Select Committee on Culture, Media and Sport Minutes of Evidence

Memorandum submitted by SMG plc (continued)



  Universality of Access—it is imperative that all areas of the country currently receiving an analogue signal are able to receive digital terrestrial television prior to analogue switch-off. It will be impossible for any commercial organisation to fund the cost of the necessary transmitter conversion. We therefore urge the Government to devise a funding mechanism to ensure this takes place.

  Regionality—we support the retention and protection of regional programmes. It is important that viewers of Scottish Television and Grampian Television have access to programmes that reflect regional and national identities. Regional programmes are an integral part of a diverse, high quality schedule: it is equally important that programmes from the regions form part of Network schedules.

  Public Service Broadcasting—we endorse the Government's support for public service broadcasting in general, and ITV's role in particular. The BBC and Channel 4's public service remits should be better defined and more closely scrutinised, as should both channels' commercial initiatives.

  Regulation—OFCOM should report to a single Department of Communications. We believe that the BBC should be included within the regulatory framework to ensure a more coherent and equitable system of regulation.

  Gaelic Broadcasting—we support Gaelic Taskforce's recommendations that Gaelic programmes should be transmitted on a separate digital channel but question the level of funding required. Any levy from ITV must come from the existing levies paid to the Treasury. We will continue to transmit Gaelic programmes until analogue switchover. Thereafter obligations on commercial organisations should be removed.

  Digital Licences—as analogue licences transfer into the digital spectrum, given the level of investment in digital infrastructure and the significant commitment to public service broadcasting by the ITV companies, subsequent digital licences should be automatically renewed, subject to meeting licence conditions.


  1.0.1  Scottish Television and Grampian Television are SMG's two ITV franchises. ITV Network Centre is submitting a comprehensive response on behalf of all the ITV companies, dealing with the issues that affect the network as a whole. We fully support and endorse that submission and therefore have confined our response to issues that are of importance and relevance to Scotland and to SMG Television in particular.

  1.0.2  Grampian and Scottish Television cover a hugely diverse area, with two thousand miles of coastline, hundreds of islands, several dialects and two languages. The stations have production centres in Aberdeen, Glasgow, Edinburgh, Dundee and Inverness. We broadcast to an audience of nearly five million people which constitutes 10 per cent of the UK television audience. Unlike any of the other ITV broadcasters and even allowing for the additional commitments of HTV and Ulster, Scottish and Grampian require to be national broadcasters, as well as regional broadcasters, reflecting Scotland's different political, legal, educational and religious institutions. In addition, we have to take account of cultural differences and a national sports infrastructure and calendar.

  1.0.3  Scottish and Grampian support the objective to ensure that a range of high quality programming is universally available and that the English regions, Scotland, Wales and Northern Ireland are properly reflected on our television screens.

  1.0.4  This is particularly important in a devolved United Kingdom: the differing cultures of all the disparate parts of the country should be represented in the national schedules of the traditional public service broadcasters (1.0 The Government's Objectives).

  1.0.5  The level of ITV programming produced in the regions ie outside London, exceeds that of any other UK broadcaster including the BBC: regional programming is the unique quality that only ITV can bring to UK broadcasting and this vital aspect of Britain's most popular broadcaster must be preserved. No other commercial broadcaster in the UK provides such a service.

  1.0.6  Although we do not believe that quotas should be set for regional production we would like the network to aspire to proportional representation for the regions and nations on UK screens.

  1.0.7  It is vitally important that the regional companies make a contribution to ITV network production, not least to portray their regions and—as far as Grampian and Scottish are concerned—the nation, to the rest of the country, to avoid a purely metro-centric portrayal of contemporary Britain.

  1.0.8  In Scotland, we provide approximately 10 per cent of the ITV audience and it is important that the network audience has a sense of Scotland, be that in drama or other genres.

