Gaelic Digital Service Public Value Test (PVT) Provisional

Gaelic Digital Service: Public Value Test provisional conclusions

November 2007

Contents

Contents 2

1. Introduction and key findings 4

2. Background – summary of the Executive’s application 6

3. Summary of the Public Value Assessment 7

4. Summary of the Market Impact Assessment 10

5. The Trust’s decision 11

6. Potential conditions of the Service Approval 14

7. Service licence 16

8. Next steps 16

Annex 1: Background to the Public Value Test 18

Annex 2: Draft service licence 19

Annex 3: Public consultation on our provisional conclusions 27

BBC Gaelic Digital Service: Public Value Test provisional conclusions

1. Introduction and key findings 1.1 This document sets out a provisional decision by the BBC Trust on a proposal from the BBC Executive to launch a Gaelic Digital Service (GDS).

1.2 The Trust is applying a Public Value Test (PVT) to the BBC Executive’s proposal and has reached provisional conclusions following consideration of two reviews of the proposal: a Public Value Assessment (PVA), conducted by the Trust, and a Market Impact Assessment (MIA), conducted by Ofcom. Background on the process of the PVT is contained in Annex 1 of this document.

1.3 The PVA and MIA were published on 12 November 2007. The PVA, together with the BBC Executive’s application and a joint BBC Trust/Ofcom description of the service proposal are available on the BBC Trust’s website (bbc.co.uk/bbctrust). The MIA is available on Ofcom’s website (ofcom.org.uk).

1.4 Before concluding that the proposed service should be approved, either with or without conditions, the BBC Trust “must be satisfied that any likely adverse impact on the market is justified by the likely public value of the proposed services” (Clause 26(6) of the Framework Agreement). The Trust must also be satisfied that approval would be consistent with the BBC Trust’s duties under Article 23 of the Charter and its other legal duties.

1.5 We have taken account of the conclusions reached in the PVA and the MIA which are summarised in sections 3 and 4 below. The PVA identifies public value in the GDS proposal; however, this requires the BBC Executive to provide further evidence in a number of areas, particularly concerning the strategies to reach beyond the current Gaelic speaking community to increase the reach of the GDS. We have asked for that evidence to be provided before the end of the consultation on these provisional conclusions. The MIA concludes that there are very significant positive market impacts of the GDS proposal, most notably in the net increase in scale it will bring to the Gaelic media sector, which should involve an increase in market opportunities for a number of players, as well as wider benefits. Ofcom also noted, however, that there were, in its view, significant concerns of potential suppliers to the GDS about the commissioning processes and protocols. We have taken these matters into account in proposing conditions aimed at enhancing the public value and addressing these points about the commissioning processes.

1.6 Our overall conclusion is that whilst the service proposal could deliver public value, the evidence presently before us is not sufficient for the Trust to conclude that the level of likely public value would be sufficient to justify the level of investment proposed. Accordingly, on this basis, we are not satisfied that we should approve the proposal without further evidence.

1.7 As we set out in section 3 below, we need to see greater evidence that the proposed service will create public value by supporting the future of the Gaelic language and offering wider value to the audience in Scotland. In particular:

• The Trust is not convinced that the proposal for the service places enough emphasis on the role of the service in attracting new speakers to the Gaelic language. In particular, we have not seen sufficient evidence as to how the educational strategy will be delivered – which we regard as key to the public value of the service. • Although we can see that a few programmes could appeal more widely to an audience beyond Gaelic speakers, we have seen very little evidence of a convincing plan for appealing to a wider audience in Scotland – certainly not that would justify the projected reach of the service. 1.8 If the BBC Executive can provide the additional information required in these areas, it is our view that, based on the matters addressed in the PVA, the proposal would demonstrate a level of likely public value that would justify the level of investment required.

1.9 On the basis that the Trust is provided with the additional information to reach this conclusion, then certain conditions are recommended in section 6 to safeguard the likely public value in the proposal put forward by the BBC Executive and to strive for even more public value. These would include a range of conditions to be satisfied before the service can launch as well as conditions for any service licence.

1.10 Therefore, provided the requirement for additional information is fully satisfied, applying the requirements of clause 26(6) of the Framework Agreement, we would conclude that the likely public value that would be created by the GDS would be sufficient to justify any adverse market impact. We would, therefore, be minded to approve the proposal, subject to the specific requirements set out in these provisional conclusions.

1.11 However, in the event that the additional information required is not provided, the Trust would reach the judgement that insufficient public value is created by the proposal.

1.12 Our provisional conclusions are open to consultation for a period of 28 days.

1.13 The PVT has been undertaken in accordance with the terms of the Public Value Test: Guidance on the conduct of the PVT published by the BBC Trust in August 2007 and available on the BBC Trust’s website.

2. Background – summary of the Executive’s application

2.1 Prior to the launch of the PVT process, the BBC Trust and Ofcom worked together to produce a service description, which was then published as part of the public consultation. This summary draws primarily from this description, as well as from the PVA.

2.2 The BBC Executive and the Gaelic Media Service (GMS) have concluded a collaboration agreement to provide the GDS – drawing on content from the BBC and a variety of other providers.

