Canadian Heritage Committee on Jan. 29th, 2008

[Wilf White]

We have a formula for the assessment of public value, which we know as RQIV. Those initials stand for reach, quality, impact, and value for money.

We tend to assess the success of our services not by share but by reach. It is on how many people are attracted to the content, not on how we have done against our competitors.

Quality is also a very important component. A program that wins awards for its quality is regarded as having high public value even if its reach was not perhaps as high as we might have hoped.

Impact, again, is an important factor in the equation. How much did the audience like what they got? We have, for example, a radio network, Radio 3, which broadcasts only classical, some jazz, and world music. Its audience share is very small, but we know it is extremely valued by that audience, so its impact and quality are high.

Value for money comes in as well. Obviously your ideal program is one of exceptional quality that secures high reach, is very much appreciated by its audience, and, better still, was cheap to make. You don't always get all four. Value for money is not simply a basic formula of cost-per-viewer hour. I think we assess that against the other three factors. Did we get good reach? Did we get good quality? Was there real audience appreciation for what we did? We assess value for money on that basis.

The share is not something that is a primary consideration for us. Yes, it matters, of course. If people are watching our competitors far more than they watch us, then in time that starts to raise questions about value for money, doesn't it? It is reach rather than share on which we concentrate.

[Luc Malo, Bloc, Verchères—Les Patriotes, QC]

Is this concept generally accepted and recognized by the bulk of the population, or are there certain criticisms levelled at this assessment formula?

[Wilf White]

If I'm honest, I'm not sure the general public is all that well initiated into the RQIV formula, but I think it does accord with how the public sees the BBC. We are far more often criticized for making programs that are too popular, that are too much like, people say, the programs of our commercial competitors, but we're rarely criticized for producing a program of high quality even if it had a small audience. I think the RQIV proposition actually is one that does accord with the way people tend to think about the BBC and tend to value us.

[Luc Malo, Bloc, Verchères—Les Patriotes, QC]

Thank you.

[The Chair, Conservative, Gary Schellenberger]

Thank you very much.

We will now switch to Mr. Abbott. Then we will do one complete round again, if that's all right. So please prepare your questions for the next round.

[Jim Abbott, Conservative, Kootenay—Columbia, BC]

Thank you.

Mr. White and Mr. Wilson, we certainly value this very much. It is going to be of great value to us in putting together our report.

I have a couple of questions relative to understanding the BBC as it might relate to our North American market. I want to ask quickly how you would describe what I would call market fragmentation.

One of the difficulties our public broadcaster is faced with in the North American market is the fact that most of the commercial networks now take ownership positions in programing and in networks that appear only on cable or satellite. Although the network itself, say CTV or Global, might be losing market share, the company ends up purchasing other companies that appear on cable or satellite, so their entire company doesn't necessarily lose market share. That's what's going on in North America.

I wonder if you could give us a description. Is there any parallel to that kind of thing happening in your market, at least as far as your audience is concerned?

[Wilf White]

I think we are subject to similar pressures. The interesting figure last year was that in peak time more people were watching the smaller channels than the big, historic BBC, ITV, and Channel 4 broadcasters. The margin was small, but that was a first and had never happened before.

The BBC is still, by quite a long way, the most watched television service in the U.K. as a single group, but other broadcasters are under very considerable pressure. I think the pressure is felt most acutely by our commercially funded counterparts--ITV and Channel 4--that also have to compete for commercial revenue with these other operators.

For us, ITV and Channel 4 market fragmentation has also offered opportunities. So we have been able to launch more channels of our own to recapture some of the audience that has been drifting away from BBC One and BBC Two. We now have BBC Three, a channel for younger adults; BBC Four, an arts and cultural channel; two children's channels; as well as News 24; and a channel covering the U.K. Parliament. Those channels help to bring back to the BBC some of the audience that our main networks are losing.

But yes, we are facing similar pressures to North America.

