 Good morning, and welcome to the 20th meeting of the committee in 2018. This is the committee's last meeting before the summer recess. We have apologies from Claire Baker MSP today, and Neil Findlay MSP will be attending the committee as Claire's substitute. I understand that Neil has another appointment and he will be arriving later in the course of our meeting. We have also received apologies from Marie Gougeon, and Tavish Scott will be slightly late. Our first item of business today is the decision on taking item 3 in private. Are members agreed? Yes. Our second item of business today is an evidence session from two separate panels on STV strategic review. The committee will take evidence on this issue from the relevant trade unions and then from OFCOM. I'd like to welcome our first panel of witnesses today from the National Union of Journalists, Michelle Stannis Street, the General Secretary and John Stoner, the Scottish organisers, and Paul McManus, the Scotland Negotiations Officer from the Broadcasting, Entertainment, Communications and Theatre Union. That's beck to you for most of us. Thank you very much for coming today. I'd like to invite Paul McManus to make an opening statement. Thank you very much, chair, and thank you very much to the committee for inviting us along today to make a submission. In making the submission, we outlined the three elements that STV has put forward as part of their strategic review, but I think it's worth highlighting, before we jump to the effect of those three elements, that STV is a commercial organisation, so it's always about the money. Over the past two or three years, STV has fallen short of its £20 million annual profit target by around £2 million a year. Discussions with STV management over the past few years, that point has not been lost on us, and it has been a significant issue for the management of STV over the past two or three years. To my mind, that puts the cuts that are being proposed by STV just now into a bit more context. When we start to add up the effect of the cuts that they are implementing just now, I think that I certainly won't be surprised if, perhaps not this year, but next year, they go through the magic £20 million barrier, or what has been a barrier to them recently. When our members are concerned about the rationale for the cuts and the changes that STV is implementing and how they don't make sense to the members, or some of them don't make sense to the members, we have to remind them that effectively this is a financial exercise. It's not about improving the operational side of the business, it's about improving the finances of the business. Indeed, STV says that some of the cost saving is attributed towards increased investment in programming, but the bulk of that programme will come from commissions, from other broadcasters and from other agencies that it won't be, in our view, net investment from STV. Investment in terms of the staff is probably our biggest area of concern here. Yes, some jobs have been created in the new production unit, however, high-end, highly trained, highly skilled, highly loyal craft and technical staff are essentially being discarded by STV for no other reason than to save money. These staff, the bulk of them in their 40s and 50s, have spent many years loyalty towards STV, and we would have expected that some of that loyalty would have been repaid by STV investing in skills development and retraining. Their line has essentially been, we're not willing to invest the time or effort in retraining these staff. Now back to, has never been opposed to the introduction of new technology or the benefits of new technology, and indeed we do see many benefits from new technology. What we are opposed to is the inequality where crafts and technical staff are denied the opportunity to retrain into those areas, so that has created a great deal of fear, resentment and anger amongst the staff. I say fear because the staff who are leaving, the staff who are not being given the opportunity to retrain and reskill are quite rightly angry and frustrated, but it leaves a sense of fear for those who are left behind. Fear from people who are saying, well, I don't particularly want to take on these skills, I don't particularly have the skills to do these new roles, but it's either that or I'll lose my job. All round the management, the way in which this process has been managed, the treatment of the staff contradicts any ethos of fair work that the Scottish Parliament is trying to produce across the Scottish economy. We would suggest that, hopefully, the committee will agree with us that SDVs should be roundly condemned for the way in which it is treated at staff throughout this process. We had the chief executive of SDVs along to give evidence to us on the strategic review a couple of weeks ago, and he accepted that they were cutting £1 million out of the new service, but you have heard his evidence in which he said that there would be a better new service afterwards. I wonder if you would care to reflect on that. I think that that is patently untrue. You can't remove the amount of staff and the quality of staff that they are removing and deliver a better service. We go back to the tried and tested phrases of working smarter. It doesn't prove to be true in this case. Yes, a number of the news is a reduction in the news because of the loss of SDVs, too. As I said in my submission, I have no doubt that they will still meet their regulatory requirements. However, whenever any broadcaster removes high-end, highly-skilled, craft and technical staff from the news gathering process, quality suffers. By his own admission, quantity is suffering, and we would argue very strongly that quality will suffer. The remaining staff will be overstretched and overworked, unable to deliver a quality service. Thank you. I wonder if the NUG would like to respond to that question as well. I think that that is absolutely right that it is inevitable when the quantity of the news offering that is going to be there is diminished. It is inevitable that the breadth of diversity and scope and quality of that news provision is also going to be diminished. Our members are deeply concerned about that. The quality and breadth and distinct local nature of a lot of that news provision is a really important element and unique selling point of what SDVs have to offer, and we fear that that is going to be very badly compromised in the future. Thank you. I will go to Stuart McMillan now. Thank you, convener. Both of your organisations have got quite a number of staff at SDVs. The NUG, I believe that you did a ballot of your members, is that correct? And back to, I believe that you didn't do a ballot of your members, is that correct? That's correct, Jess. Can you provide some background as to why that decision was taken, please? Absolutely. Back to policy is that whenever management brings forward proposals for any kind of changes, we will negotiate our way through those proposals. We will expect us to leave no stone unturned in arriving at a negotiated settlement to any issue, and only if, at the end of that process, we have members facing compulsory redundancy, then we will ask our members for the authority to ballot for industrial action at that point. It's our view that that's the best way to do things. Okay. Certainly when you were having discussions with your members, providing them with updates as to what was going on, was there ever a feeling that your members actually wanted to have a ballot for industrial action? No. Well, in the event that any of our members are facing compulsory action, they took the decision very earlier on. If, at the end of this process, any of our members face compulsory redundancies, then we expect you to come back to us and tell us that you're starting a ballot for industrial action. However, through the early stages, it was getting there negotiating and trying to arrive at an agreed settlement for this. Okay. In terms of the NUJ, you had your ballot. What was the turnout again for your ballot? The turnout was 81 members voted out of a total of 99. Did they all vote for industrial action? 80 voted in favour and one voted against. That's pretty conclusive then. The second question, or the second area, is just on... I heard on the radio at the weekend that, apparently, Christa Lamber has increased her stake in the STV. I think that that's about 18 per cent now. Do you have any comments you'd like to put on the record about that? Do you think that that is a positive thing, in your opinion? Or is that a negative issue? I think that it's difficult to see that as a positive thing. Her members have been concerned about the presence of Christa Lamber right from the outset, right from the day that their name was mentioned, because of the type of organisation that they are. I think that it's also very fair to say that there is a prevalent fear and concern that this whole exercise, the way in which it's been cat-handed and badly managed and poorly implemented, is seen by many people as well as a prelu to a period in which STV will be on the market. We'll see a sale and a loss of a distinctive Scottish focused national broadcaster. Whilst the company has told you all that that's not in the plans and that's not the motivation behind that, that hasn't made those fears and those concerns go away. I think that in terms of Christa Lamber, their reputation is well known. They believe that confattant companies up and increase their financial effectiveness. I think that going back to the financial arguments that I made, financial comments that I made at the start of my submission, I think that it's a sign that Christa Lamber sees the companies going in the right way financially from their point of view. It makes it more attractive for them to get involved. I don't think that our membership is a particularly positive gesture. At the same point, we have to remember that Simon Pitts has given us assurances that he's got no intention of fattening the company up for sale. However, we reminded him that our members at Grampian TV were told that for a great many years up until the day that the shareholders decided to take the money and run so that in a commercial environment staff can have no faith about any reassurances about the company not being for sale, it's a fact of life in commercial broadcasting. I think that that also goes back to your opening comment, Mr McManus, that STV is a commercial operation. Absolutely. It's weighed heavily on them that they haven't hit their 20 million pound targets over the past two or three years. There can be no reassurances. It's something that you have to live with in a commercial environment that at any point the shareholders can say, right, fine, we're off, we'll take the money and go. Okay, well thank you. Ross Greer. Thank you, convener. I refer members to my register of interests. I'm a member of the NUJ. I would like to ask about the process around redundancies. There's been some, not confusion so far, but two quite contradictory versions of events, one from the staff, from your members and one from senior management around how staff were informed of potential redundancies. We heard through your submission, and I've certainly heard informally from individuals that staff were informed that their jobs would be safe and then informed that they weren't, that some members of staff were informed that they were facing potential compulsory redundancy minutes before a live broadcast. The senior management's version of events seemed to be quite different from what the staff were saying. I was wondering if you could detail your understanding of how staff have been informed of the process so far? Initially, the company called staff to one-to-one meetings to tell them whether they were, or to be more, to tell them whether their post was at risk or not and explain the process to them. They initially opened up to receiving applications for voluntary redundancies. The