WEDNESDAY 11 JULY 2007

______

Present

Bonham-Carter of Yarnbury, B Eccles of Moulton, B Fowler, L (Chairman) King of Bridgwater, L McIntosh of Hudnall, B Manchester, Bp Maxton, L Thornton, B ______

Witnesses: Ms Dorothy Byrne, Head of News and Current Affairs, Channel 4, and Mr Jim

Gray, News Editor, Channel 4 News, ITN, examined.

Chairman: Good morning, welcome very much to this session. I am sorry to have kept you waiting a few minutes. Are there any declarations of interest that Members of the Committee want to make?

Baroness Eccles: I would like to make a declaration for the record, which is that I am an independent national director of Times Newspapers Holdings Limited, which is a wholly owned subsidiary of News International. We have extremely specific and limited responsibilities which do not include any matters concerned with finance or policy regarding the newspapers.

Q66 Lord King of Bridgwater: I am doing a thing called The Iraq Commission, at the moment, which is being done by Channel 4, for which they are paying me.

Ms Byrne: Watch it on Saturday night at 7.30!

Q67 Chairman: Thank you very much. Having got that over, let us start. Welcome. I think you know what we are doing; we are looking at media ownership and the news, but what we are also doing, in coming up to that, is looking at how the agendas of news have changed; the way that people access the news is changing, the process of news gathering – how that has changed – and the impact of ownership, and concentration of media ownership, on the balance and diversity of opinion seen in the news. So it is, at this stage, very wide in its reach. Could I begin, then, as far as Channel 4 is concerned, by asking you this: has the production of news become more or less expensive over the past ten years, as far as Channel 4 is concerned? How do you view that?

Ms Byrne: I think it would be good if Jim answered about the costs of news production because he is doing it every day and can explain that perhaps better than me. As far as we are concerned, paying a substantial sum of money for our news is something that we are absolutely committed to. So if some costs have gone down because of technological progress then we have aimed to switch that money into paying more for original journalism.

Q68 Chairman: Let me cut through that. The real point is this: we have been told, both in this Committee and outside, that news channels are inherently unprofitable in this country; there is no way you can actually make a profit out of running a news channel. Is that something you would agree with?

Ms Byrne: I am proud to say that Channel 4 News loses more money for Channel 4 than any other programme that we make!

Q69 Chairman: You are proud to say that?

Ms Byrne: Yes.

Mr Gray: I do my best!

Ms Byrne: I am not sure what the current funding gap is but I think it is about £10 million. I always say to the news: “That shows how much we love you”.

2 Q70 Chairman: Excuse me interrupting, but that is a pretty flip answer, is it not, really?

Surely, you would like to have a news programme that was washing its face; that was profitable. People do not normally, in the media industry, like actually running things which are being subsidised by other parts of the business.

Mr Gray: Good morning, my Lord Chairman. I should explain who I am. I am the editor of

Channel 4 News but, also, the head of the department at ITN which makes all of the news services – that is News at Noon, More4 News, the evening programme at 7 and all the online.

It is true, as Dorothy says, it is about £20 million we get to make all those programmes, and I think the ad revenue around those slots is about ten-ish. It could be I could offer to give

Channel 4 a programme more in line with the revenue – it could be done; a decent little news programme could be done for half the price. However, it would not be able to do what is set out in the remit, and primarily that is the journalistic parts of the remit. The technology has made the cost of news processing and news gathering cheaper over the last ten years, so in the field we can deploy fewer people to do what we used to do years ago: satellite links are coming down, you can take portable satellites where you used to have to book through foreign broadcasters, and back at the newsroom processing of news, the picture, the graphics and the scripts, are all converging; the technology that does that is becoming very much similar so that an individual can actually do more than one role these days. However, if you just went down that route into a highly effective news processing operation it would look quite good; it would look quite sharp on air, but you would very rarely find out new and serious information, because it spends its money on the processing side rather than the journalism side. So that is the remit we are set - it is very strong on original, revelatory journalism - and the cost of that has not come down; that is people; that is not technology.

Q71 Chairman: How many people do you employ?

3 Mr Gray: Overall it has gone up. About five years ago it was about 110 and right now it is coming on 140 because its services have expanded with the More4 News service and online.

Q72 Chairman: You are really saying, for the foreseeable future and in the past as well, that with a news programme like what you do with your 7 o’clock news programme and all that, there is no way you are ever going to make money out of that.

Mr Gray: I think it is pretty difficult, actually, to say in terms that you would actually make money. You asked Dorothy that you are hearing the received view there is no future for news channels. I think by that you did actually mean news channels not a news programme. That is true; I do not think you can because of the existence of News 24 – they do it for free. ITV used to have a news channel but they got out of the game because I do not think there is the advertising revenue for two news channels, commercial ones, up against the BBC, but when it comes to our form of news, which is a shaped news programme, the premium paid on journalism, talent and expertise – specialists journalists, foreign viewers – it is difficult for me to see that that would make the channel money, frankly..

Q73 Chairman: What that means as far as policy for Channel 4 is concerned is that the money has got to come from elsewhere, either in the Channel 4 budget or extraneously. I suppose there is an implied subsidy from analogue, and once you go from analogue to digital, that implied subsidy disappears. What happens next?

Ms Byrne: Our view would be that whatever happens Channel 4 News as it is must continue, so a means must be found to ensure that we have the funding to continue. Overall, at the moment, Channel 4’s average percentage audience is 10 per cent and for the news it is 5 per cent. If we continue, as we must, with our one-hour, serious news programme in which 40-50 per cent of its content is foreign, that programme is not going to make money. But we should not cut back on its seriousness, its quality or its length – I am absolutely sure of that. I am

4 sure that that is right, not just for Channel 4 but, also, for British democracy. I think the existence of Channel 4 News is vital as a very serious competitor to the BBC.

Q74 Chairman: We will come on to some of the figures, but tell us, generally, how many people watch the 7 o’clock news?

Ms Byrne: About a million. That, since 2001, has held at a time when other programmes have gone down in other broadcasters. We are pleased with that.

Mr Gray: What we take from that is – and some people might call it a niche, but a million is still a good number - that there is still a market for serious, in-depth news. Perhaps that is where we should place even more of a premium: the trust, the accuracy and the depth which you do not get in other outlets, even though they are multiplying exponentially. So this is bucking the trend, frankly, for our audience has gone up beyond 6 per cent. It is around about one million and that is stable, whereas other news programmes are running down.

Q75 Chairman: Basically, what you are saying is that in the foreseeable future, over the next few years, unless there is some public subsidy, public support – however you want to put it – the kind of news programmes that you are running at the moment, it is not going to be possible to run.

Ms Byrne: Channel 4, as I said, has a funding gap. I would always come back to saying that whatever happens the most important part of Channel 4 is its news and current affairs, and means must be found to maintain them at length in prime time.

Q76 Lord Maxton: That is exactly the point I wanted to make. Is one of your problems the timing of that hour? That 7 to 8 time is competing almost every day with the two most popular broadcasting events each day, which is Coronation Street and Eastenders – at least

5 part of your programme is. If you were at a different time do you think you would get a better viewing?

Ms Byrne: I think it is a good time. We are satisfied with that time. It is just at the beginning of prime time. I am not sure that people want to sit down at 8 o’clock at night and watch a one-hour programme, although of course on More4 we have started a half-hour programme, and that is doing very well and has increased its viewers by about 40 per cent in the last year.

Q77 Lord Maxton: You are moving into radio. Are you using news on that? Are you using the same staff to provide that news? If so, are you getting extra revenue for it?

Ms Byrne: We will set up a radio team but our proposal is that they work alongside the team that we have got so that we can have economies of scale. I think that we will obviously have to have a proper dedicated news team, particularly that programme in the morning. I think it is an incredibly important programme. Again and again you hear people say that the Today programme sets the political agenda of the day. Now, that may well be true, but in a democracy is it right that one programme sets the agenda of the day? So for that programme we need proper, separate staffing. That is the most important programme because it is in the morning that there really is that democratic deficit, although we will have programmes at lunchtime and in the evening and on the other services. The E4 Channel is one where we will aim particularly to find imaginative ways to reach out to young people, who, obviously, it is very important that we try to engage in the news.

