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BBC plc, 2017. The new CEO decides between ITV and HBO

Following a manifesto commitment to "remove the legacy of public service by transferring all broadcasting to the private sector", the incoming government decides to sell off the BBC when the Royal Charter expires on the 31st December 2016.

BBC plc 2017  Photograph: Shutterstock
BBC plc 2017 Photograph: Shutterstock
published on UK Free TV

The first Act of the new Parliament is the Future Broadcasting Act which provides for the BBC (as well as Channel 4) to be sold off on the stock market, and the public service commitments of other channels erased from the statue book.

From Sunday 1st January 2017, BBC plc is now run for the benefit of the shareholders. The newly public corporation, now run by suitably remunerated CEO, no longer has the licence fee income to depend upon: the fee has been curtailed during 2016.

Still, the BBC has some breathing space: its market capitalization has provided it with several billion in the bank.

What options does the incoming boss have?

The new CEO has a stark choice, which is summed up by this diagram:


You can launch the BBC as a subscription service in only 11.8 million UK, homes because 10.3 million have Freeview and 2.1 million Freesat. The terrestrial and satellite services deliberately do not have subscription-compatible equipment as part of their offer.

It certainly would be possible to create a "Beebview" terrestrial subscription service: the question is how many of the 10.3 million homes would want to pay for it, given they have resisted the barrage of tempting offers from Sky and Virgin Media over the past couple of decades.

If the BBC could get people to pay £12 a month per home, at a rate of 80% in 11.8 subscription homes, that would bring in £1.4bn a year, about half the current £3.6bn.

To make up the shortfall in the income the BBC would need to 77% of the Freeview homes pay for an ongoing subscription. This could be quite difficult, plus the associated costs of subscription box subsidies.

ITV too?

The alternative model is to leave out the subscription gatekeepers altogether.

There would be two advantages to making the BBC show adverts, from the point of view of the new CEO.

There would be no need to equip any home with new equipment.

Secondly, the new BBC would need to make 25% less programmes to fill the same timeslots.

However, there are disadvantages to taking adverts. The main one is that economic models suggest that the total revenue that can be taken from TV adverts will not increase. The current revenue would be shared between BBC One and ITV.

Secondly, the advertising market is very unstable. The income streams for future years would be hard to judge.

Of course, it is possible our new CEO will want to have both adverts and subscription. The new CEO will have to decide if the revenue lost to cancelling subscribers who dislike adverts would be more or less than the benefit to cutting per-hour costs and the income from adverts.

In the next part, I will be looking at the HBO subscription model of BBC plc, 2017. Then I will look at the ad-funded model. Following on from that, I will then examine if there are any other options for BBC plc.

All questions
BBC Three Linear channel re-opens1
Removing all barriers to communication between diverse cultures2
How do I get a test card with Freeview3
What can I do when my Sky Digibox says 'No Signal' or 'Technical fau4
Can I receive UK TV in Ghana?5
In this section
BBC salami-slicing returns to overnight services?1
#GreatBBC campaign launched2
Goodbye BBC Red Button!3
Want to know how much the BBC spend in England, Scotland, Wales and NI per home?4
S4C and Welsh Exceptionalism?5
BBC future: make sure you make the deadline6

Sunday, 23 March 2014
1:24 AM

Australia removed its licence fee many years ago, so that the ABC (the Australian version of the BBC) is funded directly from government. This has the disadvantage that the ABC is beholden to government for funding, and they have to go, cap in hand, to government every now and then.
Is this feasible for the BBC?

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Tim's 8 posts AU flag
Richard E

11:03 AM

The BBC ,should go subscription , the licence fee is out of date ,its a tax ,& there should be `No taxation without representation `. The BBC is anti democratic in, its constant left wing news bias, its just a mouth piece of the Labour Party , Guardian views of the news .A bloody disgrace .