management made it quite clear to us from the startlet that they didn't believe that the voluntary process would achieve the number of redundancies that they needed and that they believed that at some point it would be necessary to move to compulsory redundancies. Staff have been told contradictory things at different points. My view of the whole process is that, not only when a company embarks on a consultation, it already has its restructure set out. They have designed the restructure, they know what the end result is going to be before they embark on consulting about redundancies. With the process, it is fair to say that, on a weekly basis, we have not had a clear picture of how the new structure would look. In my view, the company has embarked on the consultation process without having its final plans firmly established. I create that information given to staff that has changed. I know of one member of staff who was told that her job was disappearing. She could apply for voluntary redundancies, or she could apply for some of the posts that were going to be vacant. She decided to go for the latter. She changed her mind a bit further on and decided to go for voluntary. I was told at that point that we do not want to make your redundant anymore. We want you to stay. That is not untypical of some of the things that have happened to staff. If you want to ask me more, I will tell you more. I hope that answers your question. Given that we have had the news that there are no planned compulsory redundancies now with editorial staff, where do you think that the cuts will now fall? Is this because enough voluntary redundancies have been agreed to, or is it because the company now has identified other areas in which it can make compulsory redundancies and the savings that it is looking to make? I think that one of the things that I can just pick up in your earlier question as well is that there are two ways to do a redundancy consultation. You can give the trade unions and the staff a detailed set of plans and say that that is it. We are ready to consult on it now, in which case most of the staff in the trade unions go, well, that is great, you are presented as with a fairer company, so where do we go from here? Or the management can come to you and in this instance, as Steve Ewing explained to us, they decided that they would come to us and say, well, here is what it feels like, but we want to talk to you about it. Equally, rather than calling an all-staff meeting and saying that here are the people who are at risk of redundancy, they elected to get into one-to-ones to say to individuals that your post is potentially at risk of redundancy. They explained to us that, from previous experience, a number of staff affected by such proposals said, I do not want to sit in an all-staff meeting and hear that my job is at risk. You should be talking to me one-to-one. From my perspective, my faith is placed in the trade union management consultation process. There are different ways for management to present their proposals to staff, and it is easy to sit back and nitpick and be negative about it. I prefer management coventers with some flexibility to say, well, here is what it feels like. What do you think? We are talking about people's jobs and I want to know or I want to be able to believe that, getting into a consultation process, I can put forward alternative suggestions that they may say, well, okay, but we will go down that route and not make that person redundant. Now, anybody affected is a stressful period for them, but, from my experience, members would rather us being able to come back to them and say, okay, I know that you were targeted for redundancy, but we have actually managed to sort something out for you. I prefer to have that than not having any flexibility in management at all. That does open management up then to the critique that, well, you do not know what you are doing, but it depends on which side of the fence you are on. I would suspect between the two scenarios that you described in your initial question, the truth is somewhere in the middle. Yes, they made mistakes, yes, they did not get it right, everybody get told. The one thing I feel they fell down on was that they did not give people written detail. People were told in individual meetings what they suspected was happening, staff were given briefings, when showing nice PowerPoint presentations, but there was never any bits of paper that people could hang their hats on and say, right, there's five of these and it's one of this and it's six of those. Our members were coming to us saying, well, I was told it was three and somebody said, no, no, he said four. So, the feedback coming back in the absence of bits of paper was a bit contradictory. I think that, again, it is the bulk of our members who are facing redundancy. Nobody's out of the woods yet, as I said in my opening submission, if people turn round and say, well, we're not taking on the new skills, then they put themselves in the firing line. My point comes back to the lack of investment in training and skills development for the people. I don't believe there's any need for any compulsory redundancies, that's the point that we would make them with SDV. They have negotiated changes to their proposals, we have reduced the number of people affected, we have found alternative work for the number of people affected, and that is a positive thing, but SDV needs to do more to meet us in the middle so that we can avoid compulsory redundancies. Flexibility is important in any process like this, of course, but it's not a situation in which you're faced with a company who's facing a major financial crisis and feels the need that they have to act really swiftly to ram through changes or else face severe consequences. I think that it's really unfortunate with this process that a more reasonable, rational and considered view wasn't taken from the outset to meaningfully engage with staff about their plan to bake these cuts and to have a serious amount of time to be able to do that. The whole process from start to finish, from the announcement of a review in March to the point in which they announced what the scale of those cuts would be, has been carried out, I think, with unseemly haste. It's not quite a ffator company, but it's pretty much that. If you don't have the time to meaningfully engage in consult and you're told at the outset it's only going to be a 30-day consultation process, which I think is a pretty bargain basement employer approach to take when you're talking about people's futures and livelihoods, it's very difficult for members to take other than a defensive position and try and protect the position against compulsory redundancies, which was the reason we balloted when we did. In ordinary circumstances that shouldn't be as consideration we should have to make in a collective bargaining process. It should be more grown up, it should be more engaged, there should be opportunities for staff and members to feed through alternatives and other ideas and change and inform that process. In the course of this process inevitably you get volunteers flooding because a lot of people are very unhappy about the state of the company at the moment and don't want to stay there, they feel that they've been treated really shabbily and I understand that and none of that to me is befitting of a national broadcaster. I think in retrospect there's been a lot of mistakes made and I would hope that the company learns from that because yes the shareholders are a priority for any commercial entity but their staff should be their fundamental priority and it's their passion and loyalty commitment to those roles that makes STV what it is and I hope that the tone and the engagement with the unions and their staff changes in the coming period. In the two or three weeks since we've heard from Simon Pitts I'm sure there's been further talks and he referred to that happening. I just wondered if you can give the committee an update on what the outcome of any further talks has been? Yes, the initial consultation period effectively ends tomorrow. The troll for voluntary redundancies has closed. There have been a continuing number of reductions in the number of people at risk but there are some two or three selection processes going on just now for staff affected by their proposals. I have to emphasise though that again at the very first meeting with STV you're widely set out there. This has appeared for volunteers, this has appeared for consultations, we said to them you're talking about the end of the year for most of these posts and changes to take effect so we'll be talking for the rest of the year about this at the very least and they went absolutely you know we've set out our initial stall but we'll talk for as long as it takes so you know and equally the troll for volunteers we have to have a cut-off date to try and establish how many we get in the first launch. We've gone through that process and STV have now widened the process out because there are still some posts at risk so we had discussed with STV this week about staff from other potential areas who might be interested or who are interested in voluntary redundancy that may allow redeployment and retraining opportunities so again there's the two elements to it that the STV to closure has some very defined timelines as to when programmes finish work through right through to December so we're kind of got arbitrary dates there to try and address the issues for those staff. We're currently looking at the staff with August and December dates and some of them I've been told this morning are you know now being moved into the new productions unit the the crafting technical staff we are in a selection process for a couple of them at the minute but again no post closures are foreseen before the end of the year so we will now be looking at the these volunteers from wider areas to see if there's redeployment opportunities and STV agreed with me yesterday that if a couple of people in the wider areas do put their hands up they would offer potential redeployment for affected staff so we're kind of in individual discussions about individuals with STV on an ongoing basis but the numbers you know do keep coming down. There are clearly different perspectives on the modernisation agenda and I raised with the chief executive the impact on news reporting in STV north area because clearly I represent constituency in the north of Scotland and the reduction of staff there and the potential impact on reflecting diversity and maintaining quality and also coping with the geographical and indeed weather challenges you sometimes have in that large part of the country and of course the response was that there's actually going to be more cameras or be video journalists etc etc. What's your view of that? I know there were initially some reservations that that cannot maintain the same kind of quality of reporting but is that something you think you can hold back? I can't come in at this point. One of the examples that you were given by us even management where multimedia journalism has worked very well was BBC Wales and they quoted a figure of 200 journalists retrained as video journalists now we've checked up on that and there's something not quite right about that figure. One of our members has actually suggested that a zero might have been added accidentally somewhere along the line but it's nowhere near 200 and we've got conflicting reports from our members about how well that works. Clearly some of our members say that there are occasions when a craft camera is absolutely necessary and makes the job much easier to do on your hand that there are some occasions when having the ability to self-shoot is advantageous but overall our view is that reducing the number of craft cameras given the actual journalist more tasks to perform must have an impact on the quality of news gathering and the quality of news broadcast. I