Cynulliad Cenedlaethol Cymru

If you don’t mind, I’ll answer in English.

Well, you would expect me to say this, because you know me to be a very optimistic person, but let me just take a step back from that kind of question. There is no doubt that we are facing headwinds as a commercial broadcaster. Media consumption is changing; there’s no question at all about that. There are big, global companies who are competing directly with us for television advertising and for viewers. I think television advertising as a whole in the UK will be down probably this year, and that will be the fourth year in a row that it’s been down, and that, I think, is something of a record. And the uncertainty that is apparent in Britain—you know, we’re a UK economy-sensitive stock, and our stock price is 50 per cent lower than it was maybe two years ago.

Against that backdrop, I would say that what ITV Wales is doing in Wales is something of a success story. We are currently Wales's most watched and biggest peak-time broadcaster. We are growing our share of the tv news market in Wales, which I think is particularly important. We've grown a production business of scale in Wales, which makes some 500 hours of programming a year, supporting some 250 jobs. We are finding new audiences, younger audiences, on new platforms, and we are telling more Welsh stories across the UK network. So, on lots of levels, there is a lot to celebrate about what ITV Wales is doing and the role that it plays in national life. That's not to say that everything is easy, but things have not been easy for broadcasters for many years. We are, I would argue, probably in our third age of disruption to the tv model. The first disrupter was when we moved from the public service broadcaster model to multichannel—so we went from four broadcasters in Wales to 200 to 300. The second area of disruption to the linear tv model was when somebody invented the recording device, so then the audience could then decide when to watch things, pause things and so on and so forth. That was a further area of disruption to what we do and it disrupted our business model. And we're now in the third area of disruption, which is the internet, and that's opened up the competition to large global players who are unregulated in this space, and that provides further competition against us.

So, against that backdrop, I think we're doing remarkably well. The audiences, particularly for our public service broadcasting, remain resilient, and that's, I think, to be welcomed in the Welsh context, particularly for the news and current affairs that we do in a market that we know is relatively weak in Wales.

So, if you're doing more in terms of—or more people are watching the news that you're providing here in Wales, do you plan to increase the provision in that regard as a public service, given that you've mentioned that you are seeing more people come to ITV to utilise your news services?

So, again, let me take a step back from that. Commercially funded public service broadcasting is a very precious thing. There are, as I've said, hundreds of commercial channels available in Wales. There's only one in Wales that's actually producing programmes for Wales that are made in Wales. Against that backdrop too what you've also got to remember is that the public service broadcasting that we do support is made available to viewers free—we don't charge for it—and it's at no direct cost to the taxpayer. So, that makes commercially funded public service broadcasting quite unique in the public service broadcasting landscape.

The question you're asking me, in effect, is: is there scope to afford more? So, I've explained the dynamic system in which public service broadcasting operates. That competition is only getting harder; it's not getting any less. We are competing well in that marketplace, but the competition is only growing. Ofcom has looked at this twice in the last 10 years. It looked at it first of all in 2008 and looked at it again in 2013 and asked that very question that you yourself are asking and it's a question of proportionality. Is the additional benefit we get by being a public service broadcaster in Wales—and that's the really key point here, that we could be a broad commercial success in Wales and not be a public service broadcaster. We get additional benefits by holding the licence. So, we are able to reach more homes in Wales, but only a small proportion of more homes in Wales, by being a public service broadcaster. And, of course, we get greater prominence on the electronic programme guide from being a public service broadcaster. So, there are commercial benefits to us doing that. And then there are the costs that are the programmes that we make solely for audiences in Wales—the news and the current affairs. And Ofcom's looked at that twice and asked are those benefits that ITV gets by being a public service broadcaster proportionate to the costs of that and are those are sustainable too. 

We have a 10-year licence that is going to run to the end of 2024. It's very difficult to see to the end of next week at the moment in terms of the economic landscape, but we are committing to 2024. As I've said, at the moment, we are facing some very strong headwinds, but we're committed to 2024 for those costs. So, what the licence provides is not just a certain volume of programming that Ofcom itself has said is proportionate, but it also provides sustainability.

So, you wouldn't change it now. You would stay with what Ofcom has. You wouldn't want to say, 'Well, we're doing so well that we want to put x additional programmes on.' You're comfortable with what Ofcom has determined to be what you would need to provide within the confines of the market that you're in.

Well, a couple of things there—. What I'm trying to do is to explain the public service element of what I'm talking about. Now, if you take a sort of global picture of what ITV does in Wales, the public service element of what we do is around 300 hours a year, a significant, substantial amount that generates a great deal of public good—programmes that are performing really well. But that sits against the backdrop that, in Wales as a whole, we will produce around 800 hours of programmes as a commercial broadcaster, as a commercial producer of scale. So, we, as a successful commercial company, are doing a great deal in Wales to support the creative industries. We're making a great deal of programmes on top of the public service element of things.