Q78 Bishop of Manchester: If I am at home at around 7 o’clock I will invariably look at

Channel 4 News before switching over later on to see what is happening in my diocese in

Coronation Street. I wonder if you could articulate what it is that, for me, is attractive and informative and, really, quite valuable about Channel 4 News? In other words, can you – and

6 you touched on this a little earlier in an answer – define more sharply exactly what it is you are after in the Channel 4 News programme, and then perhaps analyse a bit what you see to be the chief differences between what you are after in Channel 4 News and what the other channels are doing in theirs?

Mr Gray: Let us start with the obvious point of difference. Lord Maxton was asking about the slot, the 7 to 8 pm, one hour. That is a very obvious difference between Channel 4 News and other news programmes – twice the length. However, it is not just a point of difference, it is the point of difference that makes quite a lot of the other points of difference possible: in depth, the range, the surprise, the forum for debate, taking things further and taking the viewer into places where they had not expected to go. That would be much less possible if it was a half-hour programme. Remember, we are the news supplier to Channel 4; there is no other news programme, so we have to choose venues as well, so it has to be around that main news event. If you had only half-an-hour you would find your flexibility to move into the other revelatory, surprising elements and charging and provocative elements much less possible and much more constrained. So I would say the slot is not just one item amongst many; it is a very important point of difference. When you define the programme what we try to do is have the viewer leave the programme having a sense of the most important and interesting things that have happened that day, but, also, the sense that they have not just heard about them in the same way as they could have somewhere else. So we try to package the news events and take them further with a lot more energy. That is one thing I really stress often to the presenter, Jon Snow; we try to bring energy and fizz to the studio and a real burning sense of curiosity that the programme is absolutely trying to find things out, so that you can feel the programme straining to go further and find out the challenge to uncover. It is that aspect, that the programme is very active; it is not a passive purveyor of stuff that has happened that day; it is out there finding it out.

7 Q79 Bishop of Manchester: It is a kind of news magazine programme.

Mr Gray: Yes, I would think it is a kind of hybrid; it is news/current affairs. I suppose the nearest to it would be Newsnight, although Newsnight is probably more at the current affairs end whereas Channel 4 News is more at the news end of that spectrum.

Q80 Bishop of Manchester: I have been watching it for several years now. You talk about fizz and you have got energy about what you want to do. I think it is probably much the same as it always has been, and I noticed in the recent Ofcom report that there is a point made there that actually Channel 4 News has not changed - the implication being that probably it ought to. Can you comment, first of all, on whether, over the last five to ten years, that is an accurate observation and then what ideas you have, if it is an accurate observation, for changing it in the future?

Mr Gray: I actually do not think it is accurate. Some of the agenda areas will overlap but there will be new agenda areas that we take on. I would say that if you look at the content now, and do a content analysis, I think you would find that the original journalism content, on which we put a high premium, is higher now than it was before. We strive, even when we are covering news stories which are the major news stories of the day, that are on all the programmes, we absolutely go hell-bent: “What new can we bring to this story? What more can we find out?” I would say that has definitely changed – the urge, the drive to bring revelation and new information to life is higher than it was before.

Q81 Bishop of Manchester: So the Ofcom analysis, in saying that there has been very little change, is unfair?

Mr Gray: In terms of content, yes. I am not quite sure if that is a perceptual view ----

Ms Byrne: I think it has continued to be a very serious programme and, perhaps, that was more what they meant – that we have not, in any way, dumbed-down. In fact, I believe that

8 our foreign content has become higher. I have to say, as the person that has contracted the news, I think Channel 4 News has got better every year. I think it is a much more exciting programme than it used to be. Every year I genuinely believe it has got better. I would also say, specifically, that it is more diverse and that that thing which Channel 4 News has always had of seeing the world from the perspective of other people and of people in other countries has become a much more important thing to us. It is a few years ago now that we first did, for example, news from India, where we took the whole news to India for a week – not just to say what is happening in India but to say how does the world seem if you are an Indian? News from Iran, which we made, was an outstanding programme of immense importance in that week of programmes because it enabled you to see what it felt like to be an Iranian; the way that Iranians saw things. I think that in terms of multicultural Britain there is a much greater diversity of voice now on Channel 4 News than there used to be and I think that the work done by the cultural diversity network shows that that is appreciated. That is of incredible importance. All news broadcasters must do more to make people from ethnic minorities in

Britain feel that the news is not just for a select group of white, middle-class people who went to Oxford; that their interests and concerns are represented on the news. I have to say that I think, year-on-year, Channel 4 News has got better and better and that you hear a wider variety of people. You sometimes hear people who are quite shocking, but who you have to hear because you have to know what they think.

Q82 Chairman: Do you think it is impartially put? Where does impartiality come in the values that you put on the news programme?

Ms Byrne: I would say that due impartiality is probably number one because that is what makes the viewer understand that they can trust the news and that it is true; that it is as true as we can make it on that day. That is what we are aiming to be. As we move from being one nightly news programme, which is what we were five or ten years ago, to lunchtime, More4,

9 news on the web and radio, in each of these new territories what we are taking is the name

Channel 4 News and saying to people: “You can switch this on, you can tap into it but you know that it is impartial; you know that you can trust it”. I think impartiality is incredibly important.

Q83 Lord Maxton: Leading from that, Ofcom have suggested in their review that it should only be the public service broadcasters, of which you are one, who should have that impartiality requirement and that, presumably, therefore, although you would have it on your television channel there is not that same requirement, presumably, on your radio or on your online services. But you would choose to do it.

Ms Byrne: Although it is not required of us we have chosen that our online presence should also be duly impartial because we believe that whatever territory we enter that is what people expect of us. I personally think that all news should be duly impartial and that it would be a retrograde step in a multicultural society, in particular, to say that we would have news programmes or channels which pandered to prejudices of particular groups. I do not think it helps anybody in society to start having news which is not duly impartial. I think that would be going backwards. There are many countries where you turn on the news and you have no idea whether or not it is really true. I would say, for example, that we know that significant percentages of Muslims believe that 9/11 was a conspiracy of the American and Israeli

Governments - or 7/7. Channel 4 News did a survey of Muslim opinions about who was to blame for 7/7. Do we want a channel where that view could be stated as being an absolute fact? Jim, what do you think?

Mr Gray: I probably disagree slightly with you here, Dorothy, in that I cannot see a news channel working as a commercial proposition – you are probably talking about foxification

(?) of news channels, but as long as it was transparent about it it might work as a commercial

10 proposition. However, at heart, an authentic news service as opposed to an opinion-based news service should be duly impartial.

Q84 Lord Maxton: In a sense that minor disagreement between you leads me to my next question, which is what is the relationship between Channel 4 and ITN, basically? ITN are the providers of the news. Who decides on the issues like the editorial, who is coming first; what has been the main story and whether or not you are being impartial? Is it ITN or is it

Channel 4?

Mr Gray: It is us, ITN. It is all clearly set out because we have a contractual relationship as a supplier to our customer – our dearly beloved customer – but day-to-day control rests with us at ITN. The running orders are set by us, the agendas are set by us. Obviously, there is close consultation with Channel 4 about things like the look and feel ----

Q85 Lord Maxton: On a daily basis?

Mr Gray: We are in contact, probably, several times every day but actually not in the sense of Dorothy requesting, encouraging or instructing – that does not happen. We make up our running orders and I will probably tell Dorothy what we are doing that night. There are certain specific instances in which I am required to notify the channel – and it is notification, it is not asking for permission. It would be if there were extremely controversial items. For instance, when we had the leak of the Attorney General’s legal advice on the Iraq War the channel were taken into confidence on that some time before when it was getting likely, because of the consequences; the legality, the issues around even broadcasting that. That is the most extreme but there are other areas to do with taste and decency where I would call a pre-transmission referral protocol, where I will just tip the channel off that we are doing it.

Frankly, it is a lack of courtesy if Channel 4 gets a lot of calls following a news programme because something has been in that news programme and they did not even know. So their

11 viewers call; the department is besieged by calls and we did not even have the courtesy to tell them. However, it is different from deciding content; that is decided by us.

Ms Byrne: There is a very detailed editorial specification for each programme which lays down contractually what that programme’s aims are. For example, one of the aims of

Channel 4 News is that it should have its own independent agenda and should not follow slavishly the agenda of other news programmes. That is its point of difference. The format of the programme is all laid down but on a day-to-day basis the decision on the news running order has to lie with the people who are making the news programme. As Jim says, we obviously talk regularly and the relationship is such that we both know what we are aiming at.

