Examination of Witnesses (Questions 548
THURSDAY 20 JUNE 2002
548. I apologise for the delay but I cannot
pretend it was unanticipated.
(Mr Jones) I have never known Greg not
549. I will start the questioning as Anne Picking
has had to leave the room. The Bill does not specify whether the
Content Board will be an executive or advisory body. Would it
be fair to say you would prefer it as an advisory body with key
regulatory decisions to the main board? This is obviously a follow-on
from the questions Anne Picking asked the BBC.
(Mr Jones) No, Chairman, I do not think so. It would
be right and proper for the Content Board to be reasonably self-sufficient
and we feel it will be more than capable look after day-to-day
decisions on content issues. I think it is vital they have clearly
defined roles. There will be a relatively small OFCOM Board and
I would have thought it is right and proper that they concentrate
on the key strategic issues whereas the Content Board deals with
programme detail. I think Greg touched on this, we do not want
two regulators, therefore it is vital the Content Board stays
in close touch with the main OFCOM Board. I would have thought
if there were very big key issues like a change in the remit of
a particular channel and a major change in the programming policy
of Channel 3 or Channel 4 or Channel 5, I would have thought that
would be referred for a final decision to the main OFCOM Board,
but if it were a simple programme issue, a Brasseye I would
see that being settled by the Content Board, not bogging down
the main OFCOM Board. One final point on that, there is also a
risk that the Consumer Panel and the Content Board overlap, and
again I think there needs to be a very clear definition of roles.
I would have thought the Consumer Panel should stick to issues
like pricing, access, genuine consumer issues, whereas programme
matters, channel policy, programme remits, stay within the Content
Board. So clear delineation, co-operation between each, but each
having clearly defined roles.
550. On Tier 3 regulation and particularly the
obligations on regional programming, in your submission you highlight
the fact these have strengthened slightly in terms of statutory
regulations though many of the statutory provisions regarding
regional programming and regional news and so on are in fact in
the licensing agreements anyway. Is this something that you are
comfortable with, Tier 3 regarding regional programming? Is it
something which you think gives you a premium in the market or
is it something which, as some would fear, would loosen and relax
in years to come as you consolidate?
(Mr Desmond) I think broadly we are comfortable. We
feel comfortable that you have to protect and maintain public
service broadcasting and a clear part of that for us is regionalism
and our obligations to the regions and regional output. We have
one concern which is specific to Clause 193 in the Bill, that
effectively OFCOM will have the power to ensure appropriate investment
is undertaken in different parts of the UK. As you are probably
well aware, in our recent Charter agreed with the ITC in terms
of nations and regions, we are already committed to this, and
in fact already produce more than 50 per cent of our network output
outside London. We vehemently believe that ITV is very much about
ITV regionally broadcasting to the nation as opposed to London
broadcasting to the nation, and we are very proud of that, but
it very much has to be on a meritocracy basis. There is a huge
regional commitment there, in fact we would like to see Channel
4 and potentially Channel 5 get up to the mark as their originating
production increases. Turning specifically to regionalism itself,
if we have been guilty of anything it is not shouting enough about
what we do within the regions. Part of our recent agreement with
the ITC is that we have strengthened our regional output. We still
transmit over 6,000 hours of regional programming and in many
of our regions we transmit more than BBC1 and BBC2 combined on
a regional basis. We also transmit 27 different versions of local
news within our regions and are committed to further investment
to regionalism in peak. I think the key thing is that the Bill
provides broadly the right degree of statutory protection and
the right degree of flexibility and I think we are happy with
that. If we were to leave you with one point it is that our commitment
to regionalism is as strong as ever but regional ITV will not
be protected by being set in aspic.
551. One other thing which is not set in aspic
according to the Bill we have before us is the ownership provisions
and we have already heard a little this morning about various
views on relaxation of the ownership restrictions on Channel 5
and Channel 3 and so on. I would invite you to give your views
on that and also on the specific proposal about separating pay-per-view
rights, subscription rights, to programming from free-to-air terrestrial
rights, and whether OFCOM should have a role along those lines.
How would you respond?
