Examination of Witnesses (Questions 840-859)|
THURSDAY 27 JUNE 2002
840. What are you aiming for?
(Mr McGarry) I do not think it would be reasonable
to make such a provision giving such a power. At the moment when
ownerships of licences in ITV change, the ITC insists, or attempts
to insist, that the licence obligations are honoured by whoever
now owns them.
841. But they will be able to do exactly that
even if the partial owner is foreign, will they not?
(Mr McGarry) Yes.
842. There will be no change in that, will there?
(Mr McGarry) No, but I believe that there is a reason
or a justification for saying that if a foreign owner takes over
one of our channels, they should be required to meet the more
specific targets and obligations in terms of having to honour
843. What I am trying to get out of you is that
you are going further than the licence obligations. What kind
of more specific requirements are you asking for?
(Mr McGarry) Some of the things that are missing from
the proposals as they stand, like specific quotas for genre of
programmes, for example, which I think should be there in relation
to that, and quotas of that kind.
(Mr Lennon) Can I reinforce the point I made earlier
about the changed nature of relationships should certain foreign
owners break into the market. Although they grit their teeth,
the current Channel 3 and Channel 5 operators do accept that there
is a legitimate social purpose in having regulation of content.
Despite this, they have come up against economic problems which
have taken them back to the regulator and caused them to argue
for consolidation within the industry. The nature of that discussionfor
example, were a large American network to be in dialogue with
OFCOM about their economic problemsI suggest would be completely
different, and OFCOM would find itself dealing with companies
who do not share that culture of accepting, somewhat reluctantly
sometimes, that there is a public service obligation on broadcasters
in this country.
844. I am sorry to pursue it, but I am making
the point that the public sector obligation is a very specific
licence obligation which can be enforced, though I think what
Mr McGarry is arguing is for something beyond the licence obligation.
I do not think there is any doubt when you press the matter later
about the enforcement of the licence obligation, but I think the
argument has been put that there is going to be a need for it
to go beyond the licence obligation. I think that if you are going
to argue that, you have to be very clear. I am not arguing that
you should come out with details today, or we shall probably be
here all afternoon, but if you do have some thoughts then I think
you have to get together and tell us what the change in the Billcoming
back to my pointought to be on this. It is a pretty big
step to go beyond the licence obligations and say that because
the owner is foreign, you are going to impose some rules which
would not apply if the owner was British, which is what you are
actually saying. You cannot do it in a European context anyway,
(Mr McGarry) Not in a European context, no.
845. Can I pick the bones out of this? As I
understand it, Ian and Tony's submissions are quite clear. You
would seek changes in public service remits to be made by primary
legislation not by secondary legislation?
(Mr Lennon) Yes.
I think that covers your point?
(Mr McGarry) Yes.
(Mr Lennon) In a sense, I do not think we would necessarily
differentiate between the rules that ought to be applied to a
non-EU owner and the rules that are applied to the EU owner. The
point we are making is that any remit is open to interpretation
by the regulator, and our experience with the ITC is that the
operators are remarkably successful in seeking a general relaxation
of the ownership controls and to some extent the remit on the
grounds of economic necessity. The economic imperatives for a
vast global multinational will be rather different from those
that we have seen from operators in our country already. Can I
give a specific example. The ITC has, within the last fortnight,
relaxed the requirement for regional programming on Channel 3.
They have called it "standardisation". The net effect
of this, as you heard from PACT, is that hundreds and possibly
thousands of hours of regional programming will now cease. That
is an example of interpretation of a remit which we feel OFCOM
would be just as capable of doing as the ITC has been in the past.
847. Without putting words into your mouth at
all, as I understand it, the position you are taking is that the
type of pressures the Secretary of State or indeed OFCOM might
come undereconomic pressuresfrom a new owner are
such that a government at any given moment might be prepared to
pull the plug, but in fact changing the public service obligations,
which are in the public interest, goes deeper than that, therefore
that is why I think you are suggesting that there should be primary
legislation and not secondary legislation, in order to get the
issue very adequately debated?
(Mr Lennon) Yes. The social interests of listeners
and viewers sometimes have to be put before the economic interests
of the owners.
848. That is as I understood where you were
coming from. Peter, do you have any comment on that at all?
(Mr De Val) No.
Baroness Cohen of Pimlico: Clearly it is the
rest of the nation we are thinking of, is it not?
Chairman: Yes. Of course, any individual company
can make a tremendously compelling case, but the real issue is
making sure that the public interest is not necessarily thereby
bailing it out.
