At the heart of the government’s green paper on the future of the BBC is an implicit accusation that the broadcaster is ‘crowding out’ the market through the scale and quality of its services. The BBC is accused of (potentially) ‘stealing’ audience from private broadcasters, diminishing potential income from advertising (or subscription) and, consequently, private investments. If the BBC is to be blamed for ‘crowding out’ private broadcasters, it is necessary to prove that the private broadcasters would engage in the part of the broadcasting landscape that the BBC has dared to occupy. Recent research shows this perspective to be flawed. In short, there is a finite pool of advertising pounds available within the UK and were the BBC not to exist, this limited pool would not and could not increase to fill the void.
Furthermore, this defence does not account for the fact that businesses are often risk-averse and unwilling (or unable) to transform existing landscapes, or indeed create new ones. For example, in 2012, BBC TV invested 56 pence of every pound of revenue in first-run UK content. The equivalent figures were 44 pence for the commercial public service broadcasters (based on total PSB revenues) and a meagre 7 pence for the rest of the commercial sector. Yet if the BBC is to robustly defend itself from the charge of crowding out, it needs not only strong counterfactual evidence such as the example above, but also a framework to more accurately assess its contribution to industry and society within the UK and abroad.
The ‘crowding out’ argument is an ideological position in which public services in general, and the BBC in particular, are a means of last resort. Their role is not to compete but rather to address market failures. But the use of market failure theory here is misplaced and what is more, it seeks to deliberately misconstrue the BBC’s leadership role in the UK’s incredibly vibrant culture industry. The assumption is that there is an existing market, and if the BBC takes a larger chunk of it, there is less left for the private sector, and this leads to criticisms that active public organizations like the BBC not only crowd out but also stifle innovation. In fact, as I have emphasized in my book on The Entrepreneurial State, the public sector not only ‘de-risks’ the private sector by sharing its risk, it often ‘leads the way’‒ courageously taking on risk that the private sector fears. Thus rather than analysing public sector investment via the need to correct ‘market failures’ it is necessary to build a theory of how the public sector shapes and creates markets—as it has done in the history of the IT revolution. Indeed, the BBC is a perfect example of an organization that by remaining ahead of the game, investing in its own competencies and capabilities, has been able to steer, shape and create new market landscapes and indeed opportunities for both public and private actors.
