Tuesday’s publication of the government’s Green Paper on the future of the BBC gives the public three months to respond to a series of questions about how the Corporation should be regulated, run and financed.
The last of these issues is the most important. It is also the easiest to answer, even if the document tiptoes around the licence fee as if it were an unexploded bomb. Whilst Lisa Nandy worries about making the licence fee “fairer”, or “more sustainable”, or “future-proofed” or “supplemented”, the verb that steadfastly eludes her is “replace”. Yet that word alone could solve a large number of the problems with the BBC, starting with its financial viability.
For many decades, the licence fee proved to be remarkably dynamic as a funding mechanism. First, the steady roll-out of radio; then of television, boosted by the arrival of ITV and colour; then the surge of single-person households and EU migrants – every year, the BBC’s customer base grew. Until it stopped.
Meanwhile, the incongruity between what consumers were required to pay for – a single broadcaster – and what they actually consumed steadily accelerated: pirate radio, commercial radio, ITV, Channel 4, Five, satellite and cable, streaming and the internet. As alternatives multiplied, some free-to-air, others accessed by monthly subscription or one-off fees, the oppressive enforcement of compulsory payment to the BBC became increasingly unpopular. As evasion and disconnection from live broadcasts become more prevalent, the licence fee has lost its dynamism and buoyancy. But what to do?
The Green Paper laughably refers to the public“investing” in the BBC (as if they had a choice), as part of a “contract” (with no escape clause). These euphemisms cannot disguise the nature of the problem. People have become used to choice – nearly 80 per cent of households subscribe to one or more streaming services – and cannot see why the BBC should be any different.
The Green Paper floats the idea of advertising being allowed on BBC services, without mentioning the fact that the BBC already collects hundreds of millions a year in ad revenue from its wholly-owned UKTV channels. Without the licence fee, most of BBC radio would need advertising revenue to survive. This might actually stimulate the radio advertising market, bringing new and larger audiences to radio advertisers. On BBC TV, advertising could only ever be marginal – as it is for Netflix.
Similarly, expecting BBC Studios significantly to increase its net contribution to the corporation’s coffers is dreamland: it generates large gross revenues, but very modest profits – barely 4 per cent of licence fee proceeds.
Least practical of all is the notion of a “top-up” subscription service, behind a paywall. This would either reduce the value of the licence-funded services, by diverting the most attractive programmes to the pay offering, or magically require the BBC to invent a whole new raft of premium content that it somehow failed to supply to its underlying customers.
What the Green Paper fails to understand is that the streamers not only offer consumers high quality content, and the right to choose to pay, but also a different viewing experience. No longer linear “channels” of “a bit of this” followed by “a bit of that”, in the hope that there will be a bit of something for everyone, but a menu, driven by a spearhead of new programming, supported by a “long tail” of library material, available whenever suits the viewer.
The BBC could readily provide multiple streams: drama, entertainment, sport, arts, documentaries, learning, children’s, with new material backed by the vast archive accumulated over decades. There could be various packages, as well as an all-in-one offer, priced below the current licence fee. Monthly fees might vary – the arts stream could charge extra during Proms season, allowing subscribers to see all, or nearly all, the concerts live, rather than just the two (yes, two) the BBC currently offers.
The BBC could retain a free-to-air linear channel, made up of news, current affairs and excerpts from the streaming services – say, EastEnders episodes a fortnight after their premiere, or sports highlights. This would serve as a “barker” for the pay services, operated as a marketing support by the BBC.
Other changes would follow. The BBC would no longer be required to pay for World Service radio and television (back to the Foreign Office, as before 2014), or BBC Monitoring, or S4C. Ministers would have no say in the level of charges, or appointments to the board. The BBC Charter could simply lapse. Ofcom would oversee compliance with content guidelines.
Not least, the BBC would at last have an incentive to become properly efficient. The Green Paper cites reports from the National Audit Office, supporting BBC claims to spend just 5 per cent of licence fee proceeds on overheads. Phooey! The true figure is close to 45 per cent. Even the Green Paper admits that just £1.2 billion from the BBC’s £3.8 billion TV Licence income is spent on new TV programmes each year (excluding news).
That figure has not changed for a decade, as the efficiency of the licence fee has eroded. The BBC and its viewers need a dynamic funding mechanism. Netflix has over 300 million subscribers in 190 countries. Lisa – think big!