We might have a discussion after the programme: do we both now think that was the best lead item of that day, but if you start to have a broadcaster tell the news journalists precisely what to put in the news every day it would be a mess, would it not?

Q86 Baroness Bonham-Carter of Yarnbury: Dorothy, in your role as a Channel 4 person you have to make sure that the news is true Channel 4 news. Jim was suggesting that it was rather a one-way discourse between you two, ie, him telling you. I find that slightly hard to believe.

Ms Byrne: It is laid down in the contract and we have been doing it for years; in fact, both of us have been doing it for years, so instinctively we both know what our important Channel 4

News stories are and it is rare that I would look at the news and think, “Blimey! What was that about?”, because we are having these day-to-day conversations and then we meet once a week at Channel 4 News to discuss the forward strategy for the following weeks.

Q87 Baroness Bonham-Carter of Yarnbury: You clearly have a very good personal relationship and, as you say, it has evolved over the years.

12 Mr Gray: There is also a format. As well as weekly meetings there is a quarterly review of all aspects of the programme from commercial through to editorial and we will agree targets, so we will sit down and think what is important to the programme in the coming year, and it may be something like China or global climate change or the business of reproduction.

Whatever we might agree the news team will then go off and look for stories in those areas.

They will only do them if they are newsworthy or generally meet our own criteria, not just to do them because we have set a target to do them.

Ms Byrne: Our targets are really quite precise about which areas of the world we think are insufficiently covered.

Q88 Baroness Bonham-Carter of Yarnbury: Moving on to the question of the funding for the news, due to competing with Sky the ITN budget has been considerably reduced over the last six years for news, has it not?

Mr Gray: For Channel 4 News?

Q89 Baroness Bonham-Carter of Yarnbury: For the ITN news contract for ITV.

Mr Gray: For ITV, the previous one, yes.

Q90 Baroness Bonham-Carter of Yarnbury: How has that affected your ability to provide the kind of news that you want to provide?

Mr Gray: Actually, minimally. It is quite a complex relationship because the money that comes to ITN for Channel 4 to meet the general news services funds our independent autonomous activities but part of it also goes to what we may call shared resources. For instance, I collaborate with ITV News on the cost of things which I really would not want to pay for on my own, satellite tracks and things like that. You do not use them all the time but you want them there when you need them, and, frankly, on that news-gathering aspect of it,

13 the shared facilities around the news, I am getting as good a service as I ever did. In fact, in some things I can guarantee it is better under this new contract that we signed last year because I also have access to the facilities of the ITV regional company news teams in a better way than I did before, and that was something that came through, and we discussed it with the channel and with the ITV network around the time of the last contract, so frankly my news- gathering is better. There is a good reason why that should be so, because you were talking about the squeeze on budgets. Actually, the view of Channel 4 and our own view on this is not to squeeze it over our money. I am getting similar-ish money but I have to do more for it; that is true, so we have to become much more effective. What I said at the beginning about those aspects of news which have shrunk has allowed me to do more journalism because, if you look at the budgets, more money goes on the screen than it did before. There is less money now to spend on behind-the-scenes things, like shared infrastructure and computers and so on. That has been squeezed in order to preserve the journalistic content.

Q91 Baroness Bonham-Carter of Yarnbury: Can I pick up on something you said earlier?

You were talking about the fact that with modern technology one person can do more things, what I called multi-skilling. Of course, there does come a point where, if you have too few people involved in a project, that does endanger the quality of the journalism. Is there a pressure for you to drive multi-skilling to such a point that you do not have enough people on a story?

Mr Gray: That is a danger because there is commercial pressure. I cannot stand aside and watch the industry as a whole go a certain way and then become uncompetitive. However, you cannot buy into it so deeply that you cannot provide the right product, so you are right: for me this is an everyday balance between multi-skilling and making sure that what is on the screen is the right stuff. As I said at the beginning, we could give Channel 4 a programme at half the price and it probably would be quite good, but we would not find many things out.

14 Ms Byrne: There are longer pieces that we do that I do not think they could be done with that level of multi-skilling because we are a news/current affairs cross-over programme, so we have agreed the limits on multi-skilling in our new newsroom that we are constructing at the moment. I should also say with regard to your last question that our contract with ITN runs to great lengths and one reason for that is to ensure that Channel 4 gets value for money at every moment and that if there are any reductions in ITV’s service we are protected.

Q92 Baroness Bonham-Carter of Yarnbury: Would Channel 4 be happy if ITV were to gain complete ownership of ITN?

Ms Byrne: One of the points in our contract is obviously that we could review the situation were that to happen, and were that to happen that is what we would do. I think it would depend but we have got a number of clauses in the contract. One, obviously, relates to the ownership of ITN but also to the ownership of ITV and to any reduction in ITV’s service.

We have tried to imagine every potential scenario and to protect our interests should that happen.

Q93 Baroness McIntosh of Hudnall: Can I go back to a point that you touched on earlier, which was about the audience share for your programmes? I think you said that for the evening programme it was about a million and that that was relatively stable.

Mr Gray: Yes.

Q94 Baroness McIntosh of Hudnall: Can you tell us a bit about ratings overall for all your news output and how it compares with the way that ratings for your overall programme have gone over the past decade?

Ms Byrne: Roughly speaking, the percentage for the news is five per cent and the percentage for Channel 4 as a whole is ten per cent, so roughly speaking it is half. Our lunchtime news

15 programme is about 200,000. That has been pretty stable since we started lunchtime news, which I should say we decided to start; it was not any requirement that we should start it. We come straight off the back of schools programmes and so we are in the slightly strange position that we have no audience inheritance because schoolchildren are not allowed to watch the news. It would be nice if that was a bit higher but I think it is roughly similar to some other programmes at around that time. More 4 News began only last year and, as I say, it has gone up by about 40 per cent within that year and has currently the highest news rating of any news programme at that time. However, that means that it is only about 50,000, but the fact is that it has increased so much in a year, and I think we are really improving the programme as well on a daily basis. I have got quite high hopes for that programme and, again, from the research we have done, the audience really like it. They think it is a bit of a younger version of Channel 4 News and it is a bit more global, they say. They spot it has got a really interesting international agenda. We have just re-launched our news website and it is a very different website from what it was before, so we will not know for a few months what its usage is going to be.

Q95 Baroness McIntosh of Hudnall: Given that, obviously, there is quite a lot of concern at the moment, and the Ofcom report pointed this out, about the overall take-up of news and that the audience is volatile, to say the least, do you feel content that your particular brand of news is holding its own? I get the sense that you do.

Ms Byrne: Yes. We are really pleased that it is holding its own, but our next step is to go out there and find audiences in other ways. The take-up of news by young people is, obviously, a great concern when you look at those Ofcom figures and that is one reason why we have put more money into the website, because if you look at some of the information there it looks like some young people are just getting their news on the internet and the BBC has got this

16 enormous website. We cannot compete with it, it is so huge and they have got so much money. What we have got going for us is that young people really like Channel 4.

Q96 Baroness McIntosh of Hudnall: Can I stop you there because it would be very helpful if you could just tell us as briefly as you can how you know that, in other words, what mechanisms do you have for surveying audiences, who does it, does Channel 4 do it, does

ITN do it, do you do it together, and what does it show?

Ms Byrne: We have got a whole department which does research into our audiences and I know that they will be giving you at some point really detailed information. What we do know is that our main Channel 4 News is the youngest news on TV and I think 21 per cent of the audience is 16-34, but more particularly we know that Channel 4 has a higher percentage of that 16-34 audience in general for its programmes. We feel that we have this good reputation among young people. They like us, they do not think we are patronising, so how can we take that reputation to where they are, and if they are on the internet or they are listening they want to listen to our new E4 radio station, so how can we take the brand, so to speak, and create with the same ethos a different version of Channel 4 News that would be right for the internet or right for the E4 radio station?

Q97 Baroness Thornton: It is quite clear that you have a younger audience than the other public service broadcasters and you have said that you have got quite a large proportion of young people watching the news. Can you tell us a little bit more about how you fulfil a special role in providing news to engage that younger audience? What are you going to do, or are you going to do that, and how? You were starting to say that.

Ms Byrne: I think Jim described it, because we have agreed that this is really important to us and he can describe the strategy.