[Jim Abbott, Conservative, Kootenay—Columbia, BC]

I'm not sure how accurate this is, but I would dare say that 90% of our Canadian audiences are getting their signals from cable or satellite and only 10% are reliant on on-air broadcasting. How would that compare to the U.K.?

[Wilf White]

The U.K. is very different. The vast majority of people are still receiving terrestrial broadcasting, either digitally or by analog. Digital penetration in the U.K. is around 85%, and more than one-third of that 85% is Freeview, which is the digital terrestrial system. So if you put together digital terrestrial at about 34% and the analog at around 15%, you can see that roughly half of the people in the U.K. are still receiving their broadcasts terrestrially.

[Jim Abbott, Conservative, Kootenay—Columbia, BC]

That then would deal, in a way, with the market fragmentation. In other words, those people, if they are having their signals delivered terrestrially, do not have the same level of access as the Canadian viewer has on satellite or cable.

[Wilf White]

That's absolutely right. The number of channels that you get on digital terrestrial television does vary a bit according to where you live, but it can be anywhere between 30 and 60. In satellite and cable you're looking at upwards of 200, 300, or 400 channels. So yes, that does to some extent limit market fragmentation in the U.K., though I would say we are very conscious that our competitors for audiences are not all broadcasters these days, hence our discussions earlier about YouTube and broadband content. That also has a major effect on us, people getting their audiovisual content by means other than linear broadcasting.

[Jim Abbott, Conservative, Kootenay—Columbia, BC]

Very quickly, on your content, your programming, one of the challenges we have in Canada, of course, is being right next door to the largest exporter of culture. It is their largest export, as a matter of fact. As a consequence, dominantly, with 20% of our population receiving services in French, nonetheless 80% receiving it in English, we have a challenge that the signal is fairly accessible to most people, because 90% of Canada's population lives within 100 miles of the U.S. border. That is challenge number one.

Challenge number two, technically, is how to define what Canadian content is. How does the BBC define what British content is, and what percentage of your programming is what you would call British content?

So there are two questions: one, how do you define British content; and two, what percentage is it?

[Wilf White]

U.K. content is essentially content that has been commissioned here. Obviously it doesn't have to be necessarily all made in the U.K., because we have BBC programs that are filmed entirely abroad.

In terms of the percentage of output on our channels that is British, as I say, it is over 80%. It varies a little according to the channel you're watching. On our children's channels, for example, we make a real effort to ensure that well over 90% of our broadcasts are British, because we think it is particularly important that children get to enjoy British-made programs, British-made content.

On other channels, on BBC Four, for example, the figure is a little bit lower, because one of the things that BBC Four tries to do is to show foreign films to a British audience, so of course it doesn't have the same insistence on British content as the children's channels do. But that's broadly how we operate.

[Jim Abbott, Conservative, Kootenay—Columbia, BC]

I just need a little clarification. That is, you're saying it's a question of whether the BBC commissions the programming as opposed to there being a free-standing definition of what British content would be.

[Wilf White]

There are legal definitions, but the essential principle is that the programming is commissioned from the U.K.

[Jim Abbott, Conservative, Kootenay—Columbia, BC]

Thank you.

[The Chair, Conservative, Gary Schellenberger]

We'll switch now to Mr. Scarpaleggia.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

Thank you, Mr. Chair.

Thank you, Mr. White and Mr. Wilson.

You may have gone over this at the beginning of your presentation. I came in a few minutes late, so I apologize if I raise an issue you've already covered.

What is the relative weight or presence of the BBC and all its channels in the British broadcasting system? The preconception that an outsider would have is that the BBC is British television. What is your relative market share? Are you the dominant player in the market?

[Wilf White]

Taken together, the BBC's television channels do get more of an audience than any other broadcaster's group of channels. BBC One and ITV, our principal network rival, get a pretty similar share. We are slightly ahead of them these days, but we used to be behind, and who knows, they may pull ahead again. The figures are broadly similar.

