House of Commons Culture, Media and Sport Committee Broadcasting in transition Third Report of Session 2003–04 Report, together with formal minutes, oral and written evidence Ordered by The House of Commons to be printed 24 February 2004 HC 380 [incorporating HC101-i and HC132-i] Published on 4 March 2004 by authority of the House of Commons London: The Stationery Office Limited £15.50 The Culture, Media and Sport Committee The Culture, Media and Sport Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department for Culture, Media and Sport and its associated public bodies. Current membership Mr Gerald Kaufman MP (Labour, Manchester Gorton) (Chairman) Mr Chris Bryant MP (Labour, Rhondda) Mr Frank Doran MP (Labour, Aberdeen Central) Michael Fabricant MP (Conservative, Lichfield) Mr Adrian Flook MP (Conservative, Taunton) Mr Charles Hendry MP (Conservative, Wealden) Alan Keen MP (Labour, Feltham and Heston) Rosemary McKenna MP (Labour, Cumbernauld and Kilsyth) Ms Debra Shipley (Labour, Stourbridge) John Thurso MP (Liberal Democrat, Caithness, Sutherland and Easter Ross) Derek Wyatt MP (Labour, Sittingbourne and Sheppey) Powers The Committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the Internet via www.parliament.uk Publications The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at http://www.parliament.uk/parliamentary_committees/culture__media_and_sport. cfm Committee staff The current staff of the Committee are Fergus Reid (Clerk), Olivia Davidson (Second Clerk), Grahame Danby (Inquiry Manager), Anita Fuki (Committee Assistant) and Louise Thomas (Secretary). Contacts All correspondence should be addressed to the Clerk of the Culture, Media and Sport Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 6188; fax 020 7219 2031; the Committee’s email address is [email protected] Broadcasting in transition 1 Contents Report Page Summary 3 1 Introduction 5 2 Background 6 3 Ofcom: preparedness and handover 11 Establishment of Ofcom 11 Accountability and transparency 14 Review of public service broadcasting 15 The digital transition 19 4 ITV Merger 19 Television advertising 20 Regional programme production 22 Regionally-originated programming 22 Regionally-oriented programming 23 Production facilities 24 ITV regional news 25 ITV as a public service broadcaster 28 Conclusions and recommendations 31 Formal minutes 34 Witnesses 36 List of written evidence 37 List of unprinted written evidence 38 Broadcasting in transition 3 Summary On 12 December 2000, the Government published A New Future for Communications (Cm 5010), the joint work of two departments: Trade and Industry and Culture, Media and Sport. In recognition of the changing and converging worlds of telephony and broadcasting, a key proposal was the establishment of a single communications regulator, the Office of Communications (Ofcom). The Committee reported on the white paper in March 2001, welcoming the adoption of our predecessor Committee’s recommendation, made in 1998, for a single regulator while, at the same time, noting the absence of any reference to Ofcom’s accountability to Parliament. We were thus all the more appreciative of the suggestion of Ofcom’s chairman, Lord Currie, that the newly merged regulator give evidence to the Committee on an annual basis. The short Office of Communications Act 2002 had confined itself to the establishment of Ofcom, leaving details of the scope and nature of its activities to the (much) larger Communications Act 2003. The latter began as a draft Bill, published in May 2002 (shortly after the Committee’s report on Communications) and subjected to pre-legislative scrutiny by a joint committee. The 2003 Act received Royal Assent on 17 July, giving Ofcom only five months to become fully operational by vesting day, 29 December 2003. A key consideration has been the avoidance of a regulatory interregnum during the transition to the new regime, particularly in view of ongoing developments in broadcasting. Notable among these was government approval, in November 2003, for the merger of Carlton Communications Plc and Granada plc, subject to undertakings aimed at protecting other Channel 3 licensees (Grampian, Scottish, Ulster and Channel) as well as safeguarding competition in the market for advertising airtime. ITV plc began trading on 2 February 2004. With the rationalisation and consolidation that invariably accompany media mergers, ITV’s current proposals for studios and staffing levels in the Meridian franchise provide a relevant backdrop; and a cause for concern. We received several representations from trade unions, individual