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Ofcom Seminar on Future of Broadcasting in Scotland

Ofcom Seminar on Future of Broadcasting in Scotland

Wednesday 11 June, 2008 ; 1500-1800

Ofcom Scotland , Sutherland House, Glasgow

Present (with initials used in note):

David Byers , Scottish Enterprise Borders (DB)

Donald Campbell, Gaelic Media Service (DCa)

Dominic Curran, Scottish Broadcasting Commission (DCu)

Anne Dagg, Scottish Government (AD)

Bobby Hain , STV (BH)

Iain Hamilton, HIE (IH)

Claire Hancock , Channel 4 (CH)

Mike Kidd, Screen Industries Summit Group (MK)

Donalda MacKinnon,  BBC Scotland (DM)

Iain Macwhirter, Sunday Herald (IM)

Thomas Prag ,  Advisory Committee for Scotland (TP)

David Reilly, IWC Media (DRe)

Dave Rushton , Institute of Local Television (DRu)

Philip Schlesinger ,  Advisory Committee for Scotland (PS)

David Strachan , Tern Television (DS)

Joyce Taylor , Content Board Member for Scotland (JT)

Ofcom

Stewart Purvis (SP)

Kate Stross (KS)

Carmel McLaughlin (CMcL)

Vicki Nash (VN)

Alan Stewart

Apologies: Trisha McAuley , SCC ; Laura Stewart , Scotland Office

Introduction

1 VN outlined the agenda which included discussion of the four Ofcom models, the current status of PSB in Scotland and the issues over short and long terms. CMcL briefed the meeting on Ofcom’s current thinking on the DDR .

Model 1

Summary

Those who expressed a view agreed that the position of the BBC was important however the King Report had opened up the question of a future, possibly more federalist structure of the BBC . Some were sceptical of just how challenging the ITV position was.

Detail

2 SP said Ofcom had been particularly open about the challenges faced by Channel 3 in Scotland when giving evidence that morning to the Education, Lifelong Learning and Culture Committee. SP referred to the seven questions that VN had posed prior to the meeting:

• Is it agreed that there is a problem with, or threat to public service broadcasting in Scotland ? Does it feel more like a challenge rather than a digital opportunity?
• What is the threat? Is it (i) risk of loss of competition to the BBC ; (ii) a weakening of public service broadcasting purpose or delivery; (iii) a further undermining of the democratic infrastructure; (iv) a weakening of the television production sector and the creative economy; or a combination of all of these?
• Do the four Ofcom models adequately frame the debate and the potential options for Scotland ?
• If not, what other models could be on the table?
• What are the challenges to the current broadcasting ecology concerning English language broadcasting? What is the attainable future for Scotland in terms of ITV, Channel 4, and Channel 5? What are the challenges for Gaelic broadcasting?
• Where do the new media and alternative platforms fit in? What would constitute a specifically Scottish vision for the role of the new media?
• What would a good outcome for Scotland look like if we peer ahead to the Ofcom final statement in early 2009? And within that, what actions are necessary to put in hand between now and then by the other participants such as the Westminster Government, Scottish Government, the broadcasters and the independent sector?

3 PS agreed there was a threat to PSB . The King Report had raised some fundamental questions about the structure of the BBC and there was the possibility of a more federal model. The BBC was the lynchpin of PSB in the future but the form of the BBC was now more open to question. The Ofcom Advisory Committee for Scotland took the view that perhaps ITV and SMG were getting away with too much given the value of their assets. There was the question of whether C4 continued in its present model and the GDS was limited in audience reach for technical reasons. There was also a political question given that Scotland has an unfinished constitutional settlement. King had made it clear that an England-plus model was not acceptable. However the BBC should not be the fallguy: press and radio had also to be taken into account.

4 SP pointed out that under models 2, 3 and 4 stv would not be a public service broadcaster and would not get a special position in the spectrum. However under model 1 a role could be assumed for stv or another licence holder. If ITV plc did not want PSB status under any model then where would the Scottish licence holder go? ITV had purchased a multiplex and could bypass the PSB system by walking away from its licences in England and Wales. This could put Scotland and Northern Ireland in a difficult position.