17 Mr Gray: As Dorothy said, that is the right figure. Currently the evening news programme has about a fifth or a quarter, sometimes 21 per cent, sometimes 23 per cent of 16-34-year olds. That compares with about eight per cent for other providers, so that is happening itself but you cannot sit back and be complacent. One temptation, of course, would be to stuff the programme full of youth-orientated things, but then you would degrade it. What we have done under the new contract which has released the funds is that we have employed some further specialists who will look for stories and pitch stories to me to get on the air which still satisfy all the journalistic credentials that we want but take our journalism in other areas, so we have technology correspondents looking at that field of new technology from broadband through to mobiles with a business slant, a consumer slant, a political slant, and finding out good stories there. We are doing more work in popular culture, so again that will have to satisfy our criteria of what makes a story on Channel 4 News. That is not “it”. What I said at the very beginning is also “it” – the feel of the programme. It does not feel like an old man’s programme. It feels very vital. There is a lot of vitality and a lot of energy, so the way we construct the programmes and the running orders and the shooting style are all part of what it is that goes to make Channel 4 News feel right for the audience as well as the content.

Ms Byrne: It feels independent and it feels that it challenges the set agenda that a lot of other people have and I think that that may be what young people like about it.

Q98 Lord Maxton: Given that young people use the net perhaps more than older people – and I am what is called a silver surfer but there are not many of us – whatever do you do, particularly with your new website, to get yourself on the front page, so to speak? When I go into Yahoo there are people there who are beaming their programmes straight in and basically showing me that this is where I should go. How do you do that?

Mr Gray: That is part of the strategy currently being put through now in order to get linkages through to the Channel 4 website from key other drivers. There are ways you can go round

18 that, but there are also journalistic ways you can go round that, by making sure that the top stories crop up, so this is how it feeds back into the programme. In order to keep your head above the noise on the net you have to have something different to say. One way of doing it is to just shout louder but if you have something different to say it means that you will be a more attractive proposition.

Q99 Lord Maxton: Do you think you will get the younger viewers by that strategy to your news?

Mr Gray: Yes. We are out there. As Dorothy said, the biggest challenge, frankly, is to come up with something that people can see because it is news driven. If people just want the news then BBC is the option, it is so vast, it is so comprehensive and it is high quality, but if you want to find out what it is that Channel 4 has got to say about that news story or if they have got anything extra to say, you need to get that message forward and that is why we are trying to find means of drawing in younger viewers and net users from other sources.

Q100 Baroness Eccles of Moulton: The next question really has been partly based on the commercial viability of news. In the Ofcom recent report, in relation to the fact that the independent PBS channels at the moment have a privileged access to the analogue spectrum, which, of course, will come to an end when all broadcasting becomes digital, it says that the statutory mechanisms to enforce the inclusion of news on television “may only work on BBC and probably Channel 4”, and I am quoting from paragraph 1.25 in the report. What do you think of that? Do you think that this is an accurate summary?

Ms Byrne: It is interesting. ITV is a very important news provider and particularly important to me because we make our news together. Will it be to ITV’s advantage to have news after that date? Yes, because it would mark it out from the many other channels that are out there.

You may all have a view on that but having really good news does make a statement about

19 your channel that I think is very attractive to viewers, and I find it interesting that ITV, for example, in current affairs, keeps Tonight with Trevor McDonald and keeps it in prime time, because it obviously thinks it does a good job for it. Currently I think ITV News is a very good programme and it is doing pretty well. I would hope that ITV would continue in some way with news but -----

Q101 Baroness Eccles of Moulton: Do you think that Channel 4 News can survive in its present form?

Ms Byrne: I go back to it. It has to survive. Channel 4 News is the key and most important purpose of Channel 4. We just have to all be clear about that. I do not walk about Channel 4 saying, “I am the most important person in Channel 4”, but I do walk about saying, “What I do is the most important thing that Channel 4 does”, and I have to say that everybody agrees.

Q102 Chairman: You mean everybody in Channel 4 agrees?

Ms Byrne: Everybody in Channel 4 agrees. The marketing and the promotion of news and current affairs at Channel 4 I think is a demonstration of its real commitment to it, and it is not just at the heart of what we do; it is us. I always say that Channel 4 News is the soul of

Channel 4. It is what it is for.

Q103 Chairman: The last time I heard anyone say, “It has to survive” several times it was the British Leyland Rover management in Birmingham, but I will not go down that road. You suggested that if ITV took over ITN Channel 4 would review the situation. Actually, there is nothing you could do about it, is there? I mean, the only thing you could do, I suppose, would be take another news provider if you felt that strongly.

Ms Byrne: Yes. If we felt it was not right that would be what we would consider doing.

20 Mr Gray: ITN, we obviously hope, would propose a model of the kind of news that would still meet all its responsibilities and obligations.

Q104 Chairman: I may be wrong but I did not get an overwhelming sense that you were totally confident that ITV was going to continue in the news area.

Ms Byrne: I hope that they do. I think there are very good reasons for them to do so.

Q105 Chairman: Just to end where we began, the bottom line is that at the moment you are supported by roughly £10 million a year to keep your Channel 4 news programmes going and that money has got to come from somewhere in your view because it is not going to come from, if I can put it this way, the market place?

Ms Byrne: Exactly.

Q106 Chairman: Thank you very much indeed. It has been a very interesting session. We have undoubtedly got more questions for you but perhaps we could put those on paper and send them to you.

Mr Gray: Of course.

Chairman: Thank you very much for coming.

21 Witnesses: Mr Chris Shaw, Senior Programme Controller, and Ms Sue Robertson, Director of Corporate Affairs, five, examined.

Q107 Chairman: I will not go through the introduction because I think you heard it the last time round, but welcome very much and we appreciate you coming. I wonder if I could start by asking who is five owned by?

Ms Robertson: We are owned by RTL and they are in turn 90 per cent owned by

Bertelsmann.

Q108 Chairman: RTL is a company registered in Luxembourg?

Ms Robertson: Yes.

Q109 Chairman: And Bertelsmann is -----

Ms Robertson: Based in Gütesloh, they are registered in Germany. They are a private company so they are not listed, whereas, I think, roughly ten per cent of RTL is publicly listed, not in the UK but in Europe.

Q110 Chairman: So predominantly you are under private ownership, are you?

Ms Robertson: I suppose you could say that, yes. RTL do their interim figures and annual reports and are transparent about their finances.

Q111 Chairman: And RTL has a big portfolio of other media companies?

Ms Robertson: They have got a large portfolio of other media companies. RTL Germany is one of the largest, and they have a share in M6 in France, REN TV, in Russia, RTL KLUB in

Hungary and Antena 3 in Spain. They are the largest pan-European broadcasting company and they have radio interests in France and Belgium.

22 Q112 Chairman: And sitting at the head of it is who?

Ms Robertson: Sitting at the head of RTL is Gerhard Zeiler. He is the CEO of RTL.

Q113 Chairman: But is it a traditional family company?

Ms Robertson: Bertelsmann is a family trust and the Mohn family Controls the trust ,but the people we most have our dealings with are RTL and Gerhard. Zeiler who is the CEO of RTL, he attends all of our board meetings. He is a broadcaster himself. He used to run RTL

Germany, so we are not dealing with very distant shareholders who do not know anything about broadcasting. He is interested in the schedules and the broadcasting part of our role and he understands what we need to do as a broadcaster.

Q114 Chairman: So it is a foreign-owned company?

Ms Robertson: A European-owned company.

Q115 Chairman: A European-owned company; thank you.

Ms Robertson: There is a distinction.

Q116 Chairman: I prefer not to have this debate. What impact does that have upon the news that you provide? Does it have any impact?

Ms Robertson: Our ownership?

Q117 Chairman: Yes.

Ms Robertson: No. As far as RTL are concerned they want us to run a channel that is going to work in the UK. They are not forcing us to take any programmes or do any particular types of programming or have any editorial role in terms of what is on the news or, come to that, in the programme scheduling.

23 Q118 Chairman: And you take your news service from -----?

Ms Robertson: We take our news service from Sky.

Q119 Chairman: And how much do you pay for that?

Mr Shaw: We pay roughly £10 million for our news, most of which goes to Sky, but not all of it. Some presenters we contract directly.