employees and Members of Parliament about plans to relocate staff from New Hythe, Maidstone, and the consequent impact on news and sports coverage in the south east sub-region. We also received representation about concerns over the impact of possible consolidation in the East Midlands. The Committee expects Ofcom to monitor the situation closely, and to intervene where necessary to safeguard the present high quality programming in regions and sub-regions throughout the country. So far as national news is concerned, the Committee believes that ITV’s removal of the 10pm news to 10.30pm is inconsistent with the spirit, if not the letter, of the statutory requirements of the Communications Act 2003 and the Broadcasting Acts it supersedes. We are concerned that Ofcom proved itself such an easy touch on this matter, which does not bode well for future attempts by ITV to manipulate its franchise. On 28 January 2004, Lord Hutton published his Report of the Inquiry into the Circumstances Surrounding the Death of Dr David Kelly C.M.G. His conclusions relating to the role of the BBC Governors will also merit careful examination in the context of the Government’s review of the BBC’s Royal Charter. Broadcasting in transition 5 1 Introduction 1. In November 2003, the Committee agreed to conduct a short inquiry into the implications of the merger of Carlton Communications Plc and Granada plc for the fulfilment of ITV’s public service broadcasting responsibilities including, but not confined to, regional programming and news. We were further prompted by concerns that consolidation of resources, and accompanying redundancies, for example in the Meridian franchise area, would adversely affect coverage of news and sport, particularly at the sub- regional level. 2. Concurrent with the ITV merger process has been the transition to a new regulatory system for broadcasting and telecommunications, authorised and embodied by the Communications Act 2003. A single regulator, the Office of Communications (Ofcom), was established in shadow form by the Office of Communications Act 2002, and assumed full powers from five legacy regulators on 29 December 2003. We decided to examine Ofcom on its preparedness to carry out its duties, principally in respect of broadcasting. 3. On 9 December 2003 we took evidence from SMG plc, the owner of Grampian Television Ltd and Scottish Television Ltd – two of the four ITV licensees not part of either Granada or Carlton. We also examined the Producers’ Alliance for Cinema and Television (PACT), the UK trade association representing the commercial interests of independent feature film, television, animation and interactive media companies. The National Union of Journalists (NUJ) and the Broadcasting Entertainment Cinematograph and Theatre Union (BECTU) were examined, in part to illuminate concerns over the implications of the merger for the performance of ITV as a whole against its public service broadcasting obligations. Finally, we took evidence from Granada and Carlton. 4. Our second evidence session, on 16 December, was devoted to examining the Office of Communications. Lord Currie of Marylebone (Chairman) and Mr Stephen Carter (Chief Executive) were examined on their operational preparedness and the conduct of the handover period involving the five regulators they were soon to replace. We took the opportunity to question them on a wide range of public service broadcasting issues, including the scheduling of national news coverage on Channel 3 and the impact of proposals by Meridian Broadcasting Ltd for news coverage in the South East. We raised the issue of children’s programming, in particular the nature of food and drink advertisements scheduled in the breaks. We appreciate Lord Currie’s request that Ofcom appear before the Committee. 5. Where memoranda have been submitted by witnesses, we have printed these adjacent to the oral evidence at the back of this volume. We received further evidence in the form of written submissions to the Committee and correspondence involving a variety of interested parties. Some of this has been published as memoranda, while the rest has been listed and sent to the Public Record Office and the House of Commons Library. 6 Broadcasting in transition 2 Background 6. During the 1997-98 parliamentary session, the previous Committee published its report, The Multi-Media Revolution.1 It included the following recommendation: “We recommend the absorption of all current regulatory bodies into one Communications Regulation Commission with overall responsibility for statutory regulation of broadcasting,