  1.0.9  We also believe that Scottish and Grampian Television "meet the needs of different communities and cultural interests". Like all of the ITV companies, Scottish and Grampian are a key part of the fabric of the communities they serve and it is vital that they continue to demonstrate a deep understanding of the concerns and interests of their regions.

  1.0.10  For some 40 years, both stations have been broadcasting to their respective regions and have built up a strong relationship with their viewers. All of our research shows that there is a demand and appetite for a regional television service. Viewers in Scotland are loyal to their regional companies and, by providing a regional service, Scottish and Grampian have become part of the culture of their viewers. Indeed the ITV brand is not commonly referred to by viewers in Scotland, who relate more closely to their regional station brands.


  2.0.1  The issue of universality of access is particularly important to Scotland, given the nature of its geography and topography. 81 transmitters in the UK—giving 78 per cent of the population access to digital television—have been converted to digital. Of these, 13 are in Scotland, leaving a further 190 requiring conversion. To undertake conversion of all current analogue transmitters to digital, thereby ensuring universality of access, will be prohibitively expensive and consequently impossible for any commercial organisation, such as Scottish Television and Grampian Television. Therefore there will be large areas, both rural communities and sizeable towns, that simply will not receive digital terrestrial television. We agree with the Government assertion that it is essential that people living in all parts of Britain, however remote, should have access to television, radio, telephone and Internet services. If they do not, we will see the creation of a division in society between the information "haves" and "have nots"; in essence a communications ghetto. (3.0 Ensuring Universal Access)

  2.0.2  We therefore urge the Government to devise a funding mechanism to ensure that digital television is available to all. This would fulfil the objective to:

  "make additional services universally available while also safeguarding commercial interests."


  3.0.1  We support the retention of independent television production quotas at the level of the 1990 Broadcasting Act. Both Scottish and Grampian have good relationships with local independents and we are happy to continue to commission them.

  3.0.2  However, we would like to point out that the recent acquisitions of leading independent production companies by broadcasters and overseas companies, indicate that it will become increasingly difficult to meet that quota without redefining what constitutes an independent producer. This is particularly true in Scotland because of the relatively small size of the independent production sector and the lack of an infrastructure for the companies to operate within. We therefore welcome the Government's intention to consider adjustments to help ensure that broadcasters' ability to meet their obligations is not jeopardised by events outside their control.

  3.0.3  As previously stated, Scottish Television and Grampian Television are part of the ITV Network. With control of ITV now vested in its two main shareholders, Granada and Carlton, our share of the Network is currently around 6 per cent. SMG Network productions is a small supplier of Network programmes, competing with production giants such as Granada and larger independent productions companies such as Zenith. However, our share of Network programmes production does not equate to our Network share of six per cent, and we believe our position will become increasingly marginalised as ITV consolidates further and broadcasters continue to acquire independent production businesses. We would therefore ask that the definition of Independent Producers be redefined to include those who have minority stakes in broadcasters. This redefinition would benefit production in the regions, given that the quota systems that operate across the BBC and Channel 4, and help the Government to realise its objectives in UK original production.

  3.0.4  In respect of independent production, Scotland is a microcosm of the UK-wide industry; if it proves difficult for the ITV network to reach the quota then this will be exacerbated in Scotland because of the lack of experienced personnel referred to above. However, we would aspire to the 25 per cent quota and would wish to see it retained.


  4.0.1  Both Scottish and Grampian Television are committed to the retention of their regional dimension as public service broadcasters.

  4.0.2  Regionality is very important to ITV viewers, and, we would argue, particularly so for Scottish and Grampian. Scotland is not a region, it is a separate nation within the UK, with its own political, educational, religious, sporting and cultural agendas and a regional television service is required to reflect this. Despite increasing globalisation, regional and national identities remain strong and our viewers relate to, and identify with, aspects of life in their local area: there is an appetite and demand for local/regional information and entertainment. We believe that Scottish and Grampian meet that demand through their respective regional programme production. Furthermore, both companies contribute greatly to the creative economy in Scotland.