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Richard E's 42 posts GB flag
David Roberts

11:20 AM

Richard E: The whole Broadcasting arena has evolved to the extent that the BBC no longer has only ITV to compete with.Consequently,as the BBC'S dominance has has diminished,so it's sole reliance on the Licence fee should be terminated,or at least reduced. The BBC is no longer in a position to bid for or retain,the broadcast right's for many sporting event's and BBC 'Staples' such as Test match cricket are long gone and probably never to return to the BBC. ITV has had to,in recent Years,restructure itself,to become more competitive,in a tougher commercial environment,so should the BBC and perhaps,sponsored programmes may be one way to go,if the idea of a fully commercial BBC is too much to bear.

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David Roberts's 23 posts GB flag
Ian Edge
1:02 PM

Richard E: I note your views about the so called "Left wing Bias" in the BBC.
Would you rather it be like Fox News with its extreme right wing bias, or like the Daily Wail with its lies and distortions ?
Can't you stand any News Media that just tells it how it is, without bias and with fair debate from each side and equal and accurate representation of the views of both sides
and accurate reporting of events ?
My view is that the BBC should continue as it is as it does a fine job for the British viewers.

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Ian Edge's 6 posts GB flag
Charles Stuart

1:18 PM

I think there's an element of truth in Richard E's accusation that the BBC is a left-wing mouthpiece. There was a report on this some time ago that suggested that the problem stems from the fact that most media jobs advertising is in left and left-leaning publications. It was suggested that the BBC should advertise more in The Spectator and The Daily Telegraph to counter this. A second problem was identified as that it's human nature to favour like-minded individuals, so, if the hirers are more often than not left-of-centre politically, then the people they hire are more likely to be left-of-centre too.

There is a problem and possibly the most easily implemented solution that could work would be political party quotas on staff. However, this goes against the idea of the BBC being an impartial body. Perhaps it's that idea that is anachronistic and should be scrapped. But I think it's an idea that is dear to many people's hearts. There is a problem and there is no satisfactory solution.

I think that the licence is an old-fashioned funding system and that it will become more and more vulnerable to evasion. On another thread I suggested that iPlayer should be pay-per-view, with an exemption for people who'd paid their licence fee. Maybe the whole BBC should be offered as pay-per-view or an annual licence - take your choice. I would quite like to see a single person's discount for the licence, as with Council Tax.

I think that the BBC as it is is fundamentally an excellent broadcaster. It does, though, have an outdated funding system that is unable to adapt to a changing environment quickly. I would like to see the BBC continue, primarily funded by the licence, but I do think that how the licence is collected, who pays it and how much they pay does need a fundamental rethink. (51.4634,-2.5264) 

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Charles Stuart's 159 posts GB flag
Richard E

1:31 PM

In a nutshell , If I want to buy the Guardian , I`ll buy the Guardian ,likewise if I want to buy the Mail , I`ll buy it ,not forced to pay for something I`ll don`t want to .If subscription came in ,I would only pay for BBC 2 & 4 only. With regards to sports rights , the sporting bodies are all commercial organisations ,& sports rights should be sold to commercial tv companies who bid the highest price .The BBC should not bother ,& the production is not really BBC anymore ,in the sport they show . The crews are freelance & they work for ITV, SKY , BT,as well as BBC . The outside broadcast equipment come from people like SIS live , who work for everyone else too. About the news biased read if you don`t believe it .

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Richard E's 42 posts GB flag

3:59 PM

Ian Edge : "Hear, hear", well said!, although as far as Richard E's accusation of left wing bias in the BBC is concerned, I feel that in many instances its inclined to err in exactly the opposite direction, that is judging by the amount of air time that's given to views being expressed by some right winger relative to that from someone on the opposite side of the fence.

Of course it could just be that the right winger just seemed to be going on for longer!!

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jb38's 7,179 posts GB flag
Richard E

7:35 PM

JB 38 , thanks mate , they are all lefties , a relative of mine works for Chan 4 news , he gives me all the goss , about the BBC , & the politics of most of the reporters , also check there twitter feeds, it gives the whole game away , if you think what I say is BS .

