The BBC Strategy Review: Sky responds

The group director of corporate affairs at BSkyB gives the company's verdict on the BBC Strategy Review: the Trust has failed to fulfil its duties; the executive proposes only superficial changes.
Graham McWilliam
4 June 2010

BBC Strategy Review - BSkyB response

The BBC Trust has asked for public responses to proposals put forward by the BBC Executive following the Trust's decision to ask the Executive to undertake a "major review" of the BBC's strategy.

While Sky agrees that a comprehensive review of the BBC's strategy is needed, we have significant reservations about the way in which the Trust has chosen to conduct this process. Consequently, we question whether the proposals put forward by the Executive represent a serious and far reaching review of the BBC's strategy.

The BBC's remit must be viewed in the context of wider market provision

The BBC receives a very large guaranteed income each year from licence fee payers, who also benefit from the provision of high-quality content by the commercial sector. The BBC therefore has an overriding duty to deploy public resources in a way that maximises public service delivery in aggregate across all these sources/

The delivery of this duty requires that the BBC constantly evaluates the choices it makes and prioritises spending in areas where it can make the biggest and most positive difference. That means focusing on those areas that the market is not serving well, where there is a real deficit in provision, and de-prioritising or stepping back entirely from other areas where the market is providing or has the capability to provide more. To do otherwise is to spend licence fee payers' money inefficiently and to cause distortions to the market without public service justification.

The Trust has failed to discharge its responsibility to set the BBC's strategy

The Trust itself says in its introduction to the Executives proposals that, "under the BBC's Royal Charter it is the responsibility of the BBC Trust to set the overall strategy for the BBC cabn best fulful the public purposes laid down in the charter"

It is hard to reconcile this with handling responsibility for the important first stage of the Review to the Executive. In doing so the Trust has demonstrated that it is not willing or able to set the strategic direction of the BBC or require that the Executive makes difficult choices in the public interest.

The BBC Trust should have take the opportunity provided by the Strategic Review to ask fundamental questions about where the BBC could pull back as the market delivers more and how to reduce the burden on the licence fee payer. This approach would have discharged its responsibilities as set out in the BBC's Royal Charter to set "the overall strategic direction of the BBC, including its the public interest, particularly the interest of licence fee payers". It is important to recognise that the interest of licence fee payers is not identical to the interest of the BBC. Licence fee payers want provision of quality content from a wide range of sources including the commercial sector. The market impact of established and new BBC services therefore needs to feature strongly in the Trust's deliberations

The Executive's proposals do not address the fundamental questions

The Executive's proposals appear tactical and cosmetic. They tinker around the edges of the BBC's activities, giving the impression of change while avoiding the questions over the BBC's future strategic direction. Examination of the proposals demonstrates that the Review does not address in any meaningful way how the BBC should be making hard choices and prioritisng its resources. For example:

- The ease with which the Executive is able to propose the reallocation of £600m of spending - one fifth of its cost base - without needing to make any significant changes to the output of its main networks, demonstrates how much money the BBC has to play with and how inefficient it has become. Furthermore, the reallocation of such a large sum of money into new content is proposed without any assessment of the impact of its current output on the comemercial sector, and with the presumption that the BBC should be doing more rather than less, regardless of what the market is already providing or of the impact of new spending on the BBC's competitors.

- This lack of regard for what the market is able to provide, and the BBC's unwillingness to consider any real change to its current strategy of competing with commercial broadcasters for audiences irrespective of cost or public interest, is further illustrated by the unambitious proposal to reduce spending on imported Hollywood movies by just 20 percent. Quite apart from the questionable assumption that the BBC should be spending any money on imported content which is well provided for by the market, the Executive's proposal only reduces the amount to the level the BBC was spending three years ago, which hardly represents a significant change in approach.

- The Executive's proposals are in fact arbitrary in nature, designed to attract attention to small changes while disguising the reality of maintaining the status quo. This is highlighted by the recommendation to close 6Music for reasons which contradict the Trust's findings earlier this year that the station "makes an important contribution to the delivery of the BBC's public purposes". The Executive's argument for proposing its closure appears to be that, while it currently only reaches a niche audience that is not well served by the market, should 6Music grow it would significantly increase its market impact. It is ironic that the BBC is so concerned by the potential future market impact of a niche channel but chooses to pay no attention to the actual market impact caused by its major services, many of which it is proposing to spend more money on.

"Fewer things better" means doing less

While the BBC Trust did ask the Executive to consider where the BBC's focus could be narrowed and its scale reduced, it should have been clear that doing " fewer things better" actually means doing less, allowing the market to do more, minimising the risk of crowding out commercial operators and benefiting licence fee payers by passing savings back to them. It is particularly insensitive of the BBC not to have given serious consideration at a time of economic uncertainty where many other organisations - both the public and private sector - are making hard choices and delivering significant savings, and despite the Trust's promise to try to ensurer that the BBC "does not compete unfairly, exclude new entrants or squeeze out smaller competitors".

The fact that this has not happened demonstrates the unwillingness or inability of the Trust to put licence fee payers first by exercising "a general oversight" of the work of the Executive - effectively and in the public interest - and the inappropriateness of asking the Executive to conduct such an important Review.

The failure of the Trust to fulfil properly its duties calls into question, not only the validity of the Strategy Review, which has failed to produce any significant change in the BBC's approach, bu t also the role of the Trust as the guardian of the interests of licence fee payers. We urge the Trust to re-examine its duty to set the BBC's strategy and priorities under the Royal Charter and to re-think its approach to the Strategy Review in light of this before proceeding any further.


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