Lord Hussey of North Bradley
849. To some extent we have talked around my
question already, but I shall read it out anyway. What effects
would you expect the proposed new regulatory structure for public
service broadcasting to have? They obviously have a certain considerable
degree of power. Will they exercise it, how will they exercise
it and how would you like them to exercise it?
(Mr Lennon) How will they exercise it is probably
a question to ask me in about five years' time, because it is
simply impossible to predict. The way we would like to see it
exercised is to stick as closely as possible to the principles
of public service broadcasting and the need for content regulation
to deliver that type of programming, in an increasingly commercial
environment, up against competition. OFCOM will have extensive
powers. Whether it is in their powers or in the primary legislation,
I think one of the things we would like to see is that the broadcasters
who are not in tier 2 or tier 3 also are under some obligation
to carry programming of a public service nature which is socially
useful. At the moment there is a pretty uneven playing field if
you look across the spectrum of broadcasters. Leaving out the
publicly-funded ones, at one end you have
850. That is kind of you. Very few people have.
(Mr Lennon) I think you cannot have any debate without
mentioning the BBC when you are talking about communications and
broadcasting. At one end of the spectrum you have very heavily
regulated Channel 3, struggling in a lot of cases to deliver its
public service remit because of economic problems, but they are
clearly under an obligation, they pay licence fees in many cases
running into tens of millions of pounds. At the other end of the
spectrum you have, for example, satellite broadcasting in this
country, under no real public service obligations whatsoever,
competing very directly with the regulated sector, not paying
very much for access, which is where the question with respect
to charging comes in. I think ideally what we would like to see,
amongst other things, is OFCOM levelling that playing field so
the public service commercial operators can actually stand a chance
of surviving and continuing with their tradition of programme
851. That is a very clear answer. Thank you
very much for that. The second part of my question is, can you
suggest any changes to the proposed general public service remit
in Clause 181? If you look at Clause 181 it includes practically
everything, but I thought, just to keep you going, what about
"facilitating fair and well-informed debate on news and current
(Mr Lennon) It was interesting to see that the oldest
definition around actually creeps into that long shopping list
in the form of education, information and entertainment. I think
all of us have struggled with the definition of PSB.
852. I have struggled with it all my life!
(Mr Lennon) You know what it is when you see it. In
terms of those clauses certainly the view of my union is that
there probably is not much point just adding to the shopping list,
because the phraseology there captures what we all understand
to be public service broadcasting in a UK sense. The key to it
is actually putting into OFCOM's terms of reference the ability
to force broadcasters to deliver what they think public service
broadcasting is. So we would not want to make any specific alterations
which lengthened that shopping list into a rather ham-fisted recipe
for what we call public service broadcasting.
853. So you get out there and ask them to justify
their position? You go to the public service broadcasters and
ask them to justify their position or alternatively their material?
(Mr Lennon) I do not know that it is a question of
854. "Explain" is perhaps a better
(Mr Lennon) Yes.
Chairman: One last question, and then I must
855. Can I ask a supplementary on that. You
have said you all understand what is public sector broadcasting.
I rather pursued the Chairman of the BBC the other day to ask
him whether he thought that all of his output was public sector
broadcasting. I think he tried to tell me that it was, because
all the entertainment was. As the previous chairman of a Channel
3 company, we were not allowed to think that all our output was
public sector broadcasting. On the same basis, then, a lot of
BSkyB coming over the satellite is public sector broadcastingfilms
and so on. Do you agree that all the BBC's output is public sector
broadcasting, or do you think that actually a lot of it is, in
effect, general entertainment broadcasting that might be coming
(Mr Lennon) I am not sure there is a compelling reason
to answer that really. I think the justification for the licence
fee is that the BBC does broadcast across all ranges of programmes
and meets all the needs of public service broadcasting. Whether
you actually define it within that total broadcasting output as
a specific programme being public service broadcasters or not,
I do not know. I think the BBC has to provide programmes which
are distinctive. One of my worries about the purpose of this draft
is that it does refer to "entertainment". It does not
anywhere talk about drama in terms of the importance of that within
the overall requirements of the regulated channels, and I think
that is a mistake. When you were operating HTV you were required
by the ITC to provide a range of programmes, it was the justification
for your having the licence and the advertising revenue and so
on, and that range of programmes had to include drama that was
hopefully relevant to your region but also hopefully of a kind
which was going to go onto the network and would attract viewers
in that way. I am not sure whether there is a deliberate thought
in the drafting of the Bill that somehow or other the word "entertainment"
has come in, without any encouragement, as far as I can see it,
for the necessity of producing high-quality tragedy and drama
which is the best really that British television produces and
In the absence of the Chairman, Lord Crickhowell
was called to the Chair
Chairman: I think you very well brought out
the point I was seeking. I agree with you about the importance
of drama. I am just questioning whether "entertainment"
is an adequate definition in terms of public sector broadcasting.