5 IM referred to the King Report as the beginning of the disaggregation of British broadcasting. Its conclusions were blindingly obvious but needed stated and were largely as a result of the changed political situation in Scotland . There was now a great opportunity for BBC Scotland because there needed to be funding to address the conclusions. He added that it looked as if ITV were walking away from PSB but didn’t think the battle was over yet.

6 DM referred to the need for the arrangements to address the inadequacies highlighted by King to be sustainable. Ultimately the BBC could end up with better, more representative network news across the UK with a strong contribution from Scotland . DM liked to think there could be a more federal system to allow BBC Scotland to contribute more actively. There could also be more localised, bespoke news services with local content possibly on broadband.

7 BH said there was an appetite for news at a sub-regional level. It was notable that every major Scottish city boasted a top selling newspaper. Stv launched its sub-regional opts at a time when ITV was losing news share and had gone from being 5 th or 6 th in news performance among C3 licensees to 2 nd. BH referred to the idea for a hybrid Scottish 2230 news bulletin. This had been commercially difficult to achieve but he suspected that any new research would reveal greater interest in it now.

8 SP concluded that there was a demand to keep Scotland-wide services but also for local services too. Trends at the global, national and true local levels all had an impact.

Where is there a PSB gap in Scotland ?

Summary

Some participants believed there was a gap at or below the sub-regional level.

Detail

9 TP asked which tier referred to in 8 above was missing? Was local news at risk? There could be a stronger market for this depending on what the BBC decides to do. DRu said the BBC delivered at the level of the state and nation but the civic footprint was missing in TV. This was the local authority area and was the one with the biggest unfulfilled public demand. As a new concept this was threatening to existing broadcasters. SP pointed to opportunities referred to by CMcL in the introduction. JT asked where the advertising market opportunities were: at a macro, Scottish national level; a regional, stv level; or at a sub-regional level. BH agreed with DRu that there was potential for more advertising opportunities at the level below sub-regions. The advertising market was more challenged at the macro level. In the context of drawing lessons from existing local TV services, DRu referred to limitations of coverage for the analogue RSLs and their difficulties in the transition to digital.

What are the prospects for public funding?

Summary

Prospects were unclear; one participant suggested a new community model requiring public funding.

Detail

10 SP referred to the GDS and asked if there was an appetite for funding within the Scottish Government. AD responded by saying that it depended on the recommendations made by the Scottish Broadcasting Commission. DCur said the SBC had heard of several coherent proposals during its evidence. The SBC was thinking through the plausible options within the context of the overall, dramatic change. There were ideas for a national channel, local channels and various hybrids using spare spectrum. DB reported that there was a strong appetite in the South of Scotland for a local authority/community model with public sector support. Since the established platforms tended to avoid such an area of local population, there was a need for synergy crossing all platforms to create a service using broadband and broadcasting.

What are the views from Scotland on plurality?

Summary

The consensus was that plurality was necessary but there were different views on how to ensure it existed. For example, should existing broadcasters be given public funding? How do independents maintain access to the networks? Stv proposed a hybrid of two models.

Detail

11 DCa felt plurality was very important. The BBC ’s and C4 core audiences were most geared towards ABC1s so if ITV withdrew, large sections of the audience would not be served. In terms of regulatory assets one mux was being set aside in up to four blocks for High Definition services but there may only be one or two PSBs in the future. Independent companies held rights but there was need to talk about different ways of getting their material into the market place – ways other than through the existing PSBs. Large areas of Scotland would have no access to interleaved spectrum. Fibre connectivity could be one of the answers for the future with fibre access open to all and not necessarily having to go through a broadcaster. CMcL clarified that there were many areas in Scotland that Ofcom had not yet looked at from an interleaved point of view. It was hard to justify undertaking network modelling for all the 1,100 transmitter sites. DCa said focussing on satellite and DTT restricted plurality to those players able to get onto these platforms. DB questioned whether there would be fibre across the south of Scotland . It might need wireless connectivity with broadband used for on-demand services for individual customers. TP felt fibre was not yet the answer and there was a need to have PSB so that viewers could easily get at it.