2.3 The proposal is to launch a dedicated digital TV channel in Gaelic – on-air for up to seven hours per day (concentrated in, but not confined to, late afternoons and evenings). This would comprise 1.5 hours per day of originated programming (including existing output from the BBC), narrative repeats and archive content. The service would also draw on BBC Radio nan Gàidheal as a sustaining service when the TV channel is off-air. There would also be significantly enhanced Gaelic content for users of bbc.co.uk. 2.4 The service would be mixed-genre – including the daily news and weather in Gaelic. 2.5 At least half of the programme fund contributed by GMS would be spent in the independent sector. The BBC Executive and GMS originally stated that, in due course, up to 50 per cent of non-news and current affairs programmes on the TV channel would come from independent producers, subject to a sufficiently developed independent Gaelic production base. They have subsequently clarified that this should in fact read “at least 50 per cent” rather than “up to”. The content supply strategy will be formulated after further negotiation with key stakeholders. 2.6 Subject to the completion of this PVT in early 2008, and BBC Trust approval, it is expected that the service would launch before the end of March 2008. 2.7 It would be available, in the first instance, on satellite and broadband1 and on digital cable later in 2008. Distribution on digital terrestrial television would be in Scotland only and would come with digital switchover. 2.8 Following completion of digital switchover, it is proposed that the existing regular

1 The channel would not be offered in whole via broadband. The broadband offer would be on-demand (via iPlayer) only on the BBC website as part of BBC Scotland’s 10 hours per week allocation, and possibly some complementary catch-up content on the GMS website.

Gaelic zones on BBC Two would be withdrawn. Although a change to the BBC Two Scotland Service Licence, we do not consider that removal of the Gaelic zones on BBC Two Scotland would be a significant change to the UK Public Services since the Gaelic programming objective provided in the BBC Two Scotland service licence will be covered by the objective of the GDS proposal. There should be little or no impact caused by the removal of the Gaelic zones on BBC Two Scotland as this provision will be replaced by Gaelic content being provided on the GDS. As such, and in the event that the Gaelic zones are removed from BBC Two, the Trust does not consider that such a change would require a separate PVT. 2.9 The BBC and GMS would continue to provide programming to the Gaelic digital channel TeleG for the duration of TeleG’s licence (which currently runs until 2010). 2.10 The service would be licensed and regulated by the BBC Trust, and would be subject also to Ofcom regulation to the same extent as any other BBC service. 2.11 The BBC proposes to manage the service jointly with GMS, although ultimate responsibility for editorial standards would rest with the Director-General of the BBC who is accountable to the BBC Trust.

3. Summary of the Public Value Assessment 3.1 This section provides a summary of the PVA to aid the reader and is not a substitute for reference to the PVA report which deals with these matters in full. The Trust has considered the full PVA report and all its conclusions in reaching provisional PVT conclusions.

3.2 The PVA, as an initial stage of analysis, considered whether the proposal fits with the BBC's public purposes. It is a prerequisite of any approval that a proposed service should further the public purposes in some way. The public purposes are:

• sustaining citizenship and civil society; • promoting education and learning; • stimulating creativity and cultural excellence; • reflecting the UK's nations, regions and communities; • bringing the UK to the world and the world to the UK; and • in promoting the above purposes, delivering to the public the benefit of emerging communications technologies and services (the digital purpose). 3.3 As well as considering how the proposal promotes the public purposes, the PVA assessed the proposal in relation to four key drivers of public value:

• Quality and distinctiveness • Impact

• Reach • Cost and value for money 3.4 In reaching conclusions, the PVA started by looking at the strategic objectives the BBC is trying to achieve. The proposal is for a service intended to have an increased impact on existing Gaelic speakers, and a wider value to learners and the wider population of Scotland. Therefore, the PVA took impact as a key issue. The Trust has also taken a consistent view in the previous PVTs that have been carried out, that public value will never be realised if a service does not reach its intended audience. Therefore, reach was also treated as a key issue. The other drivers were regarded as important, but the PVA treated them as having a secondary weight, although considering that any new service approved must show value for money.

3.5 In assessing these aspects of public value, the PVA found that there is evidence that suggests the GDS would be of good quality and provide an enhanced service to existing Gaelic speakers and, therefore, contribute to some degree to the BBC's public purposes. The PVA also found, however, that the current evidence provided by the BBC Executive in support of the GDS proposal was not sufficient to support the conclusion that the proposal would reach the claimed audience of 5 to 10 per cent of the population in Scotland. In addition, the PVA found that, if the service is limited to just existing Gaelic speakers, the service would come at a considerable cost in terms of cost per user of the service.

3.6 The PVA therefore concluded, overall, that the service proposals could deliver public value; however, the evidence was not sufficient for the Trust to conclude that the level of likely public value would be sufficient to justify the level of investment proposed. The Trust considered it would need to see greater evidence that the proposed service will create public value by supporting the future of the Gaelic language and offering wider value to the audience in Scotland. In particular, the Trust would need to see more developed strategies for educational content, commissioning of programming, and the marketing of the service. This reshaping of the proposal would need to be inside the proposed budget for the GDS put forward in the BBC Executive's application.

3.7 The PVA considered that the key supporting documents that the BBC Executive should provide, as evidence, are:

• the commissioning strategy for the GDS; and

• the marketing strategy for the GDS.

In addition the PVA considered that the Trust should understand how the BBC Executive's arrangements with a range of partners for the delivery of educational material would work, and their state of development. The Trust would like the Executive to consider how far the BBC can sensibly leverage from its other public

services to the GDS. The PVA recommends that the BBC Executive be asked to provide this evidence no later than the close of the public consultation period for the PVT.

3.8 The PVA concluded that, if such evidence can be provided, this would demonstrate a level of likely public value that would justify the level of investment proposed. This would provide an overall assessment that the proposals provide sufficient public value for the Trust to consider approving the service.

