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22/05/14 11:23

Royal Television Society Speech

Cabinet Secretary for Culture and External Affairs Fiona Hyslop
City of Glasgow College, Glasgow
Wednesday 21 May, 2014

Thank you John for that kind introduction and good evening, ladies and gentlemen. I am delighted to be here this evening to talk about the future of broadcasting in an independent Scotland and look forward to discussion with you afterwards.

I am more used to meeting John Mackay at the studio for Scotland Tonight. So I am really grateful to him for taking time out of his busy evening schedule to chair this evening’s event. I am also glad that Scotland Tonight is to continue over the summer holidays to ensure that the constitutional debate is covered fully and thoroughly. So my thanks to John for sacrificing not just this evening, but his whole summer holidays, in the constitutional cause.

That decision to continue Scotland Tonight over the summer illustrates both the importance of the debate over Scottish independence and the centrality of broadcasting to our common discourse.

So my thanks to the Royal Television Society for organising this event. The timing is propitious and so is the place. Glasgow was the site for the first ever long distance television transmission, achieved by John Logie Baird in 1927, when he transmitted television from London to the Glasgow Central Hotel.

Mention of John Logie Baird reminds us of the central role that scots have played in broadcasting, whether James Clerk Maxwell predicting the existence of the electromagnetic spectrum, Archibald Campbell Swinton in theorising how it could be used for transmitting moving images, John Logie Baird in actually making that happen, or Lord Reith of Stonehaven in devising the model of public service broadcasting that is funded by the public but resolutely independent of Government.

So Scotland has given a lot to broadcasting. Broadcasting has not always given as much back. John Logie Baird invented television in 1925, colour television in 1928, and 3 dimensional television – or stereoscopic television as he called it – in 1929. Yet it took until 1952 for Scotland to receive television, 1969 before we got colour television, and as for 3 dimensional television, last year the BBC abandoned its experimentation in this area.

When the current administration took office back in 2007 we were faced with a situation where there was very limited Gaelic broadcasting, except on Radio nan Gaidheal where Scotland’s share of network production was a measly 2 per cent and where viewers in the south of Scotland received news and current affairs on Channel 3 from Gateshead.

So we knew there were many problems. We also knew that we had very few powers in this area. We did not let that daunt us.

In an exceptionally unfavourable public expenditure environment, we prioritised Gaelic broadcasting and found £12 million annually to fund BBC Alba to broadcast on free to air digital terrestrial television, where it now reaches some 500,000 viewers a month, over 5 times the number of Gaelic speakers, showing the appetite for Scottish produced content.

We set up the Scottish Broadcasting Commission to make a reasoned case for moving to a population share of network production. Its report was unanimously endorsed by a vote in the Scottish Parliament. Since then we have seen Scotland’s share of network production rise with the BBC, at least for one year, actually achieving a population share.

Last year, following persistent campaigning by the Scottish Government and others, the Channel 3 licences were renewed on the basis of a requirement that ITV provide for separate transmission in the Scottish and English portions of its borders franchise. That was implemented last November and viewers in the South of Scotland are now seeing news and current affairs coverage that speaks far more to their interests and concerns – as, for that matter, are viewers in the North of England.

Now although I have set out some of the positive developments in broadcasting over the last few years, it remains the case, in my view, that Scotland is short-changed on broadcasting. Nor do I see any likelihood that we are going to make any substantial progress under current constitutional arrangements. We have moved some issues forward by persistent argument and persuasion but I fear that we are close to exhausting what can be achieved through such methods.

So I want to set out where I think the current position falls short of where we should be and how we get to where we should be under independence.

Let me say at once that the BBC produces a lot of excellent programming and its model of publicly funded public service broadcasting is one which we very much want to retain, a subject I want to say more about in my conclusion.

Nevertheless, on the basis of data gathered by the BBC itself, it is the case that fewer than half of Scotland’s population are satisfied with the way in which it covers Scotland. I believe that we can do better.

Scotland’s Future: Your Guide to an Independent Scotland laid down our intention for a broadcasting policy for Scotland based on three principles:

  • First, there should be an increase in production opportunities for Scottish producers, and an increase in productions that reflect life in Scotland and of Scots;
  • Second, Scottish viewers and listeners should continue to have access to all their current channels; and
  • Third, there should be no additional cost to viewers and listeners as a consequence of independence

So existing arrangements would therefore form the starting point for broadcasting services in Scotland. The licence fee payable in Scotland at the point of independence will be the same as the licence fee payable in the rest of the UK. All current licence fee payment exemptions and concessions, including those for people aged over 75 and for people who are sight-impaired, will be retained.

Existing charters and licences to broadcast would be honoured when Scotland becomes independent. On Channels 3, 4 and 5 for example, that means continuity to 2025.