12 If starting with a clean sheet for Scotland , MK wondered if a dedicated Scottish mux was feasible. This could be the starting point leading to the best use of spectrum for a mix of Scottish regional and local services. CMcL referred to the imminent publication of an Ofcom condoc looking at interleaved spectrum on a geographical basis. Ofcom had found more spectrum than it had originally thought had been available. Ofcom had identified various options. There were potential uses at regional, city and local levels. Geographical packages could also be aggregated. For cleared spectrum, it was assumed most interest would be at the UK-wide level. It was possible to have a federal network and this was possible within the existing muxes. JT welcomed thinking based on a “blank page” approach. MK said the auction process was proceeding quickly and that there was a danger of precluding left-field options. Ofcom should promote a more level playing field taking account of those who don’t have the resources of large telcos. VN referred to the fact that Ofcom had held a DDR workshop in Scotland but that the government role was not really joined up. Ofcom was included in the debate about a communications strategy for Scotland but the Government should lead it. PS said it was difficult for the regulator to adopt a clean sheet approach but it shouldn’t be for others. Plurality meant more than one operator but what about content? What were the minimal conditions for plurality in Scotland ? It might be possible to have a BBC with internal plurality; lots of organisations were not needed to have plurality in content.

13 BH believed there needed to be a degree of evolution involved in any of the models. There was a huge amount of work needed if the ITV Network was to be deconstructed. If the only way to sustain PSB was to reduce obligations on ITV it wouldn’t be sustainable for stv to continue to spend around £10m on content. There would be a time when regional news was not commercially viable. IM believed regional news was never justifiable purely on commercial grounds. BH referred to it as being the successful result of intervention from day one; it had always been intrinsically non-profit making but there had always been a reason to provide it. SP – would stv commit to news in return for continuing access to spectrum? BH – we’re committed to it but don’t know if the value of the spectrum is sufficient. The value to stv based on its channel share is not enough for us to keep investing in news. SP – why should SMG be given preference over others in any public funding? BH – this issue will come up when the licences come up for renewal. DRe said that if public money was made available for non-news he would like to see it distributed in a transparent /open fashion across the whole supply base. DRu felt the question was whether we were defending the existing structure rather than looking at a spectrum to serve the public at smaller than the regional level. SP said the spectrum availability did not rule out this option and that the licences ran out in 2014. BH did not think the spectrum benefit to stv could fund news at its current level so there were the options of reduced programme quality or of applying public funding. Stv was proposing a hybrid of models 1 and 3. BH thought ITV would continue to hold its licences with a commitment to regional news. Non-news was different. Some content funding for this should be made available in Scotland . It could be possible to use spectrum to provide a separate digital channel, at times split into more local services at different times of the day. Stv and possibly the BBC could provide archive material and could also commission from independents. The channel would be a mix of advertiser and public funded and would be based on stv’s existing infrastructure. It would be dependent on stv continuing to hold the main C3 licence.

14 DCu predicted that whichever model emerged would affect how audiences behaved. Under model 4 there was a more rapid move for audiences to look elsewhere for channels – had Ofcom taken this into account in its scenario modelling? KS said Ofcom had not linked up the models in quite that way. Model 4 was clearly more capable of responding to audience behaviour. MK agreed with the need for transparency in any funding analysis. DB queried why there should be protection for the PSB industry. IM responded by saying it wouldn’t exist otherwise. PS said there was probably a consensus in favour of public value in some broadcasting.

What are views on model 2?

Summary

While not ruling out the continuing existence of ITV and stv, there were very mixed views about this model.

Detail

15 DM said the BBC was formulating their response but she agreed with the need for plurality. DM defended the BBC ’s contribution to PSB which was viewed as a benchmark. BH said that at a macro level the models highlight “who is in the gang (PSBs) and who is not”. ITV may continue to see value in regionality and stv could still exist as a network outside the “gang”. He was not sure it would spell the end of ITV or stv just because they did not have PSB status. Model 2 took away the regulatory and government flexibility; it might result in a lot of PSB or no PSB . Stv would have a brand and distribution network even without PSB status and could continue to serve Scotland . DCa raised the issue of what material on the BBC counted towards PSB . If there was funding under this model to genuinely serve plurality then he would not rule this model out. PS described Model 2 as undesirable as it loaded everything onto the BBC and made it vulnerable in terms of funding and also politically. IM said this was not necessarily the case but the BBC did need to benchmark and ensure the quality of news and current affairs in Scotland was comparable in quality to network programming. TP worried about leaving the news agenda just to the BBC .

