Select Committee on Culture, Media and Sport Minutes of Evidence

Examination of Witnesses (Questions 95 - 99)




  95. I should like to welcome you here today. Do I take it, Mr Prebble, that you would like to make a brief opening statement before we start questioning?
  (Mr Prebble) I should like to do that, with your permission.

  96. I cannot recollect, Mr Prebble, is this the first time we welcome you as Chief Executive of ITV?
  (Mr Prebble) It is indeed.

  97. In that case, we ought to place on record our pleasure that we are doing so.
  (Mr Prebble) Thank you for inviting my colleagues and myself to address the Committee this morning. The Committee's inquiry into communications is timely. As we await publication of the Government's draft Communications Bill, much of the media industry finds itself in difficult economic circumstances. ITV itself is facing the toughest economic and competitive environment since its launch in the 1950s. Revenues are significantly down as a result of the worst TV advertising recession in history and we are facing unprecedented competition in the new multi-channel environment. Against this backdrop the current regulatory approach to public service broadcasting which was conceived over a decade ago is looking increasingly outdated. The UK has a delicate broadcasting ecology in which public service broadcasting is not the sole preserve of the publicly-funded BBC. ITV1 has historically played a crucial role in the UK's public service broadcasting ecology, providing an alternative source of funding for high quality indigenous programming from around the UK and competing with the BBC to guarantee improvements in quality and programme innovation. Regulated competition between public service broadcasters has delivered a range, diversity and quality of programming over the years for which the UK has been admired. The way in which the system now operates needs to be modernised. We must focus less on direct competition between the public service broadcasters and more on how we regulate to get the best out of each by recognising their individual strengths and weaknesses and the differences between them, not least in the way they are funded. ITV1 remains firmly committed to its public service broadcasting role, which we see in the future as being focused around three core elements: a continued commitment to a high quality and diverse schedule of programmes with national and international news at its core; a commitment to indigenous production; a commitment to the production and broadcast of programmes both in the regions and for the regions. The current system is no longer capable of providing the regulation that public service broadcasting as a whole needs, in particular because the cornerstone of public service broadcasting in the UK, the BBC, sits outside the regulatory framework. Over the past year the consequences of the existing fragmented regulatory system and the delicate ecology of UK broadcasting have become clear as the BBC has adopted a much more commercial strategy without any apparent regard to the impact on the rest of the ecology. Populist actions such as moving the BBC News from nine o'clock to ten, fully in the knowledge that News at Ten was due to return to ITV and thus proactively denying viewer choice, shunting Panorama to Sunday night and introducing a fourth episode and maybe a fifth episode of EastEnders formed part of a strategy to dilute BBC1's public service commitments and to improve its ratings. In its last report on these matters, the Committee concluded if BBC1 were to become ITV without the commercials, then this would affect the justification for the BBC as at present constituted and funded. We fear that we are perilously close to that point. Whilst the Government recognised in the Communications White Paper the need for a system of regulation which creates more of a level playing field that is fair between different broadcasters, taking into account their different missions and funding sources, it failed to recommend OFCOM have responsibility for the BBC under the all-important Tier 3. We believe that the Government should reconsider this position. It is worth noting that the only people with fundamental objections to this seem to be the BBC themselves. During the passage of the OFCOM Paving Bill through the House of Lords, there has been near universal support on all sides of the House for bringing the BBC within Tier 3 of the Government's proposed regulatory framework. I should like to say a word briefly on the issue of digital strategy. ITV and its two main shareholders have made a significant investment in the digital project with the launch of the digital terrestrial platform, ITV Digital. This now has over one million subscribers and is responsible for virtually all digital terrestrial TV viewing in the UK. However, it has faced significant obstacles to faster growth since its launch and there is a range of issues which needs to be addressed swiftly if we are to make rapid progress towards the Government's ultimate objective of digital switchover. For example, the number of households able to receive the digital terrestrial signal at launch was significantly lower than that promised in the invitation to tender. Over the past two years, we have worked hard to make improvements in coverage of the reception of the digital terrestrial signal, but this work has been hampered by the bureaucracy surrounding the terrestrial spectrum planning process and the lack of Government leadership on this issue. We welcome therefore the recent publication by the Government of its Digital Action Plan. This initiative clearly signals that the Government is determined to drive forward the switchover to digital and maintain the UK's lead in this important area. Having published this preliminary Plan, the Government now needs to maintain the momentum and ensure that a clear route map to digital switchover for the UK is produced in the coming months. A strong digital terrestrial platform is vital to the future of public service broadcasting in the digital era and to ensuring that no-one is excluded from the digital revolution. It will not be possible to maintain universal access to free-to-air channels without digital terrestrial. DTT also offers the UK the most affordable route to switchover and is vital to underpin competition and choice for consumers in the digital future. Finally, and very briefly, I should like to say something about the Government's plans in the forthcoming Bill to lift specific legislative restrictions on single ownership of ITV. This is welcome. A further consolidated stronger ITV will be better placed to continue meeting its public service obligations and to provide the BBC with the kind of competition in the digital era which will be needed if diversity in UK programming is to be maintained. The Bill should also end the current absurdity whereby the licence payment of ITV companies can only be varied at the point of licence renewal. The ITV companies are currently making licence payments which are based on an assumption of three per cent real growth in advertising revenues per annum when in fact in the past year we have seen revenues significantly decline. I hope that this brief statement has been helpful in providing the Committee with some idea of our priorities as we move forward.

Mr Fabricant

  98. Surely part of the reason why your advertising revenue has fallen is not only because of lack of confidence among advertisers in the economy, but because your ratings have been so bad. You blame the BBC for shifting round News, Panorama and EastEnders and whatever, but are you saying that the BBC should not compete for an audience at all?
  (Mr Jones) We are not saying that at all.

  99. It sounds like it.
  (Mr Jones) We recognise that ITV is a mass market channel and indeed to justify the licence fee or any form of public funding the BBC has to be fully successful in commanding audiences. We are simply facing a downturn in the economy. We won peak time 51 weeks of the year last year. We get most of our money from peak time, that is where most of our investment goes and we dominate that. We are seven points ahead of the BBC. The only week we lost was Christmas and that was because the BBC decided to spend a lot of money on Hollywood films and we stuck to original production. Rumours of our decline are greatly exaggerated. We are still dominating the peak time market.

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