Why commercial tv has no more shots in the locker

Rather improbably, James Murdoch, heir apparent of NewsCorp, and our current culture secretary, Ben Bradshaw, have found themselves in earnest agreement about something. That something is the BBC: it is too big for its boots and must be cut down to size.

Murdoch, it will be remembered, used the MacTaggart lecture last month to lambast the BBC’s smothering “Orwellian” tendency, particularly in the sphere of online news journalism. The gist of his argument is that the BBC is perverting public subsidy by trespassing on what should properly be the sacred precinct of private enterprise.

Bradshaw exploited the equally prestigious platform of the biennial Royal Television Society conference – a by-invitation-only fest for the big cats of media where the fur is always guaranteed to fly – to pointedly praise Murdoch’s critique. True, he did baulk at the word “Orwellian”, but that – it would appear – is precisely because the state does not have enough control over the BBC’s agenda. It has, in Bradshaw’s view, become an out-of-control institution which badly needs reining in.

Now, I’m no apologist for an organisation that seems to think it’s all right to pay Jonathan Ross the equivalent of “1,000 BBC journalists’ salaries”. But I do draw the line at making it a scapegoat for what are much more complex public broadcast media ills.

The point about our current, dysfunctional, broadcast media ecology is surely not that the BBC is too big, but that commercial broadcasters are too weak. In case you think that is splitting hairs, there is an important difference between these two perspectives. Portraying BBC excesses as the root cause of the commercial sector’s near-bankruptcy seems to offer a deceptively satisfying solution. Prune the BBC, and you stimulate private competition in two ways, first by resizing the gorilla itself and second by redirecting some of its resources into more needy areas.

If only matters were that simple. Perhaps the BBC has, to a degree, stunted the growth of its commercial rivals, but it is also crystal clear that many of their present travails are self-inflicted.

A favourite bone of contention, picked over by both Murdoch and Bradshaw, is the alleged mischannelling of licence-fee money into a BBC digital strategy. I seem to remember that ITV – a few years back – spent a very great deal of shareholders’ money on creating ONdigital, which flopped ignominiously. It was left to the BBC (with BSkyB) to pick up the pieces and create Freeview. Likewise with the nascent trend in internet protocol television. The issue is surely less a matter of the BBC creating an “unfairly” successful product in iPlayer, and more a matter of the regulator blocking ITV and Channel 4 from exploiting its superior technology by canning the Kangaroo project.

Let’s illustrate this argument further by exploring some of the events – all of them interconnected – that have littered a week pregnant with consequences for commercial television. Chief among them: Andy Duncan, chief executive of C4, follows his chairman Luke Johnson to the exit; ITV fails, as yet, to secure the services of Tony Ball as its next CEO; it also fails to secure a significant relaxation of Contract Rights Renewal (CRR); Bradshaw performs a spectacular U-turn on his predecessor Andy Burnham by giving the green light to TV product placement; and finally, the BBC scuppers the most-favoured C4 funding solution by announcing that it intends to “privatise” BBC Worldwide, its commercial division.

What we are dealing with here are the symptoms of systemic failure. The system has failed because the traditional revenue streams – principally advertising – can no longer adequately support the public service broadcasting requirements incumbent upon ITV, C4 and Five if they are to fulfil the requirements of their licence. Ofcom, the broadcast regulator, estimates the shortfall at up to £235m.

While the depth of the present recession may have acutely exacerbated their problems, it is not the fundamental cause. Nor is the BBC. For that we must look to the digital revolution in general; the imbalances it has caused; and the failure of imagination in addressing them, particularly within the regulatory field.

Somehow, over the past decade we have contrived a situation where the digital newcomers – from Google, to the broadband providers, set-top box manufacturers and the pay-TV sector – are allowed to play on the swings and roundabouts of progress scot-free, leaving the traditional players with a very burdensome oilcan. It is this intractable situation that has shattered the career of Andy Duncan, as it has Michael Grade’s. Neither, eventually, could come up with a satisfactory funding solution.

ITV has been condemned to the twilight zone by the Competition Commission’s decision to keep an essentially unchanged CRR mechanism in place. True, the CC’s decision will be music to advertisers’ ears, since the minimal relaxation envisaged is along the lines of the “son of CRR” proposals recommended by their trade body, ISBA. A slight loosening of the straitjacket plus the product placement sop thrown in by Bradshaw hardly constitutes adequate financial succour, however, for the flailing TV behemoth. If Ball really does take the ITV job, he will be pressing the “nuclear button” sooner rather than later. He will have no choice if he wishes to cash in his £30m chips in five years’ time.

Right now, it’s fashionable to sneer at Duncan as a “margarine man” and a “bit of a spiv”. Not so. There is more to Duncan than bull-market spin, as his contribution – when at the BBC – to Freeview clearly demonstrates. Of course he has made blunders, but these are not what tripped him up. He went because the BBC Worldwide funding solution to C4’s woes – the best shot, but still a long shot – fell through and there is now nothing left in the locker.

Of course, just what privatisation of Worldwide actually means – apart from a direct snub to C4 – remains unclear. In what way will enriching pension funds or, worse, private investors benefit the common good and curb the power of the BBC?