3.9 On the basis that the Trust is provided with the evidence to reach this conclusion, the PVA recommends that the following requirements have to be met before any launch of the GDS in order to enhance and protect public value:

• The BBC Executive must provide fuller details of how the management structure, financial and accountability controls for the partnership will function. The Trust would like further explanation and BBC Internal Audit should confirm these matters have been considered and resolved.

• The BBC Executive's Controller of Fair Trading must confirm that the proposals for training of independent production companies satisfy the BBC’s fair trading guidelines.

• The Trust requires clear evidence of how the commissioning strategy will minimise the partnership risk created by the joint venture – for example, will the partners commission certain genres (other than news) rather than both commissioning all genres?

• The BBC and GMS must have agreed plans to ensure that the user experience when accessing online material held by GMS and the BBC will be a consistent, seamless and high quality one.

• In light of recent speculation about availability of slots on the Sky Electronic Programme Guide (EPG), there must be confirmation that a Sky EPG listing can be obtained.

• The funding for the GDS must comply with any applicable requirements set out in clause 75 of the Framework Agreement.

3.10 In the event of the Trust approving the launch of the GDS, the PVA recommends the following service conditions:

• That launch on DTT should await a review by the Trust by 2010, given the absence of reliable evidence as to the case for a linear TV channel, and given that space on the DTT would not be immediately available anyway. This review will allow the Trust to take account of experience gained from the channel being available on satellite and cable alongside the existing opt-out on BBC Two and

also to monitor what progress has been made with broadband penetration particularly in the Highlands area. Any such review would involve Ofcom and GMS.

• Were the service licence to be revoked or expire without renewal, and the BBC- GMS collaboration agreement therefore terminated, any renewal of the service licence should be subject to approval by the Trust and it will be at the discretion of the Trust to apply a further PVT if necessary.

• A condition for the service licence to remain valid should be that agreed funding is provided by GMS.

4. Summary of the Market Impact Assessment

4.1 This section provides a summary of the MIA to aid the reader and is not a substitute for reference to the MIA report which deals with these matters in full. The Trust has considered the full MIA report and all its conclusions in reaching provisional PVT conclusions.

4.2 Ofcom looked at five categories of products and services that could be affected by launch of the BBC GDS: independently produced Gaelic TV programmes; other Gaelic programming on TV and radio; Gaelic print and online material; Gaelic education services; TV platform and network services.

4.3 Ofcom, in the MIA, found that there are very significant positive market impacts of the GDS proposal, most notably in the net increase in scale it will bring to the Gaelic media sector, which should involve an increase in market opportunities for a number of players, as well as wider benefits. Ofcom also noted, however, that there were, in its view, significant concerns of potential suppliers to the GDS about the commissioning processes and protocols.

4.4 The MIA did not propose any modifications to the GDS proposal but made some recommendations to the Trust, should the proposal be approved, to ensure transparency in the commissioning processes of potential suppliers to the GDS and to encourage the GDS to play its part in further developing a diverse and creative production base for the Gaelic media sector. Specifically, the MIA makes the following recommendations:

• Steps should be considered to ensure transparency of governance for the GDS's commissioning practices.

• There should be clarity on how the GDS will ensure the complete independence of commissioning from in-house production.

• There should be a clear and transparent audit trail in the commissioning process and the GDS should make every effort to ensure that all potential producers have access to information on how funds will be applied, who makes the funding decisions, and the nature of the editorial strategy.

• That, in principle, the independent sector should have the opportunity to bid for all genres of GDS programming and there should be no ring-fencing, albeit that the MIA recognises a distinction between news and non-news programming.

• The GDS should actively consider the use of personnel and facilities from the independent and freelance sector to contribute to its newsgathering operation for the channel.

• The GDS should clarify the reference in the service description that “in due course up to 50 per cent of non-news and current affairs programmes on the TV channel would come from independent producers”, and, as part of discussions on the content supply strategy, should set a more precise target or “floor” for independent production.

• There should be clarity in the area of online rights and the production of any content specifically for online outlets once terms of trade applied to both BBC and GMS funded output are agreed. Specifically, agreements should be flexible enough to adapt to any changes in the commercial online market and independent producers should be able to compete for commissions for any online-specific content.

• The scope for the online element of the GDS to develop the market by providing links and signposts to other Gaelic sites, should happen in a fair and non- discriminatory fashion.

• The GDS should open up a dialogue with TeleG to ensure that there is a co- ordinated approach towards the scheduling of Gaelic programmes for the duration of the TeleG licence.

5. The Trust’s decision

5.1 We are satisfied that the proposal would create almost no adverse market impact and the MIA suggests any impact would be positive. However, as set out in section 3 on the basis of the evidence before us, applying the test in clause 26(6) of the Framework Agreement, we cannot conclude that the proposal would create sufficient public value.

5.2 In section 3 we have set out the additional evidence we would need to see to conclude that the proposal would generate sufficient public value to justify the level of investment required.

5.3 The challenge from the Trust can be summarised in two key points: • The Trust is not convinced that the proposal for the service places enough emphasis on the role of the service in attracting new speakers to the Gaelic language. In particular, we have not seen sufficient evidence as to how the educational strategy will be delivered – which we regard as key to the public value of the service. • Although we can see that a few programmes could appeal more widely to an audience beyond Gaelic speakers, we have seen very little evidence of a convincing plan for appealing to a wider audience in Scotland – certainly not that would justify the projected reach of the service.