Q120 Chairman: Just to go back to the question you heard me ask Channel 4, this £10 million a year that you spend on news, which is not an insubstantial amount, -----

Ms Robertson: In terms of our overall programme budget, which is around £200 million, you are looking at around five per cent of the overall programme budget, which is roughly what you heard from Channel 4 in terms of what they spend on their news, but I think their overall programme budget is over £400 million.

Q121 Chairman: Did you agree with what Channel 4 was saying, that if you ran this as, if you like, your own outfit you would not be able to make it profitable? How do you view news?

Mr Shaw: I did not like what Dorothy said about, “I am proud to lose £10 million”, as a sort of badge of public service honour. I would like news to make money but it is true it is very difficult to make news make money.

Q122 Chairman: But you do not make a virtue of it?

Mr Shaw: No. I do not see any reason for it to be virtuous not to make money. Anyway, that is a personal opinion. I do not think we do make money out of our news. It is very complicated. I do not find doing the kind of cost value analysis of any programme worthwhile because advertising gets shifted around the schedule, depending on where most viewers are and how the regulation divides it up across the day, but we do have adverts in the

24 middle of our news programmes and if we were allowed to sponsor them I am not saying we could make a lot of money but I think we could get close to breaking even.

Q123 Chairman: If the news was sponsored by…?

Mr Shaw: If we had an American system where we were allowed sponsorship of the news.

Ms Robertson: But we are not saying that is what we want.

Mr Shaw: No. I am just saying that it is possible to make money out of news but not under current regulation.

Q124 Chairman: So you are not saying that is what you want but that is how you could do it. Why do you not want to? What is the difficulty?

Ms Robertson: There is a whole other debate about another company sponsoring your news programme, and whether or not there is an editorial link between a sponsor and a news programme. We have not even had that debate; so it is not something we are looking to do.

Q125 Chairman: Unless you do go down that road, which you appear reluctant to go down, news is an unprofitable business as far as five is concerned, just as much as it is for Channel 4.

Ms Robertson: It is not the most profitable part of our programming, but you have to look at the programming as a whole. Going back to your last questions to Channel 4 – about “Would you still be doing news in 2013 after digital switchover?” – I would say as the director of

Channel 4 that, as a multi-genre channel, we would absolutely be doing news. It is part of the personality and – I hate to use the word because it is very marketing-oriented – the brand of your whole channel. Who your newsreaders are, the face of your news, the type of news you do, says a lot about you as a channel; so I think it would be really unlikely that we would stop doing it I cannot talk for our shareholders in five or six years’ time, but it is a very important part of our personality as a channel. We will continue to do news. It is not just how much

25 money it happens to make in terms of the outbreak in the middle of the news; that is not the only way you cost or value your news service.

Q126 Chairman: Do you get the impression that that view of yours is shared by

Bertelsmann?

Ms Robertson: We have never had this discussion with Bertelsmann, so I cannot say; but

RTL and Bertelsmann are very happy for us to ---

Mr Shaw: The investment in news has actually grown over the ten years that I have been involved with it. There has never been downward pressure on the money we spend on news.

Unlike Channel 4, we are a private profit-making company. You can therefore draw your own conclusions from that. I would like more viewers and I would like it to make more money for the company, but I realise that a lot of the benefits are not cash-based. As Sue said, they are to do with the image of a channel.

Q127 Chairman: You have a system of cross-subsidy, basically?

Mr Shaw: There are parts of the schedule that do not make money and there are other parts that do.

Ms Robertson: You could talk about our children’s programmes or our arts programmes in just the same way as we are talking about news, but all of these things together – with our

American-purchased programmes, our documentaries, features – all go to make an overall channel. We decide where we are going to put the advertising – more or less.

Q128 Lord King of Bridgwater: I am not quite clear what you actually have to do with news. You have contracted Sky to provide your news. What input does anybody in five actually have to any news programme?

26 Mr Shaw: I am the Controller of News at Channel 5 and I have exactly the same relationship to the editor of five News as Dorothy has with Jim, who is a Sky employee in the same way as

Jim is an ITN employee.

Q129 Lord King of Bridgwater: Do you talk on a daily basis to Sky about what priority, what order of programming, what you are going to attach importance to? Sky say, “Look, we’ve got this menu today. We’ve got these various stories around”. Do you get involved in deciding?

Mr Shaw: No. Like Dorothy, I set strategy. I tend to discuss programmes after they have been transmitted rather than before. We discuss campaigns, areas that we might want to focus on in the future weeks or months; but, in terms of day-to-day decision-making, that is best left to the editor who controls the programmes.

Q130 Lord King of Bridgwater: The Sky editor?

Mr Shaw: The Sky News. The editor who works for Sky is a Sky employee, in the same way that Jim is an ITN employee.

Q131 Lord King of Bridgwater: So why should I watch five News rather than just watch

Sky?

Mr Shaw: Sky is a 24-hour rolling news service; Channel 5 News, if you have watched it, you will know is very different from Sky. It has a very different proposition. It is a linear programme of set points during the day. It has a particular take. It has won awards for its distinctiveness. It is on at different times of the day that may or may not suit you, but 5.30 suits quite a lot of people.

Q132 Lord King of Bridgwater: Could you describe the different take?

27 Mr Shaw: Yes. I think it is fresher, clearer and more straightforward than other news programmes.

Q133 Lord King of Bridgwater: Than Sky?

Mr Shaw: Than Sky and than any other news programme, actually. I think that it is clearer than others. We also are the only channel that runs what I would call these little, bite-sized updates, which are in prime time, on the hour – one minute, one and a half minutes’ long.

They are extremely popular; they are watched by up to three million people a night. Often, if you ask people about what is news on five, they will refer to those updates rather than our main programmes.

Q134 Chairman: It is because you are waiting for the next programme, is it not?

Mr Shaw: Yes, but they are still being watched and they are still useful, in the same way that

Radio 1 news programmes are useful. They are there as a service and, when we researched them, they are much appreciated. However, if you are talking about the essence of five News, it is to do with its clarity, accessibility and straightforwardness.

Q135 Lord King of Bridgwater: Have you ever had any representations made by your owners about the stance you have given to any particular news items?

Ms Robertson: No.

Mr Shaw: I have not.

Q136 Lord King of Bridgwater: You are corporate affairs, are you not?

Mr Shaw: I also have not had any conversations with Gerhard or any other shareholder about the content of the news.

Q137 Lord King of Bridgwater: Who negotiated the contract with Sky?

28 Mr Shaw: I did.

Q138 Lord King of Bridgwater: Was it ratified by RTL?

Mr Shaw: I think that any major contract is under the supervision of our shareholders, yes. It is something that is worth £10 million pounds a year. They would certainly have known about it. I think that they are very happy about ---

Q139 Lord King of Bridgwater: More than that: did they actually get involved in the negotiations?

Mr Shaw: No.

Q140 Lord King of Bridgwater: You handled it entirely?

Mr Shaw: With the director of legal affairs, yes. Just the two of us. There was no shareholder representation.

Q141 Chairman: As a matter of interest, to follow up Lord King, what actually would happen if the owners of the business tried to put pressure on you to do a particular story or to omit a particular story? What would you do?

Mr Shaw: Me personally?

Q142 Chairman: Yes.

Mr Shaw: I think that I would just go straight to my manager and say, “Listen, So-and-So is asking me to run this and I am not very happy about it”.

Q143 Lord King of Bridgwater: Who is actually the chairman of five?

Ms Robertson: The chairman of our board is called Rémy Sautter. He is from French radio; he is part of the RTL group.

29 Q144 Lord King of Bridgwater: He is RTL?

Ms Robertson: RTL own us. Our board is chaired by Rémy. Gerhard Zeiler attends all the meetings, with the executive directors of five.

Q145 Lord King of Bridgwater: Are there any British members of the five board?

Ms Robertson: The executive directors of five, including myself, our director of programmes, director of sales, chief executive, attend our five board as well, along with our shareholders.

Q146 Lord King of Bridgwater: How do you think it has changed? five has evolved as a channel over the years pretty markedly, has it not? How has the news evolved?

Mr Shaw: I think that it has been in parallel. I describe it as that we were a screaming infant to begin with, desperate to be noticed, to get on the radar, and we made a lot of noise.