  4.0.3  Regionality is an integral part of ITV's publicly stated commitment to a diverse, high quality schedule. However, regionality cannot, and should not, be measured only by the number of regional hours that are produced in the region for broadcast and viewing only in that region. In the diverse culture of the modern devolved UK, it is important that network audiences are given access to programmes from the regions. Therefore regionality, and indeed public service broadcasting, should be measured by our ability to sustain original production in the regions for broadcast across the whole of the UK.


  5.0.1  As the leading Public Service Broadcaster, it is fitting that the BBC should have more demanding targets for regional production. Similarly Channel 4's public service remit should include more of a measurable commitment to promoting regional production. As stated with reference to the regional production of programmes for transmission on the ITV network, there should be an obligation to reflect the entire UK on network screens to ensure diversity of content, both geographical and cultural.

  5.0.2  The role of the BBC must be discussed, defined and tightly monitored. It is imperative that the BBC's activities are closely scrutinised, both in terms of its commitment to public service broadcasting on its main service, BBC 1 and its commercial activities. Recent initiatives, such as the removal of arts and current affairs programming from the peak hours, disturb the broadcasting ecology within the UK (to which all commercial broadcasters must react) to the detriment of the viewer. Similarly, initiatives such as News 24, given free to many multi-channel operators interferes with the proper operation of the market. The BBC should, and must, provide services that are only available because they have access to public funding.

5.1  Gaelic Broadcasting

  5.1.1  We will shortly be submitting a detailed response to the findings of the Gaelic Broadcasting Task Force. Whilst we support the setting up of a separate channel for Gaelic language programmes, we would ask the Government to take into account our concerns as to the level of funding proposed within the Milne Report. The suggestion that the ITV companies should pay a new levy to support the channel is not, in our view realistic. Any levy must come from that already paid to the Treasury by the companies, as part of their franchise agreement.

  5.1.2  We would also hope that the commercial broadcasters would be released from their Gaelic broadcasting obligations in their terrestrial licences, but until analogue switch-off we will continue to produce programmes at the existing level for transmission on the new channel.

  5.1.3  In a totally digital environment, we envisage a stand-alone Gaelic channel but we would question the financial viability of setting up a separate broadcaster to deliver the new Gaelic service. A more economical approach may be for an existing broadcaster to set up and run the service on behalf of the Gaelic Broadcasting Authority.


  6.0.1  Our view on the three tier regulatory system proposed within the White Paper (5.0 Securing Quality) concurs with that expressed in the ITV Network's submission. In addition we would stipulate the following:

  6.0.2  We agree that any new services developed by Channel 4 should not be "unfairly subsidised". We would ask that this criterion also applies to the BBC. It is clearly iniquitous that public funding is used to purchase expensive rights to programmes that are then only available to those who pay a subscription to view the channel on which these programmes are transmitted, as is the case with E4.

  6.0.3  It is fitting that Channel 5's public service obligations are relaxed; this should be reflected in the level of its tender payments.

  6.0.4  With reference to the public service remit of the BBC (5.7.1), we agree strongly that there should be a requirement upon the BBC to provide news and current affairs in peak. We believe this should be extended to include other genres such as the Arts, and in Scotland, Gaelic. It is anomalous that in Scotland there is a requirement on the ITV stations to carry Gaelic programmes in peak, but there is no similar obligation on the BBC. Currently, there are no Gaelic programmes in peak on BBC1.

  6.0.5  Furthermore, it is important that the BBC should deliver range and diversity on its main service, BBC1. The BBC is the benchmark against which all other UK public service broadcasters are measured and to which they react. Recent scheduling changes indicate that the BBC is diluting the public service remit of BBC1 and BBC2, disturbing the broadcasting ecology in the UK, and causing a reaction amongst the commercial broadcasters that could cause irreparable damage to public service broadcasting in the long run.