5.4 In addition, the Trust would like the Executive to consider how far the BBC can sensibly leverage from its other public services to the GDS. The Executive’s original application refers to educational material being delivered with a range of partners. The Trust would like to understand how those arrangements would work and the state of their development. Finally, the Trust is also concerned as to whether the service is being distributed in the most effective and efficient way possible. The Trust considers that these challenges can be met by potential licence conditions. However, this is an area where we would welcome any further clarification and thought that the Executive may wish to offer at this stage.

5.5 The BBC Executive should provide this additional evidence no later than the close of the public consultation period for these provisional conclusions. If the BBC Executive can provide the additional information required in these areas, applying the requirements of clause 26(6) of the Framework Agreement, we would conclude that the likely public value that would be created by the GDS would be sufficient to outweigh any adverse market impact. We note that the MIA's conclusion is that there would be very significant positive market impacts of the proposal, notably in the net increase in scale it will bring to the Gaelic media sector, which should involve an increase in market opportunities for a number of players, as well as wider benefits. We would, therefore, be minded to approve the proposal subject to the specific requirements set out in these provisional conclusions in section 6.

5.6 The Trust accepts all of the recommendations contained in the MIA with the exception of one point discussed below at 5.8. In general, the Trust is of the view that provided the GDS operates within the BBC’s editorial and fair trading guidelines, most of the points raised by Ofcom should be addressed. However, given the unique nature of the partnership with GMS and the role of both GMS and the BBC as commissioners, we believe there should be clear public statements and processes set out as to how the commissioning process will operate in a transparent manner. As a matter of common sense we would expect the GDS and TeleG to maintain a dialogue about the scheduling of Gaelic programmes.

5.7 The Trust also welcomes the clarification from GMS and the BBC that the aim of the GDS is to commission “at least” 50 per cent of content other than news from independent producers “in due course”. However, like Ofcom we consider this target to be rather vague. Therefore, whilst keeping the overall ambition in this area, but taking account of (a) the increase in the volume of production necessary for the new service, and (b) targets for independent production elsewhere, we would suggest the following condition. For the second year of operation of the service (2009) onwards, a minimum of 25 per cent of commissions should be sourced from independent producers. The Trust will review progress towards the “at least 50 per cent of programmes” ambition in 2010. Given the monitoring of targets below network commission level is relatively unusual, we would propose that the Audience Council Scotland is best placed to monitor progress and advise the Trust annually in their Review. The Trust would be particularly grateful for consultation responses on this issue as to whether this strikes the right balance.

5.8 Ofcom also suggests that, in principle, the independent sector should have the opportunity to bid for all genres of GDS programming and there should be no ring- fencing, albeit that the MIA recognises a distinction between news and non-news programming. It is also suggested that consideration should be given to the GDS using personnel and facilities from the independent and freelance sector to contribute to its newsgathering operation for the channel. In general, the BBC has ring-fenced its news operations from all independent commissioning targets across the UK. Given that part of the public value of the GDS news service is to contribute towards wider BBC operations across Scotland and the UK, the Trust believes that it is appropriate to maintain a ring-fence around news operations. This is not to say that the BBC should not look to use freelancers and other independent facilities in order to ensure good value for money in its delivery of news, and indeed does. We would certainly encourage the Executive to look at such options to ensure value for money of the news operation.

5.9 The conditions in section 6 include detail in relation to carriage on DTT subject to a review by the Trust by 2010. Our potential approval also includes authorising the withdrawal of the Gaelic zones from BBC Two Scotland as part of the full implementation of the distribution plans for the GDS. However, this will not take place until completion of digital switchover in Scotland. The review will also allow us to take account of experience gained from the channel being available on satellite and cable alongside the existing opt-out on BBC Two and also to monitor what progress has been made with broadband penetration particularly in the Highlands area. The Trust’s aim will be to ensure the most efficient and effective means of distribution for the service.

5.10 This potential approval is subject to certain conditions to safeguard or enhance the public value and minimise any adverse market impact. These are explained in section 6. This is not a final decision and these provisional PVT conclusions are now open to consultation.

5.11 We reached these provisional conclusions having considered the PVA and MIA in full, and the conclusions and underlying matters addressed in both. We have considered in particular the matters in the PVA and MIA in Sections 3 and 4 above. We specifically applied the requirements of Clause 26(6) in the Framework Agreement, having proper regard to the Trust’s duties under the Charter, Framework Agreement and any other relevant and appropriate guidance applicable to public bodies.

5.12 We have gone on to consider our general duties under Article 23 of the Charter and our other legal duties. In our provisional view, particularly given the matters considered in the PVT, approval of these proposals would be consistent with these duties. Particularly, but without limitation, we note that we have:

• represented the interests of licence fee payers in considering the value that would accrue to them from the proposals, if approved;

• secured the independence of the BBC through the proper application of the PVT process;

• assessed, and will continue to assess, carefully and appropriately the views of licence fee payers through formal consultation;

• exercised rigorous stewardship of public money through the value for money analysis we conducted in the PVA. This is also a reason for requesting further information from the BBC Executive;

• had regard to the competitive impact of the BBC’s activities on the wider market through our consideration of Ofcom’s MIA; and

• ensured that the BBC observes high standards of openness and transparency through the publication of this and other documents arising from the PVT process.

5.13 The Trust has also received and considered privileged legal advice on the proposal’s compliance with competition law (including state aid law). It concludes on the basis of this advice that the proposal is compliant. Acting in the public interest in considering these, and all other relevant matters, we have reached these provisional conclusions, subject to the conditions set out below.