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Richard E's 42 posts GB flag

9:02 PM

jb38: I can only agree with you and Ian Edge - the idea of the BBC being 'left wing' is one of those meme's which gets repeated over and over again, without any actual data.

The nearest thing to actual evidence was a 'study' which Charles Stuart mentioned. This assumed that because most senior BBC jobs are advertised in the Guardian, it must mean that all BBC employees are Guardian reading left wing types (there is an even more silly 'study' which concludes much the same thing on the grounds that the BBC orders slightly more copies of the Guardian than other broadsheets). There is a simple reason why such jobs are advertised in the Guardian - most media jobs are advertised in the Guardian.

Indeed, the Guardian has specialised in covering the media (and advertising to that sector) for over 30 years, well before the rest of the broadsheets. Its a bit like wondering why adverts for senior bankers are in the FT - its because they are the ones who read it. You could put an ad for BBC Head of Digital Services in Farmers Weekly, but I suspect there would be few takers...

On the other hand, actual emperical data points the other way. Actually analysing the amount of coverage given to government officials
Hard Evidence: how biased is the BBC?
shows a shift from when Labout was in power, far more minsters and less opposition. Likewise, looking at the guests on Questions Time shows a certain amount of favouritism A Very Public Sociologist: Is there Bias on BBC Question Time? . The fact that Nigel Farage has been on more times than all trade unionists combined does make you wonder (BTW - check out Mark Thomas's website about Farage - great fun!) Owen Jones It's the BBC's rightwing bias that is the threat to democracy and journalism | Owen Jones | Comment is free | The Guardian certainly makes a good case against the idea of left wing bias.

Is the BBC biased? This article in The Spectator says yes - and thats fine. Yes, of course the BBC is biased against you » Spectator Blogs . This must be the first Spectator article I've actually agreed with in a long time.

Of course there are people who see bias everywhere, such as the ones who think Sherlock is biased. And as for - the chap thinks the BBC was biased in a documentary about the EDL (a group their founder has left, saying it was too extreme), and his views about climate change are somewhat different from that of the Royal Society.

Richard E - anecdote is not data. Neither is ideological handwaving...

Tim: The Australians have had a public broadcaster funded by government, but there have been problems with budget cuts over the years, and political interference. As the Wiki page puts it 'Appointments to the ABC Board made by successive governments have often resulted in criticism of the appointees' political affiliation, background, and relative merit....From 2003 the Howard Government made several controversial appointments to the ABC Board'. The current government is certainly unhappy with ABC's coverage, and wants it to be far more supportive of the government line. 'He who pays the piper calls the tune' - I dont want the BBC having this sort of interference, nor the political control and placemen seen in Greece, Italy, etc. And independent income is a good way to ensure and independent broadcaster.

The idea of caring adverts is another tired meme - since there is only so much advertising revenue available | The Drum your just going to be slicing the pie for more players, even if there is an increase. And that is dependent on the economy.

The final thing I keep seeing is 'the licence fee is an Anachronism, now it must be subscription'. Fine - but how? When everything is via the net, thats easy, but since thats not for a decade at least, then how is it going to happen? Sky has a box, and a card, which cost money to supply, but their business model depends on it. Where are these boxes for the BBC? They dont exist. How are they to be supplied? If its part of the subscription, then it will make the subscription higher, because of the costs involved. People who talk about subscription never mention this, a bit like the cartoon of the scientist whose equation has a bit in the middle which says 'then a miracle occurs'.

The licence fee (for the present) is the worst system, apart from all the rest...

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MikeB's 2,579 posts GB flag
Monday, 24 March 2014

9:17 PM

MikeB: Re: BBC and allegation of left wing bias, I would say that the various examples given in the second / third paragraphs of your posting just about sums the situation up perfectly, insomuch that it's total nonsense!

I also found your references / links to other articles on a similar theme most interesting!

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jb38's 7,179 posts GB flag
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