When the BBC current Charter expires at the end of 2016, we plan to create a new public service broadcaster, the Scottish Broadcasting Service. The new broadcaster will initially be founded on the staff and assets of BBC Scotland, and will broadcast on TV, radio and online.

Currently, BBC Scotland delivers a range of original programming for the BBC network. We propose that the Scottish Broadcasting Service should enter into a new formal relationship with the BBC, where the Scottish Broadcasting Service will continue to supply the BBC network with the same level of programming, in return for ongoing access to BBC services in Scotland. Through this new relationship between the Scottish Broadcasting Service and the BBC, existing BBC services will continue, with the Scottish Broadcasting Service having the right to opt-out of BBC 1 and BBC 2 – when appropriate – as BBC Scotland can already. Current programming like EastEnders, Doctor Who, and Strictly Come Dancing and channels like CBeebies, will still be available in Scotland. A new English language television channel will be created for Scotland, together with a new radio station, so we have publicly funded stations for both spoken word and music.

Let me be clear in passing that the BBC Scottish Symphony Orchestra is part of BBC Scotland and will become part of the new Scottish Broadcasting Service. It will continue to be celebrated in Scotland and beyond. The new music station means there will be ample scope for the Orchestra to spend as much, if not more, time broadcasting for the new Service, to continue its studio recording work and take its place among the performing companies governed in and for Scotland.

Clearly the joint venture would need to be negotiated with the BBC. I regret that the BBC is unwilling to engage in scenario planning prior to the independence referendum, which I believe could be done without compromising its impartiality. Nevertheless I recognise that that is their position.

I am clear that our offer of a Scottish Broadcasting Service working in a joint venture is the most sensible way forward and minimises any disruption to the BBC. For the sake of argument, though, let us consider a scenario whereby the BBC is not willing to enter a joint venture but instead BBC programming is bought as a commercial proposition.

Even if it were assumed that the BBC continuing to broadcast over the spectrum into Scotland would come at a cost, any conceivable cost would be well within an independent Scotland’s capacity to pay. Details of specific commercial contracts are confidential. The accounts of BBC Worldwide – the commercial arm of the BBC – for 2013 do, however, give total figures for revenues generated by their commercial channels in the UK – where the UKTV portfolio, which operates in the UK through a joint venture between BBC Worldwide and the Scripps Networks Interactive has 10 channels – and abroad where there are a further 34 BBC-branded TV channels.

These include channels on the commercial cable company UPC which broadcasts all BBC Channels to subscribers in Ireland, the Netherlands and Switzerland. There are no openly available figures for the cost of those channels but they come within the £215 million total revenue generated by BBC Worldwide in Europe, the Middle East and Asia.

UPC has 431,000 video subscribers in Ireland, 1.7 million video subscribers in the Netherlands and 1.4 million video subscribers in Switzerland. So some 3.5 million subscribers across the three countries. That compares with 2.37 million households in Scotland.

Remember that the £215 million covers not just the UPC deal but all the other channels and content sales in Europe, the Middle East and Asia. Assuming for the sake of argument, however, that the full the £215 million was attributable to UPC, that would imply an annual cost per household of some £60 pounds. So for Scotland’s 2.37 million households, £142 million. With Scottish licence fee resources at around £320 million such a deal is readily affordable, with resources to spare.

So under independence, things would not look that different to viewers.

They will continue to use the same televisions. On Channels 1 and 2 they would see the same programming, except that there will be somewhat more Scottish content at appropriate points. Beyond Channel 2, there would be continuity with the present, except that there would be a new English language television channel for Scotland, to accompany the continuing Gaelic language channel.

So the three principles of increased production by and for Scots, continuity of programming, and no increase in costs to the licence fee payer, would be implemented.

Let me turn now from how the current situation lets down viewers and listeners and how we can remedy that, to how it lets down Scotland’s own broadcast production sector, and what we can do about that.

This is an important sector to Scotland. In 2011 total turnover was over £205 million in the private enterprises in the sector registered for VAT and/or PAYE. When you add to that the £195 million expenditure by the BBC in Scotland other than through commissions from the private sector, that totals £400 million. Employment was 3,200, and that does not include the many self employed and freelance staff who are also so vital to the sector. Gross Value Added per employee was £89,135, the highest of any sector except for oil and gas, pharmaceuticals and distilling. These figures should have moved positively since then given the effects of Sony Pictures’ Outlander production, currently shooting at Cumbernauld, Scotland’s largest ever screen inward investment with a budget of some £20 to £25 million.

We should, though, be ambitious to do more. Our sector lags behind that of nations comparable in size, such as Ireland and Finland.

