Purnell exit blurs outlook for ad policies

Harriet Dennys talks to James Purnell, outgoing minister for culture, media and sport, about the major issues facing media and advertising in 2008.

James Purnell, outgoing minister for culture, media and sport
James Purnell, outgoing minister for culture, media and sport

The media industry could be forgiven for thinking the Government has a downer on advertising in the light of recent Parliamentary debates about whether marketing is responsible for the worrying rise in childhood obesity.

Children's broadcasters - already out of pocket to the tune of £39m after media regulator Ofcom banned advertising of foods high in fat, salt or sugar around programmes watched by children under 16 - are still recovering from the strain of lobbying the Government hard to prevent an extension of the ad ban to all programmes pre-9pm.

But while health minister Alan Johnson was on the side of ad ban campaigners, and even Prime Minister Gordon Brown was said to support more draconian measures, recently departed media minister James Purnell is firmly in the advertising camp, and was instrumental in the announcement last Wednesday that the Government's obesity strategy would contain no further restrictions.

Speaking before his sudden parachuting in to disgraced minister Peter Hain's vacated position at the Department for Work and Pensions, Purnell warned that the move would come at too high a price for the British TV industry - he estimated it would cost commercial broadcasters between £160m and £240m a year - and helped formulate recommendations that the Government should invest more in healthy marketing and promoting sport in schools.

Purnell, who was broadcast minister when the ad ban was first proposed in 2005, speaks of the need for "getting the right balance between the effect on the public and freedom of speech". So, although he supported the original legislation because "the public health benefit justified the restrictions", the feeling at the Department for Culture, Media and Sport was that the proposed pre-watershed ban would be neither legitimate nor balanced.

He says: "Advertising is the bloodstream of the creative industries, in that it is part of other industries but is also a very important creative industry in itself. It is a sector where Britain is probably the best in the world: it provides many high-quality jobs, and it is something precious we want to keep on supporting."

Purnell grants Media Week an audience on a rainy afternoon in January that turns out to be one of the minister's last days at the DCMS. He cuts a sober figure in his plain white shirt and black tie against a colourful backdrop of stripy sofas and personally chosen modern art, particularly noteworthy being a representation of "the growing influence of black women in British society" by Sonia Boyce.

Complementing his taste for contemporary art, Purnell, 37, is an avid radio consumer, listening mainly to Xfm, BBC 6Music, Five Live and BBC Radio 4.

His TV viewing has been "much improved" by Sky+ technology (although he recently had to switch to the Virgin equivalent as he lives in a conservation area not conducive to Sky dishes), and - as any self-respecting 21st-century media and culture minister should - he has a profile on Facebook.

Purnell is an evangelist for the creative industries, which he informs me is "one of two British sectors to increase its share of global markets in the last few years, the other being pharmaceuticals". His erstwhile department is leading the Creative Industries Strategy, being published next month, which aims to put creative industries "at the top of the to-do-list for all government departments".

He says: "Creative industries make up 3% of our gross national product and employ nearly two million people. These are industries where Britain is very strong and that are going to grow in future, so it is very important they are at the centre of overall government policy thinking."

He adds: "This is a very subtle area of policy, because if you intervene too much it can be counterproductive. However, the Government can make a big difference; for example, ensuring young people get exposure to creativity in the arts, or indeed talking about the reasons why advertising is important to the economy."

When he joined the Labour cabinet as Secretary of State for Culture, Media and Sport in June last year, Purnell set out three goals for media policy. These were: an open market to encourage innovation and creativity, universal access to distinctive and original content of the highest quality, and enabling consumers to be in charge.

Purnell will hope the newly formed Convergence Think Tank will aid his successor, Andy Burnham, to realise these ambitions. The think tank will hold regular seminars to help shape Britain's communications landscape, chaired initially by Burnham and energy minister John Hutton, with the first planned for 7 February.