And one of the things I would say too is that one of the things we've been pursuing in the last three to four years is just asking that question: can we make more programming than—directly to your question, can we make more programming for audiences in Wales on top of our public service commitments? And the answer to that question is, 'Yes we can, and yes we are.' Now, what I've always said at this committee is that it will have to be commercially sustainable. We can't afford to make any more public service broadcasting within that model that I've described, but what we can do, potentially, is commission programmes for the network that are seen then by audiences in Wales but also seen by audiences across the UK, and we're starting to see growth in that.

Now, I don't have a quota for that. We have to secure those commissions as a meritocracy and compete with all the producers right across the UK, but we are having some success with that. So, on lots of levels—. Yes, there is the public service element. It's performing really well and doing really well. We are a commercial producer of scale in Wales, which is supporting many hundreds of jobs, and we are also commissioning more programmes that are made in Wales that are shown to UK audiences. So, I think, on all levels, we are showing success. I understand that, for some, it will never be enough, but each year I think we are doing more and we are showing the contribution that we can make to Welsh life.

Okay. I'm sure others will have more questions on this, but I'll pass over to Jenny Rathbone.

You highlighted in your report that you're now—ITV Cymru Wales is now—the most watched peak-time television channel in Wales. Could you just outline a little bit more how that's changed in the last five years? Obviously, you've introduced new programmes. Is that the main reason why people are coming to you or is it the quality of your news and current affairs output?

I think what ITV offers as a broadcaster is a really broad range of programming. I think that, as you've seen the explosion in multichannel, there's been an opportunity for channels to specialise in particular genres, even down to particular types of programme. But what ITV continues to do is offer a broad range of programming that you would expect of a broadcaster that's reflecting the national life both of the UK and, indeed, of Wales. Now, it's an incredibly competitive environment, so what is it that's making us successful? I would argue that we spend around £1 billion a year on the schedule as a whole, and the overwhelming majority of that is UK-originated content. This is not buying in content from around the world. This is concentrating on stories that reflect British and Welsh life.

We focus a lot on prime-time drama. That, obviously, is really important to audiences, but, at the same time, we have a really trusted news service, which other channels do not have. We will have focus on—sports rights are expensive, but we still carry some very important sports events: the World Cup, football, we'll have the Rugby World Cup coming up next year. So, those are really important draws as well. Then we tell a rich vein of stories, whether that's through our returning soap operas such as Coronation Street and Emmerdale, which continue to absolutely perform at the top of their game, through to stories in terms of factual and current affairs and politics and so on and so forth. And then, on top of that, we then provide programming that's very specific and local to audiences, so, in our particular case, the news and the current affairs that we provide as well. I think, if you put all of that together, yes, there's a huge amount of choice out there for viewers. But that is one of the reasons that I think that ITV has been successful—the broad range of programming that it's able to provide.

Okay. When you came to see us a couple of years ago, you told us that you thought that ITV Cymru Wales was well placed to be a real launch pad for network productions. What do you—? How would you now assess the situation?

I would say that there are three areas where I felt that we could potentially make in-roads into creating programmes for UK audiences. The first element are the programmes that we're already commissioning for Welsh audiences. I've always felt that some of those stories deserve to be seen by a UK audience. A really good example of where we've successfully done that over the last year or two is with a programme called The Harbour, which is a delightful tale of people living—a factual programme—around Tenby, which we made, commissioned solely for Welsh audiences, but we felt, actually, could work on a UK stage. We subsequently persuaded the commissioners of that, they ran it and it became the second most watched programme in that slot, that year—so, very successful.

Another area we can potentially get network commissioners is through a sort of co-commissioning model. So, that is to work with commissioners of other broadcasters and say, 'Look, we've got an idea that we can potentially show Wales, but this could potentially work on your network, so I'll give you two or three examples of that.' We would work with, say, the Welsh language broadcaster, S4C, to make a programme called Crime Files—so it's called Crime Files on ITV Wales; it's called Y Ditectif on S4C—very successful for both. 

Another programme that we co-commissioned with the ITV network—so, the whole concept of the programme at the commissioning stage was us and the ITV network commissioners talking—was a series called St David's: Britain's Smallest City, which has just finished a very successful six-part run here in Wales, and that will be seen in the spring, I think, right across the UK. So, that's a second model—

In what slot?

I think—. I don't know the exact slot, but it will be in prime time within the network. It would probably go—. I don't know; it'll probably be in an 8 o'clock or 7.30 p.m. sort of slot, prime-time slot.

Okay.

And then the third model is where the network itself commissions a Welsh story purely for the network. We've got currently—. The example you will know from that is the Aberfan documentary that we made a couple of years ago on the fiftieth anniversary. And following the success—. Because a lot of this is about trust and track record. So, following the success of that programme, which went on to win a Royal Television Society award, a UK RTS award, we've been commissioned to make two new series, largely building on our access that we have within Wales: one with South Wales Police, which is a remarkable series that follows the murder squad detectives of South Wales Police, tracing a murder, and that series, I think, will go out next spring. And we're also working with Dyfed-Powys Police on a series that follows them in the Tenby area, a series called Harbour Cops. And they're commissioned purely for the network; they're not being commissioned by us or in any way jointly commissioned. 