think as well it's worth bearing in mind that in the consultation process STV identified to us that they are keen to increase the audience figures amongst the younger generations which, funnily enough, was already a year younger than me which was quite insulting but anyway STV felt that the younger generation, quite rightly I would agree, don't generally sit down at tea time and watch the news or come in from school and watch the news. They're quite happy to watch mobile phone footage on their tablets or phones or iPads or whatever and therefore they felt that less craft skills are required to deliver that kind of footage to the younger generation. So there's an expectation, a belief within STV that the quality is not the paramount issue. Certainly in terms of the north there's been a reduction, there's significant reduction in the western isles, a significant reduction of craft skills across the north of Scotland and I absolutely no doubt that quality will suffer and the quantity of coverage will suffer. Indeed one of the days we met with the STV I was told that that morning in Aberdeen we had a situation where one video journalist was out filming another video journalist doing a story. So when STV said everybody will have a camera and the world will be wonderful it's not a simple case that you've got all these extra cameras on the road. As John said there will be occasions where people will be doubling up and STV said there will be occasions where there's three of them at the one time covering the same story. So it's not as simple we're going to hand out 30 cameras and we're going to have tons more footage. Indeed STV have said to themselves that they want to reduce the number of stories that they shoot each day. It just relates to the bigger picture debate, which is the fact that your members are in the television industry, the media industry, and it is rapidly changing. That's clearly one of the motivations for the proposals from the management but I was just wondering do you feel that your members have had adequate input into that debate about what should happen next and how we should adapt to that changing agenda and is there any lessons to learn in terms of going forward about how you can be better involved in that debate? I think that that conversation is what we're about to happen next. Once the jobs have been settled we will be taking part in working groups about what the new setup should look like and how it should operate. I can't say as yet we've had adequate consultation but we hope that we will have by the time the process has ended. It would have made more sense to have that stage of a process before you got to the stage of the voluntary redundancy exercise and the cuts being implemented. Similarly, none of our members have ever been resistant to technical change or the challenges that that kind of creates in different ways but it's about how that's implemented, how it's done properly and making sure that if there's training and reskilling that needs to happen that that's done in an intelligent way and in a way that takes those people with them and gives people the opportunity to acquire those different skills at the same time as still exploiting and using and valuing all of the skills and experience that they bring with them as long-serving members of staff are making that redeployment process work in a fair and transparent way. There are some things that would be some earlier engagement on that might have helped the process and might have served to lessen the impact that there's been on staff morale because certainly from our members morale is at rock bottom at the moment and I think that's a really unfortunate consequence of the process and the handling of this to date. I just add on in terms of a broader concern that I would have in reading the the evidence from the company when you last met with them is that there's a lot of focus on future visions, there's always a lot of guff spoken about visions in these kind of situations but it's very much kind of the focus was on drama and that side of the business which is really important, very important part of it but equally so is news and current affairs and it felt quite light in its focus in that regard and we would have concerns about what is the future in that area, are the resources going to be sufficient, technical changes and different ways of doing things are often seen by companies as a way of doing things more cheaply when actually to do those things properly and effectively and with maximum impact for everybody, for listeners and readers as well is to do that with proper resources which requires real investment not a movement around of existing resources, you need those people and you need those skills. I think that in terms of your question I would actually go one stage further, I think that the two exercises should be completely divorced because the debate about the benefits of new technology is one that we have with other broadcasters and I've had with SDV in the past when it's connected to we need to save some money so we're going to chuck everybody a wee cheap camera, there's quite a understandable level of scepticism that this isn't about achieving the benefits of new technology it's about saving money you know and as Michelle said with the proper training and skills and upskilling and investment in it then you can get benefits from new technology. So I think they should have had that conversation in a different time in a different place and you know in SDV or quick as John says to quote BBC Wales, they neglected to do any comparisons with BBC Scotland where since the concept of a new channel was announced BBC Scotland has engaged in detailed and regular discussions with us about the balance, the headlines were 80 new journalism posts but BBC Scotland was sitting down with us saying right well how many of these posts should be craft, what should these people be doing, what skills should we give them, what skills should they have, you know where should the balance be and those discussions are ongoing and indeed BBC Scotland is in the process of advertising for a you know a considerable number of craft journalism posts with the BBC's terminology these days everybody's class there's journalism and I think you know an awful lot of people say you know just say right well that's a journalist you know you can be a craft editor and we call the journalists these days so we have those ongoing conversations with the BBC and they will continue and SDV should have taken a leaf out of their book and sat down with us and said right we want to use more of these cameras because the BBC and others have tried that type of exercise before where they just shot cameras at people and it's failed miserably you know where there's an intelligent debate again as Michelle says then we tend to everybody tends to benefit from it better and the staff are more engaged in the process like that. Thank you Alexander Stewart. It's quite apparent that much of the success of SDV is down to the workforce, the loyalty of the workforce, the skill base you have, the total professionalism that's been shown over the years and also you're not unflexible about changing and moving things forward and when we had the chief executive I mean I said to him here that this was a public relations disaster for SDV but it's a bigger disaster for your members in this whole process now we've touched today on the redeployment and retraining and giving individuals that opportunity can you maybe just elaborate how that whole process is working and has worked so far because I still get the feeling that there are some people who obviously have morale at rock bottom level because they have just been discarded in this whole process. The closure of SDV is the first example of what you're asking about as soon as Simon Pitts came in and the review was initiated it was expected that the closure of SDV 2 would be announced at some points losing 800,000 a year audience figures aren't great now the previous chief executive felt he could go on building that service up and make it profitable but since Simon Pitts arrived well it became clear through the review it was likely to close. Now within SDV 2 there are journalism jobs associated to the additional news output but the majority of staff are in production areas and they've come in over the past three or four years through the local TV franchise. Some of them the minute they heard the announcement of the review and the outcome of the review and were told that the poster at risk went well but there are new jobs coming but you've just you know there was no conversation about how you might keep me in the company it was simply your posters at risk and further down the road we're not quite sure when there may be new jobs now some of those staff went well if that's your attitude we're off we'll just go at the end of June some staff were asked to stay on longer said no we're off at the end of June and again we said to SDV you should have been coming to the table to those production staff saying there will be production jobs here's what they look like and we would be very keen for you to move forward. Now that's kind of what's happened in practice is management have been talking to me saying right well you know you've got people here affected by the closure of SDV 2 there's jobs here we really hope they apply for them and some of those people have been successful in getting jobs but if it'd been managed slightly more proactively to begin with they wouldn't have been put through that unnecessary stress. There are other people currently who are sitting there who as I say you know SDV reinforced that I made last week they look me straight in the face of no Paul we're not going to offer any retraining or skills development to those people they're at risk if they don't find something else that suits their particular skills then they're gone you know so there have been again different responses and different approaches from SDV in either way and that's why going back to my earlier point we've kind of had to work through job by job to try and arrive at a solution that works whatever we do. I'd also like to confirm that there are people who are simply going because the thing and a job elsewhere people have been leaving without any redundancy package you'll understand why that's happening you've got one major broadcaster announcing a redundancy programme and another major broadcaster 200 metres down the road with with 80 jobs to fill and as Paul just said where do I go for a job there's a job being advertised down the road I'm going to apply for that now because it may not be there in a month's time so you'll understand why people are saying I've had enough of what's happening here I'm going to apply for a job let me see exactly what you've entailed is that putting people in that difficult position where they have no real security for their retraining or redeployment then it's a much easier option for stv for them to go because then stv don't have to bother about having to manage that situation for them they've made their own choice and it may be because they have no other option but to make that choice so do you think that that was a plan by stv to try and force that situation on individuals no I have to say I think it's from the highest levels of stv it's been an absolute disregard and a lack of commitment towards the the staff there are people some of the people affected by these proposals who are currently going through a selection processor in the rently 60s cannot afford to lose their jobs are sitting there with stv saying we're not going to put any time or money into into retraining you they have the skills to do the jobs and where the bbc and other broadcasters have taken a more positive approach then the feedback from the broadcasters has been really positive about you know either journalism staff taking on craft skills craft staff taking on journalism skills particularly at the