What should the BBC be for and what should be the purpose of public service broadcasting?

The BBC should “inform, educate and entertain” its audiences, in the UK primarily, but also abroad. In the UK, 97% of UK adults use BBC services each week, spending an average of 18.5 hours on them.1 Ofcom2 and the BBC Trust3 report that audience expectations of the BBC’s programming are generally met and, in particular, the BBC is the most highly trusted supplier of impartial news, a key PSB genre. Testament to its importance, 80% of UK adults would miss the BBC if it no longer existed, more than any other broadcaster.4

The BBC should also be for the UK economy. The BBC is the foundation of the UK’s audiovisual economy, including exports. As the figure below demonstrates, the UK’s £29 billion in revenues from the audiovisual sector in 2010 make it the single largest creative economy amongst EU Member States, supporting a tissue of 20,000 SMEs.5

By spending £2.4 billion on its PSB services across TV, radio and online, the BBC is the single largest source of funding for original UK content (excluding sports). The commissioning of in-house or independent productions sustains the UK’s large talent pool of creators, nurtured by publicly-funded schools and higher education programmes.

Research shows that well-funded PSB supplied at scale does not “crowd out” commercial expenditure on programming6, but serves UK audiences and the UK economy by contributing to a ‘virtuous’ cycle of investment and competition. As a result, the UK has four global players in content creation and exports - the BBC, ITV, Channel 4, and BSkyB - more than any market apart from the US. The Nordic countries and Australia also provide evidence that well-funded PSB supplied at scale boosts commercial activity.

By conveying the UK’s unique cultural identity, history and values to the world, the BBC attracts tourists to our shores.7 BBC.com and BBC World services are a beacon of impartiality and probity in the global space.

I support the continuation of public service broadcasting supplied by the BBC, Channel 4, Channel 3 and Channel 5. Despite fragmenting PSB channel audience behaviours due to the development of multichannel TV, as well as the growing online supply of legal and illegal audiovisual content, PSB TV consumption accounts for most of TV time, and its significance to the public is foreseeably likely to remain intact in the decade to 2027.

The mass emergence of online alternatives such as videos hosted by YouTube, of sites hosting pirated films and TV shows, and above all destinations for pornography, only strengthens the case for ensuring that UK consumers have access to the well-made and high-quality content produced by the PSBs…when they ‘grow up’! The PSB eco-system is working extremely well for UK audiences and for the economy and should be continued.

How well has the BBC performed in the current Charter period in achieving its mission and public purposes? Are the public purposes in the current Charter the right ones? How might they change?

For the publicly-owned BBC, its performance should be assessed through surveys of UK adults, its ultimate ‘shareholders’. According to the BBC Trust’s Purpose Remit Report, the majority of UK adults – 56% – are ‘high approvers’ of the BBC, 32% are mid-approvers and 10% are low approvers. The BBC Trust survey also reported that a majority of UK adults – 57% – think the licence fee is ‘good value’, overlapping with ‘high approvers’.8 However, 43% of respondents thought the licence fee was ‘not good value’, amongst which 66% selected the factor ‘cost and affordability’ as an influence on value for money considerations.9 How well the BBC was run was a factor cited by 20% of those in the good value for money camp and 31% in the not good value camp. The implications for the BBC and its funding of this important piece of research need to be better understood.

In answer to the question raised, the six public purposes in the current Charter should be maintained.

What scope, scale and remit should the BBC have? Should the BBC’s output and services be provided to any greater or lesser degree for particular audiences? What balance should be struck in what the BBC produces in-house, commissions externally and leaves entirely to others to create?

I support a continuation of the funding mechanism consisting of the licence fee assessed on all UK TV households (subject to exemptions), supplemented by ‘commercial’ revenues from the distribution of BBC content to secondary uses inside the UK and outside it. It seems incontrovertible that the intellectual property rights created by the BBC in the course of using licence fee monies over time ‘belong’ to the UK public. Their exploitation too should be used to fund BBC activities.

As today, the BBC’s activities should span radio, TV and online. I strongly support free-to-air services for members of licence fee paying households, whatever their choice of receiving device. BBC Worldwide and BBC.com should remain free to access to all audiences, inside and outside the UK.