So, three routes, lots of success in those areas—and that's as ITV Cymru Wales. So, ITV is a large company. On top of that, we have three other production labels in Wales. We've obviously got Boom Cymru, which is a part of ITV Studios. We've got Boomerang, which make, I think, something like 50 hours of network programmes, and then we've got Shiver Cymru, which is a partnership between ourselves and Shiver. So, between us, I think we're making programmes for pretty much every UK broadcaster across a range of genres. I think there's going to be a drama that Boom Cymru Wales are making, which is going to go out on Channel 5. So, Channel 5 recently said that it wanted to get back into putting drama into its prime-time schedule and Boom Cymru has been successful in that. So, across the piece, really, in terms of ITV's activities in Wales, we are creating and telling more stories made in Wales for UK audiences.

Yes, I can see that these partnerships make absolute good sense in the context of the challenge from all these internet providers. You say that the network productions are based on a meritocracy. We described it is a laissez-faire approach. How much is your strategy driven by Ofcom's expectations of seeing much more of Wales and Welsh life depicted on UK television?

From my perspective, from where I sit, it just makes sense for a UK broadcaster such as ITV to be telling more Welsh stories. We have great storytellers and we have great stories to tell. It is a meritocracy, so you have to persuade people of that. I wouldn't want it, in many ways, any other way, but it is quite difficult. I think the success that we are having shows that people are listening. Those programmes are proving to be successful commercially as well—the audiences are coming to them. That obviously helps too. If you persuade people to make a programme and then audiences come to it, then the next time you're looking to have that conversation, it gets easier.

We've got a pipeline of ideas as well. The last time I was here, that's what I spoke about before as well. It's important that they're not just one-offs, that I can sit here and say, 'We've done that.' Have we got a pipeline of ideas coming through? Have we got the connections into the network where we're having those conversations and they're regular conversations? The answer to both of those is 'yes'. The relationships that we are forming with commissioners are good and lasting ones. The ITV commissioning team as a whole, I think, has a very good reputation within the industry as a team that makes quick decisions and is very communicative. That's what we are finding, and I know my colleagues at Boom and Boomerang, similarly, are finding that too. So, I wouldn't want to be—. It is a meritocracy and there's a lot of competition, and the competition just keeps getting tougher, and there are new entrants into the marketplace all of the time, but I think we've made some really good strides in the last three years and I'm confident about the future. 

This meritocracy, how London-centric is it? Are all the decisions made from London?

All the commissioners are based in London, but, do we get commissioners here to talk about programmes? Yes, we do. Just last Monday, I was showing not the commissioners things, but the chairman of ITV was in Wales last Monday and we had a very good conversation. We took him to see senior colleagues at Boom Cymru as well. We've had the director of news and current affairs with us in the last fortnight. My team have heard from one of the major commissioners in factual within the last month. So, they are based in London— 

You're aware of the discourse, aren't you? That everything is London-centric, including all the money, all the transport, et cetera. So, if ITV is not distributing its network across the UK, it risks being left behind. 

What I would say to that is we're not sitting back and waiting for the network to come to us. We are Wales's voice in ITV, and we're ITV's voice in Wales. ITV recognises that we're the fourth largest production base that ITV has outside of London. That's important. Stories are where the people are. We've got a lot of people here. ITV recognises we've got a lot of people here. It makes a lot of sense to make programmes here. We've got a lot to sell and to tell. I think we're seeing lots of success in that area and I'm hopeful for success in the future. And it's not just ITV. We're not just talking to the commissioners of ITV, we're also talking to the commissioners of Channel 5, Channel 4, and indeed the BBC. So, it's about us getting Welsh stories on all of the networks, not just ITV, from our perspective.

Okay. Lastly, could you just tell us about this investigations producer? What is that person's role in ensuring that important stories are properly aired?

As you know, we do news and we do current affairs, and we do current affairs in both English and in Welsh. In current affairs, it's established tradition, as you know, that investigations will be done. For example, in the last couple of weeks, there's been an investigation into the care standards at a care home in north Wales—a very traditional current affairs investigation. That happens in both English and in Welsh, as you would expect. The role that you're specifically talking about is to do with news, specifically.

The reasons why we looked to do that are—. The questions we asked ourselves were: 'How do you make your news service distinctive? How do you make it stand out from the crowd? How do you create something that the viewers want to come to?' Now, we're growing our share of the tv news market against very tough competition, and I think one of the reasons that we're able to do that is because we are able to offer something that is distinctive.

