Burns insight into mixed funding future for BBC

Lord Burns paints a picture of a future BBC that is focused hard on public service, drops shows when they become widely popular, but may carry an advertising presence. Branwell Johnson reports

The BBC is undergoing a period of huge upheaval with much soul-searching about its public service broadcasting remit, structure and future funding – all ahead of a review of its Royal Charter in 2006.

The future shape of the BBC might be dimly discerned in the study published last week and compiled by a government-appointed independent panel chaired by Lord Burns. The report suggests the corporation should step away from overt commercial programming and competitive scheduling, and suggests, albeit tentatively, that it might take up advertising.

The study’s observations are not recommendations but are intended to feed into the debate surrounding the charter’s renewal.

Psychologically, the BBC is still reeling from the Hutton Inquiry and the subsequent departure of chairman Gavyn Davies and director-general Greg Dyke. Now Dyke’s successor, Mark Thompson, is facing his own ordeal by fire as he begins to push through severe job cuts and slashed programming budgets as part of his plan to get the corporation in shape for charter renewal. The BBC was expected to confirm programme budget cuts of up to 15 per cent and the loss of up to 6,000 jobs as Marketing Week went to press.

Underpinning the need for the BBC to slim down and shape up is the looming date for digital switchover, scheduled for 2012. Already more than half of UK homes have digital television, either through cable, satellite or digital terrestrial, and more are expected to switch as the deadline approaches, accelerating the fragmentation of the TV audience. The BBC and other broadcasters will also have to prepare for a time when viewers frequently use broadband services to watch programmes.

The report from Lord Burns and his panel states that there should be “greater clarity about the BBC’s role in this changing environment” and that “the new charter should require the BBC to focus clearly on its core public service broadcasting (PSB) purpose”.

Advertisers have welcomed the report’s call for a greater focus on PSB and a partial withdrawal from more commercial programming. Mark Trinder, head of marketing communications at Woolworths and a former chairman of the Incorporated Society of British Advertisers’ Television Action Group, says: “As advertisers we believe the BBC is significantly distorting the television market and we do want this clarification of the BBC’s remit. The BBC is not as accountable as it should be as far as we are concerned.”

Procter & Gamble head of media Bernard Balderston adds: “There is no question that advertisers think the BBC is too competitive. It behaves as a commercial animal yet is publicly funded.”

The Burns Report sets out some clear markers on what the BBC should be avoiding, and states: “The challenge of engaging audiences should not result in the imitation of successful formats supplied elsewhere.” It adds that the BBC should “be more willing to exit programming that it had originated but which has subsequently become widespread and more of a commodity, for example ‘make-over’ programmes or certain types of game show.”

There is already criticism of the number of “ballroom dancing” shows that the BBC is developing hot on the flashing heels of its Strictly Come Dancing. BBC viewers can look forward to Strictly Come Dancing On Ice on Boxing Day, while Graham Norton is to front the show Strictly Dance Fever.

The use of Norton, poached from Channel 4 for an alleged £5m, illustrates another criticism – that the BBC should be “more cautious” in bidding for talent from commercial providers if it is just going to use the performers in programmes similar to those that it already shows. As Accenture media partner Theresa Wise says: “The BBC plays a critical role in bringing new talent to the market that might otherwise not be discovered. It can afford to take a creative risk. But if it is bidding for talent at the top of the tree, you could argue this is not the best use of public money.”

But the BBC may not have the financial resources to make such huge bids in the future. The Government has just approved a £6.50 increase in the colour licence fee from next April, but while the Burns Report says “the balance of the debate lies in favour of the licence fee for the time being”, it adds: “it will become increasingly difficult to sustain the licence fee in the long term”.

The licence fee raised nearly £2.8bn in the year to March 2004. It is an invaluable resource to the BBC because it provides stable funding and allows for long-term planning. However, it is criticised as being a regressive tax with high enforcement costs.

The Burns Report suggests that, beyond the next charter, the BBC may have to move towards a form of mixed funding, which could include elements of subscription, a lower-level licence fee, a tax-funded government grant and possibly “some advertising”.

Any advertising on the BBC has serious implications for commercial channels because, experts say, the £3.5bn currently spent on broadcast advertising is unlikely to grow by much, so it would mean less revenue available all round and hence smaller budgets for quality programming.

Jim Marshall, chairman of the Institute of Practitioners in Advertising’s Media Futures Group, says: “There’s no doubt that advertisers would welcome the opportunity of advertising on BBC channels. The prospect of advertising during the Today programme or on BBC1 is mouth-watering.”

Balderston agrees that an advertiser-friendly BBC would be very useful but believes that any initial opportunities will lie in sponsorship and advertiser-funded programming. He says: “Over a period of time it’s perfectly possible to introduce progressive advertising to the BBC.”

Trinder adds: “I would be very surprised if in the near to mid-term advertising appears on the core BBC television channels. But there could be other forms of advertising presence and perhaps some of the smaller channels could be advertiser funded.”

He points out that many areas within the BBC dabble with the commercial world, for instance Radio 1’s contentious partnership deal with the Official Chart Company and Coca-Cola. The soft drink was being mentioned on air during the Chart Show until September.

The way the BBC is governed in future will prove critical to how it addresses funding and programming. Outsiders believe that the roles of regulating the BBC and defending it should be separate, and the Burns Report seems to back this: “Self-regulation without an external perspective has been judged increasingly inadequate.”

But the BBC has come out fighting and last Friday chairman Michael Grade stated that it is a “false dichotomy” to see the governors’ job as regulator incompatible with that of governance. He points out that in commercial companies, regulation is in the public interest and governance is in shareholders’ interests. But at the BBC “the public are our shareholders”.

As for increased accountability, one possibility that Grade floats is a “virtual” annual general meeting where licence-payers and governors communicate and “an element of voting” could be introduced for key issues.

The debate about the BBC’s future cannot be an endless and circular discussion: in the rapidly changing broadcast environment decisions have to be made swiftly and maybe one of the more obvious conclusions from this debate will be that the charter review should occur more than once every ten years.

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