Actually, five News was extremely successful in its opening few years. We won loads of industry awards and were credited with changing some of the conventions of television news at the time. Then, as the channel drifted upmarket and began to “grow up”, if you like, got past puberty, I think the news also decided that, as well as being noisy and different, it had to work harder to be taken more seriously – and that would be the sort of middle phase.

Q147 Lord King of Bridgwater: Do we know the audience figure?

Mr Shaw: Yes, I can give you the audience figures. Which particular bit?

Q148 Lord King of Bridgwater: For news.

Mr Shaw: There are three news programmes on Channel 5 and four or five updates a day.

The lunchtime news at 11.30 has an audience of roughly 200,000, four or five per cent share, the same as Channel 4 News. Our 5.30 news has an audience of roughly 600,000, a 4½ per cent share. Our 7 p.m. news has an audience of roughly 300,000; that is a share of just under two per cent. Across a day, therefore, about a million individual viewers will watch five

30 News in its programme form, and another two million viewers will see our updates. Can I also say that Channel 4 News is not the youngest news on terrestrial television? The seven o’clock news on Channel 5 is.

Q149 Chairman: We will note that.

Ms Robertson: Twenty-three per cent.

Q150 Baroness Thornton: Can I ask a supplementary here about Ofcom’s recent review of the news, which suggested that, after digital switchover, “statutory mechanisms to enforce the inclusion of news on television may only work on BBC and possibly Channel 4”. That was what was quoted earlier. Can you tell me what your reaction is to that analysis?

Ms Robertson: As I said earlier, it is quite hard to think forward as long as 2012, but I cannot really conceive of a time where, as a multi-genre broadcaster which is trying to establish its own personality, brand and reputation, we would not have a news service. I think that it is essential; it is part of your multi-genre status. Of all the areas of PSB that we are very committed to – round arts programmes, kids, news – news is the most essential. I agree with

Dorothy in a lot of ways. It is a linchpin to your channel.

Q151 Baroness Thornton: What if you do not have to?

Ms Robertson: We do not have to do as much children’s programming or arts programming as we do, but we choose to because we think it is important for our reputation and our personality. I would say the same would go, even more so, for news.

Q152 Baroness Bonham-Carter of Yarnbury: What you have not said, Chris, is that

Channel 5 News pioneered the desk-perching newsreader.

Mr Shaw: Yes. I was the editor of five News, but I do insist that a lot of the modern conventions of television news, whether you like them or not, can be traced directly back to

31 five News in 1997, including the notion that newscasters have legs and they do not have to be men and middle-aged.

Q153 Baroness Bonham-Carter of Yarnbury: You used to have your news provided by

ITN.

Mr Shaw: Yes.

Q154 Baroness Bonham-Carter of Yarnbury: And now it is Sky. Why did you make that change?

Mr Shaw: Primarily because we felt that Sky were offering better value for money and a better service at a lower cost – which is not quite the same thing.

Q155 Baroness Bonham-Carter of Yarnbury: How much was it to do with the fact that it was a lower bid?

Mr Shaw: I was under very strict instructions to find the best deal in terms of quality, price and reliability; and the best deal in 2002, when ITN and Sky competed for the contract, was

Sky by quite a long margin.

Q156 Baroness Bonham-Carter of Yarnbury: But you could have chosen to go with ITN?

You were not compelled to go with the lower bid is what I am trying to get at.

Mr Shaw: No. I was instructed to go for the lowest bid and the highest quality, best value for money. If there had been quality issues or reliability issues around Sky’s provision or doubts about their long-term commitment then, yes, the cost may not have been an issue; but, as it happened, the Sky bid worked out on all criteria to be the best for us, in my opinion.

32 Q157 Baroness Bonham-Carter of Yarnbury: So you do think you could have successfully argued for a higher bid, if you could have persuaded people that the news you were providing would have been adversely affected by the lower one?

Mr Shaw: Yes. I worked at ITN for most of my career and it was not an easy thing to take the business away from them; but, in my honest opinion, Sky offered us a better deal in every respect at that time. Nothing has happened since that has suggested that I made the wrong decision. On the contrary: I think it has been vindicated.

Q158 Baroness Bonham-Carter of Yarnbury: Can you tell us what that better deal is that they provide?

Mr Shaw: Yes. To start with, it was cheaper. The key thing for us – and this was alluded to in the evidence given by Channel 4 – was the access that ITN could give us to their core news-gathering infrastructure. That was quite restricted, and I felt that it was getting increasingly restricted, because they were effectively supplying three rival commercial broadcasters with news simultaneously. If I am being absolutely honest, I am not sure that is a hugely healthy thing. Sky, in contrast, do not have a terrestrial platform, were not competing with five and we did not have anyone else competing for their attention to us either. So they were able to offer us total, unfettered access at a very competitive price to all their picture, all their journalism, and all their infrastructure; whereas, at ITN, that access was restricted in various ways, due to their obligations to other customers, including ITV who are a 40 per cent shareholder.

Q159 Baroness Bonham-Carter of Yarnbury: Do you feel in a more general sense that

Sky and five are a better fit?

Mr Shaw: I do.

33 Q160 Baroness Bonham-Carter of Yarnbury: I do not know if I mean editorially, but in the sort of culture?

Mr Shaw: Not necessarily culturally but, given that we could not at that time – and cannot really at the moment – afford to make our own news for £10 million a year, I think that Sky and five are a very good fit, editorially and commercially. Culturally, I have not had any problems either, to be honest, although there are always some tensions between a customer and its supplier over what is most important. Overall, I am very happy. For example, one pleasant by-product is unfettered access to all of Sky’s excellent international correspondents.

We could not do that at ITN. We had to send our own people out there.

Q161 Baroness Bonham-Carter of Yarnbury: From the point of view of your relationship with the powers-that-be at Sky and at ITN, has there been a difference in its nature?

Mr Shaw: I suppose one difference, if I am being candid – and I did work at Sky for a year, but a long time ago – I was much more aware of the internal dynamics at ITN than I am at

Sky. My dealings are very straightforward there. I talk to the editor of five News; I have some conversations with the editor-in-chief of Sky News, and that is it. I do not really have any dealings with BSkyB, just the news bit of it. Those conversations are held with our

Business and Legal Affairs. All I can say is that it is a very smooth commercial relationship.

We are looking now at what we are going to do in 2008 and beyond; whether we need to reschedule bits of our news; the whole challenges that digital distribution present to us, particularly online, and so on. However, every time we have suggested new initiatives they have been very co-operative and they have been very accommodating as a news supplier; so I have no complaints.

Q162 Baroness Bonham-Carter of Yarnbury: Does the editor of five News have a very close relationship with the editor-in-chief of Sky News?

34 Mr Shaw: Actually, the last one was left pretty much to their own devices, but they do meet every day – I know that. The editor of five News is number three in the pecking order at Sky

News overall; so he – it is a “he” now as well – is a Sky employee but is my supplier. So they have to learn to serve two masters, if you like.

Q163 Baroness Eccles of Moulton: The next question follows on very closely from the discussion you have been having with Lady Bonham-Carter. I think that you have pretty well set out what the main weaknesses of the ITN’s bid would have been in your description of the fact that they have three rival commercial broadcasters, and obviously, with ITV being a

40 per cent shareholder, that clearly would have had some influence. I do not know if there are any other weaknesses in the ITN’s bid that you would like to tell us about – maybe yes, maybe no – but the question I want to move on to, very much arising out of what you have just been saying, is this. From your description, your access to news now is very much greater than it was when you were tied in to fettered access, and it would be interesting to know what difference that has made to the quality and scope of news you have been able to put out. However, perhaps you should tell me if we have missed anything out on weaknesses in the ITN’s bid first.

Mr Shaw: There were other factors but, to be honest, I think that some of it is commercially sensitive, and quite personal as well; so I would rather not discuss them in a forum like this.

All I can say is that it was not just about price and quality; there were other factors involved.

On the way that we have benefited from the new supply agreement with Sky, I have mentioned the access to their expensive bureaux of seven international operations and correspondents, all of whom send us pieces and will do things for us on a bespoke basis too.

We also have access to Sky’s excellent network of satellite uplinks, trucks and so on. For example, if Adam Bolton finds something out for Sky, we get told as quickly as the Sky News desk get told. It is not just the pictures, therefore: it is the journalism too. Suddenly we have,

35 if you like, the kind of firepower of – whatever it is – the 250-odd producers, correspondents and so on, who work at Sky, in addition to the 60 who are directly employed for five News.