So, let me give you a very recent example. As you would imagine, Monday's 6 o'clock evening news programme would still fill the Principality Stadium three times over every night—it's a really important programme in terms of getting Welsh news to viewers in Wales. As you would imagine at 6 o'clock, it's pretty much dominated by what's going on in Westminster at the moment, understandably, but after we'd done that with Adrian there, providing that analysis and understanding, there was a second story that we have got to ourselves—we're the only ones then telling it in Wales—around stalking. And what was particularly interesting about that story was that it was somebody talking from a male perspective about stalking.

So, that's one example within the running order that, actually, in some ways you could have looked at all the running orders of all the major news programmes that day and said, 'Actually, they're all going to be dominated by Brexit', but ITV Wales at 6 o'clock wasn't, because it had this within it. I think that's one of the reasons that I would point to, together with the fact we've boosted our investment in specialist journalism as well, to make sense of stories at 6 o'clock. People know what's going on during the course of the day. We might not for the next hour, but you know what I mean. When they come to their 6 o'clock programme, they're not just wanting to know what's happened today, as a lot of people have got a sense of what's happened today. What we are trying to do is to help make sense of that for people, which is why we've invested in specialist journalism.

But the original journalism producer is something that we deliberately looked to do to bring a distinctiveness to our news programming, a distinctiveness that we thought our current affairs had, and we wanted to bring that into our news as well. 

Okay, thank you.

Diolch yn fawr, Cadeirydd. Like Jenny Rathbone, I'm very suspicious of overarching concepts like meritocracy. The danger is they're very empty and whoever sets the rules and the measures, especially if it's a highly centralised system, determines the structure and, often, the periphery is told to go away. And of course, if it does something exceptional on merit, then it can break into the established status quo. And I've not found your evidence very convincing on that aspect. What I have found much more positive is in your description of what's happened in the last four years, which is almost a strategy it seems to me.

So, the first thing you—

Thank you. I'll take 'almost'. 

Well, a strategic approach is not a meritocracy, is it, or relying on a wonder-phrase like 'meritocracy'? You said, when you're commissioning for a Welsh audience, you're now thinking in terms of, 'This could go wider, even though the central purpose is the Welsh audience.' You mentioned The Harbour programme. So, is that more systematic in your thinking, that approach? Because, obviously, before 2014, there was hardly anything that got out of Wales. But there are now intimations of a much greater sort of ambition and some success so far. So, is that a more general approach or is that still for the Welsh audience and it's fairly exceptional when you suddenly think, 'We've hit on a really interesting insight here that might go further'?

I think, actually, all of those things. I think, when I refer to a meritocracy, what I'm trying to describe is the system in which we're operating, rightly or wrongly, but that is the system. Can you then be strategic within that system to achieve your aims? Yes, you can. Are there things that you can set out to do to achieve your aims? Yes, there are. So, let me give you an example.

At the moment, we've got a network production arm called Boomerang and then there's Boom Cymru, which are traditionally kind of focused towards S4C as a producer. Now, you could take a view, and indeed we have, that says that the programmes that Boom Cymru are making could, potentially, be formats that could go, not just in Britain, but around the world, potentially. But how do you achieve that? So, one of the things that they've done is invested in a role, and the sole purpose of that role is to look at those programmes that are being made for broadcasters in Wales and asking those questions: 'Can they be supersized? How do you work? Who do you need to form relationships with in ITV to achieve that?' and so on and so forth. So, that's an example, I think, of taking a strategic approach.

In terms of content itself, the audience is the prime determinant. So, the first question we have to ask ourselves is, 'Is this relevant to a Welsh audience and is a Welsh audience going to come to this?' That has to be our primary consideration when we're commissioning for a Welsh audience. 

How do you make that decision? 

Oh, gosh. Now, that is a very difficult question for me to answer. I'm not quite sure I would. 

Because we asked the same of the BBC because we asked about portrayal. We don't know, actually, what they—. Somebody's portrayal could be very different to somebody else's analysis of what it means to be Welsh or what would be distinctive. 

Yes. So, to just, sort of, finish the point, the reason I say that in terms of, 'Would this work for a Welsh audience?' is there's no reason why something that would work for a Welsh audience couldn't then work for a UK audience. That's probably the point I'm trying to make. So, you know, Coronation Street is as popular in Wales as it is in other parts of Britain. Now, within that, of course, Coronation Street is maybe a little less popular in the south of Britain and a little more popular in the north of Britain, and it's particularly popular in Wales. So, you get a sense of what people watch, what they come to and who the audience is. So, we have lots of information and data about our audience. So, we are commissioning for that audience to get more of that audience. The commissioning decision is not just simply that gut, although a lot of it can be—you know, 'I really like that story. I think that's a terrific story, it should be told.' There's a big element of that in traditional television, but a lot, too, is also supported by data that says, 'Okay, do audiences come to it, et cetera, et cetera?' And budgets, too, will be a part of it as well: 'Can we afford to tell that story to the quality we want to tell it, and so on and so forth?' So, there's a whole host of things within that.