older age groups perhaps when you get to that level you feel I have to be willing to learn but there has been very little negative feedback about it stv and it's not the first time there have been you know throughout the whole you know new technology the introduction of video journalism and all types of other new technology stv has steadfastly refused to invest in training those people so it's a kind of corp it's a corporate it's a damning corporate failure in my group it's a failure for corporate to ensure that the staff are put in that untenable situation that they have no other options but to accept things outside or to accept what's been given to them inside because they don't they don't necessarily have the options that open to them to move I would really hesitate before saying that that was intentional I know that there are staff leaving stv that they don't want to lose no but they may still be losing them because of the because of their behaviour because of their their attitude and because of what they're actually doing to individuals precisely it doesn't really matter whether it's cockup or conspiracy that is the effect of the actions that they have you know chosen to implement it's it's been it's been the wrong approach right from the get-go the fact that basic information like the you know the so-called the report that was carried out the DMM media report that is ostensibly at the heart of their future plan and strategy hasn't been why has that not been shared I mean that's basic information that should be seen as an important part of that process if it's if it's what they say it is and which has led to their decision making it should be a useful thing to back up the proposals in their future and so not to share stuff like that and not to have meaningful conversations and dialogue with their unions and their staff about that is incredibly remiss so to put people in a position of feeling that they have to jump in case they're pushed you know a month or so down the line with no certainty about how long the the formal consultation process will actually last is is not right and it absolutely should not be the kind of behaviour of a broadcaster of note like sdv I mean as you said that an organisation next member if you don't mind jimmy green good morning panel I mean there's been a lot of discussion here I think it's absolutely right that there's a huge amount of criticism with regard to sdv and how you handled this process and I think perhaps some of the concerns that the panel raises around the process the communication the time periods the consultation just the general approach that's been taken by new management within the organisation but that being said what we will get at the end of this is a more modernised approach to news gathering and news delivery which will deliver more output in terms of more original content production giving new skills to existing members of staff who previously did not have those digital skills increased in-house productions in terms of setting up new new development of content so you know whilst it's difficult and it's right that we criticise sdv does the panel not accept that this modernisation had to happen eventually you know sdv has been a dinosaur in modernisation of creating multimedia journalists and it's probably one of the last major broadcasters in the UK to make that shift is there not a notwithstanding the problems that you're bringing today is there not an understanding and acceptance that this was bound to happen and it was never going to be easy I have to say I don't accept that no I don't expect accept that this is part of a modernisation process sdv embarked on multi-skilled journalists many years ago at the same time as the BBC and other broadcasters and you know we saw the disappearance of craft editors shortly after they took over grampian tv when they introduced video journalism and I would argue that this is not about modernising the agenda this is about increasing the use of multi-skilled roles to save money I mean sdv have video journalists the same the same as every other broadcaster they have multi-skilled roles the same as every other broadcaster this is a straightforward cost-saving exercise let's get rid of the older more expensive craft staff and let's hand you know more younger cheaper people cameras so that it'll give us increased coverage by sdv's own admission the output is going to reduce they have told us the amount of stories they fill them every day will reduce for for the news and yes you know in terms of production and programme making they've told us they're going to invest money on that and we hope that genuinely does turn out to be the case but we this isn't about modernising sdv and some of the technology they have introduced in recent years has been industry leading and we have worked with them in the introduction of that technology this is not about them being behind the times this is about them saving money right and to characterise sdv and by inference you know staff and skills has been like a dinosaur I don't I don't accept and and it is a modernisation is one of those words that's used to mean lots of different things isn't it particularly by companies to justify cost cutting exercises that they're carrying out I think you've got to look at actually what's going to be the outcome and from our perspective you know what's going to be the outcome in terms of quality journalism and programming quality news and current affairs news that's diverse in its output both geographically and in its depth and and we know already that there's going to be fewer stories few fewer pieces of original journalism and current affairs is that a good thing I don't think so is that modernisation it's not particularly good form of modernisation in my view and to be able to embrace you know multi platforms in the way that journalists do all the time and journalists love getting their stories out they don't care about the platform or how it's disseminated they just want to be able to do their jobs properly they want to make sure that the their output their work is professional of and of a high standard and and that's how you know they judge what works and what doesn't and and what's befitting of a modern workforce or not thank you can I just refer you to the to the written submission from the NUJ where we say that sdv news is one of the leading online news services in Scotland and has engagement levels and reach on social media beyond that of many of its competitors that sounds to me like it's sdv's competitors who need to modernise and in regard to multi-skilling how many skills can you train a worker to have before you accept that he can't possibly deploy all those skills in the course of 24 hours I also found it quite insulting in listening to the chief executive speak about this because the was the sense of a narrative that somehow you know he's come in and sdv's been lagging behind the industry in all of these different ways and he's dragging them into the you know the 21st century which absolutely doesn't reflect the workforce as we know it and the output as we know it and I don't think the optics of that coming in to a new team your staff and given that perspective of the way in which they work and the skills that they have I think is a very bad luck if I could just clarify for the record perhaps that in no way was I referring to the staff as dinosaurs I actually share some of the deep rooted concerns that many of them have especially the on-air talent around this new concept that they will have to turn up at stories drive themselves the story set up the camera shoot themselves delivering the story edit the package do a broadcast version of digital version and then get back to to base again and all this is going to be a seamless and an easy task I know for a fact it's not so I absolutely share their concerns on that but there is a wider point here and that is that sdv does have to go where its audiences are and audiences are shifting and if audiences are shifting to new forms of consumption of news through smaller bite-sized packages produced yes on smaller cameras but you know I have a camera in my office which shoots in 4k which is broadcast quality so it doesn't mean it's cheaper and worse it's just how technology is changing how does the panel think that sdv could moving forward meet the objectives of going where audiences are but still maintain these really important craft skills that a lot of your members have I think there's two different elements to that and again you know my four grown-up kids I rarely watch sdv or bbc news but they're frequently showing me news items that somebody has shot on their mobile phone on their mobile phone so I recognise that you know we have to face that conundrum if that's how the younger generation want to get their news then can we really sit there and say no you can't do that broadcasters you must have a craft camera and a sound operator and a vt editor and a journalist on every story no we have to move with it we have to move with the times and we have to accept that our concern is about how the staff are taking in that journey and that's where you know again sdv have failed its crafting technical staff in that regard by simply abandoning them rather than taking them on the journey as other as other broadcasters are done so I think for me it's more about working with the the broadcasters and sdv in particular to get the best benefits potential benefits out of the new technology but making sure that they take the staff with them in that journey rather than simply discarding them and hiring somebody else one of the things that the management said when they were here was that they've looked at what's happened to newspapers and they're trying not to repeat the mistakes made by newspaper companies which of course I understand and respect them for trying to do that but we would argue that the the year by year dwindling newspaper circulations is as a direct result of cutting staff and reducing the quality of newspapers so that the newspapers that you buy today are not as good as the newspapers you were buying 10 years ago that's the lesson that sdv needs to learn from newspapers failures that cutting staff and cutting quality is not the way to preserve your broadcast company you need to reach people in as many different media as possible of course but it's the quality that you deliver through each medium that is crucial to retaining your audience thank you I'd like to move on now to Neil Findlay but before I invite you to ask the question Mr Findlay have you get any relevant interests to declare none can we know thanks how many are directly employed across the board and what's the trade union density we our density increased the day the day we announced that we were that we were balloting our density which is which is always a welcome aspect of having a ballot for action we we currently have 99 members we believe the total possible eligibility for energy membership would be 110 so huge density I believe that sdv going by their figures have around just under 400 staff on some kind of permanent or part time contract and I think between ourselves and the NUJ we're probably close to 50% of the staff in terms of density okay and is there a deliberate move to get rid of staff who are higher paid I believe so yes I think it's over a number of years ago we agreed a new paying grading system with sdv which was benchmarked on market rates and a significant number of our members in the high-end craft and technical areas their salaries sat above those scales for historical reasons and there have been discussions every year about annual pay rises and how we address those anomalies and anomalies as sdv call them and the people who are being identified at risk of redundancy in the craft and technical areas are the top earners they're the highest salaries and as I say you know we believe there are other roles that those people can do there are other