856. Coming on to the theme of high-quality
entertainment and drama, I would be interested in your comments
on the first evidence we heard this morningyou referred
to it yourselffrom PACT and so on. Do you think that if
we have high-quality content, in whatever field, should an independent
production sector be one we should be further seeking to encourage
in this Bill? What do you think would be your first stab at the
sort of proposals that they put before us?
(Mr Prodger) I think the answer to that is yet, but
it goes a bit further than them in that. I think one of the points
that Tony and Ian made is about British production per se, and
the point that are regulated and non-regulated areas of broadcast
in this country showing a very distinct difference between the
amount of British production. It comes to the point about does
Sky produce public service broadcasting, or does any of the secondary
market who certainly provide entertainment. There is very little
British or European entertainment to be found, certainly in new
production. There is a certain amount of old production that is
re-run time and time again. I think that the Bill in general should
be seeking to promote production, whether it be independent or
not. That comes to the point about where does the regulation stop,
should it go beyond the channels that currently exist and should
it actually have some remit on the rafter of channels that now
exist, because there is a pressure there, and the pressure that
has been seen time and time again. Every time the licensees have
gone to the ITC to seek a reduction in their licence, then they
have been granted it for economic reasons. We believe that that
is against the public interest, but we understand why, because
they are having to compete with an industry that does not have
the same restrictions on them. There is no requirement in the
Hallmark Channel to produce anything at all, it simply brings
across cheap imports. That unfortunately is what the majority
of competitors are currently doing. So if the question is, should
we seek to promote, then yes, we should, but we need to look beyond
the current remit and the current channels that are regulated,
because if we do not do that we can only stifle the actual production,
whether it be independent or otherwise, in this country.
(Mr McGarry) Very briefly, my understanding of PACT's
principle is that it is not that they cannot get access under
the quota arrangements, it is the terms under which they get that
access and the rights they have to deliver to the broadcaster
who is funding it. That is a point I have heard made often before
and with which one has some sympathy, but I think there has to
be a balance. I certainly think it is right that there should
be independent production. I think it is a way of bringing in
new ideas, it challenges the in-house production. Also I am equally
convinced that one of the best things about British television
in this country is the strength of its production base, and without
the BBC that would simply not exist. Therefore, I think in-house
BBC production has got to be there for the future. The independants
have a leading role to play in that. They certainly have done
in drama productions. A very large number of drama productions
which are commissioned by the BBC, ITV and Channel 4 are from
independants. I think there is a balance that has to be struck.
(Mr Lennon) I think ten years ago your question would
have prompted a much more hostile reaction from trade unionists
in the industry. We must acknowledge that the independent production
sector is now a fact of life. To give them credit, I think they
have demonstrated, as they said when they first started, that
the main-course broadcasters do not have a monopoly on ideas,
and their output is often creditable. The thing you need to consider
in weighing up an expansion of that sector is the effect it will
have on the rest of the established production base in this country.
There I think the question of critical mass arises. There is no
doubt, despite the effects of the independent quota on the BBC,
the BBC still has critical mass and is a major programme maker.
However, if I can, for example, just quote from a number of ITV
companies which Lord Crickhowell will know well, since independent
production arrived the staffing at Anglia Television has dropped
from 750 to 200, which is a reduction of a third; the staff of
Yorkshire Television has dropped from 3,600 to 600, which is a
reduction of five-sixths. Most of these are programme-making people.
Part of this is the impact of the independent quotanot
all of it by any means. We certainly argue that where you see
such significant reductions in the programme-making staff of Channel
3 companies, you are looking at a situation where some of them
are at critical mass or below, and it is worth pointing out that
many individual ITV companies are actually now smaller than the
biggest of the independent producers.
857. Clauses 190, 193 and 194 provide for quotas
for original production by all commercial public sector broadcasters,
and for regional programming and production by Channel 3 licensees.
What changes do you want in these clauses, and why?
(Mr Lennon) Much stronger language. We would like
to see words like "substantial", "significant",
and indications that there has to be an identifiable and worthwhile
contribution in terms of regional output. So much stronger language.
We think that the way it is worded it looks almost optional for
OFCOM to be setting quotas for regional production.
