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  • Ian Ritchie : Business7

It's time SMG put pressure on BBC

IT LOOKS like being an interesting time for Scottish broadcasting - and we've not been able to say that for quite a while.

Earlier this week, Rob Woodward, the embattled CEO of SMG, resorted to playing the 'get out of jail' card that he has been keeping in his top drawer for the last few months.

Having figured out that their shares couldn't go much lower whatever they did, SMG has raised £95 million in a deeply discounted rights issue which will be used to pay off most of their current massive debt.

He would, of course, have preferred to have sold or floated Virgin Radio but he found that with the credit crunch and a glut of media players on the market already, they weren't going to get anything like the £85m or more that they think that it is worth.

Woodward is now close to having dug himself out of the hole that he inherited from SMG's previous management team. For five years or so, SMG have been so indebted that they have been unable to invest significantly in their core asset, their broadcasting license as the ITV franchise holder for Scotland.

Virgin Radio is still up for sale of course, but that will be done when market conditions allow, and Woodward has promised that much of the proceeds raised will be returned to shareholders.

So the nightmare that has been SMG for the last decade is almost over. The company bought several properties at the top of the market (they paid Chris Evans an astonishing £225m for Virgin Radio) and then when the advertising recession hit in 2001 they found themselves unable to service the debt that piled up.

Having got the debt under control, Woodward can now concentrate on what he came to SMG to do - run a TV company.

Meanwhile the SNP's broadcasting commission is getting underway under the chairmanship of Blair Jenkins, who has previously held senior management positions at both SMG and BBC Scotland and so has some considerable experience in this field.

Broadcasting is a 'reserved matter' for the UK government so there is little that the SNP government can actually do to affect it. But it knows that the BBC, in particular, is highly sensitive to public and political pressure - it can be 'encouraged' to divert more resources to Scotland, particularly if there is any threat, for example, to set up a 'Scottish Broadcasting Corporation' and seize its Scottish license fee income to pay for it. The UK is currently preparing for a switchover to digital television and the old analogue signal will be switched off - in Scotland that will happen in 2010.

The current digital system, with relatively low power transmitters, has created space for more than 30 channels, and acquiring these has been the subject of a poker game between broadcasters over the last few years. Each of the major broadcasters has developed a family of channels - BBC has BBC 1, 2, 3 and 4, News24 etc; ITV has ITV2, ITV3 and ITV4; Channel 4 has E4, More 4 and Film4; and Five has launched Five Life and Five US.

SMG originally had a digital channel, S2, as part of its 'gifted' spectrum when the digital networks were set up, but it gave that up and it is now occupied by ITV2. During the past few years, SMG has been too indebted to take its place at the poker table and to bid for any new channels.

And maybe it is because of the lack of competition from SMG, or the lack of political pressure, but you get the impression that BBC Scotland has not been trying particularly hard recently.

In Wales, they have a whole channel, S4C which carries welsh language programmes, and another, S4C2, which carries the proceedings of the Welsh parliament.

BBC2W, the digital version of BBC2 broadcast in Wales, carries programmes in English but produced in Wales for their Welsh audience from 8.30 to 10.30 every evening - there is no equivalent of any of these Welsh services here in Scotland, a significantly larger country.

The BBC will change its compression standard at digital switchover, creating capacity for at least four new channels. Before that gets grabbed for other services or high definition TV, the Jenkins commission needs to ensure that at least one of these channels will be freed up for a dedicated BBC Scottish channel, broadcasting programmes made in Scotland for Scots.

BBC Worldwide announced only last week that it is planning to launch 30 new channels for markets such as the USA, Europe, Japan, Malaysia, the Philippines, Latin America and Africa. As the BBC is actually paid for by £300m or so of Scottish money.

Maybe they should think about launching a BBC Scottish channel sometime before they get round to 'BBC Malaysia'.

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