Public Service Broadcasting: is there life without the Fee?

Ofcom’s Chief Executive, Stephen Carter, has an acid criticism of those who have run television up to now. Patrician concern with cultural arguments about programme content, he argues, has so dominated their thinking that any consideration of the way content is distributed has been relegated as some grubby, downstream engineering issue. Yet the experience of Sky in the past decade, and digital switch-over in the next, demonstrates that increasingly the economics and technologies of distribution will drive content decisions. It is a tough but fair critique.

The danger is to believe that the future of television is a simple extrapolation of the television we have known. It is not. It took roughly twelve years for half of British homes to have multi channel Television, in about six years this will rise to 80%. The cost of distribution will continue to fall, encouraging more TV services to start. Some will fail, some will succeed, and some will be new types of non-licence fee public broadcaster like Teachers TV, and new forms of commercial television supplying video on demand. All will contribute to the fragmentation of traditional mass audiences. The major commercial broadcasters, (ITV1/2/GMTV, C/E4, C5, and a C6), will share roughly 40% of the audience between them. This will cause production budgets to shrink as pressure to get audiences will rise. The money available for programmes will be spread thinner.

This is the landscape we face; the challenge is to build a new way of educating informing and entertaining that can create a Rethian act for the 21st century.

This year, as the BBC’s Charter is shaped, and as Ofcom deliberate on the nature of public service television, it is up to those of us who believe in the validity of making qualitative judgements about programmes to explain why public service broadcasting should exist. To explain that concern for the cultural and social purpose of British television is not some liberal distaste for markets, but a desire to ensure that television remains the cultural backbone of the country. It is our belief that the current system of commercial public service broadcasting, ITV, Channel 4 and Channel 5, in a digital economy, will inevitably deliver television programmes of a diminishing range, narrowing ambition and diluting social purpose.

The current public funding model has to be thoroughly reviewed. This does not require the dismantling of the entire structure of British broadcasting, but it does require a clear understanding of the fundamental changes in the economics of broadcasting.

In recent weeks the British broadcasting establishment has closed ranks as the Broadcasting Policy Group, led by David Elstein, loosed the collective force of its ravaging intellect on the assumptions behind public service broadcasting and the future of the BBC. The Elstein Report was under attack before it was opened. This was a pity, as putting aside his desire to privatise the BBC, there is a powerful central idea about the transparency of public provision of broadcasting that should not be idly discarded.

This article offers a more limited but immediately workable, proposal that helps the Government realise its ambition of public service competition in British television, which, if the status quo remains unaltered, will inevitably shrivel away.

As the digital world takes shape, so the conditions that have allowed advertising funded broadcasters to commission programmes other than purely for profit disappear. In the old world of three commercial channels, the granting of a licence guaranteed such profitable returns that the corresponding obligations to provide arts, current affairs and education programmes, or challenging drama and comedy, were easily accommodated. Commercial television was a licence to make good money and some good programmes.

Terrestrial channels will lose their advantage, as digital homes increase. The 'surplus' value from the guaranteed revenues that ITV or Channel 4 once enjoyed that could be invested in low rating or high risk programming disappears. In this world the duty of each programme slot will be to gain the maximum in ratings and revenues. However so long as the BBC has a licence fee, it will have the cash to fund programmes to match their public editorial remit, but public service competition with the BBC will die.

The Elstein Committee proposes a Public Broadcasting Authority that, as the BBC moves to a privatised subscription service, takes over the public responsibilities of broadcasting. However behind its assumptions is a belief that the market is capable of providing much of what the BBC does now.

Unlike David Elstein, we believe a Public Service Fund does not have to be predicated on the destruction of the BBC. What is needed is a catalyst to keep alive creative risk and social purpose in the commercial sector. So there is still competition for quality and social value as well as for market share; and the BBC’s worth would continue to be benchmarked by public service competition.

We propose a smaller, more focussed Public Broadcasting Fund exclusively for commercial broadcasters to act as an incentive to invest in such programmes. We make no judgement on the future size of the BBC licence fee, or the date at which the BBC should move to subscription.

This fund would be a co production fund offering matching funds to commercial broadcasters, be they free to air advertising supported broadcasters, or subscription services on pay platforms like Sky. The fund aims to lower the risk for commercial broadcasters, encouraging them to commission different programming from that which already exists. However it does not lower the risk so much that broadcasters can afford to commission self indulgently. It is a fund that can only be accessed by a broadcaster guaranteeing distribution, and risking airtime and money. So the scheme rests on two parties, the fund and the broadcaster taking a mutual risk.

A small team of commissioners and fund managers would control a budget of £150 million pa, leveraging a further minimum of £150 million of matching funds from the commercial broadcasters, a total of £300m, midway between the programme budgets of Five and Channel 4, or 10% of the BBC licence fee. This money could come from top slicing the BBC licence fee, but equally, and preferably, from spectrum tax receipts.

The exact number of programme hours funded would vary. However, we envisage, across all commercial channels, each week roughly 3 hours of landmark drama, one and a half hours (3 episodes) of comedy, 5 hours of documentary, 2 hours of Art or Religion, 2 hours of Current affairs and 3 hours of children’s programming. The key is that it must fund programming that does not copy existing series and formats.

One potent argument against such a Fund is that it would be some hideous quango trying to force “good for you’ programmes down reluctant throats. This charge should be taken seriously. The success of British television has been that the responsibility for public service innovation has resided with the broadcasters who are creatively accountable to their public. A Fund, divorced from this consumer accountability, could be a self-indulgent plaything, exercising power without responsibility across the airwaves.

We have designed the Fund to take account of such concerns. First, as a co-production fund, it can only back projects when there is a broadcasters’ commitment to them. It would only invest when the broadcaster had commitment to a guaranteed time slot. This would ensure good programmes were not hidden away in the schedule. It would fund no more than 50% of the budget and no less than 20%, the ceiling to ensure a genuine commitment, the floor to prevent the fund being used as “top-up” money where the broadcaster would have made the programme anyway. A programme that a broadcaster does not want will not get made. However, a programme editorially admired but whose scale and ambition is too great a risk in a fragmented market dominated by format and acquired US programmes, could, thanks to the Fund, reach the screen. The money would be paid direct to the producer who would have to account to both the broadcaster and the Fund.

Another objection to the fund is that self-important people with social agendas would manage it. We envisage a small team, answerable to Ofcom, similar to the original Channel 4 publisher commissioners, people with a track record in television, who do not see their role as producer manqué. They would be the programming equivalents of venture capitalists and they only succeed if they create successful programmes with their broadcast partners. The Fund’s management costs would be capped at approximately no more than 2% of the Fund. In a nutshell the fund is a miniature version of Channel Four that does not own its own airwaves.

Those who see such a Fund as a bureaucratic inhibitor of carefree creativity must answer the question: how else will programmes which put their cultural and social purpose ahead of a guaranteed audience get made in a digital world where there is no longer any economic incentive to make them?

British commercial television has the talent in abundance to make imaginative, challenging and different programmes, which defy the homogenisation of the safe and the familiar. But in a digital television market where unlimited competition will flatten innovation, we will need a fresh catalyst to make this happen. That incentive is what the Public Broadcasting Fund can provide.

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