(Mr Desmond) We fundamentally agree with Greg's comments.
Certainly if ownership were to change, and let's take the scenario
where BSkyB could buy Channel 5, it would fundamentally change
the ecology of public service broadcasting. Certainly on rights
for sport and major movies, where again we agree with Greg, and
the whole issue of being able to use the pay channel of what is
paid for by rights into the free-to-air environment, you can see
a fundamental shift in terms of how that competes against other
terrestrial broadcasters, and that is an issue which we would
fear. It is right and proper that should be looked at in the forthcoming
Bill and be part of that Bill.
(Mr Jones) Are we happy that ITV companies could be
taken over by non-European owners? I think generally we are quite
relaxed about it. The important thing about ITV is the duties
and obligations placed upon it by the Bill in terms of its regional
duties, its commitment to original production, its commitment
to regional production outside London, its commitment to news.
All those things actually protect ITV and what ITV is all about.
Who owns it is neither here nor there. As long as it is well funded
and we can continue to fund the programme service, we are relaxed
about it. As for the thought that an American owner would come
in and ITV would be awash with American programmes, well, it would
not be, because what they would do is come in and destroy the
business they have just bought. American programmes do not play
a major role in the ITV schedule. What plays in ITV is original
drama, original entertainment, original documentaries. You will
not find on BBC1 or ITV very many American programmes other than
films. It is unlikely we would play Friends or ER
in peak time because it does not give you big, mass volume audiences,
we want 6, 7, 8 million, whereas West Wing only gets a
couple of million. That sort of high quality drama is great for
Channel 4, great for BBC2, but it is not right for ITV, our viewers
want to watch original production.
552. Clive, what you said about ownership does
not surprise me because throughout the evidence we have received
we have tended to find those companies which are commercially
owned tended to be very relaxed about, shall we say, if not downright
agreeing with, relaxation of ownership rules because it would
on one view allow the owners to realise their investments, such
as that of Channel 5. Channel 4, on the other hand, has made an
extensive submission on the potential effect on production and
other aspects of the UK television economy of unlimited foreign
ownership. Can I ask the question in a slightly different way.
What evidence is there that particularly US or Canadian or Australian
ownership of Channel 3 or Channel 5 would, and I quote the Secretary
of State, encourage innovation, allow the UK to benefit rapidly
from the ideas of technological developments, or indeed help to
give our industry the edge? What evidence is there for those statements?
(Mr Jones) You should really ask the Secretary of
State rather than me but I would say a number of things. We are
dealing, as I said, with a hypothetical situation here. We have
been able to be taken over since 1992 by European broadcasters
and nobody has done it yet and there is no indication that TF1
or anybody else is interested in buying ITV. There has been major
consolidation in ITV and it is now dominated by our two companies.
Has that changed the basic nature of ITV or changed our regional
commitments? Has it meant any of our 27 regional news services
having been closed down? Has it meant we have cut back on regionalism?
Has it meant that Coronation Street has moved from Manchester
to just outside Sevenoaks, or Emmerdale has moved to Scotland,
or Taggart or Rebus have ceased to be made in Glasgow?
No, it has not, because it is down to the licences and it is down
to the regulator to ensure we stick to our licences. Would American
ownership re-invigorate ITV? It could. America is one of the most
vibrant and creative film and television environments in the world,
they do make very good television programmes and very good movies,
there is a host of creative talent there and they are willing
to invest in creativity, but there is no guarantee one way or
the other that they could come in and improve ITV or improve Channel
5. The real protection for viewers, the real protection for the
Government, is I think in the licences and in the provisions of
the Bill to define the service. If that is done properly, whoever
owns the companies or whoever owns one single ITV, the nature
of the service would be underpinned by the Bill and by the history.
553. In summary, would you both agree there
is actually no evidence therefore that we would have a more innovative
and better television industry in this country were that to happen?