I think what I would say, too, is when we're commissioning for Wales, we recognise that Wales in itself is a very diverse place. We position ourselves as a national broadcaster. Our news service is not a local service or a regional news service. It's a national news service. So, I think we have a sense of those things that apply to national life and those are our guide, but then, within that, we know there's a huge range of diversity within the stories that we could be telling. It's a very complicated sort of business, and we don't always get it right, and sometimes we go to tell stories and we think, 'That would be a fantastic story to tell' and the audience doesn't come to it, and we can't explain it, and we would have loved if they would have done, but sometimes they don't.

But to come back to The Harbour, I think that, in terms of—. We felt very passionate about that story. The audience came to that story in Wales. It was about a very tiny bit of Wales; it was just about Tenby, but the Welsh audience came to it. So, we felt that, 'Well, if the Welsh audience could come to that story, why couldn't a UK audience come to that?' We persuaded the UK commissioners of that, and, as I say, it went out in an 8 o'clock slot on a Monday and became the second highest performing programme in that slot that year. So, that's 51 other programmes that had gone before it, and it was the second highest of all of those. So, I think we, sort of, struck upon something, the form of storytelling, what it was about, and in the sort of zeitgeist of where we're currently at it resonated with audiences.

And tastes change, and you've got to keep up with them. If you keep everything the same and say, 'That works. Pour wax over it, keep it the same', actually, over time, the audience will deteriorate. So, you've got to keep it fresh; you've got to keep it updated. Coronation Street's been on our screens for 50, 60 years, but it still feels fresh, relevant, telling the stories of Britain, and that's what the secret is behind its success. 

David. 

Okay. Inferring from that very long answer—

Sorry.

—that you are doing more in terms of the Boomerang example of asking the question, 'Could this go outside Wales?'—and that does seem to me to have been a strategic shift in the last three or four years—I'd like now to go on to core commissioning, which, again, seems to me to be a key area. The evidence, I think, in terms of output and your financial position and investment is that that's improved a lot, but we're still below—. I mean, if you take a population, sort of, measure of 5 per cent, we're still not generating that type of activity. Is this an issue where the proportion of core commissioning that's going on is still not terribly favourable to Wales, or are you happy that core commissioning concepts are being worked through more strategically, and there are more opportunities there, with the strength of the creative industry in Wales also being a factor? So, how are we doing on that core commissioning element?

Again, I think it probably all comes from where your point of view is. If you take that 5 per cent aspect, well, we're the fourth largest production base that ITV has in the UK, so, actually, we're overperforming and overdelivering in that aspect. In terms of, say, our measure of our public service broadcasting spend, per head of population, we will spend two and a half times on our PSB in Wales what ITV will spend in the English regions. The reason for that is because we are delivering more PSB. And then, on top of that, all the commercial activity that we do in Wales that other parts of the UK aren't doing, I would say that takes us above the 5 per cent.

In terms of that representation and portrayal, if you look at ITV next year, we'll have the Rugby World Cup. If Wales do particularly well and get through to the final, then the portrayal of Wales might be a lot higher than in previous years. Things go in cycles as well. I think ITV Wales is in a strong position. I think ITV Wales's contribution to ITV is probably disproportionate relative to other parts of ITV.

I suppose what I'm trying to really concentrate on is: is there more core commissioning in the whole network and is Wales getting a good proportion of that core commissioning, or is the model still fairly one of 'produce excellence and break through'?

Well, we started, as you said, in 2014 from a base of zero. The answer, clearly, would've been 'no'. Is there more that I think we will be doing in the future? I think my answer to that is going to be 'yes', but I can't predict that. So, we are working to continue to—. Our ambition is to continue to grow. There are barriers to that, but I think we have the wherewithal, the capacity, the talent and the production base to overcome those. So, I'm very optimistic for the future, and, as I come to these meetings, I'll hopefully have more of a positive story to tell in that area.

The third strand that I was interested in is Welsh commissions deliberately for the UK network. So, is this a new category? Well, presumably, it's new, because there was only, I think, one before 2014, or whatever, that made it to that network level. But, are you thinking in terms of a certain number of commissions you want to make in your own resources for the UK network, or have I misunderstood what you were explaining in one of your earlier answers?

No. What we are looking to do here is—. We are a producer of scale in Wales, we have a great many talented people in Wales and we have some great stories to tell, and what we have looked to do in the last couple of years is to establish that track record and to build that trust. We also make programmes very effectively and very efficiently as well. And those are all bedrock and good foundation sort of things. We've also got really good relationships now with commissioners. Now, I can't then predict what happens as a result of those, but I think, compared with where we were five years ago, I think we're in really good shape to tell more stories, and we've got a range—. Again, it's that pipeline, and in the pipeline, there is a range of ideas, some of which could end up being a break-out global hit and a format that everybody's talking about in two years' time, through to one-off stories that could win a wonderful award. None of them may come off, as well, because that's the nature of television, but what we have established, I think, is the foundation that could deliver that success, and I'm hopeful that it will.