Views on Model 3 and what was Channel 4’s approach?

Summary

Channel 4 preferred model 3 but there were a number of issues which could not be clarified at this stage.

Detail

16 CH reported that C4 hadn’t decided on their position with regard to the funding model although there was a preference for model 3. C4’s character was different in PSB terms compared to the BBC and C4 felt strongly that it should remain different. Model 2 took C4 out of the loop somewhat in terms of Scotland . Model 3 sustained Scottish production for the network. C4 had no remit for programmes specifically for the nations and regions but provided a diversity of programmes for the UK as a whole. CH referred to C4’s commitment to increase the proportion of its spend on original commissions in Scotland , Wales and Northern Ireland by 50% by 2012. There was a commitment to grow the Scottish production sector. VN suggested people might prefer to see money invested in granular Scottish news and current affairs. CH – C4 were not in a position at present to say what they would do for the nations. MK couldn’t see why C4 should be exempt from the arguments about network production affecting the BBC . CH – the amount commissioned out of Scotland should increase with new talent being developed. DRe said it would be ideal to see network commissioning editors with budgets, based in Scotland . DS said targets without teeth were toothless. Ofcom had added false teeth to a toothless mouth. The BBC ’s out of London commitments had a long timescale – delivery by 2016 - so there would be continuing travel to and from London by Scottish independents. C4’s pledges did represent a substantial increase. In contrast, the ability to have face to face meetings within a couple of hours made a difference. DRe welcomed the pledges for out of London but also commented on the relatively long timescale. CH said there would be a commissioner for 4IP in Glasgow by this autumn. BH said quotas assumed you could have them imposed on you and depended on the existence of a creative sector. And if there was no news other than the BBC there was the possibility of viewers in Scotland having no other PSB material to view. DS referred to Scottish independents accessing the Canadian production fund. Canada had a good co-production model but the scheme was extraordinarily complicated. He also made the distinction between national and regional production for the network and national and regional production for the nations and regions themselves. There was a need for more Scottish opt-out on the network and there was also a lack of Scottish representation on the network. DRu referred to the twin demands of community of interest programming and geographical community interest programming.

Attitudes towards other forms of public service content?

Summary

Participants recognised the value of other public service content but providers did not currently have a significant level of scale.

Detail

17 IM reported that newspapers were trying to produce a lot of online content and some was of quite good quality and almost looked like PSB . CH referred to C4 looking at creative content other than traditional programming. SP spoke about creative solutions with a mix of types of content. Contestable funding could enable other players? MK – yes but it was difficult to get to a level of scale and engagement to enable them to become serious players. DRu referred to broadcasting funding being concentrated in Glasgow and the need for other cities to have their own broadcasting capacity. In Dundee C4 had been involved in rebuilding the rungs of the ladder that used to be there, something local TV would build upon. MK referred to the possibility of achieving substantial growth by increasing the totality of players.

Other possible models?

Summary

The meeting discussed several alternative models although no one model emerged as a favourite. A new Scottish channel had attractions but the audience demand should not be assumed.