6. Potential conditions of the Service Approval

6.1 The following section is based on the BBC Executive responding to the information requested by the Trust outlined in sections 3 and 5.

6.2 In proposing approval of the service (subject to the additional information being provided by the BBC Executive and it being satisfactory) the Trust would be broadly

endorsing the specifications set out in the service description released at the start of this PVT. In the event of final approval, we are proposing conditions of launch – or, if not a formal condition, that the Trust sets out its view as appropriate – in the following areas:

• The BBC and GMS must have agreed plans to ensure that the user experience when accessing online material held by GMS and the BBC will be a consistent, seamless and high-quality one.

• The BBC and GMS should clarify the area of online rights and the production of any content specifically for online outlets once terms of trade applied to both BBC and GMS funded output are agreed. Specifically, agreements should be flexible enough to adapt to any changes in the commercial online market, and independent producers should be able to compete for commissions for any (non- news) online-specific content.

• The BBC Executive should also ensure that appropriate links and signposts to other Gaelic sites should be made in a fair and non-discriminatory fashion.

• The BBC Executive must present clear evidence of how the commissioning strategy will minimise the partnership risk created by the joint venture – for example will the partners commission certain genres (other than news) rather than both commissioning all genres?

• Clear processes and terms of trade must be in place for how commissioning, particularly from the independent sector, will function and be transparent.

• There should be confirmation that a Sky EPG listing can be obtained.

• The funding for the GDS must comply with any applicable requirements set out in clause 75 of the Framework Agreement.

• The partnership and governance arrangements between the BBC and GMS must be robust and sufficient to ensure the proper stewardship of licence fee payer revenue. Accordingly the service therefore should not launch until:

a. the BBC Executive provides fuller details of how the management, financial and accountability controls of the partnership will function with a report from BBC internal audit giving a clear opinion on them; and

b. the Controller of Fair Trading has confirmed that the proposal to fund training for independent production companies complies with the BBC's Fair Trading Guidelines.

6.3 The results of this work should be presented to the Trust’s PVT Committee.

6.4 In addition, the following conditions should be covered within any Service Licence for the GDS and also by modifications as appropriate to the BBC Two Service licence:

• Launch on DTT should await a review by the Trust by 2010. • The future removal of the opt-out from BBC Two is authorised now but also subject to review by 2010. • The service licence should run for five years. Any renewal of the licence will be subject to approval by the Trust and it will be at the discretion of the Trust to apply a further PVT if necessary, although with the review by 2010 of delivery options this may not be necessary. • The service licence would only be valid whilst agreed funding is provided by GMS. • There should be a target of at least 25 per cent of GDS commissions from the independent sector from the second year of operation (Financial Year 2009). The aspiration of at least 50 per cent is endorsed by the Trust, and we will look at progress achieved in working towards this in 2010.

7. Service licence

7.1 Since the GDS would be a new service, it would require a service licence. We have provided a draft of this in Annex 2. It reflects the specifications outlined in the service description issued at the start of this PVT, together with the conditions outlined in section 6 above.

7.2 We are publicly consulting on the draft service licence with these provisional PVT conclusions. If, after consultation, the Trust decides to adopt a final decision that materially varies from these provisional conclusions, then we would consider whether any further consultation on the service licence is also required.

7.3 Our approach to review of performance is addressed in the draft service licence.

8. Next steps

8.1 The timetable for this PVT has anticipated from the outset that the BBC Trust would consult on its provisional conclusions for 28 days. During this period the BBC Executive will also have the opportunity to provide the additional evidence the Trust has specified. For the avoidance of doubt, if sufficient evidence were not forthcoming to the Trust then the public value demonstrated would be insufficient to justify the investment in the service and it is likely that the Trust would have to decline the Executive’s application.

8.2 Having now completed the PVA and MIA stages of the PVT, we have considered whether 28 days is a sufficient period for consultation. We considered in particular the following:

• The service description produced by the Trust and Ofcom has been publicly available since 16 August 2007. At the start of this PVT we also published as much of the BBC Executive's application and supporting documents as allowed by commercial sensitivity. This allowed for proper consultation at that stage. This should also have given respondents the opportunity to become familiar with the matters considered in the provisional conclusions.

• The PVA and MIA have been published in advance of these provisional conclusions.

• Both the PVA and MIA set out the issues relevant to the PVT and the provisional conclusions set out our views.

8.3 It is important that the PVT process proceed expeditiously as required by the Framework Agreement. We consider that unless there are particular circumstances, 28 days for consultation on our provisional conclusions will generally be appropriate and, after careful consideration, we have concluded that it is for this PVT.

8.4 Our provisional conclusions are open to consultation until 17:00 on 19 December 2007. Annex 3 contains the questions we would ask you to consider. In the sections above, we have also noted some specific areas where we invite responses.

8.5 Following the end of the consultation, we will consider representations received. We presently intend to publish our final conclusions no later than 28 January 2008.

Annex 1: Background to the Public Value Test The BBC’s new Royal Charter and Agreement came into effect on 1 January 2007. The Charter makes clear that the BBC should be able to alter its UK public services – for example, to respond to changes in technology, culture, market conditions and public expectations. However, any significant service-related proposals for change from the BBC Executive, including proposed new services, must be subject to full and proper scrutiny. The means by which this scrutiny takes place prior to approval is the Public Value Test (PVT).