To some extent that can be addressed through the creation of the Scottish Broadcasting Service. The BBC in Scotland currently produces 2,321 originated hours of television programming. Ireland’s RTÉ produces 4,700. Finland’s YLE produces 4,900. The BBC employs 1,200 people in Scotland. RTÉ employs 1,800 and YLE employs 3,500. The BBC spends £201 million in Scotland. RTÉ spends £286 million and YLE spends £386 million. Over time I would expect the Scottish Broadcasting Service to reach the European norm for funding, employment and production by national broadcasters.

It is not only, however, through the national broadcaster that we can bring about improvement. I want to see a general climate that encourages the television sector. Partly that is about having an approach that is business friendly in general. The broadcasting sector will benefit from a range of measures that will support business generally under independence. For example Scotland’s Future: Your Guide to an Independent Scotland sets out how a business friendly approach to corporation tax could be pursued, similar to Ireland’s approach now and to the Scottish Government’s approach to business rates through the Small Business Bonus scheme.

We can also look at ways of supporting the sector more directly.

Scotland’s Future: Your Guide to an Independent Scotland, stated that – quote – “We will also encourage inward investment in film and television production in Scotland, and use our new overseas network to promote Scotland as a location for film and television production. We plan to continue the existing fiscal incentives for such production, and, within the first term of an independent Scottish parliament, we propose to look at ways to encourage further development in the sector, through incentives, infrastructural investment and support for development, skills and training.”

Certainly, when you look at other countries the potential of Governmental support to encourage the sector is clear. Again, the example of Ireland is instructive. It is very telling, in my view, that in the face of the economic difficulties of the last few years, Ireland has not just maintained but progressively strengthened its support for the sector and continues to do so. From the first of January of next year, it will increase the support under its Section 481 fiscal incentive from 28 per cent to 32 per cent.

That is in addition to the support available in grant support under its Sound and Vision scheme. 7 per cent of television licence fee resources in Ireland are used to allow the Broadcasting Authority of Ireland to run a television and radio archiving programme and to support the Sound and Vision scheme. It provides funding of between 85 and 95 per cent of production costs in support of high quality programmes on Irish culture, heritage and experience, and programmes to improve adult and media literacy. This is funding that goes to independent producers, who have a commission from a broadcaster. As I set out earlier, Scotland’s licence fee resources are relatively large and we could look at a similar scheme, if we had more control of those resources under independence.

It is no doubt because of such support, together with the greater size of RTÉ compared to the BBC in Scotland, that the Irish production sector is larger than that in Scotland, with available statistics indicating 3,200 employees in Scotland against some 6,000 in Ireland.

As Robin MacPherson, the Director of Screen Academy Scotland, pointed out in an article in this week’s Sunday Herald, an independent Scotland could also join the Council of Europe’s EURIMAGES cinema support scheme – a €25 million co-production fund that we could access for an annual cost in the region of €200,000. We would also be entitled, like all EU members other than France, Germany, Italy, Spain and the UK, to preferential consideration for funding for screen co-production under the European Commission’s Creative Europe scheme, as state with a smaller production sector.

As well as getting incentives right, I am keen to see us get the infrastructure right. There we have seen positive developments over the last few years with, for example, the development of Film City Glasgow, the BBC’s and STV’s new headquarters at Pacific Quay, and the 140,000 square foot studio that has been developed at Cumbernauld for the Outlander production.

This, though, is a market that is growing. Pricewaterhouse-Coopers’ Entertainment and Media Outlook 2013-2017 forecasts that the film and television market as a whole will grow by 17 per cent between 2013 and 2017. Digital streaming of filmed entertainment is predicted to almost triple over the next four years, reflecting the growth in blockbuster series such as Breaking Bad and, indeed, Outlander.

So I see scope for further development and in March Ekos Consultants, commissioned by Scottish Enterprise, issued the most in depth study ever of Delivery Options for Production Space for Film and TV in Scotland. On the back of that a Development Brief was issued inviting private sector proposals for developing and operating a studio. Because this is at a commercially confidential stage I cannot say much about this but I can confirm that a number of proposals were received and are being considered.

Now that is an example of where we are taking forward action under current constitutional arrangements. Quite rightly, the Scottish people expect us to make the most of the powers we do have, and to seek to influence by argument and persuasion in those areas where we do not have powers.

In closing, though, let me stress that I think that we close to the limits of what can be achieved under the current constitutional position. Infrastructure development is desirable but can only have its full effect when the sector has the bedrock of a dedicated national broadcaster, and we have full powers to encourage and attract production investment.

Let me finish, though, not with the worrying prospects under the present arrangements, but with the positive opportunities that independence offers. A new, dynamic national broadcaster. Continuity of programming, and the opportunity to channel support to the production sector.

Thank you.