(Mr Desmond) I would endorse what Clive has said,
I do not think there would be. ITV already competes against the
best of American programming which is screened on Channel 4, Channel
5 and satellite, and we know what drives our audience performance,
which is strong originated drama, strong originated entertainment
and factual programmes, and we also know that derives the revenue
which we take from the market place. I think anybody coming in
and fundamentally changing that shape and mix of programming would
have a huge financial horror show. I really support what Clive
(Mr Jones) Would we welcome the creative brains behind
24 or West Wing or Friends or ER helping
us to make better programmes for ITV? Too damn right we would.
554. You do not need to be taken over by them?
(Mr Jones) I do not know, it might help to pay them
a great deal of money.
555. Are you suggesting then, as I think you
are, that the underlying rationale which the Secretary of State
offers for the Bill is an interesting assertion rather than any
form of clear fact?
(Mr Jones) Yes, because it cannot be proven. It cannot
be proven in the present environment so, yes, it has to be an
556. You argue that OFCOM should have no locus
in scheduling matters, which are best left to the judgment of
the broadcaster. I suppose in a sense, you would, wouldn't you,
after the history of ITC and news programming. But is it not the
case that OFCOM must take an intelligent and well-informed view
on the impact scheduling can make on the success or otherwise
of delivering the public service remit?
(Mr Desmond) I think in broad terms we have no issue
that OFCOM obviously has a clear view in scheduling matters, in
terms of range, diversity and our commitment to regionalism. It
is when it gets down to very specific scheduling issues and the
fact OFCOM could come back at the end of the year and say, "We
think ITV should have played Programme X in Position Y".
I think really it should be down to the broadcaster, understanding
its remit, understandings its obligations, to schedule to best
effect whilst maintaining those obligations.
557. So what sort of observations or instructions
would it be reasonable for OFCOM to make?
(Mr Jones) The Bill says, and it is a Tier 2 requirement
on us which would be supervised by OFCOM, that we will carry news,
current affairs, regional programmes and regional in peak news,
which is a perfectly reasonable thing to do, but this is supposed
to be about light touch regulation. I do not think it is light
touch regulation for a group of regulators, most of whom would
have no experience of television scheduling whatsoever, to tell
experienced television people who spend a fortune each and every
day, each and every month, on researching audiences to understand
what they need and want at particular times, where to put a particular
television programme. It is intriguing that Greg came back from
Australia and decided to move the news and he did it, yet we had
months and months of negotiation with our regulator about moving
our news. There is a general requirement on us to do high quality,
national and international news in the peak and to do current
affairs in peak in a schedule of range and diversity, with children's
programmes, drama, entertainment and information. I think it is
for the people running channels in a light touch regime to put
558. Is that what you think the Bill will give
(Mr Jones) I thought that was the policy aim behind
it. I think by and large, yes. I think there is a reasonable balance
within the Bill. Some things are over-prescriptive, which we have
described in our evidence, but generally, yes, we are relatively
content with it.
559. Andrew Neil at the Social Market Foundation
debate at BAFTA yesterday described ITV as "a badly managed
basket case". Indeed, there is some suspicion that your friend,
Greg, would gladly in the future just slog it out with BSkyB and
Channel 5 and see you pushed to the margins. In those circumstances,
are you worried at all that the clause in the Bill actually puts
an extra public service remit on ITV? Would you like a more flexible
public service remit? Would you like a public service remit tied
to audience share?
(Mr Desmond) Broadly speaking, we are reasonably happy
with the remit providing the light touch is applied to it. In
terms of the reference to basket case, ITV has been through a
very difficult time in terms of its core business, we have been
through the worst advertising recession in living memory from
our perspective, and have come up against the BBC which is now
dramatically well funded and therefore there is an imbalance in
the system which may well take some time to even out in the way
the levy implications on our licences are currently configured.
In terms of the remit itself, and changes to it, we think OFCOM
should have the power to look at the economic landscape and take
a judgmental decision both in terms of what is happening to the
economy, what is happening in terms of the performance within
the broadcasting environment, but it should be judgmental as opposed
to formulaic. It is really up to us, if we believe there is a
case for change, to come forward with a very clear proposition,
or indeed if we believe another broadcaster should be making basic
changes or should have changes forced upon them, then we should
bring that case forward. So we do believe it is a proper role
for OFCOM rather than the Secretary of State.