The formation of the group is timely, because there has never been a more urgent time for media policymaking. If there have been three ages of broadcasting to date - the BBC monopoly, the analogue era and the multi-channel era - these have been succeeded by the on-demand decade: a time of rapid internet-led change where media legislation approaches its sell-by date quicker than ever.

Purnell explains: "The think tank was set up because broadcasting policy comes in waves; we are on the threshold of significant changes that may require further reform. As we approach digital switchover, and as Google looks likely to take more advertising revenue than ITV this year, we need to think about how the regulatory and legislative framework can be adapted to support these issues."

The most pressing area for reform is the "huge elephant in the room" that is the funding model for public service broadcasting in a converged world. At the recent Oxford Media Convention, Purnell posed the question: "Do we think it is sustainable for every penny of the licence fee to go to a single organisation in an industry that now has very many providers rather than just a handful?"

At this stage, the intention is to establish the central questions rather than propose solutions - Purnell says there is currently "no timeframe for legislation". However, he is clear that the existing PSB model will have to adapt if Britain is to retain its reputation for world-class broadcasting. He adds: "We are not going to question the whole concept of public service broadcasting, or whether it has a future, but the model needs to change to ensure its relevance is conserved."

Over the next year, the Government will conduct its review of the framework for public service broadcasting alongside Ofcom's PSB Review, before consulting all major broadcasters. Purnell adds: "The idea is that when Ofcom comes out with its proposals, we will be ready to take action on them."

In the meantime, another priority for the DCMS is commercial radio, which, Purnell admits, has been hit hard by the growth in internet advertising, and consequently has a legislative framework that is "creaking a bit".

According to Purnell, both Ofcom and the DCMS are "sympathetic" to the argument that existing restrictions on radio ownership have been overtaken by changes in technology.

He says: "The radio legislative framework has been the one most under challenge from market trends, so we are looking at this with some urgency."

One area that has yet to take off for the radio industry is digital radio, with market leader GCap struggling to fill the capacity of the first digital multiplex since winning the licence back in 1999.

However, Purnell is philosophical about radio's digital future. "You can look at this in two ways," he suggests.

"You can either say there have been well-reported issues with GCap, and clearly they have been affected by the digital advertising trends that have affected TV as well, or you can look at the fact that Channel 4 is coming into the market, and there are going to be exciting developments on the internet, with new technologies coming in."

The Government's commitment to digital radio and "helping consumers get the radio they want" is reinforced by the launch of the Digital Radio Working Group, which was due to meet for the first time yesterday (Monday, 28 January). Since the group is chaired by Barry Cox, chairman of TV switchover body Digital UK, could the Government be planning to drive digital take-up through an analogue switch-off for radio?

Purnell confirms this is "one of the issues the group will look at". However, although possible, he says it is "unlikely in the short term, because digital radio is nowhere near the level of penetration of digital TV".

The Government's short-term strategy for commercial radio is to maintain radio listening as a core part of people's lives, while maximising the possibilities of new technology.

"Radio is one of those media that people really love and rely on," says Purnell. "We want to maintain that, while capitalising on the possibilities coming through new technologies: far more stations, digital TV carrying radio and internet radio stations bespoke to particular tastes."

He adds: "Good politicians always want to get the best of both worlds, and we would like to get that in radio as well."

Purnell is certainly politic when asked for his opinion on post-switchover TV spectrum allocation. "I think I shouldn't think," is his evasive reply. "It used to be that governments would just allocate spectrum to pet projects, but now that job has been given to Ofcom, so it is allocated on a much more market-led basis."

As Media Week's 30-minute audience draws to a close, Purnell speaks of the importance of ensuring that more schoolchildren have access to the internet in order to keep up with their peers, and of a competitive broadband market being the best way to keep costs down and encourage innovation.

He is obviously only too aware of the need for radical changes in policy to keep track with the complex communications landscape.

As he told the Oxford Media Convention recently: "Change is necessary and constant, to preserve what we value and make it compatible with the world we are living in rather than the world we have left."

The advertising industry will hope that Purnell's successor as media minister - and former flatmate - Burnham will demonstrate a similar commitment to productive change and an understanding of what advertising contributes to the British economy.