(Mr Prodger) I think you have to add to that significant
quality as well, which is always a concern. If you look at the
significant amount of production that currently takes place in
this country, it employs very few people, and there is very little
questionable quality in relation to public service. There are
an awful lot of fly-on-the-wall programmes, there are a lot of
Big Brothers, Popstars, Soapstars, Pop
Idol. All of that is original production. None of it is drama
or challenging, and so there is a question of strengthening the
actual content of original production. In the latest ITC report,
where they for the first time look at the so called light-of-touch
regulation, there is no question whatsoever taken on quality,
this is purely a quantity report. That was an instruction that
they gave in order to identify supposedly light-of-touch working,
but it must be a concern in relation to the actual quality of
production and the type and the range of production, as much as
simply how much production is made.
Chairman: We must be drawing to a close. Brian,
do you want to put something to the Bill team?
858. Can I ask a question generally first, which
is this. It is a very fast-moving market, and times have changed
very quickly. The Bill does actually say, in relation to broadcasting,
that training, equal opportunities and disability is right, but
it only talks about it in terms of broadcasting. Is that a problem
in terms of the whole nature of convergence?
(Mr McGarry) Yes.
(Mr Lennon) Yes. Even within the broadcasting sector
there is a difficulty with this. We thoroughly welcome the commitment
OFCOM will have to promote training and equal opportunities. Although
it may not be strictly necessary, we are grateful that that is
now going to be written into the licence between the BBC and the
Secretary of State as well. The problem in the industry is partly
to do with the impermanent centres of employment, the massive
downsizing we have seen over the last decade. When you are getting
rid of people you are by definition not bringing new people in.
In terms of equal opportunity, and to some extent training, if
you are not bringing new people in you cannot either begin to
change the balance of your workforce to reflect the community
around you, nor have you the flesh and blood, the new recruits,
who need to be trained up. So even inside the broadcasting sector
there is a problem. Outside the broadcasting sector, in the film
industry, for example, there is a different kind of problem. It
is a predominantly freelance sector. There is very little permanent
employment out there. The effect of this is that the engagement
and selection processes are either very often not up to the standards
I suspect that larger employers would expect; it is often word
of mouth, done on a basis of who knows whom. There is the potential
for inbuilt discrimination in that in all sorts of senses, so
that equal opportunities are hard to deliver out there in the
freelance sector. Equally on training, the big battle in the freelance
sector these days is raising money for training. We are involved
in a number of schemes which, if you add them up, are worth about
£1Ö million a year for free training of freelancers.
That is a drop in the ocean compared to what is actually needed.
You have the additional problem for freelancers that a day spent
training, even if the training is free, is a day when they have
lost the opportunity to go and work for somebody. So whilst we
welcome the existence of those clauses, we will be looking to
OFCOM to go much further than the basic wording, to try to do
something proactive in the Bill.
(Mr McGarry) Training has always been a problem in
the industry, particularly for the casual employee. The 36,000
people I represent are almost exclusively casually employed, going
from one location to another. I do hope that the Bill will be
read in such a way that it means that the broadcasters will have
a responsibility for those casually employed people on whom they
are now very dependent. Whilst there is some training in certainly
the BBC and the independent sector for technicians and others
working in the industry, virtually nobody is taking any responsibility
for the specific training of actors in the audio-visual industry.
You mentioned convergence of new technologies. Some of the things
that actors are now being required to do they are not learning
at drama school, I can assure you, in terms of working on their
own blue screen or animated characters screen. There are techniques
which are very special to audio-visual performance, and we would
argue very stronglyforgive me for making a special vested-interest
pointthat the broadcasters should include in that training
responsibility the special training of the casual performers on
whom they are so dependent.
(Mr Darlington) Can I add that obviously as a telecommunications
union, we think that if you are going to have convergence, and
that is why you are having OFCOM, you should be looking for the
promotion of good-quality training right across the board of the
people who work in the converging broadcasting and telecommunications
sector. The second thing I want to say is that the Secretaries
of State, in their introduction to the Policy Statement, referred
to a high level of employment as being one of their policy objectives,
and yet the Bill barely talks of the workforce behind the industries
which are being regulated. We would like to see Clauses 3(1) and
3(2) specifically require OFCOM to take account of the employment
consequences of its decisions and, indeed, to be required actively
to promote high levels of good-quality employment in the sector.
859. So can I ask the Bill team why was it so
(Mr Suter) I think we shall have to come back to you
with a note on that.
Chairman: We are promised a note to come back
on that very final point. I think I must wind things up. Thank
you very much indeed.