhaps you would expand on your submission on ownership rules.
  (Mr Rhodes) The basic position is that since the adoption of the 1990 legislation there has been a fairly dramatic change in both the broadcasting but, more generally, the communications sector. Much of the media ownership controls seem to us to have been overtaken by events. There has been a large influx of new channels with greater diversity in both ownership and the types of services provided. We also see the services being provided over many different media. For example, if one looks at news provision we have many 24-hour news channels; and we also have news available through the Internet. We believe that much of the prescriptive regulation is now outdated, and we look to a far more simplified régime with a particular focus on merger control. As long as concentrations do not exist in the market, we believe that the desired degree of plurality and diversity can be achieved in the media sector.

  355. Do you have plans to increase your own production of programmes on a wider scale? Sky One seems to contain bought-in programmes?
  (Mr Ball) Over the past 18 months Sky has increased the spend on original programming by about 60 per cent. We invest a lot in original programming. We spend about £45 million in producing sports output just in Britain. We have launched Sky Pictures which makes films, some for theatrical release. All of those will end up on the Sky movie channels. Our plans include bringing UK-produced original content to our channels.
  (Mr Gallagher) The Sky One budget is now over 50 per cent original UK content, and the proportion of air time is more than 40 per cent UK content.


  356. Am I right in understanding that, regardless of the Government's decision about analogue switch-off, you intend to have switch-off for your own customers? If so, have you yet decided on a date for that?
  (Mr Ball) We do intend to switch off our analogue signal. We are now down to about 350,000 customers. Given the way that we are tracking with conversions, it is feasible to shut down the analogue service some time in the summer of this year. As you say, that is totally separate from the Government's plans for analogue switchover of the terrestrial signal.

  357. Have you made any estimates of what your penetration would be by then? How many customers, or what proportion of UK households, do you expect to have signed up by then?
  (Mr Ball) As of today, people have been signed up to 5.25 million systems, although not all of them have been installed. By the middle of this year we should achieve about 5.4 million, which is over 20 per cent of UK households.

  358. Right up to and including the creation of Channel 4 everybody could receive everything free-to-air. With the creation of Channel 5, although it is free-to-air it is by no means universally covered on analogue or terrestrial. Your system makes a large number of stations available to viewers and your competitors' systems are not necessarily the same as yours. Can you confirm that in terms of audio-visual communication we have almost certainly reached the end of universality of access; namely, that from now on both those who subscribe and those who do not will be able to receive only a proportion, however high, of what is on offer? Therefore, we are moving into what is, however large, niche audiences. For example, at the last moment you signed up to carry E4. You have 4.5 million subscribers. I understand that E4 would be very pleased if it achieved an audience of 100,000. Can you confirm—if I am wrong, tell me so—that that is now the environment into which we have moved and in which we shall stay?
  (Mr Ball) We believe in platform neutrality. We would be happy to carry all channels and make all of them available to our subscribers. What you are seeing is a "nicheness" in the case of E4 and multi-channels; that is, the absolute number of people who watch these individual channels will appear to be low in comparison with the days when we had just four channels. With the exception of Channel 5 which last year increased its share, we are seeing the multi-channel share go up and the terrestrials—the four channels that you spoke of—go down. I think that in future all platforms should be able to carry all channels and differentiate themselves by the quality of the service or services that they offer to their customers. I am not sure that I have completely answered your question.

  359. I subscribe to Sky digital. I cannot get the Performance channel on Sky digital and, unless there is to be a major change, I shall not get it. If I subscribed to ONdigital I would not be able to get the Artsworld channel. I read that Universal is to launch a channel for old movies called The Studio which for the present is not to be carried by Sky but will be carried by cable. What I should like to clarify, not in any critical sense, is that, even taking into account the strange anomaly of ITV not being carried by you, which damages ITV, never again shall we be in a world where everybody automatically gets everything?
  (Mr Ball) I think that you are right; it is not automatic. For example, you referred to the Performance channel. BSkyB is an open platform; any channel can go up on it. We cannot prevent someone coming onto that open platform. Therefore, if the Performance channel wants to be on DISAT it can do so. There is a conditional access rate card regulated by Oftel which means that it can gain access to our platform. All other platforms are closed. Therefore, there is a potential lack of choice. Some channels will be unable to get through that gatekeeper. We argue that if all platforms were open any channel provider, assuming it saw a market there, could launch its channel onto that platform. One would have a situation in which, say, Performance could be available everywhere should it be thought there was a market for it.

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Prepared 23 February 2001