areas where changes could be made and sdv you know specifically targeted the craft cameras I'm not I'm not saying that the picture in the individuals is just a fact of life that the craft cameras the craft editors a lot of the technical people are at the higher end of the salary scale so when you say to us well we want to get rid of a craft camera and you know employ a younger person with a digital camera that's going to be multi-skilled their salary is probably going to be less than half of the craft camera so it's an inevitable outcome that high-end salaries suffer. The voluntary redundancy terms that were offered would not be attractive to someone with only a few year service and on a low salary but would be more attractive to someone with many year service and earning a high salary. You can draw your own conclusion from that. In relation to the journalists is it the case that a large number of the new journalists are employed on a salary level under £20,000? Do you know the numbers? I don't know. All of the multi-skilling that has been encouraged and demanded has there been an analysis of the multi skills and talents of the people who are the decision makers? Are they included in this multi-tasking, multi-talented new regime? We'd probably argue that they're epitome of a few managers but I'll leave it there. They've handled this process so well, that's clear. There certainly was talk that they might have to operate cameras if they need you. I've got a couple of questions just to finish for Michelle Stannis Street. You mentioned in your replies to Stuart McMillan earlier the fact that the STV was the last independent channel 3 in the UK. From an MUJ point of view, what the effect has been of the loss of the independent channel 3 provision across the UK as it's been subsumed into ITV? What's the effect being on jobs and quality of news journalism? That's probably been a varied picture throughout. I think the fear for the future here is that it would be potentially on a pathway where there would be a loss of a very focused national broadcaster here that brings a distinct Scottish voice and a diversity that is so different from the rest of the UK. Particularly in the context of current UK politics, international politics, there's a very different perspective here that if lost would have even more of a significant impact or detriment compared to any other changes that have taken place through ITV in the past to become effectively a region of ITV as opposed to what it is at the moment. That's the concerns for our members at the moment in terms of how they might see the short to medium term panning out, particularly when you're looking at it in the bigger picture of the movements that are happening in the broadcasting sector generally. What's going on with Sky at the moment? What's going on with Comcast and Disney and the potential of a consolidation that's mooted in the short to medium term as well? What's that impact going to be here in Scotland and on STV? Inevitably, when there's consolidation and changes of that type, you're embarking on a cost cutting programme that in our experience from a journalistic perspective inevitably has a detrimental impact on the quality of the output and the diversity of the output on increasingly less local and coverage and less distinctive hubs that become broader and bigger and bigger to render them almost meaningless from a local perspective. I think that that would be the real concern that we would have in our experience elsewhere. Can I just add on that? I think one of the key points that Michelle made there was in our experience is if you go round the communities that are served by border, Tinties, Jotser TV, they feel as they were taken over by TV that they've lost their cultural identity. Those television stations don't reflect the cultural identities or cultural importances to the people of the regions of England and indeed Richard May will be able to tell you how people in the north of Scotland feel about their cultural identity since Grampen was taken over by STV. That would again, as Michelle said, become further diluted by any kind of greater consolidation. Do the proposed changes expect them to have an effect on STV's ability to meet its news programme obligations as part of the channel 3 licences? No, absolutely not. They've still said, stated to us, that they'll still exceed their licence obligations and I've got absolutely no doubt to dispute that. They're dropping it back down. They're taking out the STV2 element and they will drop down, so they're just in excess of the licence obligations. Where do you think Ofcom would have a role? At what point would that be triggered? If there was a quality threshold, they'd probably be in there tomorrow, but I honestly would struggle to see where Ofcom would get involved in the foreseeable future in terms of strict licence commitments. We'll eventually want to look at what is coming out of Edinburgh, because there's going to be a diminution in the output of news from Edinburgh. We don't quite yet know how that's going to operate. We don't know if there's going to be an opt or some other arrangement, but I would think that that would be where Ofcom might want to be. We're having an evidence session with Ofcom after this evidence session, so it would be interesting to know if there's anything that you think we should be raised with. I think that the Edinburgh opt, for want of a better phrase, is one of the things that you should ask Ofcom about. I'm afraid that we're out of time, so I'd like to close the evidence session now and thank our witnesses for coming to speak to us today. I'm keen to keep to time. I now like to welcome our second panel of witnesses today from Ofcom. We have Glenn Preston, the director of Scotland, Neil Stock, the director of broadcast licensing and Tony Close, director of content standards licensing and enforcement. You have indicated that you wish to say a few words just explaining your roles to the committee. Yes, thanks, convener. It's just a really brief introduction about who you're speaking to. You're probably a bit sick and tired of seeing and hearing from me, to be honest, but, as you said, I'm the Scotland director. I have two broad responsibilities. One is to head a small nations team in Scotland that represents Scottish interests within Ofcom on our policymaking and regulatory decision taking and then a broader role to grow and expand the Edinburgh office. As you're aware, we've increased in size over the last couple of years. We're about mid-30s, hoping to get to 40 by the end of this calendar year with a mix of different specialisms in the office from economists through consumer enforcement specialists to some of Tony's team actually on the content standards side and some content policy specialists as well. Morning. Thank you for the invite today. I'm Tony Close. I'm Ofcom's director of content standards licensing and enforcement. My job title might give you a clue to what I do at Ofcom. I oversee the teams that look after broadcast licensing, licensing the 2000 television and radio services that we regulate at Ofcom. My teams set the standards, they draft the rules in the broadcasting code and they enforce those standards for all broadcasters that Ofcom regulate. I'm also a member of Ofcom's content board, a largely non-executive committee laid out in statute to advise the main board on content matters and to represent the interests of citizens and consumers. Good morning. I'm Neil Stock. I work in Tony's team on the licensing side and I think that the main reason that I'm here today is one of my particular responsibilities, is local TV licensing and policy. Thank you very much. I'd like to start off by looking particularly at the impact on news in terms of STV strategic review. We've just heard from the trade unions and the NUJ in particular explains the uniqueness of STV's news provision as effectively a national broadcaster, not just a regional broadcaster. Although STV has said that its review will still maintain its obligations and indeed exceed its obligations in terms of news provision, there clearly is a great deal of concern about the future of STV as a national broadcaster. I wonder if you would perhaps explain where you would find appropriate to intervene in terms of if they weren't meeting the licence obligations. I'll happily answer this question. As you know, STVs have a set of obligations, approximately four hours per week of regional news, about an hour and a half in current affairs. We expect them, whatever changes that they make at the organisation, we expect them to continue to deliver and even exceed if they want to do those obligations. If they failed to deliver against those obligations, that's a licence requirement. They would be subject to the full array of enforcement action that is available to OFCOM. We don't anticipate that they will fail to deliver against those, but we would continue to monitor their compliance with their obligations to make sure that they continue to hit them. The NUJ indicated that the current plans for the Edinburgh provision thought that that was a case for OFCOM to intervene because they are considerably downgrading their Edinburgh provision. Can you help me to understand that a bit more? They are continuing to perform against their objectives. Well, I guess that this is what the NUJ believed that they caught their plans for Edinburgh, which they planted downgrade to the provision from Edinburgh. They believed that it was a regulatory issue that might be something that you would wish to investigate. We probably need to talk to the NUJ about what they mean by that, because the question is, are they talking about the provisions in the Edinburgh local licence that sits with STV 2, which, as we know from the strategic reviews, is due to go off air, I think, towards the end of this month, or whether we're talking about the broader Channel 3 central and north licences? Certainly, I don't think that we've had any indication that there's a proposal to come to us and say that they want to change those licence conditions or have them relax, particularly in relation to news. So it would be good to get clarity about which of those two it was. In terms of the bigger picture, it's been raised by a number of members' concerns that the main shale holder in STV is quite an aggressive act of investor, and there has been quite a lot of suggestion, although it is denied by STV that they're being prepared for sale to ITV. If that did happen, what would your role be in terms of the licence? Okay, I think it's important, first of all, to say that we are also unaware of any intelligence that suggests that they're preparing for sale to anyone, including ITV. But if they were to be sold to ITV, we have a role assessing the change of control. We'd undertake a change of control review. As part of that, we would look at the programming commitments and obligations, take a view on whether or not, at the point of changing control, we wanted to change any of those, as we did when ITV purchased a UTV in 2015, where we took that opportunity to bake in tougher, more challenging current affairs commitments for them. There's one additional point worth making there, which the committees previously had the exchanges between myself and the Cabinet Secretary for Culture a few weeks ago, just after the STV strategic review announcement, where we did flag the fact that the broader issue of media plurality, which the cabinet secretary asked about in this committee, has shown interest in the past, is something that we want to keep monitoring. We believe that there should be a sufficient plurality of providers of TV and radio services across the UK, including in Scotland. We have a measurement framework for media plurality, so the tools are there for us to do that sort of formal review, should those circumstances arise. Mr Close, you mentioned UTV. Certainly what we've been told and what was widely covered