If the BBC Executive proposes to launch a new UK public service or make significant changes to an existing UK public service, the BBC Trust will consider the proposal and decide whether to launch a PVT. The BBC’s UK public services include all the BBC television and radio channels broadcast in the UK and the BBC’s online services. They do not include the BBC’s overseas services nor its commercial services, such as the publication of magazines or sale of videos by the BBC subsidiary BBC Worldwide.

Where a PVT is undertaken the new service or change must not happen until that process is complete. The PVT has several elements. A Public Value Assessment (PVA) is prepared by the BBC Trust to ascertain the likely public value of the proposed change. In making this assessment, the BBC Trust acts in accordance with the requirements of a Framework Agreement concluded between the BBC and the Secretary of State for Culture, Media and Sport (Framework Agreement). It also must comply with all its other legal duties including the general duties in Article 23 of the Charter.

At the same time, the communications regulator Ofcom prepares a Market Impact Assessment (MIA) examining the extent of any likely adverse impact on markets relevant to the proposed change.

The BBC Trust then considers these two assessments and reaches provisional conclusions on the proposed change. This document sets out the Trust’s provisional conclusions. In order to conclude that the proposed change should be made, granting approval either with or without conditions, the BBC Trust must be satisfied that any likely adverse impact on the market is justified by the likely public value of the proposed change. It also must be satisfied that approval would be consistent with the BBC Trust’s duties under Article 23 of the Charter and its other legal duties. The BBC Trust’s provisional conclusions are the subject of public consultation. The BBC Trust will review and take account of, as appropriate, all representations received before making its final decision on whether or not to approve the proposed change.

Annex 2: Draft service licence The Gaelic Digital Service

Part 1: Key characteristics of the service

1. Remit The remit of the Gaelic Digital Service (GDS) is to offer a television, radio and online service with content in the Gaelic language. The service should include a mix of genres, including television news and weather. The service should aim to serve Gaelic speakers, those learning the language, those that might wish to learn, and those interested in the language and culture. It should aim to reflect and support Gaelic culture, identity and heritage.

2. Scope of this Licence This Service Licence covers only the television output of the GDS. Its radio component is covered by the Radio nan Gàidheal Service Licence, and bbc.co.uk/alba is covered by the bbc.co.uk Service Licence.

The GDS should be available for up to seven hours each day. It should be transmitted free to air for general reception in the UK as a live broadcast on digital television platforms2 and it may be simulcast on fixed and mobile internet protocol networks.

It may also offer its broadcast content on fixed and mobile internet protocol networks or via other platforms3 for seven days after it has been broadcast. On the same platforms, it may allow users retrospectively to download multiple episodes of first-run series (known as “series stacking”)4 until a date no later than seven days after the last episode in the relevant series. The aggregate volume of such “series stacked” content must represent no more than

2 The service is likely to only be available on digital terrestrial TV when digital switchover occurs in Scotland, subject to a further review by the BBC Trust prior to the launch of any such service.

3 Provision by particular providers over certain platforms has been specifically approved by the Trust in its Public Value Test final conclusions of April 2007. Content may also in future be syndicated to other providers and platforms, in accordance with the Trust’s Syndication Policy for BBC on-demand content.

4 The Trust’s guidelines for which programmes may be included in series stacking are those where the series has a distinct run, with a beginning and an end and a clear “narrative arc” or those with exceptionally high impact. These should cover a broad range of programmes, in terms of genre and appeal.

15 per cent of all television content offered on-demand. On the internet, it may give users 30 days after downloading the content to access it for the first time and may allow users to repeatedly consume downloaded content for up to seven days after first access.

The GDS should offer programme-related content on bbc.co.uk.5 This licence is valid for five years from the date it is issued. Should at any time the Gaelic Media Service (GMS) withdraw from its partnership with the BBC or fail to provide agreed funding for the service, then this licence will be suspended.

3. Service budget The television part of the GDS service (covered by this service licence) is funded jointly by the BBC and by Gaelic Media Service. The overall budget for the Gaelic television service is £[13.75m] in 2008/09. Of this, the BBC’s contribution covered by this service licence is £[4.0m]. These numbers do not include any spend on distribution which is outside the scope of this licence.

The BBC’s contribution to this budget may be adjusted annually for Retail Price Inflation. Any planned or actual change in the BBC’s annual expenditure on the service of more than 10 per cent in real value requires approval from the BBC Trust and may entail variation of this Service Licence.

The Trust’s approval will also be required if total funding of the Gaelic Digital Service changes by more than 10 per cent in real value.

4. Overview of aims and objectives Programmes on the GDS should exhibit some or all of the following characteristics: high quality, original, challenging, innovative and engaging, and it should nurture UK talent.

The service should deliver its remit through high-quality programmes with wide appeal across a range of genres. It should show around 1.5 hours each day of originated television programming, including output from other BBC services. It may also show narrative and archive repeats.

5 This includes the offer of some news and current affairs output on-demand for an unlimited time period after initial broadcast. Any expansion of this offering will require the approval of the BBC Trust.

The GDS should commission original programming across a range of genres, including news, weather, sports, live events, children’s, music and entertainment, factual programming, educational output and some comedy and drama. Its news and current affairs output should be accurate, impartial and independent. It should support Scottish and Gaelic music and arts, and should represent the BBC’s main outlet for events of particular significance to Gaelic speakers. It should commission work from new and established talent. When the television service is not being transmitted, the GDS may simulcast BBC Radio nan Gàidheal. The GDS is committed to commissioning output from independent suppliers, in accordance with the BBC’s statutory commitments.