Regarding BBC commissioning to in-house vs the independent production sector, a minimum quota to qualifying independent producers of 25% of commissioning budgets is common to all PSBs, and thus is an irreducible minimum for the BBC after 2017. Since 2007, the Window of Creative Competition (WoCC) provides for another 25% of the BBC’s TV commissioning budget to be allocated to a competitive process engaging in-house and qualifying independent producers. As a result, the BBC Trust has reported that, of the £887 million the BBC spent on commissioning new network television programmes in 2011-12, around 52% was commissioned from the BBC’s in-house television production teams, and around 48% was commissioned from independent producers.10

Since it appears that independent producers generally win commissions from the BBC when competing against in-house for new network television programmes, there is a superficial efficiency argument to be made for greater contestability. I believe however that additional analysis would be needed on net benefits to UK licence fee payers of extending the WoCC.

One immediate downside is that the potential earnings of BBC Worldwide reduce from 100% of revenues post 30 day broadcast window to 15% under PACT terms of trade (20% for pilots). It is worth remembering that UK taxpayers own the pool of BBC intellectual property created through fully-owned works, but not those of the independent production sector.

How have the BBC’s commercial activities during the current Charter fitted with the BBC’s public purposes and have they achieved an adequate return for licence fee payers? What should be the aims, scope and scale of such activities beyond 2016?

The BBC’s commercial activities fit well with the BBC’s public purposes. Because the BBC allocates the direct costs of programming to the broadcast window entirely, the secondary exploitation of BBC content in the UK and globally is obviously positive for its revenues, even if the rate of return or its adequacy cannot be quantified. In total, BBC Worldwide reported close to £1 billion in income to the BBC, supporting further commissioning investments of value to UK audiences and to the UK economy. In addition to BBC.com and BBC World Services, bringing BBC programmes to global audiences is, in particular, central to shaping views of the UK, fulfilling this important remit.

What role should the BBC play in developing technology and new ways of distributing content?

The BBC has assumed a leadership role in developing new ways of distributing content, notably Freeview and the iPlayer.

BBC.com is used by 18 million people11 in the UK alone (Nielsen). BBC’s YouTube presence is also developing. The recent BBC Playlister app for Spotify is an example of the BBC bringing the music in its TV programmes to a big digital music platform where users congregate, investing in technology and product development to this end.

More generally, the proliferation of connected devices, operating systems and demand for new usage features on the part of users, require constant investment by the BBC in the technical aspects of distribution. Standing still is not an option for the BBC, even if 97% of all viewing to the BBC is over broadcast channels.

How should the BBC be funded beyond 2016? Is there a case for distributing funding for public service content more widely beyond the BBC? What comparisons can be made with the provision of public service content in other countries? 

Mandatorily paid by UK TV households, the licence fee is fair insofar as the applicable condition for the payment is the same for all households with TV sets that are enjoying free-to-air programming, irrespective of the level of consumption, or of the main FTA supplier. This is consistent with the practices of other countries with a strong tradition of public service broadcasting (unlike the US, where PBS is funded by voluntary donations).

Direct Government funding would be more compromising of the BBC’s independence from the political process than any other funding mechanism. In the age of austerity, discussions on the funding of the BBC taking place on an annual basis would most likely lead to reductions and/or volatility in funding, which would undermine the BBC’s ability to carry out its mandate over time.

In this regard, it is regrettable that the Government resorted to top-slicing licence fee revenues to fund activities that are not undertaken by the BBC itself nor of direct service to all licence fee payers. For example, BBC revenues are being used to subsidise high-speed broadband roll-out in rural areas that are not able to sustain commercial roll-outs by BT or Virgin Media. However worthy rural broadband roll-out might be as a goal, top-slicing is not the right answer.

Funding the BBC through advertising would be highly disruptive to all broadcasters: a greatly expanded supply of impacts would greatly reduce the cost per thousand realised. It would incentivise the BBC to produce programming to drive audiences, rather than programming to meet its PSB remit irrespective of actual audiences achieved, which is the essence of PSB in my opinion.

