2.1 ISBA has historically argued, sometimes vigorously, for advertising on the BBC’s main channels. We did so because advertiser demand outstripped supply on the commercial channels, leading to a need for a ‘safety valve’ against volatile and high costs. Such arguments failed because they met no support from the BBC itself, but mainly because they offered no perceived benefit to viewers.
This market pressure relaxed as (many) more channels came to air; the internet grew as an advertising medium; and latterly through a protracted economic downturn. However, it is returning with a strengthening economy and is exacerbated whenever the BBC distorts the market by competing aggressively for audience (e.g. Strictly vs X Factor etc…).
2.2 At this time, there is no overwhelming consensus amongst advertisers on whether the BBC should take advertising on its main TV channels (though we continue to argue that Radios 1 & 2, which are to all intents and purposes commercial formats without advertising, could easily be commercialised).
2.3 Nor do we argue for a wholesale move to advertising funding of the BBC as we recognise that advertising budgets would not rise in proportion. The combined revenues of a commercial BBC and its commercial rivals would therefore fall far short of the £13.2bn (£7.3bn excluding subscriptions) currently enjoyed from hybrid public/commercial funding, significantly – perhaps drastically - depleting the funds deployed on content with attendant viewer detriments.
2.4 However, this could change. The economics of commercial television are already distorted by legislative and regulatory interventions in certain sectors – e.g. HFSS foods, alcohol, gambling – notably where ‘watersheds’ are used to protect minors and there are many and various calls for further intervention.
2.5 Further interventions will lead to earlier dayparts - where fewer brands are permitted - becoming buyers’ markets. At the same time, later segments - which also tend to be more highly demanded as they are richer in more economically attractive audiences – could be overwhelmed by advertiser demand.
2.6 This is a natural, if perhaps poorly-understood unintended consequence of calls for watersheds, and would certainly lead to renewed calls for the ‘safety valve’ of advertising on the BBC’s main channels, perhaps initially post-watershed only.
2.7 Both protection of funds available for deployment on content and ensuring diversity of advertising post-watersheds provide clear benefits to viewers. We therefore argue that Government should keep a very open mind to the viability and necessity of advertising on the BBC and most critically not close the notion down, let alone for another ten years.
3.1 We believe that the purposes outlined at this time are the correct ones, but that the proportion of effort applied against each purpose is likely to require ongoing review and rebalancing. ISBA believes the principal purpose of PSB in the digital age should be to deliver services which meet the needs of citizen-consumer-viewers which are not provided by the market. This raises serious issues for the BBC. We consider the BBC the core of public service delivery, around which other public service broadcasters’ activities and remits should fit.
3.2 We argue that the BBC’s activities should be restricted to public purposes and services, and question its role wherever the market can and does provide good services – for example: popular entertainment shows on TV; contemporary hit radio; successful magazines; and web-based news services. We also renew our call for absolute consistency of regulation of all UK broadcasters.
3.3 We are aware that this might require a recalibration and realignment of the BBC towards more factual, sometimes serious output, for example. As our society becomes more multicultural, a greater emphasis on the nations, regions and differing religious beliefs might be necessary. Provision of independent news and current affairs also remains a cornerstone.
3.4 We support the proposals to continue to frame the BBC’s purposes thus, in particular with respect to the public purposes which help continue to make it not only a national, but international, institution.
4.1 The core purposes are still relevant although as stated in the response to question 1, as the BBC is a massive and complex organisation which is continuing to expand coupled with a long-established history each purpose is likely to require ongoing review and rebalancing as stated in point 3.1.
4.2 If the purposes are to remain relevant to the debate they will need to be updated on a continuous basis, so provision needs to be made for further Charter review in less than ten years. This will of course, include the core purposes.
The response to these questions have been answered on many of the BBC’s own web pages (albeit with a positive spin) but please see below an example answer to one of the above questions.
5.1 Each year the Trust commissions annual tracking surveys asking people to express their views on the importance they attach to the purpose priorities and the effectiveness of the BBC in delivering them.
5.2 It also has introduced service licences for each of the BBC's television and radio channels as well as its online services. In its annual report to Parliament, the BBC Trust reports in part on the previous year's survey findings and gives its assessment on the Executive's performance in fulfilling the purpose remits.
5.3 The purpose remits give a clear view on how the BBC, can and should be measured. The purposes give focus to the remit of the BBC and a framework for which it can operate.