Q164 Baroness Eccles of Moulton: Have you had any feedback from viewers who have specifically said that they have noticed a change in the quality of the news since the contract changed?

Mr Shaw: We have done some research and we find that Sky News is held in very high esteem by TV news consumers generally, and the comments have been positive. I think that they have noticed more foreign and feature reporting and more production value going into the news; because, as we can depend more on Sky to supply what I would call the basic day-to-day, routine news, we can focus our resource on more specialist activities, whether they be overseas or feature reporting, and so on.

Q165 Chairman: Do you say there are 250 correspondents?

Mr Shaw: No, 250 journalists and production staff work at Sky.

Q166 Chairman: Journalists and production staff?

Mr Shaw: Yes. I could not give you the exact figure.

Ms Robertson: And we have 60.

Q167 Chairman: What is the exact figure as far as five is concerned?

Mr Shaw: At the last count, it is about 58.

Q168 Chairman: Journalists and…?

Mr Shaw: These are dedicated staff. They include directors, graphic artists ---

Q169 Chairman: How many journalists do you actually employ?

36 Mr Shaw: About two-thirds of them would count as journalists.

Q170 Chairman: It would be unfair then to say that five News is really Sky News?

Mr Shaw: In what sense?

Q171 Chairman: That it is just a spin-off of Sky News?

Mr Shaw: It is a department of Sky News. They certainly think it is quite an important part of it. But it is not Sky News; it is five News. It is branded as five News and, while it uses some Sky News’ reports and services, if you look at a typical five News programme, I do not think you would say, “That looks like the half-hour of Sky News that I watched just an hour ago”. Not at all.

Ms Robertson: I think I am right in saying that the dedicated staff we have now is exactly the same level as it was when ITN ran the news for us. The difference is we have this other area of journalism we can dip into.

Q172 Lord Maxton: I am tempted to ask whether, because of Sky News, you have been involved at all in their dispute with Virgin Media.

Mr Shaw: No.

Q173 Lord Maxton: You have not been told to take it on or something?

Mr Shaw: No.

Q174 Lord Maxton: Given that we are going digital by 2012 – that is the whole country, and large parts of it is to be before that – and Sky News run a 24-hour news service on the digital platforms, will they not then feel that perhaps you are a competitor to them on those digital platforms and say, “Sorry, we’re not going to provide you with news any more”?

37 Mr Shaw: Actually, they are quite keen to extend their contract with us, so I do not think that can be the case. The truth is that we are a general entertainment channel and we do not compete with Sky News as a specialist news channel on any platform, I believe. I think that another factor for the fit being good is that Sky like a terrestrial stage, if you like, for their work.

Q175 Lord Maxton: In a sense, there will not be a terrestrial stage any more.

Mr Shaw: No, there will not but, while there is, they are quite keen to be on it. That was one of the motives for their keen bid. I think that they wanted a showcase to a broader audience.

Q176 Lord Maxton: Given that, do they give you any benefits in terms of advertising on the

Sky channels, or do they advertise the fact that they provide news to you on their Sky websites?

Mr Shaw: They get a credit at the end, like all of our suppliers, which says “Sky News”.

Yes, if you look on the Sky website I think that you will find some reference to five News there. On the five News website, I am not sure. I think that they provide us with a basic online news service; but we have developed our own initiative in that area, which is called

Your News, and it is quite a different thing.

Q177 Bishop of Manchester: I would like to quote from the Ofcom discussion document published last week, New News, Future News. On page 23 it says, “five News has struggled to gain an audience for its news programmes in the face of BBC and ITV opposition. Before the channel’s launch it was said none of the consortia interested in bidding for the licence wanted to carry any news programming at all”. Eventually, of course, news was mandated by

Parliament. It goes on to say, “Since its inception, five’s peak-time bulletin has been tried in several slots and has now been cut back from half an hour to 15 minutes at seven o’clock in

38 the evening”. Earlier on, in response to a question from Lord King, you gave the current audience figures. What I would like to try to extract from you is a sort of graph of the audiences over the last ten years. Can you give an indication of how the pattern has been established and, if possible, in the three different slots that you have?

Mr Shaw: That is quite a complicated question, but one thing I would say is that, on

September 3, we are reverting to a full half-hour at 7 p.m.

Q178 Bishop of Manchester: What is the thinking behind that? You have reversed a trend, which is encouraging news, but what has prompted you to do it?

Mr Shaw: We think that it works better in the schedule at a half-hour. We have plans to evolve the nature of the programme in 2008. We recognise that the pioneering we did ten years ago needs to be rediscovered, and I am very determined to do that. That is very much the task I have been set, and so the extension of that duration is part of that process, along with the Your News initiative I mentioned earlier on. On audiences and flipping around the schedule, we are obliged by Ofcom to have 102 hours of news in peak between 6.30 and

10.30 p.m. You are wrong to think of the seven o’clock as our main news of the day. Our main news of the day is at 5.30. As you will see, it has a reasonably healthy audience.

Q179 Bishop of Manchester: I am quoting the Ofcom report. That was not my opinion.

Mr Shaw: No, but it is a mistake you can easily make: that, because it is a statutory obligation, therefore this must be the most important. Actually, our 5.30 news is the most important news to us in terms of being our flagship, partly because it has many more viewers and a much better audience share.

Q180 Chairman: Having had your flagship on at 5.30, why are you, an hour and a half later, going to have another half-hour programme?

39 Mr Shaw: I think that it will be a very different programme. We have been running that pattern for three years now and we are reasonably happy with it; but we are obliged to run

102 hours of news between 6.30 and ten, in peak, six days a week. There are not that many other places you would care to put it, though we have tried quite a few, including 8.30, 6 p.m. and, briefly, 7.30 p.m. It has performed at more or less the same levels over ten years, if you track the growth of the channel and the size of the audiences at those various points. It is a small channel, a small audience, but it is a loyal audience. To put it in context, our audience share at 5.30 p.m. is very similar to Channel 4’s audience share, i.e. the percentage of people watching the news on that channel as a percentage of the total available audience.

Q181 Bishop of Manchester: Would that pattern that you are describing over the ten years be roughly the pattern for the other genre in the channel, or is news falling behind?

Mr Shaw: No. I have had this work done a couple of years ago, which showed that news audiences are rather less promiscuous than audiences to other types of programmes. One of the crucial factors is what is on against you. We do not tend to do that well when we are head-to-head with another news programme, which we have been at seven o’clock – because

Channel 4 News has been at seven o’clock since it started. Nor do we do brilliantly well when we have a low inheritance. For example, when television movies did very well in the afternoon on Channel 5 for many years, we inherited audiences of around a million into our

5.30 news, and often used to get figures of 800 or 900,000. As television movies have lost their appeal and lost roughly half their audiences, our users have drifted down a bit at 5.30, but not to the same extent. So I would say that we do have a loyal core audience to five News who like us and we want to make them more and more loyal, because we recognise that audiences are fracturing to all kinds of media, and particularly to news.

40 Q182 Bishop of Manchester: So the change of supplier has not altered significantly the number of viewers?

Mr Shaw: I cannot say that it has, no.

Q183 Bishop of Manchester: What about the age profiles? Do you know from any research what the most popular age groups are that watch five News?

Mr Shaw: Yes. Over 55 – for all news programmes actually, probably including Newsround, which is designed for children!

Q184 Bishop of Manchester: You referred earlier, in response to Lady Eccles, to some of the audience research on news output. Have you done any research which would indicate that, over the next five years, and particularly as we move more into the digital era, there will be significant changes to the way in which you do the news at the moment?

Mr Shaw: I think that there will be significant changes to the way we do news. We have to restore a much more radical point of difference with other news programming and with other news sources.

Q185 Bishop of Manchester: Have you any idea how that might work out in terms of five

News?

Mr Shaw: Yes, some ideas. I referred earlier on to making those who were loyal to five

News even more loyal. We believe the way to do this is through trying to interact more openly with our regular viewers and to encourage them, for example, to contribute ideas and even news items for five News. We have taken this initiative at the end of last year. We are very happy with the way it is going and intend to expand it as time goes on. It is called Your

News. We have had over 1,000 submissions in the seven months that it has been up and

41 running, and we have run news reports made by members of the public every night for the last seven months, as part of our main news output.

