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13 May 2016

BBC Charter Review - Future Imperfect

Written by: Ben Fenton, Senior Director at Edelman

Corporate Reputation, Government Affairs, Media

Much of the content of the White Paper on the future of the BBC had been pre-briefed or leaked. John Whittingdale, the Culture Secretary, presented it as having shot the foxes of Labour and the opposition of what he called “leftwing luvvies”, because, he said, far from threatening the future of the BBC, it has strengthened and secured it and as proof, he quoted the BBC itself and the BBC Trust’s positive response. He said it would hold the BBC to account and make it more transparent, while preserving its independence of government.

Two observations on this are:

  • The BBC and Trust do not agree with a) the scrutiny of the National Audit Office and b) the way in which the new unitary board has been chosen
  • If any damage has been done to the good ship BBC, it was done last year with the funding arrangements and particularly the deal to pay for over-75s licences. That was what has holed the vessel; what is happening now is shifting of deckchairs and only time will tell whether the ship is sinking

White Paper Headlines

1. Confirmation of the funding agreement and preservation of the licence fee

2. Closure of the iPlayer loophole (with hints that a “verification system” for its use by licence-fee payers only, will be a way of introducing a payment system in future to replace the fee itself)

3. Replacement of the Trust with a unitary board whose chair, deputy chair and four other members – those representing England, Scotland, Wales and Northern Ireland – will be appointed by government and the rest – up to a total of 14 – by the BBC itself

4. Appointment of Ofcom as the BBC’s regulator, not only in broadcasting code terms, but also of the market impact of its commercial activities

5. A rewriting of the original mission as laid down by Lord Reith, the first Director General, to make it incumbent on the BBC to be “distinctive” and “impartial” in its mission to “inform, educate and entertain”

6. The appointment of the NAO to audit and scrutinise the BBC’s spending and its efficiency savings processes

7. Extension of the Charter period to 11 years with a five-year “health check”, which the Secretary of State said would be a simple matter of ensuring that the governance reforms were working

8. Abolition of the World of Creative Content rules governing how much BBC content is made by outsiders, which means that all BBC content (with certain exceptions) will be open to tender by outside producers, as well as acceptance of the BBC Studios plans (subject to regulatory clearance), which allows the BBC to make programmes for others

9. “Top-slicing” of £20m from BBC money to fund support of local newspapers and the making of childrens progammes

Edelman Comments

1. As mentioned above, damage to the licence fee was done last year. How serious its effects are remains to be seen. The appointment of the NAO as an auditor, if it survives BBC objections, will play into this because the BBC has historically kept as a mystery the way in which it implements cost savings. See section 6 below.

This looks like the last gasp for the licence fee  – if the five-year health check takes place in an atmosphere where a majority of viewing is taking place on mobile or other computer-powered machines, it may even be replaced in 2022. Public opinion research included in the White Paper (pp112 on) suggests that while the public still support it, there is strong support for reform, particularly for the introduction of a tiered fee in which poorer households pay less. This could be a stalking horse for further introductions of means-testing that will be likely to reduce support for the fee overall, but also undermine arguments about the universality of the BBC’s provision of services. 

2. The closure of the iPlayer loophole has been left vague. At the moment it is expressed as the use of statutory instrument to extend the definition of TV viewing that requires a licence to catch-up and other on-demand services. The White Paper talks of a “verification system” by which householders can prove they have a licence before they can use iPlayer services. That would be a convenient presage of a system of pay-per-view and other payment methods for content, that could eventually replace the licence fee in a post-linear TV world (should such a thing ever come about). 

3. As noted above, the structure of a Unitary Board as put forward by the government has already been opposed by the Director General in a public statement. In the Commons, Mr Whittingdale confirmed that Rona Fairhead would be the first chairman of this board and would be in post until October 2018 (at least).

The culture secretary stressed that the BBC had never previously appointed its own board members (not strictly true as it appointed the non-execs of its own internal board, just not the members of the Trust or before them the governors), so it should be happy that now it can appoint a majority. Add to this the fact that the four NEDs the government will appoint are the “nations” representatives who are normally the least activist members of the body, and you would think he has a strong point. The BBC’s objection  – Lord Hall has said that there should be an independent process to choose the chair and deputy chair – must be grounded therefore in some other fear. James Purnell, Lord Hall’s right-hand man, said on Radio 4 that they thought the government should only appoint the chairman and deputy chairman through a publicly approved process. This will run and run.

4. There are serious question marks about the desire and ability of Ofcom to regulate the BBC. It is a huge leap forward for an organisation that has made huge budget cuts of its own. This may prove an unfounded concern as long as Mr Whittingdale will live up to his promise, which was questioned by the Shadow Culture Secretary Maria Eagle in the Commons today, to fund adequately the expansion of Ofcom required.

Separately, in a little-noticed part of the White Paper, Ofcom has been given the role of scrutinising the commercial activities of the BBC, in so far as they might be distortions of the markets in which it operates. We would expect that to be a focus of commercial opposition to the operations of BBC Worldwide in future.

