The BBC fight back begins

The BBC has published the first of four planned responses to the government Green Paper on Charter renewal. It is full of strong analysis, ambitions for the future and ambiguous financial forecasts. 

David Elstein
15 September 2015


On 7 September, the Science Museum in South Kensington was the setting for a presentation from BBC Director-General Lord Hall, the showing of a glitzy video, the distribution of a 99-page BBC positioning document and a supporting speech from Professor Brian Cox, mainstay of much BBC science output. All can be found on the BBC website. My advice is to ignore the speeches and read the document, right to the last pages, which set out (for those with sufficient attention span) the BBC’s version of how all the planned changes over the next five years will affect the BBC’s financial position. There is a major sting in the tail, which I will explain later!

As usual with these documents, the 99 pages contain a good deal of special pleading, faulty logic, chest-beating and blatant distortions of the BBC’s own history. I won’t bother with spelling all these out, as there is actually some impressive material which deserves attention once the flim-flam is ignored.

The strongest passages deal with distinctiveness. It would take a blind man to fail to recognize how similar many programmes on BBC Television are to those broadcast by its competitors. Originality in television is a rare commodity: genres, production techniques, casting, directing, formats such as elimination contests and such basic ingredients as running times and internal summaries are shared by all channels. Occasionally, something different briefly emerges, which is then rapidly echoed if it achieves measurable success. Imitation is built into the industry.

The BBC bravely claims that every programme it produces “aims” to be the best of its kind: nothing cynical, me-too or consciously second-best is offered. I think that claim is wide open to challenge, but let that pass. The bigger BBC statement is that “every BBC service should be clearly distinguishable from its commercial competitors” – in that sense, “distinctiveness” is an “overall” rather than a “specific” feature of BBC output.

Even this is not always achieved, but the BBC offers a number of tests to support its claims. First, it looks to demographics: for instance, the audience for BBC1 (and even more so BBC2) is very different in age profile from that for Channel Four, even if there is significant overlap in programme types.

A second test is the programme mix: “do we make fewer programmes that are commercially attractive and more of those that are not?” Again, in detail there could be argument, but the BBC has a knack for making “commercially attractive” content that at first glance might seem quite mundane. Celebrity profiles have long been a staple of popular TV (think “This Is Your Life”, which featured for decades on both BBC TV and ITV); but “Who Do You Think You Are?” puts a genealogical twist on the genre which has proved durably popular – very BBC.

A third test is a more granular content analysis: the document clearly demonstrates how different Radio 1 and Radio 2 are from each other, as well as from their commercial competitors, just by analysing their respective music playlists. To the less than clued-up Tory backbenchers, all of these radio stations can seem interchangeable, such that the BBC services could safely be consigned to the commercial sector (where no doubt they could find adequate support from advertisers). Reading this analysis might make them think again.

Much of the document is devoted to floating ideas that the BBC is planning to pursue in the next Charter period (though, frankly, a number of these have already been announced, some more than once, rather in the manner of tax breaks from Chancellors of the Exchequer). In detail, they only amount to ripples on the surface, but occasionally quite significant changes of direction are indicated. 

“We will be moving to an internet-fit BBC, to be ready for an internet-only world when it comes”: this is such a bold statement that its implications need time to register. The implication is that terrestrial signals will in due course be replaced by IP (Internet Protocol) delivery only, just like Netflix and Amazon. Given that the government is committed to providing superfast broadband to 95% of the population by 2017, and ultrafast broadband not long thereafter, “when it comes” is not that far away (even allowing for the usual slippage in project times, and the pressure on any broadband system of millions of homes trying to view video at the same time).

A pure IP delivery system - allowing broadcast spectrum to be allocated to mobile telephony - would by-pass all the supposed technological blocks to subscription funding.

Another prospective change is “a transition from rolling news to streaming news”, which is better suited to mobiles. This does not mean the immediate demise of the News Channel, as the “packages” in each linear broadcast would for a period be streamed in parallel to the live broadcast (the service has already been named “BBC Newstream”). But the opportunity to save tens of millions of pounds by closing down the broadcast channel, and placing all the content elements – plus a headline service – on the internet must make a great deal of sense, later if not sooner. It is rumoured that the Director of News would happily make the “transition” now.