Q186 Chairman: Do I get a slight impression that, left to your own devices, you would quite like to do less news in volume terms? I am not saying less in quality, but in volume terms. If it was your decision, you would not put on as much news, filling the spaces as you do at the moment?

Mr Shaw: No, I do not think that is fair. I think the kind of news that I have in mind – and if

I am going to make changes to the nature of our news again – it requires more time rather than less. Curiously, we have our little updates but, when it comes to programming, to allow news to be more discursive, to involve members of the public more readily, it requires a bit more time than we have at the moment. For example, our 5.30 programme, once you have taken out the time for the adverts and so on, is actually only about 23 minutes of editorial time. It is not a great deal to cover the events of the world, the nation and, sometimes, the local stuff too.

Q187 Baroness McIntosh of Hudnall: Mr Shaw, you have referred several times, implicitly or explicitly, to being quite a small player in the market. You have been quoted in the past as saying that when you are a small player in this market, in effect, you have to use what you have to get what you need. First of all, can you say whether you think that, as a small player, there is an adequate range of possible ways of providing news open to you? Following on from that, as to the news provider that you have now, you said in an earlier answer that you personally have no direct contact with BSkyB as the big organisation; that you deal with Sky

News. However, you have also remarked on the fact that five News is BSkyB’s terrestrial platform, as it were, for news in UK television.

Mr Shaw: “Showcase.”

42 Q188 Baroness McIntosh of Hudnall: Yes, their showcase. Do you have any concerns or any observations to make about how that positions BSkyB, or how it could position them in the future, and indeed what they might think about how it positions them, in relation particularly to, say, the next time the ITV contract comes up?

Mr Shaw: My personal view is that Sky will never win the ITV news contract while ITV is a

40 per cent holder in ITN. I just do not get that. I also think that Sky News has been tasked with doing what Fox News has done for Mr Murdoch in the United States, which is to make him some money. This is my own opinion; you would obviously have to talk to Sky about it in detail. They understand that they have a very good brand and a very good reputation for news supply, and I think that they think the more places they can show their wares, the better.

If you travel on One railways from Liverpool Street, you will see that the railway station has recently switched from BBC to Sky. That is a huge deal for them. They are spending huge amounts of money on online and on other platforms, if you like. We are still, by quite a long shot, their biggest client, but they have a clear intention to try and make a bit more money than they have done in the past.

Q189 Baroness McIntosh of Hudnall: You are focusing on the financial benefits that they are looking for, but can you give us a bit more of your perspective on what value five News specifically represents to them, not in terms of the money they are making but in terms of what leverage it gives them in the market in which they are trying to operate?

Mr Shaw: If I understand you right, it shows that they can do news programmes as well as rolling news to any potential future client; but most broadcasters, including Channel 4 and

ITV, knew that they had that power. Most of the people running Sky News cut their teeth at

ITN or at BBC. Ninety per cent of the people who work on Sky News today probably learned their trade at BBC or ITN; so they are all part of the same basic gene pool of British news. five News has shown the rest of the broadcast environment that Sky can make a bespoke

43 service without plastering their name all over it; can make a distinctive offering out of what they do as their core activity, which is rolling news. In that sense, yes, they have shown other potential customers that they can do bespoke as well as off-the-peg.

Ms Robertson: It works well for us, because it means that if they do think this is a shop window, they are motivated to do it as well as possible. From our point of view they are trying hard.

Q190 Baroness Thornton: Following on from that, can I raise the issue of public interest, around what BSkyB are doing at the moment in terms of their purchase of a stake in ITV, and what your view is on that? Ofcom have cited public interest grounds and OFT have cited anticompetitive grounds, but what is your view on what that means for this industry?

Ms Robertson: As a channel, we do not really have any view one way or the other on it. In terms of our experience with Sky as a news provider, obviously they have been good experiences. We are not affected as a broadcaster one way or the other by a 17½ per cent share that Sky has in ITV. It is not an issue that we have any very strong feelings on.

Mr Shaw: Also, in truth they have much bigger fish to fry than the news contract for ITV.

Q191 Lord Maxton: If Sky are allowed the 17.9 per cent share in ITV, first of all they become a shareholder through ITV of ITN. They also, however, are in a position – presumably they will get a board member and have a shareholding, which will be a substantial percentage – to influence the future news on ITV. It may be that they might look to persuade

ITV to ship the contract to them rather than keeping it with ITN.

Ms Robertson: As I understand it – and I am not an apologist for Sky – this is not an area where we have any strong or any particular views, but I thought that ITV had just renewed their news contract with ITN for another five years till post-2012.

44 Q192 Lord Maxton: Let me start with the first point I made. Sky will then become a shareholder in ITN and therefore a shareholder in your competitors. Might there not be a conflict of interest between what they provide to you and their interest in ITN?

Mr Shaw: I just do not see it, I am sorry. It is 17.9 per cent of 40 per cent on a third-party contract which does not come up for renewal in five years’ time. I find it quite hard to get too exercised about that.

Q193 Chairman: We will have the benefit of BSkyB. I think that it is a bit unfair to ask you to speak for them at this stage. I have two last questions. Channel 4 made quite a lot about its investment in investigative journalism. Do you go down that path?

Mr Shaw: No, we are not constituted to do long-form investigative reports. It is not to say that we do not have an enquiring mind or a curious mindset or lots of fizz and energy, and that we do not contribute to the protection of democracy, et cetera; but we are not an investigative service in the same way that Newsnight or Channel 4 are. However, we have done investigations.

Q194 Chairman: You have done investigations?

Mr Shaw: Yes.

Q195 Chairman: Many?

Mr Shaw: We do not just spit out the news as the received wisdom. All stories are examined, interrogated; sometimes we actually go out. We have just won an award for an exposé of the use of under-age children on ship-breaking yards in Bangladesh. We won quite a prestigious award from the Monte Carlo Television Festival. So we do do investigation, but it is not our hallmark. As I say, our hallmarks are clarity, straightforwardness. It is news that does not make you feel stupid.

45 Q196 Chairman: That is very clear. You will have heard, because you were here, Channel

4 at the end, and indeed at the beginning, basically saying – and I do not want to put words into their mouth – that they had this £10 million deficit and it was possible that public support would be required for that. In other words, that £10 million would have to come from the taxpayer. What would be your view on that?

Mr Shaw: On Channel 4 getting money from the taxpayer? I think that Channel 4 News is wonderful. I spent four very happy years of my own career there. Whether it is something that should be subsidised by the British taxpayer, like the Tower of London, I feel less comfortable with.

Q197 Chairman: Is that a “No”?

Mr Shaw: That is a personal opinion. You will have to ask Sue what the company position is.

Q198 Chairman: She does not look any more comfortable than you do!

Mr Shaw: I am very happy that the BBC is supported by the licence payer. I am less comfortable with other news services also doing that.

Ms Robertson: As we were talking about it earlier, you have to look at the cost of news within the totality of the cost of all your programming. From where we sit, Channel 4 is in a very healthy financial position, and we would be very happy to have some of their problems – thank you very much! They have one of the most attractive demographics of all of broadcasters in what they can sell commercially. They have over 25 per cent share of advertising revenue. We have some scepticism about the degree of financial crisis that

Channel 4 seems to feel is imminent. However, Channel 4 News is a really important part of the DNA of Channel 4. As Dorothy was saying, it really is the most obvious part of their PSB contribution, and it would be a tragedy if it were no longer to be there. Whether they need

46 some form of public intervention to ensure that is the case, I am not absolutely sure; but we are having that debate over the next year, as part of the Ofcom PSB review.

Q199 Chairman: You are not putting in for public support yourself?

Ms Robertson: We are not, no.

Q200 Chairman: And that is a decided policy?

Ms Robertson: Yes. We have consistently said that we do not believe that top-slicing the licence fee is the best way of ensuring that there will be more public service broadcasting available as a whole within the broadcasting ecology, and that different forms of funding is a better way of funding broadcasting in the broadcasting ecology. We do not see that setting up some new quango – to distribute, like Lady Bountiful, a bit of the BBC licence fee for other broadcasters to be doing some form of public service broadcasting – will add much benefit to anyone.

Chairman: That is very clear. Thank you both very much for your evidence. Perhaps if there are other issues we may come back to you on them, but we will put those in writing.

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