at the time was that the provision fell quite markedly. The news and current affairs provision and UTV fell quite markedly when it was taken over by ITV. Would you apply strict criteria for Scotland? I think that we'd apply the criteria laid out in statute. I'm unaware of the reduction or the fall that you're referring to in relation to UTV. UTV has always been well received by its audience and continues to be well received. At the time of the purchase by ITV, the commitments were enhanced. My eye understanding is that it dropped one of its current affairs programmes. I'm going to go on to Tavish Scott. Just Mr Close, to your point about it, you've had no intelligence about STV potentially being sold to ITV. None. None? Despite newspaper reports, open comment by lots of interested parties who understand this industry far better than I do, do you not count that as intelligence? People will always talk about all of the licences that we regulate. I think that you've taken over everything else in the country. I think that you had Simon Pitts, the chief executive in recently, who indicated that they're not prepping for sale as well. We weren't necessarily persuaded by his evidence. It's, of course, open to you to take your own view on what STV may or may not be doing, but as far as we're aware, I'm from an official regulatory perspective. The official position is, but you recognise there's a lot of discussion about this, open discussion about this. Mr Press, you made the point about plurality. What do you mean by that in the context of STV? Does STV have to remain an independent company? I don't think that it follows that it has to remain an independent company, but I think that it's something that we want to... Would it be acceptable if ITV took it over? In those circumstances, it would still be obligated to deliver the channel 3 licence obligations for central and north of Scotland. We wouldn't be looking at a diminishing of service unless and until somebody came to us to ask to relax it. That would have to go through the process. As Tony was saying, in relation to UTV, and I appreciate the convener's point about one or more current affairs programmes coming off air in UTV's case, we don't know that these things are going to happen. We're sort of answering hypotheticals. The licence obligations exist. They may well choose to enhance the news provision, for example, which takes us to this wider point about plurality. Do you recognise that you're right? We are dealing with hypotheticals, but the one certainty that we know is that an activist investor has increased their stake in it and that activist investor buys companies to sell them. You said earlier on that you have economists working in the team, so they keep an eye on those kind of things. Well, they're not working on a hypothetical situation of ITV buying STV. We have to keep an eye on it. But don't you scenario plan? As part of our responsibilities as the regulator, we need to make sure that there is sufficient plurality. So we pay attention to the fact that there is news coverage of these sorts of things. I think that the convener asked the question of the First Minister in the Scottish Parliament about the potential for sale and the First Minister expressed her concern about it and so on. So we monitor all of this stuff, but nobody, ITV nor STV, are coming to us to say that this is in the pipeline, and we may have to come to the regulator to talk to them about it. Okay, thank you. Thank you, Jimmy Greene. Thank you, convener. If I could, just to clarify, are you okay for me to move on to the local licences and issues, or is that... Yes, I think that's okay. Okay, thank you. So you'll be aware of the situation regarding STV 2 and local television licences. I just wondered if you could first of all open by clarifying what OFCOMS role is in the regulatory monitoring and issuing of these local fee licences, indeed in Scotland or elsewhere, and what role they will play in any licence transfers, change of controls or asset transfers? Yes, I'll answer that for you. So we are responsible for licencing all of local TV in the UK. There are 34 licences that we've issued, five in Scotland. Our responsibilities, once they're licensed, they are licensed a bit like Channel 3 licences, with a set of obligations in those licences, which the applicants proposed, and we awarded the licence on the basis that they would deliver those obligations. And so there are five licences in Scotland. STV chose to put them all together into a single service. Originally they were separate services. In the event of a change of control, in other words, someone buying the shares of those companies that our prior consent is not required, in other words, that's a commercial deal that can take place, our role then becomes just to make sure, and this is an ongoing role we have across all broadcasting services, that anyone who holds a broadcasting licence, A is a not disqualified person, there are specific rules disqualifying certain categories of person from holding licences, and also the more general, broader, fit and proper test around licences. But someone can buy the shares in an existing company and doesn't require our consent for that. A licence transfer does require our consent, so that's when a licence is transferred from the party that currently holds it to a new legal entity. In those circumstances, it does require our consent, and the law says that we can only withhold our consent if we're not satisfied that the new company would be able to comply with the conditions in the licence. What is happening in Scotland then? Is this a change of control? Is this a purchase of shares in an existing entity that holds a licence? Is this a licence transfer from one entity to another? Or what is your understanding of how STV is transferring those local TV licences to another party? So we have been told by both parties that it is not a licence transfer that that media will be buying the shares in the existing companies. And it is often happy with that, it doesn't sound like a very appropriate way to transfer ownership of what is a broadcast licence in effect. Are you satisfied that this is not just by the wording of the regulatory environment, but by the spirit of the regulatory environment? This is the best way to transfer, in effect, the complete operation from one entity to another, because buying shares in a company is one thing for an investment decision. But actually shifting the whole operation, including the management, the executive, the content decisions, the technical operations, etc. That, to me, sounds more like a substantial shift in ownership, as opposed to just shareholdings moving and shaking around. Do you not have a view on that, or are there any concerns about that? We don't have a view in the sense of either scenario is open to licences, and this obviously just doesn't apply to local TV, it applies across all broadcast services. In other words, there is nothing in the law that prevents one company that holds a broadcast licence selling the shares in their company to a new party. In other words, we have no power to do anything about that anyway. It is a decision between the parties as to whether they choose to effect the deal, the transaction, by selling shares or transferring the licence. Clearly, it depends on the situations of the company. It may be that someone who wants to buy a licence or buy a company may not want to buy the existing company, because it may have a load of debt or whatever the reason is. It is not something that we are in a position to have a view on, because the law allows for both scenarios. In other words, it is entirely up to the parties to choose which scenario they go for. However, it is worth saying that, in both scenarios, the key things that we still have a responsibility for are that the licence obligations continue to be delivered whoever holds that licence, regardless of whether there is a change of control or a transfer. In other words, in this particular case, that media will be continued to be under an obligation to deliver the programming commitments in all five licences. They will choose to do that differently to the way that STV did it, but those obligations still exist, and they will have to deliver those. As I said, the overarching requirements around disqualified persons and fit and properness still apply. We have to be notified, we have to run our checks and those sorts of things, but what we cannot do is do a detailed analysis of their overall ability to comply. You know, there is an advance assessment of whether they will comply with the conditions. If they do not comply with the conditions, like the channel 3 discussion before, we have a range of enforcement action that we can take if they do not comply with those conditions, and that applies to any licencee. Okay, so it sounds to me, in any other scenario, that it sounds a bit like a loophole in the status quo here, that simply by acquiring shares in a business, you can effectively take over the broadcast requirements of it, and I am not entirely convinced that, I guess, Ofcom is giving this due attention in many respects, because what we are talking about here is our broadcast licences, and the decisions that the new company will make may be very different from the decisions that the existing operator makes. How confident are you that STV has, up until this point, met its obligations as a local licence holder, given that it chose to network the licences, and in many respects failed to deliver on the promises that it made when it acquired those licences in the first place? So, in terms of delivering the obligations, so that each local TV licencee, like channel 3 licences, reports annually on whether they have met, that they are able to deliver their obligations across a calendar year, they report annually on whether they have or not, how they deliver those obligations, the way they choose to deliver those in terms of the way they schedule their programmes is entirely up to them, we don't take a view on that. So, hither too, we've had no compliance concerns about STV complying with their commitments, we are just now reviewing the reports for 2017, across all local TV licences, if anyone is found not to have delivered on their commitments, we will investigate that and potentially take enforcement action. I can't tell you whether STV have or haven't, because we're still in the process of reviewing those, but, as I say, they are under an obligation to deliver those commitments. Their choice to network was a commercial decision that they made on the basis that adding up all of the local programming obligations across all their five licences, they could still deliver that within a single service, in other words, they didn't come to more hours than there are in a week. STV made a commercial decision that it would be okay to have a Dundee new service, for example, broadcast across all the five areas that they broadcast in Ditto, for AIR, Aberdeen and Edinburgh and Glasgow. So, they chose, as a commercial decision, rather than to run separate channels to have a single branded service across all five, as I say, that's fine with us, because as long as they're in each local area delivering the obligations in those local areas, what they do the rest of the time, to a certain extent, as long as it complies with general standards, of course, isn't really a matter of concern. We only enforce what's in their licence, which is basically local programming and local news. Underline one of the points Neil made there. It really is up to the licences themselves to find the best way of delivering local content to their audiences. An STV picked a particular model that suited them, enabled them to continue to deliver against their commitments, the commitments that we imposed on them in their licence, in a really quite difficult commercial environment in local TV. I guess just to finish off my point, though. I think the concern