Select Committee on Culture, Media and Sport Minutes of Evidence

Memorandum submitted by Scottish Media Group (SMG)


  We would urge that the timetable for the forthcoming Communications legislation does not slip further into 2002. We are concerned that key areas of broadcasting, in urgent need of reform, are not being addressed and that neither are other crucial policy areas that fall outside the scope of the legislation, such as digital switchover. The Government must ensure that sufficient resources are deployed to deal with these important issues.

  It is imperative that a level regulatory playing field is created for Public Service Broadcasters (PSBs). This should include the BBC as the leading PSB. Therefore responsibility for the BBC within Tier 3 should be extended to OFCOM.

  The introduction of self-regulation in relation to Public Service Broadcasting is welcomed, as is the aim to develop a common framework for all PSBs. However, the definition of PSB requirements should vary according to the broadcaster. In this matter, one size does not fit all and the commercial PSBs should not be subject to the same requirements as the BBC who should continue to provide the benchmark within the UK.

  With reference to media ownership regulation, SMG will shortly submit a response to the Government's most recent consultation paper. A cross-media strategy can produce significant creative and commercial synergies for media owners and allow the achievement of scale whilst protecting plurality of voice for consumers. We remain convinced that, in order to achieve the Government's aim of creating the most dynamic and creative media market in the world, UK media companies must be allowed to achieve sufficient scale to compete not only with each other, but also with their European and global counterparts. This will enable media owners to invest sufficiently in new content and infrastructure, ensuring that the UK media market retains its reputation for high quality and independent content backed by extensive and appropriate consumer choice.

  We welcome the Government's Digital Action Plan but would urge that it be progressed rapidly. We would advocate the publication of a timetable and a plan detailing how switchover is to be achieved. This is of particular relevance to Scotland given its topography and number of remote communities.


  1.0.1  We welcome the Culture, Media and Sport Committee's inquiry into the prospects for a draft Bill on Communications and a range of related issues.

  1.0.2  Whilst understanding the need to delay the timetable of the Bill due to other demands on Parliamentary time, we would hope that there is no further delay to the timetable outlined by the Secretary of State in the Government's Response to the second report from the Culture, Media and Sport Committee Session 2000-01, i.e. the publication of a draft Communications Bill in the Spring of 2002.

  1.0.3  Having embarked on a process of major reform, which has sparked both expectation and uncertainty, Government must carry it through and deliver an effective and reformed regulatory regime as quickly as possible.

  1.0.4  We are concerned that decisions on key broadcasting-specific areas in need of urgent reform are being delayed by the complexity of the "OFCOM project" and that limited resources are available to focus on key policy areas that lie outside the scope of the legislation. An example of the former is that of ITV licence payments, the re-opening of negotiations for which is prevented under the current legislation. The current payments are based on the assumption of three per cent constant growth in revenue throughout the 10 years of the licence whereas, in fact, revenue is significantly lower than the base year on which the value of the licence was set and is unlikely to achieve 2000 levels for some years to come. Other key areas of policy affected include digital switchover, the timetable for which is not expected to be included in the draft Communications Bill. The general view is that the scale and complexity of the Communications Bill process has consumed a disproportionate amount of the relatively limited resources available within the DCMS and DTI.

  1.0.5  With regard to significant issues raised by the Paving Bill, the most significant, in our view, is that OFCOM should have greater regulatory responsibility for the BBC. It does not make sense to create a single regulator without giving that regulator comprehensive regulatory oversight of the entire broadcasting industry. The BBC's recent overt commercialism is having a profound effect on the broadcasting ecology in the UK and it is invidious that the same degree of freedom accorded to the BBC is not extended to the other Public Service Broadcasters (PSBs). The Government should ensure that a level regulatory playing field is created for all UK PSBs.

  1.0.6  We welcome the Government's intention to introduce self- regulation of broadcasters. ITV companies will have the responsibility of issuing statements of programme policy that will become the benchmark against which self-regulation would be measured. Backstop powers to ensure that these responsibilities are met would rest with OFCOM. However, Public Service requirements will differ between broadcasters, with those of the BBC ranking highest. Those of other broadcasters should be governed by a general Public Service description within which broadcasters would define their requirements in accordance with the framework outlined above. ITV's requirements will mainly be news and current affairs, regionality and original production, a significant proportion of which will come from outside London. However, OFCOM must have sufficient power to ensure that broadcasters who fall short on promises or remit are held to account. This should apply equally to the BBC.


  2.0.1  We concur with the Government's view that the question of who owns our newspapers, television and radio is vital to democracy and that a framework for media ownership which protects plurality and diversity needs to be structured in a way conducive to creating the most competitive market for UK media businesses, while allowing companies to grow and to benefit from the creative and commercial dividends that can flow from cross-media ownership.

  2.0.2  We therefore welcome the extensive consultation on cross-media ownership and SMG will shortly be submitting a response to Government detailing the company's proposals.

  2.0.3  UK media are the envy of the world. The quality and diversity of content presents the highest standards of information, entertainment and debate to UK viewers, listeners and readers. Meanwhile, the range of media owners and plurality of voice reflected in that content helps to ensure that democracy is protected and freedom of speech maintained.

  2.0.4  However, this is achieved against a background of one of the most regulated media environments in the world: an environment in which regulations are inconsistent across different media, are based on outdated views of the media world and which actively constrain the development of UK media companies.

  2.0.5  SMG, is a successful and ambitious UK media company, has a unique cross media profile in terrestrial television, radio, newspapers, magazines, outdoor and cinema advertising (see Annex). We recognise the value of our media's independent voice and are committed to editorial independence. We further understand the need to invest in high quality infrastructure and content in order to compete for the attention of our viewers, listeners and readers.

  2.0.6  We believe that for the Government to achieve its aim of creating the most dynamic and creative media market in the world, that UK media companies must be allowed to achieve sufficient scale to compete not only with each other, but also with their European and global counterparts. Only with scale can media owners invest sufficiently in new content and infrastructure, thereby ensuring that the UK media market retains its reputation for high quality and independent content backed by extensive and appropriate consumer choice.

  2.0.7  It is our fundamental view that UK competition law is sufficient to protect the interests of consumers in an environment in which technological advances are providing an increasing range of consumer choice and lowering barriers to entry.

  2.0.8  However, we note the objections expressed in the Government's consultation paper, specifically that using revenue measurement alone was a rather blunt instrument. In the interim period, we have carried out a significant amount of analysis and desk research and developed our proposal further. Our alternative cross media ownership regulatory proposal, which will be submitted in response to the most recent consultation document, takes into account Government's wish to retain some level of control over plurality of ownership whilst allowing UK companies to grow in scale and to benefit from cross-media synergies.

  2.0.9  SMG undertakes to supply a copy of our proposal on cross-media ownership regulation to the Committee upon its publication.


  3.0.1  We welcome the Government's recently circulated Digital Action Plan and would hope for rapid implementation. In particular, we believe that the Government needs to set a clear target date for switchover that will give certainty to both industry and consumers. The Government has now said that switchover by 2006 is unlikely and expectations are now being set at 2010. This is disappointing and should be reviewed. The investment in digital is significant and this decision will result in broadcasters carrying the costs of two transmission systems for longer.

  3.0.2  Government also needs to produce a detailed plan setting out how switchover will be achieved. This should include working with the Digital Broadcasting Group on Spectrum Planning, with the RCA and on planning the conversion of the transmitter network from analogue to digital, in particular in rural areas. It should also include working with equipment manufacturers for the early introduction of affordable IDTVs. This is of paramount importance for consumers and the industry in Scotland where the topography makes universality of access expensive and difficult to achieve.

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