Examination of Witnesses (Questions 440
THURSDAY 8 FEBRUARY 2001
440. Earlier we heard from ITV that one regulator
should be good for all broadcasters and each channel, however
distinctive each channel might be. There is a point at which you
must accept that you cannot get your own way?
(Sir Christopher Bland) The White Paper does not agree
with that analysis. It will come as no surprise to you to learn
that we do not agree with it either. The White Paper recognises
that there are different forms of broadcasters and public service
broadcasting. To have a uniform regulatory régime that
incorporated absolutely all aspects of regulation would be inappropriate.
The BBC is at one end of the public service broadcasting spectrum;
Channel 5 is at the other. They are funded by different means
and there are different imperatives once there is an obligation
to satisfy shareholders. We believe that the key element to be
retained in the BBC, within the responsibility of Governors, is
the responsibility for delivering the BBC's public service remit
in the terms that we spoke about earlier.
441. But some parts of the BBC are seen to be
more commercial than others. Could you not split off those and
have them separately regulated? Aside from your public service
remit, there are other aspects which could come under one regulator?
(Sir Christopher Bland) They already do. Our commercial
activities are clearly and separately identified and reported
on, and those are subject to the same kinds of commercial regulation
as are the commercial activities of our competitors. For example,
it is entirely appropriate that the OFT should take a view on
whether or not the BBC is trading fairly. We have no problem with
442. Ms Thomson, last week you claimed in a
letter to The Industry Standard Europe that the proposal
for the BBC's non-UK web sites to carry advertising was "endorsed
and encouraged" by this Committee. Surely, that was far from
the truth. Did you get it wrong?
(Ms Thomson) As you will be aware, we have been looking
for some time at the fact that a significant proportion of the
traffic to our online site comes from overseas. Is it right that
the licence fee should pay for that? We had a number of recommendations
from the Secretary of State, the Davies Committee and, I believe,
this Committee, that we should look at this and see whether that
subsidy should continue or whether there were other ways round
it. That is what we are doing at the moment.
443. Therefore, you say that you are right and
we are wrong?
(Ms Thomson) As I understand it, yes, but if you want
me to go back and get the reference I shall do so. If I have got
it wrong I apologise.
(Sir Christopher Bland) I do not believe that we relied
on the Committee alone. The Committee tells us to do many things
but we do not always take its advice. However, we always listen.
The primary reason for investigating this is that a large number
of visitors to the licence-funded sitewe believe that it
is of the order of 30 to 40 per centdo not pay the licence
fee because they originate outside the United Kingdom. The question
is whether there is a sensible mechanism to distinguish those
who are genuinely outside the UK. We are not clear about that,
and our tests which begin in two weeks will try to identify it.
If the answer is that we really cannot distinguish them there
is not an option for us to explore further.
Chairman: Perhaps I may steal a moment
of Mr Fearn's time to read out what we said in our report on the
funding of the BBC published in December 1999: "BBC Online
is the start of services which the BBC will increasingly be required
to provide in future, but we consider that it will be stultified
if it remains on its current basis. We recommend that BBC Online
should be transferred to BBC Worldwide to enable it to expand
its scope and service and take advantage of the commercial opportunities
444. Mr Dyke, what types of public service broadcasting
do you think are best provided by organisations other than the
BBC, and why?
(Mr Dyke) The history of British television is that
until comparatively recentlythe last decadeall television
broadcasters had an obligation to be public service broadcasters.
The advent of multi-channel television and Sky changed that, and
the White Paper clearly identifies that and says that certain
broadcasters should continue to have a public service remit, although
in the realm of some of the commercial broadcasters that should
become less so over time as competition grows. Clearly, the principal
responsibility must lie with the BBC, but there is still a responsibility
with Channel 4 and ITV. The White Paper says that that is less
so with Channel 5. If the BBC is to provide further digital channels,
clearly they must be part of the public service remit.
445. What types of programme do others do better
than you, or are you the top and no one can do better?
(Mr Dyke) All these things move over time. At the
moment, we are probably pre-eminent in news, but there are other
areas of programming in which others have done better than the
BBC, and at other times we have done it better. This is a cyclical
business. I believe that to do the best in public service broadcasting
there is a need for money and talent. What is the best way to
combine the two? Clearly, it is no longer the case, if it ever
was, that all the best talent works for the BBC. A lot of people
now work for ITV and a considerable amount of good talent is out
there in the marketplace, and we commission from it as well, as
we are required to do. Even if there was not such a requirement
we would do it because it is very much in our interest. For example,
in situation comedy the outside marketplace is very strong.
446. Over what timescale do you envisage digital
radio becoming a mass market medium?
(Sir Christopher Bland) Slowly. The take-up of digital
radio has been much slower than we and the Committee would wish.
One of the matters that Ms Abramsky may deal with is the way in
which BBC can help to drive the take-up of digital radio through
offering new services.