Today, the core PSB genres of news programmes and current affairs programmes are produced by a diverse group of PSB broadcasters, each with its own ‘voice’, contributing to a plurality of media on broadcast TV, the preferred medium for news. If we look at news programmes, 78% of regular viewers of BBC One consider it delivers “trustworthy” news programmes and also “helps me to understand what’s going on in the world”12, which are the two statements most important to UK audiences. That is a strong vote of confidence in the BBC’s delivery on its remit. Since the BBC performs so well on this PSB genre, it is far from clear that UK audiences would benefit from a dramatically different supply structure for PSB news.

The UK has a long idiosyncratic tradition of funding and delivering PSB, and the BBC is widely considered outside the UK to be the best model of PSB in practice. In the US, PBS is funded by voluntary donations and broadcasters have no requirement to observe impartiality in the supply of news. European countries and Japan all share the UK’s tradition of a publicly-owned and funded state broadcaster, but each has a different approach, reflecting the legitimacy of different choices. Some salient examples of these differences include:

• France Télévisions is part-funded by advertising, part-funded by a television licence fee collected by the Government (€131/year), which also subsidises other broadcasters

• Germany has one publicly-owned and funded network of regional PSBs (ARD) and one publicly-owned and funded national PSB (ZDF), together funded by a single mandatory licence fee payment per household (€215.76/year) as of 2013, replacing a household fee per receiving device (radio, TV, personal computer/connected device). It is enforced by the German equivalent of the TV Licensing Authority

• Japan’s NHK is also funded by a licence fee, but it is no longer enforced; defection has occurred since 2004 due to audience dismay with NHK following a scandal involving the misuse of public funds13

These external examples demonstrate that in countries sharing the UK’s tradition of well-funded PSB, a uniform TV household licence fee (subject to exemptions) tends to be the preferred funding mechanism. The level of the BBC’s licence fee also appears commensurate with levels achieved in comparable countries.

Also, in relation to other PSBs, the BBC’s expenditure on TV content is commensurate with the average number of minutes consumed daily of this content. (Note that expenditure on overheads is excluded.)

How should the BBC be governed, regulated and held accountable beyond 2016? In a constantly evolving communications environment, does a 10-year Royal Charter and Agreement with the Secretary of State, together, provide the most appropriate constitutional framework for the BBC?

The BBC’s Executive Board should strengthen its understanding of efficient programming and staffing decisions, and improve reporting standards for external stakeholders. This is the only significant issue with the BBC Executive, in my opinion.

December 2013

1 BBC, Audience Information, January-March 2013.

2 Ofcom, PSB Annual Report, Annexes L, J, H.

3 BBC Trust, Purpose remit survey UK report, June 2013.

4 BBC Trust, Purpose remit survey UK report, June 2013.

5 ONS, Annual Business Survey, Sections 59 and 60 (SIC 2007).

6 BBC, Public and private broadcasters across the world – the race to the top, December 2013.

7 BFI, How film and TV programmes promote tourism in the UK, August 2007.

 8 NatCen Social Research for the BBC Trust reports the top 10 drivers of value for money are “creativity”, “citizenship” and “digital”: “The BBC makes high quality programmes and online content”; “The BBC makes programmes or online content that no other broadcaster would make”; “The BBC helps me enjoy my interests, hobbies and passions”; “The BBC has a wide range of enjoyable and entertaining programmes and online content”; “The BBC helps me understand politics in Europe”; “The BBC provides high quality independent journalism”; “The BBC introduces me to new presenters, actors, writers and musical artists from the UK”; “The BBC provides quality content that I find enjoyable or useful content on interactive TV”; “The BBC provides quality content that I find enjoyable or useful on DAB digital radio”.

9 BBC Trust, Purpose Remit Survey UK report, June 2013.

10 BBC Trust, Window of Creative Competition for Television, March 2013.

11 Monthly unique visitors.

12 Ofcom, PSB Annual Report 2012, Annex B, pp 38-39.

13 http://www.nhk.or.jp/bunken/english/reports/pdf/09_no7_04.pdf