Thank you.

Sorry, just before we move on, I need to clarify something. You said we were the fourth largest outside of London, and then you said in response just now we're the fourth largest, so are we the fourth largest outside London, or are we the fourth largest?

We are the fourth largest production centre that ITV has.

And how many are there?

I think the total staff are around 350. It fluctuates depending what's in production—

How many areas are there? You said we're the fourth largest—out of how many other production areas or sectors across the UK—

Oh, I see what you're saying. 

—to be the fourth largest of?

Sorry. Well, we've got 17 regions, I think. That's just in the UK. So, 17 regions.

And they all have production centres.

Yes.

Right. Okay. I just wanted to clarify that. 

Sorry. It was a bit confusing. 

Rhianon Passmore. 

Thank you, Chair. You'll have to excuse my voice, I'm afraid. 

We've talked a little bit about strategy and, obviously, you have a statutory duty around the 25 per cent for original programming but your investment, we could say, in terms of original programming has remained static since 2009, and that's against the parallel of the BBC investment, which I believe is up over 12 per cent. So, in that regard, do you feel that, strategically, you are investing enough in original programming, bearing in mind your revenue growth and the surrounding growth in your finances? 

Probably the easiest thing for me to say is there has been no growth in what we would term as our public service broadcasting programming, but there is growth in terms of the original productions that ITV is commissioning from Wales. So, it is going up. 

But your spend has not grown. That's remained largely static. 

Well, the PSB spend has not grown, but neither has the volume of programming that we're producing. And those programmes are performing well, if you see what I'm saying. So, it's not that there isn't enough funding for those programmes; those programmes are doing well, they're performing well for the audiences and delivering against the licence. 

In terms of the overall question around, 'ITV's a profitable company, can it be doing more?', which is, in effect, what you're saying—

Specifically around independent programming. We talked earlier on about strategy in that regard and portrayal and Wales's place internationally. So, bearing in mind your statutory duty and, I would hope, your will to do more than the statutory duty in that regard—the BBC is stepping up to the plate in that regard—so 'Are you doing enough?' is my question.

I don't think we're in any way, shape or form not meeting our obligations. We are absolutely meeting our obligations. The point I would always point back to is those obligations provide substantial public benefit back into Wales and are being made against a really tough financial backdrop. With everything that we do in terms of public service programming we have to earn it before we can spend it. We don't charge our viewers for it, there's no direct cost to the taxpayer and we're doing it in a very challenging commercial environment. On top of that, we are, though, commissioning more original programming from Wales. So, it's not a story of decline, per se; what we're saying is we are meeting absolutely our obligations, which are delivering a huge amount of public good in Wales. All of those programmes are well resourced and well funded and are performing well for audiences, and then, on top of that, we are commissioning more original programming from Wales, which is being shown on the networks—

And I understand that point, and you made that point earlier in that regard, around commissioning, but in the actual financial spend, that has remained static since 2009, on original programming—or thereabouts. So, my question really, if I rephrase it, then, would be: could you not be doing a lot more if that spend was increased in terms of spend on original programming, and therefore the hopeful correlation with commissioning around that? You've obviously got more eggs in your basket to be able to produce more chickens. 

Yes. This, I guess, is where its gets quite complicated. The extra programmes that we're making have to be commercially sustainable, so the reason the original spend on the original programming that you're referring to has not gone up is because the market conditions around those have not changed. The value that's in the licence that determines that spend has not increased. Indeed, those conditions have probably got tougher, not better. 

And I fully understand that. What I'm saying is that, in terms of your revenue growth and parallels with the BBC in terms of their duties, my question remains: are you doing enough? 

I genuinely believe that we are doing enough. What I'm trying to do is to explain why it's difficult for us to do any more. 

Okay, fire away. 

When you look at—. How do I get this across? ITV is a profitable company, and it's profitable for lots of reasons. One of the—. I'll give you an example. 

If you could be brief. We've got a few more questions that we've got to get through. 

Probably the easiest way for me to explain this is that something like 56 per cent of ITV's revenues come from outside of it being a commercial broadcaster; it's absolutely nothing to do with the television advertising model in which the public service broadcasting exists. I'll go back to Boom Cymru. Boom Cymru, for example, is a very successful producer. Its business model is built around making and selling programmes to other broadcasters. That's a profitable part of the business. Now, you could say, 'Well, could you take some of the profit from that part of the business and put it into this part of the business to make non-profitable programmes?', which is, in effect, what you're saying. But my point back would be, 'Why would we, as a commercial organisation, take profit from a profitable bit of the business and put it into another part of the business— 

So, your answer is 'no'. 