6.1 In the past, we have recalled BBC founder Lord Reith's vision for the BBC – to “inform, educate, entertain”. We have pointed out that whilst this sounds admirable, it is actually almost meaningless as it can be applied to anything from BBC news to the Playboy Channel. However, it does provide the raw ingredients and to remain true to its purpose and to remain distinctive, everything the BBC does should “inform and educate and entertain” – which is a much tougher, tighter specification, but one befitting a publicly-funded organisation of the quality, accomplishment, scale and purpose of the BBC.
7.1 The BBC’s governance should be greatly improved to include a much more effective, independent and external governance of its adherence to its remit. Ofcom has a role to play here. It has proven to be a competent and durable regulator and by far in way the most attractive option following the now discredited Board of Governors and the BBC Trust that has proved something of a disappointment.
7.2 It has long been a paradox that the commercial broadcast sectors are more heavily regulated than the BBC, yet this has not impacted on their independence and ability to provide high quality content, award winning news and current affairs. We argue that the BBC should have nothing to fear from being taken full under Ofcom’s supervision.
8.1 Given ISBA’s role, we do not feel it is appropriate to respond to this question.
9.1 Perhaps the survey needs to be updated every 6 months as oppose to every year due to the speed at which the media landscape is changing.
10.1 The only amendment would be the timeliness of the survey to keep pace with the ever changing media landscape and the audiences opinions.
11.1 No. As the media landscape has evolved the BBC was measured on its success on the proportion of the population it touched in a given week – known as its ‘weekly reach’ – the BBC now knows that it must generate large, “commercial” audiences and hit shows in order to be able to justify a compulsory licence fee to a population much of which is becoming accustomed to choosing which media and content it pays for.
11.2 This has meant that the BBC's focus has crept from the creation of world-class content, particularly the kind that markets do not or cannot provide. Instead, it often pursues the creation of market-led channels and content which distort the markets they are in.
11.3 It has also parlayed an undoubted leadership position in broadcast engineering and technology in support, giving it immensely valuable first-mover advantage in online, and latterly internet-connected TV. In arguing that the BBC should provide where markets cannot; and should be applauded for kick-starting markets through innovation (e.g. online, iPlayer), it should not persist unnecessarily in such spaces. The BBC should focus less on the production and the aggressive competitive scheduling of general, mass and light entertainment of such shows.
11.4 Not only is it in these areas that the BBC’s greatest distorting influence on the market are manifest, but we fail to see the viewer benefit of such scheduling. (We would also remind the Trust of comments we made way back in 2000 when the BBC chose to move its main nightly news directly opposite ITV’s. We could not see any viewer benefit there either, only competitive jostling for audience itself driven by weekly reach as the headline performance indictor).
12.1 The BBC is principally funded by licence fees. Its main broadcast channels carry no advertising but enjoy very significant audiences. The corporation’s very existence, shape and spread of activities therefore distort the market for all the UK’s commercial broadcasters, not least in terms of the market for advertising.
12.2 Presently, the Government sets the level of the licence fee. In January 2007 the licence fee was agreed for a six-year period with the amount being approved each year by Parliament. More recently the Government decided to freeze the licence fee at its 2010 level of £145.50 until 31st March 2017.
12.3 We believe Parliament and Government should step away (though we recognise that may be difficult for many MPs looking for a campaigning platform).
12.4 We, therefore see Ofcom as taking a pivotal role in holding the BBC to its new Charter – including purposes, values etc… We also see expanded roles for the National audit office to hold the BBC financial activities to public account and for the Competition & Market Authority as a specialist co-regulator with Ofcom on market and competition matters. These are three existing and competent regulators.
13.1 A universal licence fee will become less tenable over time but is still needed in the short-term because the technology that underpins the subscription model via broadband is not sufficiently developed. ISBA is suggesting in the medium-long-term, a subscription model as being the future of payment for the BBC. We do, however, concede a licence fee or other universal tax to be necessary for a while yet, but we also believe it could morph quite practically to a household charge. Provisions need to be made for further Charter review in less than ten years.
13.2 Differential charging in line with household earnings would present it as more of a tax than a fee, and decriminalisation of non-payment would have to be revisited.
14.1 Yes it could. By having Ofcom in place as an independent regulator, it allows learnings to be taken from the likes of Sky and ITV, thus allowing these to be incorporated into a future BBC collection and charging structure.
ISBA appreciates the opportunity to submit its views to this Inquiry, and would be happy to provide more comment or information as required.
September 2015