Joint Committee on The Draft Communications Bill Minutes of Evidence


Examination of Witnesses (Questions 660-676)

MR TONY BALL, MR RAY GALLAGHER AND MS SHEILA CASSELLS

MONDAY 24 JUNE 2002

Mr Lansley

  660. In your evidence to us you did not express any view about the Bill's provisions in relation to nominated news providers, nor the policy narrative suggestion that if Channel 5 were to secure a substantial free-to-air market share that similar provisions of nominated use providers would also apply to Channel 5. Does that, therefore, mean that in so far as you have looked at them, you are content with them, and does it also therefore mean that by implication the absence of media ownership controls in other areas is sufficient to offer plurality, but that you recognise the case for special rules relating to news provision?
  (Ms Cassells) I think our view is that nominated news provisions are now rather anachronistic. We do not see why a broadcaster should not wish to produce a high-quality impartial news service in competition with the BBC and in competition with the press.

  661. You would wish there to be no special rules relating to news provision.
  (Ms Cassells) There are special rules relating to news provision in terms of the licence conditions which require people to produce high-quality news.

  662. In relation to ownership of news providers?
  (Ms Cassells) We do not think there is any reason for that.

  663. Nor numbers of owners of media news provision in the system; so at the moment we have effectively across the television scene three news providers. You are not looking for there to be a kind of rule of three continued in the future; and if there were to be two providers, that would be perfectly sufficient in your view, would it?
  (Ms Cassells) Providing the viewers are able to receive news from a variety of different sources. We have to bear in mind that we are talking about a multi-channel environment where on the digital satellite platform, for example, you have something like six dedicated news services, so there is plenty of choice. People can also receive news from the Internet and from newspapers. The issue may go to whether there should be media ownership rules in relation to cross-media owners. Again, we believe that competition law can deal with that. It was interesting to hear Derek Morris from the Competition Commission talking about how they look at plurality, and how they believe they have sufficient powers.

Paul Farrelly

  664. You have been quite clear that you just want more cross-media ownership restrictions swept away. You think the market is mature enough and you would prefer to rely on competition. Under your current ownership do you believe there is any justification at all for you hypothetically being able to buy Channel 5 but not an ITV licence?
  (Mr Ball) Yes, it is an oddity. I would think that if we were buying Channel 3 on competition grounds we would not be able to do that anyway, so you do not need that rule. It is curious that it is there.

  665. Do you think the Government should be consistent; that it is "make your mind up" time; that it is all or nothing?
  (Mr Ball) Yes. I do not think we would be allowed to. If the rule was not there, we would have difficulty anyway.

  666. It should be consistent.
  (Mr Ball) Exactly.

  667. Presumably, if you were to own it, I presume you would try to grow audience to market share to try and match ITV and BBC. You would not be content with second or third fiddle.
  (Mr Ball) I honestly have not given it that much thought. We are not trying to buy Channel 5.

  668. But you would not be prepared, as a —
  (Mr Ball) It would be a pretty big hill to climb to grow it to that kind of market share. The BBC is spending, the last time I looked, about £1 billion on BBC1 programmes, and ITV about 800 million, and Channel 5 are spending 120 million or so, or perhaps more than that. Share points and programming budget is not an exact ratio, but nonetheless there is a connection. So the kind of investment we have to make to take on a channel that is hugely dominant in the commercial market, like ITV, is phenomenal.

  669. It is not impossible, given your success in satellite broadcasting.
  (Mr Ball) Not impossible.

  670. If it is not impossible, do you not think that is another —
  (Mr Ball) As I understand it, if someone, whether it is us or somebody else, did come in and grow Channel 5 to a huge position in the market, I am sure the rules could be looked at again as to what you can do with it.

  671. The possibility exists.
  (Mr Ball) Yes.

  672. That, in itself, would be another reason for the Secretary of State's argument, for example, allowing a different thing for Channel 5; but because it is smaller now does not smack of being terribly consistent —
  (Mr Ball) I agree.

  673. We could not rule out Sky owning an ITV licence. It would take a change to your ownership structure.
  (Mr Ball) Correct.

  674. For contingency planning, have you or the board ever considered what changes to your ownership structure might be necessary to allow you to buy an ITV licence?
  (Mr Ball) No.

Nick Harvey

  675. As you know, the British film industry is reeling from the tax changes in the budget, but also independent television production companies took a knock in the budget as well. I am sure that Sky puts a value on independent production, but what can you do to help independent television producers and also the British film industry; and why did you close Sky Pictures?
  (Mr Ball) On independent production, we spend about half the budget of Sky One going to independent producers, and on the sports side we spend a fair bit on independent producers. Sky Pictures still exists. We just changed the way we go about it. Originally, we planned to make up to eight films a year. I think we now are making eleven. We do not have any distribution muscle here, or anywhere, in terms of theatrical release, which meant that we never really got to see the best projects. We were not getting bangs for our bucks, so we decided to do a deal with Pathe, where we finance up to four films with Pathe each year. We have the option of four and we did three this year. The one we passed on was a biog of Hitler. We put in about half a million or so, but Pathe make far bigger budget movies than we would have made through Sky Pictures, plus they have distribution, which means that they get the better scripts and are probably one of the first the independents would come to. That is a more efficient way for us to support the film industry. Going forward, would we have a stab at expanding Sky Pictures, or looking at the Pathe deal somewhat more? Yes, I would. Clearly, if you have content that people value, it is worth doing that. With Sky Pictures, we tried to do too much, too early, and it was really distribution that made us make the decision to drop it.

Mr Grogan

  676. You mentioned sport three or four times, where you have an enviable reputation. The listed events are enshrined in legislation. Do you now support that concept, that there are some events, for example the football World Cup, that should be available live, free-to-air to the whole population?
  (Mr Ball) I do not think we have ever bid for anything that has more recently become an "A" listed event. I have no real problem with anti-syphoning rules. The biggest problem is some of the federations, which clearly do not want to be included in the list because financially it can be disastrous.


 
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