here, though, is that clearly, STV made a decision that this no longer is working for them, for financial reasons or strategically, and they've decided to offload these assets to another operator, who, admittedly, operates other local TV licences in other parts of the UK. I think that the concern here, which I'm sure the panel must appreciate, and that's why I'm surprised it hasn't expressed a stronger view on this, is the method in which the licences are being shifted from one company to another. I think that that's the crux of the matter here, is that this doesn't seem to be going through any due diligence in that respect, notwithstanding it, and it is worth noting that both directors of STV2 and the new operator sit on the same board of the operating company that runs the local TV network. What greater role should or could off-com play in this scenario and these types of deals where one operator decides to renege on its commitments to that licence and another operator wants to control those licences? Do you think that off-com has a strong enough regulatory power to cope with a scenario that has arisen? Do you mind if I deal with that one briefly? We want the best outcome for the audience, for consumers. I think that the reason that you're not hearing obvious concern from us is twofold, one that this is not an uncommon way of buying assets in commercial entities. It's not unique to this situation and it's certainly not unique to broadcasting. I think that the second and perhaps most important point is we know that we still have powers to assess the fitness of any new licence and we know that there are obligations in place that the new licence has to meet and has to continue to meet. However, it has taken control of the entity. A supplementary question from Neil Findlay. You spoke about the broadcaster's report on tea. How many of those broadcasters when the report on tea you say we have not met our obligation? Well, as I say, for this past year we're still reviewing them, so I can't answer that question in previous years and nobody has. That's a shocker. Absolutely a shocker. I'm stunned by that. Can I add a gloss to that? I might be talking at a turn, but my understanding is anecdotally that on this year's actually a small proportion of licences have come forward and we're still running through the numbers and volunteered that they've failed to hit their programming targets, but we're going through that process. What sanction do you have? So we have a range of sanction in relation to any licence condition all broadcasters of all types are required to meet the specific conditions of their licence, whether that's number of hours or type of programming, or not doing something bad in their content. If they seriously breach a licence requirement, they go through a statutory sanctions process, where we are able to impose a financial penalty, revoke their licence, if we think it's the best way of bringing about an outcome for consumers, or try and find other ways of mitigating the failure. Is that that these powers are used regularly? Our sanctioning powers, yes. We use them fairly frequently. Do the companies report to you on their profits? No, they don't. What is the, in your view, has local TV been a success? In terms of viewing figures? Sorry, shall I start with that one? Local TV was a public policy intervention. I don't think it's our job to decide whether it's been a success or a failure. We have a role to administer it to the best of our abilities. I think it's fair to say, though, that it's been tough financially for local TV. They have and continue to spend much more money than they raise. I think that you can make your own judgment about whether or not that's a picture of success or not. Are viewing figures going in that direction or that direction? I think that viewing figures have always been fairly small for local television. Thank you. I apologise. We do collect some financial information from them when we publish it in aggregate annually. We have a report in the last two or three years. It was our communications market report, which is a big annual off-com report. This year, we're going to be publishing in a slightly differently bad report, but we provide aggregated financial information about local TV's financial performance. If you'll have seen the last couple of years' communications market reports, they've been fairly stark in making clear the financial challenges that local TV as a whole sector has faced effectively since launch. You don't report on individual companies. I think that Jamie Greene has a supplementary. Thank you for allowing me back in. It's perhaps a question for Mr Stock around enforcement. It's my understanding that one of the local TV licence obligations was the setting up of a local television charitable trust, and I believe that other licence holders in other parts of the UK have fulfilled that. Is it your understanding that STV fulfilled that licence obligation? And if it hasn't, is that something that you will look at from an enforcement point of view? No, STV did. It's called the local television network, and it's effectively a body made up of representatives of all of the local TV licence holders, and STV have been an active member of that body. The purpose of the trust, however, was to grow and support and nurture talent. We spend a lot of time in this committee talking about the industry and the development of the industry. I'm talking about a specific trust with a view to nurturing and developing the Scottish green sector and its talent base. Is that your understanding of the network that they set up, or was this more of an informal association of other operators? The way that the local TV sector set up was more of the latter than the former. It's fair to say that in the first two or three years of local TV's operation, we've chosen to take a fairly hands-off approach to allow the range of local TV licences to figure out for themselves how they best co-operate together. They've been set up with the purpose of promoting the development of local television, whatever that means for them. We haven't offered views on what they should or shouldn't be doing. They've taken their own views on how best to achieve that, either by lobbying Government, lobbying us, or various initiatives. The digital nation initiative, for example, which is a programme that they all run, was something that they came up with themselves as a means of better enhancing the service that they provide to viewers. However, we haven't taken a specific active view on their activities. I'm taking a view, but can I ask just to clarify, is Ofcom happy that all of the obligations that STV had as a local licent to the holder have been met and that no enforcement is due? In relation to the setting up of the local TV network, yes, we have no concerns about that. You mentioned earlier, and Neil Findlay asked about it as well, that licences are effectively self-regulated. How do you check the returns to make sure that they're accurate? I'll answer this. I'll offer a clarification. It's not self-regulated. As part of the self-reporting programme this year, we're undertaking a series of spot monitoring initiatives to test whether or not the information that we're being provided by local television services matches what we see on the screen for specific defined periods of time. To test whether or not they're telling us the truth. So what proportion are spot monitored? I don't know how to top my head, but I'm happy to come back to you on that. It's just that you may be aware that this committee has done quite a lot of work in terms of, in another area of your regulation, which is the quotas for nations and regions content, and there has been a lot of unhappiness amongst the independent production sector, in particular that people are able to misrepresent what is a Scottish production. That's something that people don't have confidence in, so why should they have any more confidence in this process of self-reporting? I understand the point that you're making. I think that that's one of the reasons why we've been so keen this year in particular to structure a spot monitoring programme where we look at the content ourselves as well. And if we find out that people have been misreporting, then we'll take action. So this is something that you've just introduced to the spot monitoring? You didn't have it before? No, not in a structured manner anyway. Right, okay. Some people... Can I add one thing? I mean, you know this because we've given evidence previously on this, but on made out of London, which is what you were alluding to, that's, I mean, one of the reasons that we are reviewing that as you're aware, and are expecting to consult in early autumn, and this is partly because of the process and the issue of transparency and the type of data and information that's provided. So we recognise there's an issue there that needs to be looked at. Sure. No, I accept that. It's just as opposed to what some people might say, it's a little bit laid in terms of local TV here. And just finally on local TV, because I think we're moving back to the channel, three licences. People on this committee will remember when these licences were put out there. And there were alternative bidders in Scotland, and as I recall, there was quite a serious alternative bidder which involved local newspaper provision across the country. But obviously, STV got the licence. Can you not understand why the people that failed to get the licence, having spent quite a lot of time putting the bid together, would be extremely disappointed and perhaps would have expected a more robust response from Ofcom? I do understand the reaction. This does come up across a range of licensing issues where those who have been successful, who have decided to sell or relinquish the licence, the fact is that the regulatory framework and the law behind it allows for the commercial process that Mr Stoke was describing. Ofcom has to work within our parameters. We can't do things that the law doesn't allow us to do, and where it's possible for the commercial arrangements to be struck between two parties, that can happen. It's obviously difficult for us to hypothesise about what might have happened if someone else had got it. But I think it is worth considering this in the broader context of local television and how difficult all successful licences, licence applicants, have found it to continue to run local television and to make any money from it. Certainly, when you receive complaints from the audience regarding the quality of the local news provision in the channel three areas, what are your actual processes to then investigate these complaints? OK, so can I unpack that a little bit? So it kind of depends on what you mean by a complaint about quality. So if people bring complaints to us about the fact that the news isn't sufficiently accurate or abast or it's not impartial, it's not providing the kind of balance that you'd expect from a serious news provider, we have a formal process for assessing all complaints of that type that we receive. If we think that it raises an issue against the code, a kind of substantive or qualitative issue against the code, we undertake an investigation where we put the allegations or the issues to the broadcaster, give them a chance to explain themselves and if we're not happy with that, we publicly record a breach against their obligations. If they were continuously or seriously breaching those obligations, again, and we mentioned it before this morning, we would consider taking action against them. Separately, in addition to specific complaints, we do monitor audience attitudes in relation to the quality of the TV and radio that they receive as well. We have a broad monitoring programme and a specific PSB monitoring and tracking programme that gives us an insight into what people think about the content that they're receiving, whether or not it meets their needs, whether or not