I'm trying to explain why it doesn't make business sense. That would penalise that profitable part of the company. That would potentially threaten the jobs that it creates, potentially threaten the programmes that it makes. If there was value in the licence for us to do more, we would be doing more. The value in the licence is only going one way at the moment, so it's very, very difficult for us to do more. Yes, ITV is profitable, but it's profitable because not all its profits come from being a television broadcaster; profits come from wide areas right across the globe, and it wouldn't be right to penalise other parts of ITV—

So, therefore, in terms of your financial spend on independent programming, that's remained at the same level since 2009. Your answer to my question would be that you don't think you can do more. That's all I'm trying to understand. I fully understand the market of ITV. 

It's incredibly difficult in the current market conditions for us to do more. 

Okay, thank you. 

If I just take you to the evidence you submitted, I'm going to ask you about an area that I ill understand. You say in paragraph 7.2, 

'Ofcom has during the summer been consulting on proposals to change rules which ensure that public service broadcasting content can more easily be found in the new digital landscape.' 

And then you carry on and say, 

'The changing media landscape in Wales could mean viewers in Wales are less likely to come across PSB content made in Wales'.

Could you explain this prominence issue—what it is about the rules that will be changing, or that you want to see changed, to make a difference to that, and then why it is important. I think I've got a grasp of some of that, but perhaps you could summarise them together as to the importance of it.  

It's important because the current model for sustaining commercial PSB is built on prominence, and that's prominence in terms of ITV being available in more homes via the television network, and having prominence on the electronic programme guide. And that sustains the news and the programmes that we make in Wales. So, up to this point, that's been really crucial.

As we go into a world where fewer people are accessing television content via an EPG, as more and more people are accessing tv content not through their aerial, the question then becomes: that content that is built upon those two pillars, how can it be sustained in the future? And if audiences are finding content through other means—search engines, or whatever it might be—where there is no prominence for PSBs such as ITV, how are people going to find it? And if they can't find it, then there's a real threat to what it sustains.  

How does the legislation framework impact on that, then? What is it that you'd like to see changed that would improve the PSB element?

So, at the moment, by law, certain platforms have to carry BBC, ITV, Channel 4 et cetera. 

This is when you put the screen on, and then, suddenly, the list of all the channels comes up. Is that the—?

Yes. So, Sky, for example, or Virgin, must by law carry those things. Google doesn't have to do that, Facebook doesn't have to do it, no internet platform has to do that, no television manufacturer—it's creating its own ecosystem on its own television. If you buy a television now with a remote control, it's probably got a Netflix button. You don't even need to go through the television any longer. That's where policy makers could potentially make changes to help to surface public service content. 

So, specifically, in terms of the Ofcom consultation, they're in a position to actually make significant changes to this, and your input into this is—. What specifically are you asking? That the current system has to continue, or does it have to change, or be extended?

Well, it has to adapt, because, increasingly, people are accessing—. They may be sitting in their living room, they may be watching the television screen, but how they have accessed that content is fundamentally different from what the current model sustains. So, what changes can be made so that, actually, the prominence of the ITV hub is equal to the prominence currently of the ITV television channel—I suppose that's the question you're asking. 

So, it's Ofcom who make the changes to the rules. So, they will determine—it's Ofcom who will determine the rules. Is that right?

Well, Ofcom will clearly have a view, but it may be policy makers that may have to make the ultimate decision. This is about potentially regulating the internet and regulating the internet players.  

Right. So, this could obviously have a very significant impact in terms of the commercial viability of what you do as well, then.

Absolutely. And the support of members of this committee for that, and being a voice for the importance and the contribution that the PSB currently makes in Wales, I think is an important voice within that debate. 

Okay, thank you. That's been very helpful. 

Okay, because I thought we could have more help, actually. I'm trying to understand what exactly you would want to see in terms of prominence, because, obviously, you've mentioned that the televisions—. With electronic programme guides being less important, what would you say would need to happen to make sure that ITV would be prominent? I'm not quite understanding the changes you would need to see for ITV not to fall below the radar for many of those viewers or consumers, however they consume their product. 

Well, let's just take one example—television manufacturers. At the moment, we have to reach commercial deals with television manufacturers to get that prominence as a part of that, whereas we don't need to negotiate a commercial deal with Sky about being prominent on the Sky platform. There's a key difference. 

So, the legislative change would need to be that that would be done before it reached the point that ITV would have to do it. 

Well, I think you could have made the argument 30 years ago—'Well, why don't you reach a commercial arrangement with these new platforms?' But it was felt at the time that it was really important that this content, these channels, should be available universally to people in Britain because of their public service contribution. There are a whole host of new platforms out there where this no longer applies, and that is perhaps where legislatures now need to look and say, 'Well, where should it apply?', so that the reach and impact of those PSBs is maintained in this whole ecosystem.

We're only asking because we want to be helpful, so that we can understand how we can engage with the UK Government or Ofcom to see how we can—. We've had this frustration in the past with the previous report, in terms of that a lot of this is how television manufacturers operate, and it's about having an influence on that. 