5. The addition of subjective concepts such as “distinctiveness” and “impartiality” are likely to embroil the BBC in more arguments with its multitude of critics and lead to challenges of commissions as and when they happen. The BBC has accepted this change, but may live to regret doing so. Mr Whittingdale told Radio 4 that members of the public would be able to take complaints about a lack of distinctiveness or impartiality to the new board or to Ofcom. They may be busy. The culture secretary admitted on air that he was still discussing how these two concepts would be defined. This is just one example which appears on the face of it to be a little half-baked. 

6. I suspect the BBC will go to the wall in its efforts to limit the scrutiny of the NAO, which has been pushed on them before. It is not the privacy of editorial decision making that they so jealously guard as much as the ability to push money around from place to place in order to make efficiency savings. Doing so transparently, which the WP calls for explicitly, will not help in their campaign to save the £1.5bn to be saved between now and 2020. Given that the BBC has said privately that it will resist any expansion of the number of times it is summoned before Parliament, it will not easily give in to the imposition of Parliament’s watchdog on its private affairs. 

7. The BBC is deeply suspicious of the five year “health check”, but seems to have swallowed it. The stability it gets from being decoupled from the political cycle by an 11-year charter has been exaggerated, but even another year of charter protection from the economic impacts of the future will be welcomed internally. Very few organisations in the modern world get this degree of security, but, as observed above, the BBC has paid a heavy price for it.

8. Changes to the WOCC – the rules that govern how much BBC content can be tendered to outside producers – will present opportunities to the independent production sector, but also are a recipe for argument within the BBC over the numerous exceptions that will be provided to this new rule. This will particularly apply to the “value for money” exception. The BBC has claimed that the White Paper has given government blessing to its plans for BBC Studios, although the document makes explicit reference for the need for this plan to be scrutinised by regulators, without specifying whether that means the existing Trust, Ofcom or both. Nor is there any hint in the WP about the plans recently revealed by Private Eye to divide the BBC into silos of Inform, Educate and Entertain. These moves are causing huge angst within the BBC.

9. The BBC and the government are pretending that the £20m top slicing (to pay for local newspapers to hire more reporters to cover council meetings etc and for children’s TV to be made by indies and then sold on  – or more likely given – to other PSBs) is not top slicing. They are doing so by taking the money from the £150m that was taken from the BBC to support broadband rollout and was unspent and so is being returned as part of the 2015 funding deal. It is still licence fee money and therefore still top slicing. The BBC will have to guard against the use of this money as a precedent. That is a real concern among people such as Dame Tessa Jowell, who was Labour’s culture secretary when the last charter was set in 2006, who believe it will be a slippery slope to the licence fee being used for all sorts of purposes outside its original intention.

Omissions

Of ideas flagged as being in the White Paper, the most noticeable is the idea that the Government would force the BBC to give up its 50% share in UKTV. This was due to the intervention of George Osborne who, under strong lobbying from the BBC, is believed to have pressured Mr Whittingdale to remove it from the White Paper.

Reaction

Instant reaction from the Great BBC campaign organised by Waheed Alli has been that the WP does not pass tests on independence and financial stability and they will oppose it. Alli called it a “ticking timebomb”. Peter Kosminsky, the director of Wolf Hall, called it a threat to BBC independence. The Trust and the BBC are not happy on the NAO and the board composition, as previously observed.

But it is quite hard to see the British population called to arms by this White Paper, except possibly on the “government appointees” position. The polling in the White Paper is worth reading as it suggests that within the continued broad support for the BBC, damage has been done to its reputation for competence, efficiency and public service. This is partly due to the changing way in which people consume broadcast content, but also because of the remorseless tirades from opponents of the BBC, mostly in the national press. It is particularly noticeable that support for a two-tier licence fee is strong.

Political impartiality is already a matter of dispute. Sir Michael Lyons, the former Trust chair, has complained that political pressure on the BBC has caused it to be biased against Jeremy Corbyn’s Labour party.

My View

This could have been much worse for the BBC, but there are still worrying details in it, from the BBC’s point of view. The uncertain and volatile relationship between audience, broadcaster, regulator and government was the reason the governance of the BBC was ripe for change. It is by no means certain that these measures have changed it for the better and some of the ideas behind are still worryingly fluid. 

For me, the acid test is whether the charter deal leaves the BBC in a position where it can exploit its strengths and advantages to power technological development in UK broadcasting and act as “venture capital” for the creative industries of the UK. Tentatively, I would say this deal does so, but some of the fissures it has introduced into governance and scrutiny could easily expand over time to weaken the structure and deprive us of the potential benefit of the institution that has evolved over the past 94 years.

Ben Fenton heads up Edelman’s Creative Industries offering. Previously he was the Financial Times’ chief media correspondent, and also established the paper’s live new desk operation, which covered all market-moving breaking stories and set a template for the future of digital journalism at the paper.

Image: Secretary of State for Culture, Media and Sport John Whittingdale / Twocoms / Shutterstock.com

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