Assault on BBC digital fee may cost commercial rivals dearly

In criticising the proposed BBC digital levy, rivals are undermining the licence fee consensus – and their own commercial interests.

If Gavyn Davies and his panel hoped to silence opposition to the “digital licence fee” by recommending – after weeks of leaks – it should be a temporary measure, I fear they miscalculated.

The extra licence payment was so heavily trailed opponents were in no mood to back-pedal. They’d briefed their lobbyists, lunched the journalists and prepared their press statements.

So when, on the day the report was published, Davies revealed what the panel now calls a “temporary digital supplement” would start at just £1.99 a month, halve within five years and disappear altogether by 2010 (and, furthermore, the ordinary licence fee would go down in real terms) it cut no ice with the opposition. It was the principle of the thing, dammit.

Now principles are no bad thing, and any issue that can unite the commercial television industry – from ITV to BSkyB through ONdigital, the cable companies and Channel 4 – must have something going for it, but did they really mean it when their spokesman went so far as to say, in a voice laden with doom, that “the digital licence fee threatens the whole ecology of broadcasting in this country”?

“There has always been a consensus around the main BBC licence fee, with commercial companies supporting it,” said Clive Jones, chief executive of Carlton Television, to assorted media correspondents as they emerged from the Davies press conference. “That consensus is now under threat.”

Similar, but more muted, sentiments came from ITV Network chief executive Richard Eyre: “The benefits of the licence fee as a universal funding mechanism paid by everybody are undiminished. But a licence fee – whether analogue or digital – depends on public consensus. It is unsustainable if there is a loss of public support for it, or if people do not believe it is value for money.”

Eyre, Jones and other executives in the commercial TV alliance believe the BBC already has enough money to provide more programmes and services, so long as it changes its priorities. It will be interesting to see how far Greg Dyke agrees when he arrives at Broadcasting House.

But, even if they are right, isn’t it rather risky for them to whip up opposition to the digital licence proposal? If they hasten the loss of public support for the licence fee as a whole, might they not suffer worse consequences than the BBC?

A loss of public consensus on the licence fee might not do a lot of harm to BSkyB or the cable companies, but if the public decided it was unsustainable and the BBC was forced to find another form of income, advertising-funded services such as ITV, C4 and C5 could see their income cut at a stroke.

The bigger threat to the ecology of broadcasting would have been for Davies to recommend advertising, sponsorship or subscription for the BBC.

For what underpins the ecology of broadcasting in the UK is the separation of funding: the licence fee for the BBC, advertising for the terrestrial commercial channels (and, to a lesser extent, cable and satellite) and subscriptions and pay-per-view for multichannel operators.

If ITV withdrew its support for the consensus over the licence fee, what would it propose instead? Advertising on the BBC?

The panel rejected this option, even on new public services such as BBC Choice and News 24, much to the disappointment of the Incorporated Society of British Advertisers (ISBA). But if the licence fee consensus went, presumably other options would be reconsidered?

In its response to the report, ISBA blames “the commercial broadcaster lobby, with its manifest vested interests” for swaying the panel against the idea of ads on the BBC. It claims its suggestion – “a gradual and responsible introduction” of advertising, starting with one minute of commercials per hour – would not harm existing commercial broadcasters.

It also highlights a Mori poll finding, buried on page 142 of the panel’s report, that “advertising, and not the licence fee, is the preferred way of funding the BBC among the public”. Some 58 per cent of those polled for the panel favoured ads over the licence fee.

So, as the public debate over the Davies report gathers momentum, it remains to be seen how far ITV and its commercial allies will push this concept of the “threat to the consensus”.

They’ve already instructed lawyers to examine whether the digital licence fee can be challenged in the European courts. They also want the Department of Culture to examine more closely whether the BBC needs more money, and what its scope should be in the digital age.

Yet, ironically, there is much in the Davies report that ITV welcomes, notably the proposals for greater transparency in the corporation’s spending and the introduction of performance criteria, backed by the National Audit Office, to underwrite the BBC’s “public purposes”.

Few of the report’s many critics seem to have addressed the Davies package as a whole. The “digital licence supplement” comes with a heavy price tag for the BBC: tighter financial controls, more “self-help” in the form of greater efficiency savings and, arguably, most radical of all, the partial privatisation of BBC Resources and BBC Worldwide.

Indeed, cynics may suspect the hullabaloo was a ploy to divert attention from these privatisations, which, under normal circumstances, would have dominated the headlines. The broadcasting unions – not to mention the BBC – are determined to challenge such proposals. As the consultation and lobbying process gets under way, we must wait to see which parts of the Davies package gain Government approval.

Torin Douglas is media correspondent for BBC News

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