MAKING THE CASE FOR THE INDUSTRY

TESS ALPS, chief executive, Thinkbox
"Obesity is a serious problem, but it is unfair and counterproductive to make advertising the scapegoat. Media owners are doing a better job than the Government at educating parents about diet and exercise, so it is folly to weaken them. Better surely to use the power of advertising to encourage children to adopt a healthier lifestyle. Children are eating fewer calories than they have ever done, so campaigns should focus more on output than intake, but why shouldn't advertising include manufacturers' newly formulated products? Finally, nobody should use the phrase "junk food". It is inaccurate, insulting to manufacturers and plays straight into the hands of the health zealots."

TOBY SYFRET, media analyst, Enders Analysis
"The issue of PSB funding is being addressed not before time. The whole model needs to change: we do not have to commit all public funding to one source. There has never been a need for the volume of expansion of funding that the BBC has enjoyed: it has two analogue and many digital spin-off channels, which have drifted from their original remit to act as competitors to the commercial channels. It is time to rethink precisely what we need public service broadcasting for - although once you have the set-up, you can't discard the model completely. So, given that it is there and it is valued, we must look at how it is best maintained, but we must also look at having a more liberalised funding model in a multichannel world."

RICHARD OLIVER, head of investment, Universal McCann
"A review of the role of PSBs is to be welcomed. The advertising community must ensure consideration is given both to the role of commercially funded PSBs and to the future impact of the BBC on the commercial sector. PSB requirements continue to help shape much of the programme output in the UK that advertisers are attracted to. Without some PSB requirements, competition alone would not produce such diversity and advertisers would be the poorer for it. Much of the BBC's programme output positively contributes to this programming eco system, but Auntie is not always a force for good. Some recent moves, such as the iPlayer, have been accused of stifling innovation in the commercial sector. The Kangaroo joint venture with ITV and Channel 4 is an encouraging step and might provide an insight as to how PSBs can work better together, to the benefit of consumers and advertisers."

SUPPORTING ADVERTISING AND OTHER CREATIVE INDUSTRIES

The Government's report on the creative industries, published next month, will set out its recommendations for shaping the future of advertising and media.

The strategy document will focus on the importance of creative industries - from architecture to fashion and computer services - to the UK's economic growth and the role the Government can play in supporting the creative industries.

The advertising industry is the lead contributor to the economic value of the creative sector, contributing 1.48% of the UK's gross domestic product in 2006. The sector also shows high growth rates in new channels such as internet advertising.

However, media must work on its reputation for being less responsive to external networks than other sectors, its London-centricity, and the over-supply of agencies, which means that, in general, the industry is a buyer's market.

The Institute of Practitioners in Advertising has advised the Government that it should offset negative messages about advertising linked to social issues with positive stories. For example, the sector's role in creating economic growth, funding traditional and convergent commercial media businesses, and providing livelihoods for the UK's creative talent.

Furthermore, the IPA has recommended that the Government should exempt the creative industries from changes in legislation, such as TUPE employment regulation and capital gains tax; strengthen intellectual property law to protect the creative industries in negotiations with clients; and offer tax breaks to prevent 75% of commercial TV production going overseas.

In the meantime, the industry has welcomed last week's announcement that the Government will launch a £75m marketing drive to tackle Britain's childhood obesity crisis, rather than imposing further advertising restrictions on the sector.

Sue Eustace, director of public affairs at the Advertising Association, says: "The AA is pleased the Government is allowing time for the HFSS rules to have an impact. It would have been precipitate and disproportionate to introduce a 9pm watershed ban, given the lack of evidence of the health benefits of so doing.

"Regulatory certainty is essential. The current rules were introduced after a proper process of research and consultation, and the evidence so far shows that the amount of HFSS food ads seen by children is declining in line with regulatory objectives, and that compliance to the new codes by the industry is nearly 100%."

She adds: "This is a clear sign of the self-disciplined and responsible approach taken by the self-regulated industry."

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