Detail

18 DRu suggested the smallest meaningful civic component should be reflected with different scales of local area represented in the mux system. Programmes could be borrowed from the Scottish Parliament, for example and shown at different times in different areas to match viewing patterns. There could be programmes for six or seven local areas with common interests that are shared along with programmes for Celtic communities and language minorities: a mix and match service shared according to local interest between 60/70 communities across the UK . This scale between local and UK-wide would provide the opportunity for programmes with higher production values than purely if only for a single local audience. VN referred to the Ted Brocklebank model with public funding and city services. There was then a discussion of spectrum requirements. CMcL referred to the Irish situation and added that the majority of spectrum was already in the hands of broadcasters. BH asked if it was too late to have DDR spectrum ring fenced and not auctioned if a public case was presented. CMcL – Ofcom preferred the market deciding but the government could direct Ofcom. There were also potential state aid issues. DRu said there were discussions under way with the First Minister and DCMS over the allocation of muxes to Scotland . TP pointed out that the Scottish Government could bid for spectrum. CMcL advised the meeting of the rules applying to local authorities and licensing. SP referred to the possibilities for the Scottish Government and local authorities funding propositions and partnerships for a Scottish channel. Would this be attractive to viewers? TP – we don’t know the answer to this with regard to local TV and it would be hard for a Scottish channel to attract enough viewers. JT described the concept as emotionally attractive but it depended on who was driving it and whether there was enough creativity. DB called upon the Borders experience to suggest that the market should provide for the different layers of interest – local, Borders, Scottish and European. If there was confidence in the market, then just leave it. BH said that Scotland was not a rights territory on its own. Everyone said they wanted more Scottish content but you couldn’t buy content just for Scotland – you had to pay UK rates and hope to carve them up. With regard to Border, KS updated the meeting on the ITV’s proposals and the implications. DB said the public voice was resistant to an expansion of the regional area with a supposed diminution of local content. Equally there was a view which didn’t care as proponents of that view felt the current service was of poor quality anyway. There was a need for balance and a more granular service at a lower level. DRu suggested localness could be addressed by broadband with the broadcast platform. Programmes of relevance and currently overlooked could be delivered, for example, building upon the links between the Ayrshire coast and Northern Ireland . DB referred to the opportunities for convergence across platforms featuring the modernising government agenda being promoted by local authorities. DCa referred to the Eorpa model and IM agreed that the programme represented the required quality. VN raised the prospect of an all-Scotland licence and TP said this had local appeal and was logical. VN’s vision was for content to be available on many platforms. TP referred to a production fund with new media provision and the 4IP model of interest. CH added that in this model there was regional development funding and all money went directly to the SMEs producing the content.

Other Concluding Points

AD: Scottish Government was awaiting the SBC report.

IH: there has been growth in the independent sector in the Highlands and Islands and whatever happened, the independent companies needed access to pitch for work.

CH: the resources of C4 office in Glasgow were available to the sector.

MK: PSB was not just about market failure; it served public purposes. It was not just about consumer demand but involved Border people being allowed to view PSB content.

DCa: Gaelic was coming in from the edge but distribution needed sorted.

DB: there was much talent and there should be the leverage of the maximum economic benefit. Creative talent at all levels should be encouraged.

DS: content and transmission systems were only effective when properly produced. If public funding was to be made available this needs much policing.

BH: there was a feeling intervention was still necessary for Scotland . There has been an exponential growth in content but still limited for Scotland .

DRu: there was a need for Ofcom to press the DCMS on local, civic broadcasting and there was a gap in training between graduate video making and broadcaster level programme making for a specific audience. Local TV would fill this.

DRe: commented that any direct government money would require safeguards put in place to ensure transparency.

DCu: SBC would be responding to the first phase of the PSB Review consultation to note those areas which had featured in the Commission’s evidence. When the SBC published in September it would set out its full strategic vision and anticipated that Ofcom would be able to take this on board within the PSB Review framework. One theme from the evidence to the SBC was the growing links between broadcasting and the broader creative industries.

PS: thought a model was still to emerge. The outcome would not be entirely in Ofcom’s hands. There would be a need for careful negotiation between the different governments in the UK to produce an outcome.

SP: Ofcom would want to narrow down the options in its next PSB document. The SBC and the Scottish Government would have the opportunity to provide inputs.

DM: referred to the audience and in particular the younger demographic which thought in less linear terms. Partnerships in Scotland could produce economies of scale.

IM: the BBC would change considerably as a result of the King Report. It has made the case for the Scottish Six which was deserved. After that there would be moves for broadcasting to be devolved.

TP: devolution of broadcasting had horrendous complications. However there could be ways in which the BBC can move. The GDS was an example of the UK and Scottish Government working together. Radio licensing could be devolved and there was a need to have models that could evolve, for example model 1 into model 3. Ofcom should not forget radio either.

CH: C4 was in a different position to other PSBs. It had no national and regional remit but an important role with a commitment to the Scottish sector which could provide quality for Scotland and for the network.

AS, 20 June 2008

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