Is the landscape gloomy for the BBC?

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Sebastian Ampofo's picture

There appears to be plenty of smoke and mirrors surrounding Britain’s flagship broadcaster, the BBC. You would think there was little wrong with a corporation which includes the country’s most popular channel in terms of audience share – BBC One – a channel which continues to extend its audience share lead over the second most-watched channel, ITV. And yet, there seems to be questions looming over the BBC’s future, the focus of which being the sustainability of the TV Licence.

The sustainability of the TV Licence

The current TV Licence stands at £145.50 and is set to rise in line with inflation over the next 5 years. Not paying your TV Licence if you watch live TV, despite not watching the BBC (which is where the majority of the proceeds of the TV Licence go to) is a criminal offence, and could lead to a heavy fine. And herein lies the crux of the problems. It would be unfair on viewers to pay a TV Licence if they don’t watch BBC channels, as this would come at significant cost to the viewer. It would also be resource-consuming to keep the TV Licence criminalised, since many people circumvent paying their TV Licence anyway. So, if we’re saying the TV Licence is unfair, then what’s the solution?

The solution being mooted around is to allow the BBC to carry advertising on their channels – with the reasoning behind this being two-fold. Firstly, it would allow the BBC to obtain alternative stream of revenue; but secondly and more pertinently, it would probably weaken the BBC’s power in the broadcasting landscape. Complaints from rival commercial broadcaster ITV have centred around “intensely competitive” scheduling on BBC One(1) – and the fact that BBC One, while showing ratings-grabbing shows (like Great British Bake Off and Strictly Come Dancing, both consistently achieving more than 10 million viewers a week), manages to beat ITV in the ratings year in, year out, without being forced to compete with other commercial channels, since its channels are advert-free. The point that ITV raises is perfectly valid – its audience share has suffered most since the rise of rival commercial broadcasters Sky, and Channel 5, in the late 90s, having more than halved since 1998 – while BBC One’s audience share has been more resilient(2); the increased commercial competition over the last 15 years has done ITV no favours. The problem is, if the BBC were to carry adverts on their channels, it would sap away further audience share from ITV, and fragment the commercial TV market further – that is unless the BBC would not run adverts all day.

This would mean that the BBC would only run adverts between certain times in their schedule, very much like the French public broadcasting model. In France, no advertising is permitted on public broadcaster channels between 8pm and 6am(3). If something like that was implemented for the BBC albeit with a few tweaks (so no adverts from 6pm – 6am, as 6pm is the start of primetime), it would enable the BBC to earn advertising revenue by carrying adverts from 6am – 6pm, and provide minimum disruption to viewers, since less viewers watch TV during the day. It would also allow the likes of ITV, Channel 5 and Sky to maximise their advertising revenue during primetime, which contain the most lucrative scheduling slots, without having added competition in primetime from the BBC. The pitfalls with such a model, however, are obvious. The very fact that less viewers watch TV during the day means less advertising revenue, so as a revenue stream, would advertising during the daytime really be of much use to the BBC? Probably, but the likelihood is primetime advertising would also have its problems, because people who record shows using PVRs to watch later, will merely skip through adverts, decreasing potential ad revenue. This means that even if a show adds several million viewers by timeshift (i.e. by people watching the recording of the show and not watching it live), it wouldn’t necessarily be more lucrative. Thankfully for the BBC, it gains revenue from selling shows such as Doctor Who and Sherlock, internationally. And the BBC America channel does show adverts, so some revenue is gained that way as well. Interestingly though, the BBC America channel can be only be accessed by subscribing to a digital TV service – which raises a curious conundrum.

Subscription – to be or not to be?

In the UK, we have 2 main means of subscribing to digital TV – via Sky or Virgin Media. In Sky’s case, subscription fees can be used to fund, or to cover for, programming on their channels – an example being that subscription fees rose to cover for an inflated bidding process for the Premier League TV rights(4). What if the BBC were allowed to have a part-subscription model? The benefits would be two-fold.

Firstly, only people who actually watch BBC channels would pay for them, instead of being shackled by a TV Licence – a caveat to this being that if the likes of BBC1 and 2, the terrestrial channels, were put behind a paywall, it would hand over significant audience share to ITV. This wouldn’t matter so much for the digital channels, like BBC4 and BBC News, whose audience share, while significant in multichannel terms, is insignificant in the grand scheme of TV viewing (0.75% and 1.94% shares respectively for the week ending 15th November 2015, although the BBC News share is inflated by coverage of the Paris shootings)(5).

Secondly, it would allow the BBC to compete in the bidding processes for lucrative sports. Obtaining many revenue streams (from advertising/subscription/the TV Licence) would give the BBC financial muscle and room to manoeuvre when bidding for, for example, Premier League highlights, currently shown via Match of the Day on BBC1; and Formula 1 coverage. It has only recently lost The Open golf rights and Olympics and Six Nations exclusivity, and only 4 years ago, lost exclusive Formula 1 coverage. It is important that the BBC hang on to as much sport as possible because sport coverage fills several hours during the day and pulls in strong audience shares – an example being that the BBC’s coverage of this year’s Brazilian Grand Prix, shown in the late afternoon, pulled in an average of 4.07m, whereas the regular shows that would be shown in its slot like Songs of Praise, would struggle to get half those figures. With this in mind, the BBC must defend itself from Sky and BT, who dominate the sports rights market, if it doesn’t want to face a lull in sports coverage, like what it suffered in the late 90s and early 00s.

Summary – a proposal of a way for the BBC to move forward

Taking into consideration all the points raised in this article, here are my proposals for a future BBC:

  • BBC1 and 2 to remain free-to-air and free-to-view. There will be some limited advertising from 6am – 6pm, but no advertising from 6pm – 6am.
  • As a result of the advertising on these channels, the annual TV Licence will be reduced;
  • BBC4 and BBC News will go behind a paywall and be offered to digital TV customers as a BBC package for between £5 and £10 a month – this would include free access to the BBC Store and BBC iPlayer programmes on the these channels, as well as the online access-only BBC3.

While these plans, especially the subscription-based plans, may prove controversial, it may yet prove the only compromise for the BBC to move forward and emerge from the smoke and mirrors that currently surround the corporation.

References: 

1.        Foster P. BBC’s “intensely competitive” scheduling damaging our dramas, ITV says [Internet]. The Telegraph. 2015 [cited 2015 Nov 29]. Available from: http://www.telegraph.co.uk/news/bbc/12014890/BBCs-intensely-competitive-...

2.        BARB. Annual % share of viewing - individuals 1981-2013 - BARB [Internet]. [cited 2015 Nov 29]. Available from: http://www.barb.co.uk/trendspotting/data/annual-share-of-viewing?_s=4

3.        French-property.com. France Television Licence Payment and Exemptions [Internet]. 2010 [cited 2015 Nov 29]. Available from: http://www.french-property.com/news/tax_france/france_television_licence...

4.        Hall J. Sky Sports subscription fees rise following record Premier League deal | City A.M. [Internet]. cityam. 2015 [cited 2015 Nov 29]. Available from: http://www.cityam.com/212007/sky-subscription-fees-rise-following-record...

5.        Viewing summary - BARB [Internet]. [cited 2015 Nov 29]. Available from: http://www.barb.co.uk/whats-new/weekly-viewing-summary?_s=4