Examination of Witnesses (Questions 460
THURSDAY 8 FEBRUARY 2001
460. I turn to the digital world and your role
within it. Do you have a view as to exactly how at the point of
switch-off, which should be as soon as possible, you achieve the
universality that obviously we want if the BBC is to continue
to be a universal service to all providers?
(Sir Christopher Bland) I shall ask Mr Dyke to speak
specifically about what role our new services may play. Over 90
per cent appears to be a daunting target, and it is not clear
how easy it will be to get there. All the evidence is that one
gets to a glass ceiling of about 70 per cent of people who are
prepared to subscribe, pay-per-view and have interactive services,
but to go from 70 per cent to 98 per cent will be driven by new
free-to-air services. That is one of the roles that we believe
will be played largely by the BBC, which is appropriate. That
is a public service role which is in the long-term interest of
the licence fee-payer and the country as a whole. I ask Mr Dyke
to explain how those services may do that.
(Mr Dyke) At the moment, part of the problem is that
people regard digital and pay as synonymous; they see them as
the same thing. If we can have a new set of services and promote
them when we launch them, and at the same time we promote the
fact that they are free services that can be accessed only by
digital, we can begin to make some inroads. But we have also done
a lot of work on free boxes, whether the BBC can fund them or
whether we can give them away. Without an initiative at some stage
it is very hard to see how one gets to switch-off.
461. I believe that eventually television will
be on demand and, rather than be broadcast, will be received through
some kind of Internet service. Your archive material, which is
probably the best in the world, is publicly owned. Do you agree,
as I am sure you will, that that must remain within a public broadcasting
system and made available free, whenever it becomes available,
to the people who pay for it?
(Mr Dyke) There is an enormous cost involved in the
process of digitalising most of the archives, which we have started.
That is a very expensive process but one which must be done. We
shall then try to work out how that is afforded and can be used.
Clearly, it must be available in all our public services at any
stage that they want to use it, but it could also have a commercial
use so others can use it at some time. The cost of digitalising
those archives runs into many hundreds of millions of pounds.
(Sir Christopher Bland) And the commercial imperative
462. What is the cost of broadcasting live on
your Internet web site all your radio programmes?
(Ms Abramsky) I can give you the figures for radio.
To stream the five national radio networks costs us merely £200,000
a year. The content sites that we do around them cost about £3.5
million, which is about 1 per cent of the money we spend on radio.
For that, we get 17.5 million page impressions per month, and
radio is now the most used part of BBC Online after news and sport.
At home it has a greater reach than news and sport.
463. Can you confirm that you have now scrapped
the daft system of internal pricing whereby it was cheaper for
a programme maker to go out and buy a CD than to use a BBC one?
(Mr Dyke) Yes. I can assure you that there is no requirement
to pay for the pronunciation unit nor to get into the BBC's information
(Sir Christopher Bland) In the good old days I was
very happy to pay £26 to learn how to pronounce the Chairman's
name. The cost of that is as firmly burnt into my mind as is the
464. Mr Dyke, the very title of your pamphlet
One Year On suggests that a year after your arrival at
the BBC a great deal has changed. It suggests perhaps not so much
a broom as a vacuum cleaner. In the section dealing with cost-cutting
I particularly like the paragraph headed "Croissants, cabs
and cars", followed by a proposal for a flatter organisation.
Obviously, that will have a greater effect on the waistlines of
your employees than anything else.
(Mr Dyke) In my case, yes; that was why I got rid
of the croissants.
465. Are you making significant cost savings
within the BBC, and what has changed in the year since you have
(Mr Dyke) This was largely intended as an internal
document to go to members of staff. We had announced an awful
lot but, quite rightly, we got feedback from our internal communications
system, which has been improved considerably, to the effect that
the results had not been seen. One can announce all kinds of things
at the top but one must know that they are happening down below.
Are we making the savings? Yes. The numbers in the document mean
that we are ahead of our schedule. Are we confident that we can
make the rest? Yes, but it will take some pain. This year will
see the introduction throughout the whole of the BBC of the Apollo
computer system, which has been planned for some years. Once it
is installed it will save considerable sums of money. We shall
save many millions of pounds by breaking up the different broadcast
and production divisions and centralising those services which
are now being performed individually. But we are ahead of our
schedule in terms of savings. If we want to do the other things
we must continue to spend the money. Part of the purpose in preparing
the document was to say to staff that we were doing all right
but as an act of faith extra money had to be spent in order to
make those savings inside the organisation.
466. Would those savings have been necessary
had you been granted a digital licence fee as you wanted?
(Mr Dyke) I believe that the savings are necessary
in any event. Instinctively, when we worked out that 24 per cent
of our money was going on the running of the BBC, Governors, management
and everybody said that that was too high. That is not a problem
that one deals with in profit and loss companies. In publicly-funded
organisations one must look for other ways to see how efficient
one is. More money does not necessarily make you better; it is
quite good to get better without more money.
467. You have dealt with the issue of sports
rights. However, you touched on the football World Cup. The accusation
that is being made is that the BBC and ITV are in some way conniving
in a kind of cartel and using the benefits of the protected list
system for sporting events, which the government introduced, to
get the World Cup rights on the cheap.
(Sir Christopher Bland) It is amazing that it appears
to be all right to have one cartel on one side of the bargaining
bench but not the other.
(Mr Dyke) If I thought that what we had offered so
far was getting something on the cheap I would be extremely happy.
Compared with the prices paid for previous World Cups, we are
talking about something that is magnified beyond those. One must
bear in mind that the next World Cup will take place in a time
zone that means all the matches must be played between six o'clock
and midday. That is difficult for a commercial broadcaster like
ITV because there is not much revenue to be gained in that period.
Earlier a question was asked about public service broadcasting.
I believe that we saw it at its best when the BBC covered the
Olympic Games. If one considers how we covered it, the amount
of money that we spent on it and what could have been obtained
for advertising rates at that time, it would not have made it
commercially viable. That is public service broadcasting at its
468. Earlier this morning I asked both Sky and
ITV about Sky's rate card for access to its platform. ITV told
us that in its opinion it would cost that organisation £20
million to gain access to it. I made it clear that I did not begrudge
Sky the right to make a profit, or, as it pointed out, to cover
its costs, but you are on Sky's platform and subscribe to that
rate card. Can you tell us the BBC's rate?
(Sir Christopher Bland) We are, but we would rather
469. Perhaps you will tell us privately on the
basis of commercial confidentiality?
(Sir Christopher Bland) We shall tell you privately.
I am glad to say that it is less than £20 million.
(Mr Dyke) We also agree with ITV's point that there
is a strange anomaly in the White Paper, in that public service
broadcasters are must-offer services on cable and satellite which
name the prices. That anomaly should be looked at, because those
prices should be regulated in some way to ensure that they are
Chairman: Thank you very much. We are
most grateful to you.