Part 2: Contribution to public value

5. Contribution to the promotion of the BBC’s public purposes

5.1 Reflecting the UK’s nations, regions and communities The GDS should make a very important contribution to this purpose amongst its audience by reflecting and strengthening Gaelic cultural heritage and promoting awareness of it across the UK. It should do so by its provision of output in the Gaelic language for those who speak the language, and its role in encouraging and enabling others to learn Gaelic. The GDS is aimed primarily at Gaelic speakers within Scotland, although it should also be available on some platforms to those outside Scotland. It should achieve these aims across all types of programming. In particular, its factual output should reflect topics of interest and relevance to the Gaelic community. In addition, religious and sports programming should represent the diversity of interests within the Gaelic community. It should aim to draw the Gaelic community together to share sporting, cultural and musical occasions.

5.2 Promoting education and learning

The GDS should make an important contribution to this purpose by offering regular support to those learning the Gaelic language with its programming, and by offering learning resources alongside its programming, including subtitles and additional online content. It should work with external partners in the Gaelic education sector to promote learning of the Gaelic language. The GDS should offer programming for both pre-school and older children in regular slots each week. The GDS should provide opportunities for informal learning across a wide range of subjects in its factual output. It may take part in pan-BBC learning campaigns, adapting them where necessary to enhance their appeal to Gaelic-speaking audiences.

5.3 Sustaining citizenship and civil society

The GDS should contribute to this purpose amongst its audience through its provision of accurate, impartial and independent news and current affairs shown in peak viewing times. It

should aim to originate some news material itself, as well as providing re-versioned news content gathered by the BBC elsewhere. Its journalism should focus on issues of relevance to the Gaelic speaking target audience. Political coverage, including coverage of elections, should focus on Scottish affairs, but also cover the Westminster and European parliaments, as appropriate. The service should enable audiences and experts to explore a broad range of subjects and to engage and interact on these issues. Some content should be made available for on-demand viewing online after broadcast.

Conditions The GDS should: • Broadcast live news programmes each weekday evening, including at peak time, and a longer news review at weekends

5.4 Stimulating creativity and cultural excellence

The GDS should contribute to this purpose amongst its audience, both by supporting established talent and by developing new talent. It should contribute to the creative economy in Scotland by commissioning programming from independent suppliers. The service should support Scottish music and arts by broadcasting a range of styles of music-making and other performance, including traditional and contemporary music. The GDS should commission some original comedy and drama each year.

Conditions The GDS should: • Commission at least 25 per cent by volume of its original programming (excluding news) from independent producers

5.5 Bringing the UK to the world and the world to the UK

The GDS should play its part in this purpose, primarily by bringing the world to the UK, by regularly covering international events and issues in Gaelic, and through its news output. It should bring the Scottish Gaelic community to the world by making Gaelic language content available on bbc.co.uk.

5.6 Emerging communications

The BBC’s sixth public purpose is defined in the Charter as "in promoting its other purposes, helping to deliver to the public the benefit of emerging communications technologies and services and, in addition, taking a leading role in the switchover to digital television".

The GDS should contribute to the promotion of this purpose in a variety of ways which are described in this Service Licence.

6. Annexes to this Licence

6.1 Service Licence Annex 1 – Performance assessment

The performance of the GDS will be assessed by the BBC Trust using the framework described in Service Licence Annex I. The GDS’s compliance with any Conditions, as described in section 5, will also be measured on an annual basis and reported in the Annual Report and Accounts.

The BBC Trust will expect the GDS to comply with the commitments described in sections 4 and 5 of the Service Licence. The BBC Trust will monitor compliance with these commitments retrospectively as part of its periodic service reviews and/or on an exceptional basis if there is evidence or allegation of non-compliance.

6.2. Service Licence Annex 2 - Statutory commitments

Details of statutory quotas and other obligations to be fulfilled by the GDS, in conjunction with other BBC services, are set out in Service Licence Annex II.

7. Operation of this Service Licence by the BBC Trust

For details of how the BBC Trust operates this Service Licence, please see the Service Licence Operating Framework. This is available from www.bbc.co.uk/bbctrust or upon request from the BBC Trust Unit.

Service Licence Annex 1: Performance measurement framework

Introduction

The BBC Trust has the function of assessing the performance of the Executive Board in delivering the BBC’s services and activities and holding the Executive Board to account for its performance.6 It will use the framework described below as the basis for its assessment of the GDS.

The framework is based around the four drivers of public value: Reach, Quality, Impact and Value for money and it includes measurement of the five content characteristics, as described in the BBC Agreement7: high quality, challenging, original, innovative and engaging.

The Trust can amend this framework without this constituting formal variation to this Service Licence.

Performance measurement framework

Reach: The GDS should contribute towards the maintenance of combined BBC weekly reach8 at over 90 per cent by aiming to increase its own weekly reach to around 250,000 people each week.

Quality: Audience approval of the GDS and perceptions of it as high quality and innovative. Also, the proportion of originated programmes across all hours9.

Impact: Audience perceptions of the GDS as engaging and challenging.

Value for money: The GDS’s cost per viewer hour.

6 Charter, article 24 (c)

7 Agreement, clause 14

8 For all BBC services

9 Including repeats

Service Licence Annex 2: Statutory commitments

In addition to the conditions and commitments described in this Service Licence, the GDS contributes to the fulfilment of a statutory commitment each calendar year.

• A minimum percentage of qualifying hours to be provided by independent producers

The exact level of this annual commitment is published by the BBC in its Statement of Programme Policy each year.

