The BBC is losing out badly to private competitors
It should be allowed to raise substantial new share capital from private investors
John Redwood is a former Secretary of State for Wales and MP for Wokingham. He writes regularly at his diary
The BBC is a great force against change. It seeks to freeze UK media in a top down take on what they think we need. Meanwhile the audience moves swiftly into an exciting competitive world of downloads, podcasts, on line videos, movies on demand and citizen journalists getting live clips of events as they happen. As a result the UK is slumping in the media rankings. The BBC slumbered and grumbled as Netflix surged from nowhere to have a turnover already six times the UK ‘s state broadcaster. They watched in denial as Amazon Prime and Disney sold subscriptions to their UK viewers who still have to pay the licence fee if they want to watch any live tv.
There are now more than 18 m Netflix users, 15 m Amazon Prime and 10 m Disney watchers in the UK. When asked what people look at first, 26 per cent say Netflix, 25 per cent BBC and 10 per cent fast rising You tube. This means the revenue, the profits and the investment are surging in the US as the UK state company sees its market share, purchasing clout, ability to attract talent and to win audiences badly squeezed by more fleet of foot and now much more powerful rivals.
The BBC looks to the licence fee for its revenues. More and more people are deciding they can live without live tv, allowing them to watch downloads without paying the tax. The BBC needs more money to spend on technology, new market outlets and on programmes, only to find Comcast, Amazon, Netflix and Disney generate 30 times as much turnover as the sinking UK challenger. We should be in a panic about this collapse. The BBC is now a minnow in the world of fast growing US media giants. 30 years ago Netflix and Amazon Prime Videos did not exist. They have already both dwarfed the BBC.
The BBC has a commercial international company with a pathetically small turnover of £2 bn. This has access to the BBC back book of recordings, but lacks sufficient cut through in the global market. It should be allowed to raise substantial new share capital from private investors with a Golden Share blocking foreign take over. It should spend the money raised on expanding its technical and global reach and adding new content. It should not have recourse to public funds. Currently it receives no cash subsidy and is profitable.
The BBC’s free website service impedes the establishment of competitors who need to charge to cover costs. This needs to be split between a factual and promotional website about the BBC and its offerings, free to users, and a site setting out BBC journalist and commentator takes on life behind a paywall like its competitors. The BBC domestic service model says it is advert free, yet it increasingly uses its remaining home market power to self promote energetically. A recent generic controversial advert has added to the stream of plugs for individual programmes and promotions of BBC people.
Debate about the BBC usually revolves around bias and editorial decisions. Defenders point to the Charter and to the understanding that government that automatically has great influence over funding and personnel should not use that influence to affect comment and coverage of the government. It is true the BBC does give a hard time to Labour, Conservative and Reform interviewees to demonstrate some fairness over parties. Critics allege deeper long term bias in the approach to climate change theory and net zero policies , where they have been a fan, to pro government bias over covid lockdowns, and an unwillingness to question the Bank of England and great quangos like the Environment Agency and Ofwat when they get things wrong. There is a perpetual reluctance to challenge the EU and pro EU soundbites. Coverage of the EU is thin and often uncritical.
My case today is all this political debate caused by the BBC being a state owned and directed broadcaster is getting in the way of growing and using the UK’s great cultural and news gathering potential. It means many do not look at the worrying loss of UK market share. The licence fee model cripples growth and requires a different approach to cost control and economic riskiness of ventures, as taxpayers rightly expect prudence in how their tv tax money is spent. The licence fee money will diminish as technology and US success undermines the numbers of people paying it.
Given the political sensitivity we need to examine new models. Offering everyone a share in a mutual BBC that paid a licence fee could create a people’s BBC. Licence fee shareholders could be guaranteed to keep at least 51 per cent of the total share capital to protect from foreign takeover.A licence fee shareholder could just have one share all the time they had a licence, preserving it as a mutual. Alternatively there could be a single initial grant with people free to buy and sell the shares. There could be a block on anyone buying more than say 10 per cent of the Corporation. The BBC would retain its Charter and requirement to be impartial.
It should set the task to review new sources of revenue and to have a planned phase out of the licence fee. It could go on to raise new capital and add new revenue schemes. It should charge for web access, and could have a variety of subscription and advert based services.
There would be a taxpayer grant to cover World Service and related news broadcasting in support of a UK cross party foreign policy which would be pro democracy, free speech and impartial news.
Without BBC reform the nation will adopt more and more US services and the Corporation will have to cut and cut again as licence fee income falls.
There is much to understand and consider of John’s excellent analysis of the Global headwinds facing the BBC. As an 83 year old brought up with the BBC it has been the bedrock of the information I have received via Radio 4 all my life. But ever since we voted to Leave the EU to get our Sovereignty back there was never a programme about the enormous potential of managing our own affairs discussed only economic doom and gloom was emphasised. So much so, only this year for the first time since 1979 when Commonwealth Day on the 9th March and the great service in Westminster Abbey was first broadcast to the world and which our entire Royal Family annually attend, it was cancelled in exchange for Escape to the Country. I was horrified because our Commonwealth has a membership of 56 Nation States amounting to 2.6 billion people who were all deprived of viewing this special service. What an insult that was to our King and to our Commonwealth from our National Broadcaster! In addition the seriously anti Israel coverage of the disaster of Gaza has been responsible for the appalling anti-semitism not seen since the 1930’s disfiguring our nation. To wit, I had to find out for myself that The Palestinians themselves no matter how often they are offered a State of their own will never accept one until the State of Israel is removed because in 1947 they declared the UN itself had no right to give away ‘their’ land. This fact should have been made clear by The Corporation on day 1 but it never has been. There is a bias problem within our BBC and until that is rooted out our BBC itself will not get clear-eyed about its future and it must because when it gets things right it is the best and has it all to play for!!!