And not just them. How do you find content on the internet? How is that being prioritised? We are a trusted brand. How do search engines identify, trust and surface that? And there's a whole new world coming up in terms of voice as well. At the moment, when you search for something, you get a list that you can read and then you can make a choice from the list, but in a year or two's time, you might be standing in your kitchen asking an internet provider, 'Show me a programme about Wales.' Now, how is it going to make its choice? From what? On what criteria? And how is ITV, or BBC or S4C's content going to come up in that search I suppose is the fundamental question I'm asking. 

Yes, there's a whole new inquiry for us, I think. [Laughter.] Okay. Dai Lloyd. 

I'm sorry, but I'll have to answer in English. In terms of the last point, the percentage, it's only actually a very small percentage, in terms of ITV Cymru Wales's direct commissioning for the Welsh schedule. We make most of our current affairs and factual programming in-house—we're very good at it and so on, and so forth—so it's only a small proportion. But the programmes that I've talked about—The Harbour et cetera—they were made by independents, and working with independents in a very creative way to do that. You're right in terms of—we have a very significant production base now here in Wales, which does terrific work for all of the major broadcasters, right across the UK. They work as a part of a very strong ecosystem, in Cardiff and, indeed, in Wales, and it's one that's getting noticed. As I say, the chairman of ITV, who himself used to run a major independent production company, was in Cardiff just last week, and one of the things that we did was take him around some of the amazing things that are happening in and around Cardiff. And I think it's a very, very exciting time. Notwithstanding all of the things that I've been talking about, commercially, the explosion of choice is leading to more people consuming more content. So, on one level, as a producer of programming, this is a very exciting time, and we are very well placed, both as Wales and as ITV Wales, to capitalise on that.

Okay, thank you.

Vikki Howells.

Thank you, Chair. Looking at the statistics I've got in front of me, the gross value added of motion picture, video and tv programme production in Wales has grown exponentially, hasn't it, over the last 12 years? For this year, say, an increase of 334 per cent—

Okay—I'll take your word for it. [Laughter.]

—which is fantastic. So, I was wondering about the value of the programming that you make for S4C.

Okay. Well, the funding for S4C, of course, comes from the licence fee, and S4C itself has faced great challenges to its funding, which I'm sure this committee will be aware of. And so the producers for S4C work and have operated in that climate; it's a lot tougher than it was. Of course, the programmes that we do make for them, as all independent production companies do, are made for a profit, but those margins are—it depends on the actual kind of programme you make. Some programmes deliver a larger margin than others. Volume is obviously important, too, and so on, and so forth. But the margin for S4C programming makes it commercially sustainable—it is absolutely worth us doing that. But it's not a—how can I put it? We are trying to get as big a slice of that commissioning pot as we can, but we are competing with all of the other independent production companies in Wales for that. We have no right to make programming for S4C, and it's right that we compete for that.

Okay. So, would you say the value of the programming that you make for S4C can't just be assessed in terms of GVA, but in terms of what it brings to Wales culturally, and the importance of making programmes in the Welsh language—that there's a different way of assessing its value?

I think there are lots of ways to assess its value. As you say, we're incredibly proud of the programmes that we make in the Welsh language, and we're incredibly proud of the contribution that we make in those areas. And, again, the scale of our production means that we are producing programmes across all the major genres that S4C would do as a national broadcaster in Wales.

What do you think have been the most significant changes in the last decade, in terms of the way that you do work to create those programmes for S4C?

I think the relationship that we have with S4C is perhaps closer now than it ever has been—that relationship as a producer and as the commissioning broadcaster. I think we understand them a lot more than we might have done in the past. Just last Friday, I was at a presentation by the senior commissioning team who were talking about their plans for the year and the challenges that they're facing as a broadcaster in the Welsh language. So, the communication is absolutely there and I think that, if you just take some of the ITV Cymru Wales programmes that we produce for S4C, what you've seen is us adapting those programmes, as audiences demand, to keep them successful, and introduce new formats as well—Y Byd yn ei Le, for example, is a new—. Political programming is not new, but that's a new programme that we're making for S4C. So, I think the relationship we have with S4C has got closer, it's more collaborative than ever before, and we're working very hard with the broadcaster, given the challenges that it does face, and as all broadcasters are facing, to produce the programmes that they want.

And one final question from me: obviously there's going to be an independent review into S4C—what kind of impact do you think that might have on ITV?

It would all depend on its conclusions, I would think. I hope that any review would recognise the value and the contribution that we are making.

Sorry, just to clarify: the independent review has been finalised now. 

Right, okay.

You've clearly read it. [Laughter.] So, if there are any additional comments that you have, based on Euryn Ogwen's review, then please let us know. I know that it wouldn't directly impact you, but you may have some comments.

Okay.

If there are no other questions, I'll bring the session to an end.

Thank you very much.