(Ms Abramsky) It will be slow because the critical
factor is when cheap sets will appear in the marketplace. The
commercial sector as well as the BBC have been at the forefront
of the attempt to drive digital radio in this country. We have
formed a partnership and are trying to promote it jointly. We
are talking jointly to manufacturers and retailers. But radio
is a cheap medium and people expect to be able to go out and buy
a cheap radio. Therefore, it is important that cheap sets are
available to the general public so that they can access the new
service. As to timescale, digital radio is a number of different
things. It is digital radio in the normal sense of a portable
radio, such as a car radio; it is also listening to radio on the
Internet and on digital satellite and digital cable. There are
now a number of radio services on that medium. We predict that
by about 2008 there will be 30 per cent availability of digital
in this country, but that does not mean that everyone will be
listening to it through a digital radio set. The process is very
slow. I am always startled by the length of time it took to move
from medium wave to FM: about 25 years. I believe that it will
be the same for the move to digital radio.
447. Some of us have not completely moved from
medium wave to FM. Mr Dyke, this morning ITV Network claimed that
the BBC should be the most regulated channel because of its particular
method of funding. It also suggested that there should be one
regulator for all. How do you feel about that? At present do you
consider that you are the most regulated of broadcasters?
(Mr Dyke) I have the advantage of having worked in
all systems. As Director-General of the BBC I feel more regulated
now than I did as the chief executive of an ITV company or when
I was on the board of Channel 4. The length of discussion about
strategic change, and the amount of convincing of the Governors,
is considerably more than I expected, and I believe that it is
right. We do not always get our way as the management because
the Board of Governors has a wider remit. I have not found it
a pushover in any sense, as is implied in some areas. There is
a greater degree of scrutiny than I ever experienced when I was
regulated by the Independent Broadcasting Authority or the ITC.
In recent years the problem with regulation by the ITC was that
it became regulation by numbers; for example, that a promise had
been made to provide 32 hours of such and such but only 28 had
been achieved. That appeared to be too formalistic, and it is
good that the White Paper recognises that. The ITC has also recognised
it and wants to move away from it; but we are under scrutiny by
the Government, as is right and proper. I suspect that we are
the most regulated, although not in the mechanistic way that ITV
448. If we look at what is happening in the
media, we are moving into a different world. Perhaps the regulatory
framework to which you are now subject is not wholly appropriate
to the new world. Do you believe that the system in place and
the remit in your charter are sufficient, or, as the White Paper
suggests, should it be different?
(Mr Dyke) We are not at odds with many of the proposals
in the White Paper. As management, obviously we accept that regulation
changes over time. I was very anxious that we did not have a single
content regulator across the whole of British television. Plurality
in regulation is as important as plurality among broadcasters
in terms of deciding on what is and what is not fair and those
kinds of things. However, I believe that the process by which
someone can complain about the BBC, namely via an overall regulator,
is perfectly fair.
449. Obviously, the White Paper put out by the
Government is pre-emptive of a communications Bill. Do you believe
that such a Bill should be drafted so as not to pre-empt the outcome
of the 2006 review of the BBC's Royal Charter, because the timing
can be quite difficult?
(Sir Christopher Bland) We agree that the drafting
of the Bill must pay attention to what may now seem to be a long
way away at the moment. However, we are only five years away from
the process of deciding whether there is Charter renewal, and,
implicit in that, arguably licence fee renewal and sustainability.
The drafting of the Bill needs to pay attention to that future
timetable which is rather closer than one might have first thought.
450. It has been said by others who have appeared
before us over the past few days that the BBC with all its clout
and finance is able to pick off any new service from any commercial
sector. It is set up, you identify it and then knock it out of
(Sir Christopher Bland) Do you mean the way that Kelvin
MacKenzie and Talk Radio identified sport and news as a lively
possibility and the BBC came in afterwards? That is not how it
451. Surely, there will be commercial sectors
that identify a particular niche audience and exploit it for commercial
purposes, quite rightly, and you then come along and recognise
it as a good hole to pick and enter.
(Sir Christopher Bland) We should not do that. I do
not think that we often do. Quite often, the job of the BBCRadio
5 Live is a good exampleis to be a pioneer of new ideas
in broadcasting. On the whole, it is the commercial side that
comes in afterwards. But we should not do as you have just described;
namely, see a commercial company in radio, television and online
do something and just imitate it. Before our day there were occasions
when the BBC did exactly that. You will recall the timing of Breakfast
Television and the extreme disinterest of the BBC in such broadcasting
until the IBA, as it was then, decided to award a breakfast franchise.
The BBC then piled in speedily. I do not believe that that was
the right thing to do; it was a spoiling tactic.
452. You said in your first answer that you
regarded your role as being to provide services not provided by
commercial competitors. Frankly, that is not quite so, is it?
There is a whole range of services now provided by commercial
competitors where the BBC uses licence-payers' money and yet is
not regulated in the same way as other competitors in the market?
(Sir Christopher Bland) I said that that was one of
the tests but it is not an exclusive test. For news services we
require the permission of the Secretary of State. We are now in
the process of applying for it for our new radio and television
services. One of the jobs of the Secretary of State, as it is
of the Board of Governors, is to take a look at those new services
and see whether they simply replicate something that already exists.
We take the view, which must be confirmed or contradicted by the
Secretary of State, that those new services do not fall under
that heading. Were that to be the case we would expect the application
to be turned down.