For the moment, says the document, broadcast channels remain crucial – we are not yet ready for a “box-set only” BBC. Equally, the forecast that by 2026 half of all viewing will still be “live” (it was 90% five years ago and is currently over 80%) can easily be inverted to read as only half of viewing will be live. In the meantime, the BBC will be developing a range of internet-only, internet-led and internet-friendly formats and programmes.

Another section of the document deals with promises and aspirations: how to “enable” as well as inform, educate and entertain; and how to develop “platform” thinking, whereby content from many sources (but curated by the BBC) might be aggregated on dedicated “platforms” – so leading to a “managed” version of the iPlayer incorporating non-BBC content, and another for children to be called “iPlay”.

Another roll of that dice “would provide listeners with the very best of speech radio”; an “Ideas Service” would curate content from multiple “ideas” partners; and “many types of music playlists” could be created – as if the BBC were launching audio-visual versions of The Browser or The Week online. The document is nothing if not radical: “Streaming news may replace rolling news. Children may prefer iPlay to scheduled television. The Ideas Service might mean we no longer require BBC Four.”

There is a whole section of the document on how the BBC wants to support “partnership” (as a concept) by building partnerships (plural). Anyone who has tried to partner the BBC will roll their eyes at this ambition, and the document frankly admits that the BBC “would need to learn to become a better partner”, and “learn how to work in a genuinely collaborative way”!

Yet just last month, when I suggested that the BBC could serve the audience better by finding a commercial partner to mount an online subscription service so as to deliver live TV coverage of all the Promenade concerts (the BBC shows just 3 of the 78 Proms live), the idea was swiftly dismissed as part of my obsession with subscription funding. “We are the envy of the world” for our Proms coverage, came the lofty reply, demonstrating that the BBC would rather suppress hugely valuable content, deny audiences access, and walk away from tens of millions of pounds of revenue than admit it might need a partner.

One area of partnership the BBC put on the table was a “Local Accountability Reporting Service”, no doubt in response to the steady stream of complaints from local news media that the BBC’s online expansion of local news reporting was constraining their ability to respond to the formidable challenges to their income that the internet had posed.

The idea – developed in talks with some local news publishers – was for the BBC to make available enough licence fee money for 100 reporters to be hired up and down the country, tasked with covering local politics and institutions, with content to be made available both to the BBC and to all other publishers on an equal basis.

This seeming generosity was quickly dismissed by other news publishers, who had not been involved in developing the idea. They saw it as just another step in what a previous BBC Director-General had called the BBC’s “imperial march”. The BBC would fund the venture, would manage the venture, and would supply content to the venture: understandably, critics described this as the BBC getting into the news agency business. Indeed, anyone from ITV who has experienced “sharing” of content with the BBC would confirm that users strongly gravitate towards the strongest brand – the BBC.

Other ideas dotted through the document received a warmer welcome: a major investment in TV drama; a “newsbank” of local videos for use by other media, including – possibly – untransmitted material; a “better balance” between “UK news” and “nations news”; parallel streams of content for mobile users, allowing them to “swipe” right and left between BBC options; more “formal” education as well as lots of “educational” initiatives (revealing that the BBC does understand that the “education” in its triple-headed mission statement should constitute more than just incidental learning); and possible new World Service offers to North Korea and Russian-speaking territories – though who would fund them is not disclosed (the Foreign Office has just got out of that business, and the document notes that “there are limits to how much British households can be expected to fund news for others”).

Finally, we come to page 95 of the document: the chart listing the pluses and minuses in the BBC’s income as at 2021/2 compared with 2017/8. The potential for confusion here is considerable, as the figures are annualised estimates after up to four years of cumulative impact. So the cumulative value of indexation of the licence fee is valued at £350m pa going forward, whereas licence fee “modernisation” (whereby users of the iPlayer would be required to hold a TV licence) is only valued at £100m pa (as it is not cumulative).