they see themselves or the issues they care about reflected and whether or not they think it's of good quality. I should say that STV does very well against a lot of those characteristics or premises. Certainly, in terms of the other channel 3 areas within the UK, when there has been a takeover of a local provider, have you seen an increase in complaints from the local audiences? No, I don't think so. In terms of STV, have you seen that? You mentioned a few moments ago that STV seems to fare pretty well. Has there been an increase in people complaining about the news output within the STV area? No, unless one of my colleagues wants to tell me otherwise. I don't think so. I think STV continues to perform really well with audiences. It continues to outperform the rest of the channel 3 UK licences as a whole. That's good to hear. And certainly, hopefully, that will continue going forward. After any changes actually are introduced. In terms of OFCOM, in terms of your role to highlight what you do to the wider public, when the changes do take place, would yourselves try to get your message out to the wider public in terms of to make them aware of what you do and if people want to complain, would you do something like that? To have something on for it? Yes, so maybe would you mind if we kind of both answer this? So any change to one of our licences that's likely to have a significant impact on the audience or likely to give rise to us making a change to their obligations are highly likely to undertake a public consultation before making any final decision. And as part of that public consultation, we'll decide what key stakeholders we need to ensure are aware of it, including ordinary members of the public, but also political stakeholders and other key stakeholders. I don't know whether Glenn might want to add. Well, I think there's a couple of things to add. So in the event where we are having to consider those sorts of changes and we're statutorily obligated to consult, the team that I lead will promote that across both industry and wider public stakeholders, public institutions, so the Scottish Parliament and other public bodies as well. So we would expect to be out there talking to people about any potential impact that they might have on them. The other thing that Neil alluded to earlier is that we are, we do annually produce in a state of the market reports that highlight things that have happened in Ofcom's role within those as well. So annually we've produced the communications market report across tv and radio where we produce a Scotland-specific report. We're changing the nature of that a little bit this year but the principle behind it is the same. And over the next few weeks we'll, we expect to publish that. We'll be sharing it with this committee and other Scottish Parliamentary committees too. Because it clearly has a lot of concern about the proposals and how that's going to affect the news output and the quality of that news output. So I would hope that yourselves are not going to be inundated with complaints from the from the general public but there's a possibility that that might end up being a case. I think that that's right. I think it's right, it's a possibility. Tony's already described the processes that we have in place which I think are pretty robust to be able to deal with that if it happens. It is important to acknowledge, as you saw in your own evidence with the STV chief executive and with their managing director, Bobby Hain, that they are committing to reinvesting I think it's about £5 million a year, isn't it, over the next three years to the main channel three licence obligations for central and north Scotland and to the STV player. So there is that commitment there. STV productions, for example, seems to, I think, have made more money this year in the first three or four months of this year than it had in the whole of last year. So there are some positive science here as well and it is important to recognise that. Just to pick up on that point, Mr Press, when Tavish Scott said earlier that we weren't particularly convinced by the evidence that we received from the CEO that commitment to reinvesting, I think we were a bit sceptical given the amount that they're planning to return to their shareholders and have already returned to their shareholders. That element's a matter for them and for them to respond to the committee on it, but we have to recognise, as we've talked about with the broader context of local TV about its economic viability and we know that STV 2 was loss-making, we know that the audience is watching it were tiny, I think you had some numbers given to you during that evidence session as well and we have recognised that in both our communications market reporting we've consulted recently as the committee is aware on not making available other local TV licenses because of the concern that we have about the economic viability of the sector as a whole. They're important facts that are part of this conversation. Can I add one point in relation to the channel 3 licence as well? I do want to reiterate the point that it is within STV's interest to continue to do a great job, particularly on the news provision. They are at 25 per cent audience share compared to 18 or 9 per cent against the rest of the channel 3 networks so they are outperforming them. There is a virtuous circle where the better they do as a broadcaster with their audiences the more they're able to raise revenue. It really is within their interest to continue to make high-quality programming for Scottish audiences. Mr Stock earlier you referred to the concept of fit and proper persons in terms of holding licences. I wondered if you could explain a little bit more about that and when you would judge whether an organisation on an individual wasn't fit and proper to hold a TV licence. If you don't mind, I'm going to ask my colleague Tony to answer that. Yes, of course. So I've carried out a few of these which is why Neil's referred it across to me. So we have this broad power both before we award a licence but also it's a kind of continuous requirement once someone's been issued with a licence. For us to make sure that they remain fit and proper to hold that licence. Statute empowers us to take into account two broad different types of factor. How they're behaving within the broadcasting sector so what they've done on screen have they continuously breached obligations that we've imposed on them? Are they running the risk of seriously harming the audiences but separately we're also allowed and in fact required to take into account off-screen behaviour. Other things that this licensee may have done in a non-broadcasting arena that might give rise to a kind of an undermining of the integrity of the broadcasting sector if you'll allowed them to have a licence in the first instance or if you let them keep a licence once they had had it like confirmed allegations of criminality or demonstrably proving not being able to behaviour probably in another regulated environment. If we had evidence in relation to any of our licensees it's not specific to this issue all licensees must be fit and proper of any broadcast or non-broadcast contraventions of that kind of significance then we'd undertaken assessment of their fitness because it's a continuous requirement. So in terms of Crystal Amber as the largest shareholder in STV and a company that's increasing at shareholding as Stavish Scott had alluded to earlier I mean it's regularly referred to as the investor that boards fear because it's quite open about its modus operandi is coming in to prepare companies for takeover nothing to do with public service obligations or quality of broadcasting is Crystal Amber fit and proper to hold a TV licence or be the major shareholder in a company holding a TV licence? We haven't assessed Crystal Amber's fitness to hold a TV licence based solely on the kind of issues that you raised with me now I genuinely don't believe that a largely or wholly commercial outlook or approach is the kind of factor that legislation envisages when deciding whether someone's fit and proper it doesn't fit with the kind of character of issue committing criminal acts or behaving inappropriate in other regulated environments that I think the high test of not being fit and proper is intended to deal with. So when would you perhaps look at Crystal Amber as to whether they were fit and proper? I think if there was evidence out there that they were acting in a way that genuinely raised concerns of the type that I've just described. So that could be correspondence from concerned people? All people can write to us at any times and tell us about the earnings of our licences and we're grateful for all correspondence. But for us to begin or to start to question the fitness of one of our licence holders or the major controlling shareholder in that licence that correspondence would have to indicate some significant wrongdoing of some kind that we should be rightly concerned about. Mr Scott. Thank you, convener. Just to start to mention to the convener's question there, Chris Lamber refused to come in front of this committee. Would that be of concern to us obviously but would it concern to you as the regulator? What would they have to hide in not appearing in public in front of a parliamentary committee? Are they obliged to come to the committee? I think that's what I'd ask you. If they are and they've refused if they've broken a rule that's not what I ask. I think I would be concerned by that. If they've exercised a freedom that's open to them not to come along, I think that that would be not a relevant factor for considering their fitness. Okay, all right. I'll give up. There are many organisations that aren't obliged to come before parliamentary committees but they do come before parliamentary committees because they see the value in that. I would see the value in that too. Thank you. Finally, when STV were in front of us, I asked them about the fact that ITV do not have a nations quota unlike in terms of production and unlike both the BBC and Channel 4. Could you just confirm that that is something that you'll be considering in your review of the nations and regions quotas? So I don't know if I have a direct answer to that yet. We are obligated in the next couple of years. I think by 2020, end of 2020, to do a full public service broadcast review and that will be a wide ranging review although we haven't agreed what the parameters are in terms of it but those sorts of issues I suspect would be considered as part of it. But we don't have, as I say, we haven't planned what that review looks like because it's a little bit ahead of time yet. Right. But the current review that you're having into out of London, it wouldn't be included in that then, even if people keep on going with suggestions. I don't think so. I mean, that review doesn't go as wide as looking at nations quota issues. As applied, for example, to the BBC and Channel 4 at the moment, which I know is the kind of context in which the committee's been interested about it, it's looking much more specifically as the committee's aware about the three criteria, particularly the substantive base one. And those quite specific issues around transparency and the provision of data and so on. I don't think the intention is that that that review goes widely to issues like quotas. I see. Certainly, it's something that several witnesses have raised with us and our report into the screen sector, Making Scotland a Screen Leader, which has been released today, recommends that ITV should have a nations quota. And just to convey that to you now. Thank you. Okay, thank you. We'll certainly look at that report. I know it's just been available this morning, so I haven't been able to go through all of it yet, but we'll certainly look at it. Okay, thank you very much all of you for coming to give evidence to us today. And we're now going to move into private session.