BBC Two comes out with a share around that of Channel 4, which is another major broadcaster. Just to tell you, the main network broadcasters in the U.K. are the BBC, ITV, Channel 4, and a smaller channel called Five. Five's audience is quite small. Not every part of the U.K. can receive Five.

My colleague, Daniel Wilson, very helpfully got me the figures for last year. In terms of reach, which is our principal source of measurement, BBC One in 2006-07 was reaching 78.4% of homes, as opposed to ITV, which was reaching 74.7%. BBC Two was reaching about 57% of homes, Channel 4 about 66%, and Five about 42%, whereas all the Sky channels put together were reaching about 33%. I hope that gives you a sort of sense of scale.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

Thank you. It does, in fact.

Maybe to follow up on Mr. Abbott's line of inquiry, how much American content would you say, generally speaking, in rough figures, is seen by British viewers? Obviously, in Canada, it's overwhelming. But could you just give me a rough idea of how pervasive American content is?

[Wilf White]

I think if you're talking across television as a whole, there is quite a lot of American content on the commercial and digital channels, and indeed, we have some channels that show nothing except American content.

On the BBC, apart from the occasional Hollywood movie, there are actually very few American series. It's extremely rare. In the past, back in the 1970s and 1980s, we actually showed more American programming than we do now. And when we showed, last year, a series you might be familiar with called Heroes, which was quite an unusual purchase for BBC Two, people commented on how odd it was to see an American program on the BBC.

Channel 4 shows a little bit more American content than we do. They do buy American comedy and series like ER and Desperate Housewives--programs you'll be familiar with--but again, that doesn't dominate their schedule. And all the public service broadcasters in the U.K. do have to meet quotas for original production.

I think we're very lucky in the United Kingdom. We have the benefit of no near neighbours that speak English, apart from the Republic of Ireland, of course, and a really quite well-established habit of British viewers who prefer British content over American content. So of our top programs, in terms of share, none are American.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

Thank you.

Prima facie it looks rather like...if the BBC wants an additional channel to protect itself against fragmentation, it doesn't seem to have trouble getting one. How are channels distributed in Britain? We have the CRTC here, and there's heavy lobbying of the CRTC by various broadcasters for rights. How does it work in Britain? If you want a channel, how do you get an additional channel?

[Wilf White]

The first thing I'd like to say, as the person whose job it was to get approval for our additional digital channels, is that I can assure you it was hard work. And if it looked easy, believe me it wasn't.

First of all, we own our capacity on Freeview; we own our multiplexes. So in terms of digital terrestrial distribution, we have a certain amount of capacity and we divide that up by the services we want to show through that capacity. On Sky and on cable we have to win our places, but they are obliged to carry public service channels.

In order to get approval for a new channel, what we do is first of all come up with the proposition from my side of the house, from the executive, a description of what the service is. We then take that to the trust, who agree with us how the public value of that proposition should be assessed. We put a submission to the trust saying this is what we'd like to do and this is what we think its value would be. The trust then makes a further assessment of that public value, consulting the public, consulting licence payers. Are they willing to pay for this? Do they want it?

Ofcom, the independent broadcasting regulator, assesses what its market impact is likely to be, and the trust then determines whether in its opinion the public value outweighs the market impact or not.

Finally, the secretary of state signs off the ultimate decision from a procedural point of view. He's not taking a view as to the merits of the case but on whether we have done the assessment properly.

It's a pretty rigorous process. I just got approval yesterday for a very small channel that will broadcast in Gaelic to the Gaelic speakers of the western isles of Scotland. We had to go backwards and forwards to the trust on a number of occasions to persuade them that this was a proper thing for us to be doing, etc.

So it is a pretty rigorous process.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

Thank you very much.

[The Chair, Conservative, Gary Schellenberger]

Thank you.

Ms. Mourani, please.