(Mr Dyke) When we announced last August what we planned
to do we made it clear that that was our plan until the end of
the Charter period. We did not wish to do more. The plan is based
on one thing: if we believe that analogue switch-off is coming,
how many BBC services will be available in every home? Universality
is the basis of the BBC and if you remove that much of its value
disappears. We thought that there would be a minimum of five.
There could be many more in digital satellite homes and more in
cable, but in digital terrestrial we thought there would be the
ability to have five, or perhaps six, services depending on the
technology in terms of digital compression. Therefore, we said
that that was what we should do in the period leading to switch-off.
We have to work out the services that we should deliver for free
eventually to every home in the country. One area that is now
causing some controversy is children's services. An interesting
analysis was produced by Spectrum last week. If one looks at most
of the children's services available in this country one finds
that they comprise in excess of 90 per cent American material.
That is not our intention. Therefore, we shall offer a very different
service. If one looks at the consumer research carried out, and
the consultative process that we have undergone, in this country
there is overwhelming support for children's services based on
British production without advertising. If one then sees largely
American media organisations complain that that may undermine
their market here, that can be taken into account but it should
not be the major criterion of what the BBC supplies, particularly
in circumstances when for them it is a wholly secondary market;
it is one of many that they have set up around the world based
upon production in America; in other words, it is a cheap service
because it is product that has already been made for the American
market. I do not believe that that should be the criterion by
which the BBC, the Secretary of State and, ultimately, Parliament
decide what should be provided by the licence fee.
453. But we are looking not only at a public
service broadcaster to make good deficiencies in the market but
also value for money?
(Mr Dyke) As we are.
454. There appear to be a number of areas identified
by you in which you wish to compete, for example 24-hour news.
Certainly, there was 24-hour news broadcasting before you decided
to launch News 24. You have also mentioned children's television.
Without doubt, there is already provision in that sector. You
say that that is American-based, but do you have an opportunity
to provide some BBC productions to other children's broadcasters?
(Mr Dyke) We have sold some of our library to other
children's broadcasters. We have an extensive library of children's
programmes which we shall use on some of our channels and will
also invest additional sums of money. We shall invest an additional
£41 million per annum in the production of British children's
455. But you are also investing money in providing
a new children's channel which provides an opportunity for you
to use your productions?
(Mr Dyke) But one must pay to receive that channel.
456. What does it cost the BBC for that service?
(Mr Dyke) It will cost approximately £41 million.
However, in the end we are talking about channels that are available
in every home and to every member of our society, including people
who cannot afford to pay for television. There is a good deal
of evidence that about 30 per cent of the people in this country
either do not have pay television because they do not want it
or cannot afford it. In the multi-channel world that is emerging
we believe that those who are unable to pay are entitled to more
for their licence fee than they are receiving now.
457. As to sporting rights, can Mr Dyke provide
an assurance about the deal which has been struck with Lennox
Lewis? While people are very keen that the BBC should show as
much sport as possible and have campaigned for additions to the
list system, some do not believe that professional boxing is the
best thing to go for. Can Mr Dyke assure the Committee that that
deal does not mean that the BBC will be unable to bid for the
English rugby rights when they become available, for example?
(Mr Dyke) I can give an assurance that we shall bid
for them, but I cannot be sure that we shall win them. According
to the figures that we announced this week, we are increasing
our sports budget by £30 million a year, which will allow
us to do additional things. None of us knows what will happen
to the further escalation in the cost of sports rights. Hopefully,
it will slow down. However, if the Committee looks at what is
happening to the football World Cup at the moment, that process
is certainly not slowing up. The Lennox Lewis deal is a comparatively
small amount of money. You would be quite surprised at how little
Lennox Lewis was making out of pay-per-view, which was why he
came to us. Whether or not one likes boxing, which is still a
legal sport, it is interesting that many of people who switched
en masse to pay television in the early 1990s are very
keen to move back, because the interest in and support of boxing
in this country has declined significantly since it ceased to
be broadcast on terrestrial television.
458. That is also borne out by the fact that
at Murrayfield last year the Calcutta Cup drew an audience of
6 million when put out by the BBC and this year it will have an
audience of 600,000 when it is broadcast by Sky.
(Mr Dyke) One begins to see the sporting bodies in
this country recognise that they cannot just take the highest
figure, which may mean that there is less impact. Clearly, soccer
is a difficult area.
459. Quite often sporting bodies prefer to be
televised by the BBC with a very much bigger audience for commercial
reasons; namely, that millions of people see the advertisements
around the ground on BBC that they would not see in a smaller
(Mr Dyke) Clearly, that is a factor which they must
weigh up when making a decision, but the difference in money between
pay-per-view and terrestrial was so large that that would have
been a drop in the ocean.
(Sir Christopher Bland) The argument that is now going
on in the context of rugby union is interesting. The non-professional
clubs are saying that one of the ways to encourage interest in
the game and sustain it from the grass roots up is by having a
universally broadcast service, whether it be on ITV or BBC. If
in the short term one goes for the maximum money on either subscription
or pay-per-view that is fine, but in the long term the game or
sport may wither.