  6.0.6  There needs to be discussion of, and agreement on "the level of requirements regulated at this level". We endorse and support that there should be no intervention in scheduling decisions. SMG Television acknowledges and recognises the need to satisfy viewers by providing a broad range of diverse programmes but we must also safeguard the interests of shareholders. These are not incompatible aims. High quality programmes will attract viewers and consequently increase advertising revenue thereby contributing to the profitability of the company and satisfying shareholders. This completes the virtuous circle required to re-invest money in programme making. (5.0 Securing Quality; 5.7 Second Tier).

  6.0.7  The proposal outlining the function of Regional Boards mirrors the current procedures within both Scottish and Grampian Television. Therefore we are already complying with the requirement to implement this before legislation reaches the statute book. We are also complying with the development of statements of programme policy. However, with reference to the function of the Regional Boards, we would emphasise that commercial management of the companies must remain with the respective management teams. (5.8.3)

  6.0.8  The proposal to "retain the power to approve new BBC licence fee-funded services and material changes to existing services" is to be welcomed.

6.1  Consumers

  6.1.1  Whilst we endorse the overall aim of this proposal, we would issue a note of caution. Of course there must be freedom of choice: we are all consumers and, as such, the view of the consumer is an important part of regulation and legislation. But it should be recognised that some lobby groups, by their very nature, have a vested interest in changing the media. It must not be the case that a vocal minority affects the viewing enjoyment of the majority. (7.0 Protecting the interests of consumers).


  7.0.1  In addition to pictures and sound, digital television is capable of supporting a number of ancillary services. Currently, service providers on the DTT platform provide subtitles, audio description and in-vision signing as well as the SI data that provides information on the service content, picture aspect ratio etc.

  7.0.2  Many broadcasters on the DTT platform have also launched or are in the process of launching Associated and Standalone Data services which can be used to enhance their programmes and/or advertising by providing background or supporting graphics and text information. With skilful authoring, such data services can also be used to give the viewer a sense of interactivity with the programmes or commercials they are watching and are therefore a potentially important tool in building viewer interest and loyalty in a programme service.

  7.0.3  As the broadcasting ecology develops it seems likely that programme service and content providers will wish to use a number of delivery platforms to deliver their services to the audience. This is very much in evidence now with services that used to solely rely on terrestrial transmission now also being carried on the various cable and DSAT platforms. Broadcasters will also want to take advantage of new delivery platforms such as XDSL, Internet etc to further extend the reach and available audience.

  7.0.4  Interoperability of all of the elements of these programme services (pictures, sound, subtitles, ancillary services and data and interactive services) across all of the available delivery platforms, will be absolutely crucial to the success of many of these new services.

  7.0.5  The development of digital standards across all the available delivery platforms to ensure the fullest levels of interoperability is welcomed. (7.8 Digital Standards).

  7.0.6  The views of SMG Television are as set out in the response from the ITV Network to the Government's proposals. In addition we would add the following comments: (8.0 The new organisational framework).

  7.0.7  The suggestion that digital terrestrial licences could be renewable indefinitely, subject to satisfactory performance is commercially sensible. However, there is no clear understanding of how this will be achieved during switchover to digital. The ITV licensees have invested heavily in a digital infrastructure and in ancillary services for minority groups such as the disabled. Having carried these, and other licence-associated costs for a period of years, following the switchover from analogue to digital, it would be invidious if these licences were then opened up to auction. We would argue for an automatic right to renew, with terms and conditions to be agreed.

  7.0.8  We support the proposals that "Ministers would consult on the future of public service broadcasting, the process and criteria for selection of licensees, and the required privileges". (8.8 Licensing).

  7.0.9  We support the development of access television through RSLs, as their current licences permit. However, we would be concerned if all of these individual licenses were acquired by a single organisation intent on forming a network with guaranteed access to the spectrum, effectively creating a sixth terrestrial network. This would change the ecology of the broadcasting industry in the UK beyond that on which all of our recent licence applications were based.

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Prepared 26 February 2001