Meanwhile, internal savings of £400m pa are assumed from “mitigating” the impact of inflation on costs, from “productive efficiencies” and from “scheduling mix efficiency” (i.e. cheaper programmes and more repeats). There is a modest allowance for all the new investment ideas (including much more drama) of £150m pa, and the same cost is attributed to reduced take-up of TV licences as people switch to purely on-demand viewing. There are also assumptions for the value of internal savings and what is euphemistically called “re-prioritisation” in 2017/18, and further “re-prioritisation” subsequently, together with higher commercial revenues and some income from over-75s choosing to buy TV licences.

The two biggest negatives in this balance sheet are the £400m annualised impact of 5 years of inflation at 2% pa (which is slightly higher than the value of indexation of the licence fee as that benefit starts a year later), and the £700m pa cost of free TV licences for the over-75s.

What is not mentioned at all in the document is that the government has openly stated that the BBC is entirely at liberty to stop bestowing this gift on the over-75s after 2020. The notion that there is no better way to spend £700m pa out of the BBC’s licence fee income (which by then would be £4bn pa if the over-75s concession were removed) is simply staggering, as well as being a slap in the face to millions of pensioners younger than 75, and millions of low-earners and recipients of benefits whose standard of living is well below that of many wealthy elderly households.

One of the chapters in the new book on the BBC being published this month (The BBC Today: Future Uncertain) is by journalist Neil Midgley, showing how BBC income from 2016/17 to 2019/20 is effectively index-linked, thanks to the concessions agreed in the July 2015 settlement with the Treasury. It is only after the government’s progressive reduction in paying for free licences for the over-75s in 2018/19 that this strong financial position starts to weaken, finally dropping below the projected value of CPI indexation in 2020/21.

Many commentators were dismayed by the transfer of the over-75s obligation announced in July: Lord Bragg was still protesting it in the Lords last week. Yet the truth is that the BBC will be significantly better off under this Tory 5-year settlement than it was under the coalition 5-year settlement of 2010.

There are some wrinkles here. The hole in the BBC’s finances from no longer receiving money from the Treasury for the over-75s is not the same as the BBC being required to provide free licences itself. Such provision would be entirely voluntary (and daft beyond measure). But requiring the over-75s to start paying for licences, after 20 years of exemption, might be politically tricky. Indeed, collecting from them all might be just as tricky – even the BBC might find it embarrassing to have tens of thousands of elderly non-payers dragged through the magistrates’ courts and criminalised for licence evasion.

It is therefore not surprising that this document mentions the prospect of a household levy as a possible replacement for the licence fee: that would remove the exemption issue, and leave collection and enforcement to local councils. Against that, the BBC might not welcome the political price that the SNP might demand in exchange for agreeing to a broadcasting charge being included in council tax north of the border (BBC accountability to Holyrood in Scotland, much more production spend in Scotland and new Scottish TV and radio channels).

In addition, council tax is paid in arrears (the TV licence has to be paid a year in advance, with a premium added for those opting for quarterly payments): this would weaken the BBC’s cash flow. And when the Joseph Rowntree Trust last looked at council tax a decade ago, it found that 3 million summonses for non-payment were issued annually, followed by 2 million liability orders and a million bailiff referrals. There were more imprisonments for non-payment of council tax fines than for non-payment of licence fee evasion fines.

Of the 25% of council tax households in the lowest valuation band – band A – 25% received summonses for late payment. This band includes 1.4 million pensioner homes. If the TV licence (£160 pa by 2020) were to be subsumed into council tax – effectively adding some 10% to its cost for the lowest bands – the propensity to delay or avoid one or more of the staged payments each year is likely to rise. With collection in the hands of hundreds of different councils, the BBC might find revenue security a worrying issue.

Needless to say, there is a much sounder option available, which solves all the problems of evasion, prosecution and the over-75s: encrypt BBC signals so that only those who pay a monthly subscription can receive them. Funding the BBC becomes entirely voluntary, for all households, including the over-75s; and the “iPlayer problem” also disappears, as access would only be allowed for subscribers or for those paying just for the iPlayer. Equally needless to say, the BBC’s management would rather die in a ditch than do something quite so obvious.

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