Annex 3: Public consultation on our provisional conclusions The Trust's provisional conclusions on the BBC-GMS (Gaelic Media Service) proposal for a Gaelic Digital Service are now open to public consultation.

The Trust has provisionally concluded that the service proposal could deliver public value. However, the evidence presented so far is not sufficient to conclude that the likely level of public value would justify the proposed level of investment.

Therefore, we are not satisfied that we should approve the proposal without further evidence from the BBC Executive. We would expect to see the following before the end of the consultation period:

• Evidence that the proposal for the service places enough emphasis on attracting new speakers to the Gaelic language. In particular, we have not seen sufficient evidence as to how the educational strategy will be delivered – which we regard as key to the public value of the service.

• Evidence of a convincing plan for appealing to a wider audience in Scotland, and so justify the projected reach of the service submitted in the BBC Executive's application.

The Trust welcomes the public's views on whether it has made the right decision. Should sufficient evidence on the above be forthcoming from the Executive, we are considering attaching a number of pre-launch requirements and post-launch conditions to the service, and are specifically seeking your thoughts on these.

You may submit your response in the following ways:

• At the BBC Trust’s website, www.bbc.co.uk/bbctrust

• By email to [email protected]

• By post to:

Gaelic Consultation BBC Trust 35 Marylebone High Street London W1U 4AA

Please complete the confidentiality statement, below, when you make your response.

Audio and Braille versions of this document are available upon request by calling BBC Information on 0800 068 0116.

The consultation will close on 19 December 2007.

Consultation questions

1. Do you agree that the BBC Trust is right that more focus is required on the educational aspects of the proposed service and also on how it will achieve a wider appeal in Scotland?

2. Do you agree with the BBC Trust’s decision that if the additional evidence requested is forthcoming and satisfactory, the Trust can approve the new BBC Gaelic Digital Service, subject to conditions outlined in the Trust’s report of its provisional conclusions?

3. Do you agree with the statement that if the additional evidence requested is not forthcoming then it is unlikely that the service will create sufficient public value for approval?

4. As an individual, do you believe that a service with the conditions suggested by the Trust would appeal to you either as (a) a Gaelic speaker, (b) a learner of Gaelic or (c) someone with a wider interest in Gaelic or Scottish culture?

5. Do you believe that the additional incremental spend by the BBC each year of £2.5 million plus distribution costs would create sufficient additional public value to justify this investment?

6. If you are a potential user of the service, what means of access (satellite, cable, Freeview, broadband) would be the most convenient to you?

7. Do you believe the withdrawal of the Gaelic zones on BBC Two is an appropriate measure if a Gaelic DTT (Freeview) channel is established?

8. We would be particularly interested in responses from potential educational partners and others involved in the promotion of Gaelic about your views on the possibilities to work in partnership with the GDS.

9. We would be particularly interested in views from industry respondents about the process for commissioning and the targets proposed by the Trust.

10. Do the conditions proposed in the draft BBC service licence seem appropriate?

11. Are there any other issues you would like the BBC Trust to consider in relation to the proposal?

How the BBC Trust will use your response

A summary of responses to this consultation will be published on the BBC Trust website (bbc.co.uk/bbctrust/) after the consultation has closed. Feedback to this consultation will be used by the Trust to consider its final decision in the Public Value Test of the Gaelic Digital Service.

Names and/or addresses of individual respondents will not be published on the BBC Trust website. The Trust will publish details of organisational responses. Please copy or sign the declaration below to signal that you are prepared for some or all of your response to be made public. Otherwise the assumption is that some or all of your response may be made public. If you would prefer that all or part of your response be treated as confidential, please make this clear in your submission.

Confidentiality statement

PLEASE PRINT AND SIGN THIS DECLARATION IF YOU ARE SENDING A HARD COPY OF YOUR RESPONSE. IF YOU ARE SENDING AN ELECTRONIC RESPONSE, PLEASE COPY THIS STATEMENT INTO THE RESPONSE AND COMPLETE IT. If you would prefer that all or part of your response be treated as confidential, please complete the confidentiality section below.

What do you want the BBC Trust to keep confidential?

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The BBC Trust will retain and use your name, address, email address and the organisation you work for (if applicable) for the purposes of administering the online public consultations held on this website. You will have the option of deciding whether you want your response and, if responding on behalf of an organisation, its name displayed on this website (all other personal information will be withheld from display). Your personal details will not be passed to any third parties for marketing purposes.

The BBC complies with the Data Protection Act 1998. For more information on BBC’s Privacy Policy please refer to http://www.bbc.co.uk/privacy/.

The BBC is listed as a public body in Part VI of Schedule 1 to the Freedom of Information Act 2000; this means that, subject to certain restrictions, the BBC may be required to disclose information it holds to individuals and organisations making a valid request to be supplied with that information under the Act.

If you have requested that all or part of your response should be kept confidential, the BBC will take reasonable steps to maintain confidentiality of that information if a request for its disclosure is received under the Act. Please note, however, that in the event the BBC is able to withhold information under the Act, this decision may be overturned by the Information Commissioner, the Information Tribunal or the courts.

Please note that we may still refer to the contents of responses in general terms, without disclosing specific information that is confidential. We will exercise due regard to the confidentiality of information supplied.

DECLARATION

I confirm that the information I have submitted is a formal consultation response. It can be published in full on the BBC Trust’s website, unless otherwise specified, and I authorise the BBC Trust to make use of the information in this response to meet its legal requirements. If I have sent my response by email, the BBC can disregard any standard e-mail text about not disclosing email contents and attachments.

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