The BBC and Commercial TV: Two Futures Interlocked

The government has drawn the long term funding of the BBC into the eye of scrutiny, a move that threatens the corporation with its biggest shake-up in a decade.

The battle lines appear to have been drawn, with the Government arguing that, as a publicly funded broadcaster, the nature of its license fee agreement and the value it represents must be subject to appraisal.

On the other hand, Culture Secretary John Whittingdale has been accused by BBC officials of reneging on a previous agreement that the fee would be increased in line with inflation – despite the fact that only 10% of the UK public supports this. Concerns also pervade around the rumoured move to decriminalise non-payment of the fee, which could cost the corporation hundreds of millions.

So we arrive at the crux of the argument: Is the current system fair? If not, what can be done to create a just service that doesn’t impact negatively on the rest of the TV industry whilst being of value to the public?

The fight over the BBC

A large factor in the Government’s concerns over the BBC are several flaws within the current license fee. Namely, the structure is seen as regressive, in that everybody has to pay the same figure – regardless of income.

Additionally, the Government believes unfairness sprouts from the fact that irrespective of how much BBC content viewers watch, again they all have to pay the same. Further concerns rest around how a large portion of the BBC’s £3.7 billion annual funding is pushed into radio – meaning many license payers who do not listen to radio aren’t seeing the benefits of their payment.

BBC iPlayer is another matter of contestation, with research suggesting that a mere 2% of users watch content legally through the platform as a result of a loophole. Finally, the license fee is a pre-requisite for watching any TV channel, commercial or BBC.

There’s also the issue of its output, and how the corporation uses its influence. Whittingdale has in recent memory questioned the BBC’s ownership of general entertainment programming such as The Voice, which he says, because of the BBC’s responsibility as a public service broadcaster, should be aired on a commercial TV broadcaster such as ITV instead. 

Additionally, and perhaps more cynically, it is because of the viewing figures such shows attract, which in turn attract TV advertisers and TV advertising revenue. The BBC broadcasting such programming is both a waste and outside of its remit, according the Culture Secretary. 

According to the Government’s Green Paper on the subject, the outdated license fee system could be replaced with subscriptions, taxation and a new configuration of the license fee. However, It’s the possibility of the BBC becoming commercial that has generated the biggest debate.

The sheer size of the BBC would distort competition significantly, robbing other public service broadcasters and commercial networks of their own TV advertising minutage and income.  A thriving market depends heavily on fair competition to create viable pricing structures; should the BBC be made commercial, the likes of ITV, Channel 4 and Sky may be forced to drop their already competitive rates to attract advertisers.

Whilst on the face of it that sounds great for businesses, this selling of premium airtime at even cheaper costs would have a severe impact on the quality of programming – which is largely funded by ad revenue – aired by such channels, reducing viewing figures and potentially causing the evaporation of business. Guerillascope believes this would be catastrophic for a TV advertising industry basking in the warm glow of a new Golden Era. Ultimately, TV advertisers would receive less value for money.

If the BBC were to become commercial, it would carry too much power for the current market to integrate. Monopolisation could become the state of play, leading to inertia in terms of innovation and content choice; it would render the smaller, digital TV channels  - the likes of which have become so effective for TV advertisers as platforms for targeting precise, often niche audience groups - near obsolete.

The solution?

Ultimately, we believe that there is little chance of the BBC becoming commercial. This debate boils down to what role the BBC should play in our lives; should it continue with its directive of providing universal programming, or should its remit be narrowed to create more space in the market?

The fact that George Osborne has recently slashed its Government-funding budget by a mooted £630 million suggests that this role is some way towards already being decided, and whilst for some this will represent a poor decision, for others, it’s great news for business, the economy and the UK’s media industry.

The argument is that the BBC is just too big and unfocused in its output; clipping its expansion will grant the likes of local news networks, smaller commercial channels and other media channels a more equal slice of the revenue pie. With two thirds of all TV viewing attributable to commercial TV broadcasters last year, and figures rising by approximately 3% year-on-year, we argue that this facet of the TV market should be regarded with the same importance and value.

If the license fee is to be abolished – with 63% of respondents from a public ICM study conducted last year believing it should either be scrapped completely or cut in favour of alternative revenue streams – then Guerillascope believes that a subscription-based or pay-per-view model would be the best solution.

This is the fairest outcome, as not only is a centralized TV license tax becoming increasingly redundant and even anachronistic in the age of multiscreen, universal connectivity, but that additionally, it inhibits commercial TV broadcasters, the likes of whom are vital to the economy: TV advertising not only generates billions of pounds of revenue every single year, but also plays a pivotal role in sustainable business growth for enterprises of all sizes and sectors – a key factor in our continuing economic recovery.

When all is said and done, it’s becoming clear that sustainability is not a strength the BBC in its current guise possesses.