Media Forum: Could BBC cuts lift market?

Would advertisers benefit if BBC's wings were clipped, Alasdair Reid asks.

Jeremy Hunt isn't the first Tory politician to make threatening noises about the BBC. Nor, cynics might say, is he likely to be the last. The BBC, its nature, its future, its very reason for being, is a difficult political issue - and the BBC knows it. What's more, the corporation is terribly good, like your average grass snake, at playing dead when it's attacked. It's even prepared to slough off body parts, or the odd Jonathan Ross, to make the act look all the more convincing.

Even Hunt, the Culture Secretary, readily acknowledges the cyclical nature of this game. "There is a moment when elected politicians have an opportunity to influence the BBC and it happens every five years. It is when the licence fee is renewed," he said recently.

The problem is that it's often easier, politically, to let this momentary opportunity slip by. We'll soon see. As for the rhetoric - the BBC, Hunt says, does too many things and pays itself too much for doing those things. The nation, in the form of its licence fee payers, can no longer, if it ever could, some might add, afford such largesse - and Hunt is now suggesting that it would not be unthinkable to cut the licence fee, currently £145.50 a year.

Let's be charitable and assume that Hunt has the political strength and stamina to take this on. Let's assume he can begin cutting BBC funding, while assuring us all, through more stringent auditing procedures, that the corporation is delivering value for money - in other words, acting unequivocally as a public-service broadcaster with a remit to supply what the commercial sector cannot.

If all that can be delivered, would advertisers benefit? Bob Wootton, the director of media and advertising at ISBA, reckons, on balance, that they would. He reasons: "ISBA has always bought into the notion that the BBC is one of the pillars that hangs high the roof of British media generally. But it's also true that it has cut itself a great deal of slack over a great deal of time and it is fabulously well-funded - so there is room for movement there.

"You can question the extent of the BBC online sprawl; you can question the outrageousness of Radios 1 and 2, which are commercial radio stations without the commercials; and you can question why it should compete so aggressively in television entertainment on Saturday nights, with the type of programming that the commercial sector has shown it can produce in spades. So there are excesses that need confronting. At this time, in the current economic circumstances, that notion may have more of a following wind than may have been the case in the past."

But John Davidson, the head of trading at Starcom MediaVest Group, is rather more sceptical.

He explains: "Let's say, for the sake of argument, that BBC TV might be able to attract fewer eyeballs. That means more eyeballs for commercial TV. Which means that commercial cost-per-thousands would fall - and, as a result, advertisers might want to put less money in. So that wouldn't necessarily be good for the commercial sector.

"There's probably greater potential for change in radio - because the BBC dominates the medium so much more and the commercial sector has so much more unfulfilled potential. But in digital media, the BBC is so strong. No-one has managed to emulate the iPlayer in bringing together technology and content. And cutting a few pages from its vast web presence wouldn't have much impact."

Meanwhile, Richard Oliver, the managing partner of investment at Universal McCann, argues that you can never make simple assumptions about cause and effect. He says: "Yes, there could be benefits - though it could be a long time for them to become apparent. On the other hand, you might find the BBC, in making the most of its budgets, focusing on a measure of TV viewers per licence fee pound spent - so you might find it producing even more populist stuff. In which case, there may not be any benefit at all for advertisers."

However, Steve Hatch, the managing director of MEC, says we have to focus on the long game. He concludes: "Yes, there's an obvious quality gap, with commercial broadcasters lagging behind the BBC is some areas - and there's the notion of the BBC remit. But I don't think this is about whether there might be slightly fewer people watching the likes of Strictly Come Dancing. I think if the Government wanted it, the BBC could be persuaded to have a digital infrastructure role similar to that it had in the 80s in developing computer education with the BBC Micro. And that would be of real benefit to the commercial sector in the long run."

YES - Bob Wootton, media and advertising director, ISBA

"Anything that could help broaden the reach of commercial media would be welcomed by advertisers. If the BBC's wings were clipped, that might make it focus more on its core public-service purpose."

NO - John Davidson, head of trading, SMG

"It would all depend on where the cuts were applied. But I don't think the ad industry could expect a gold rush on the back of cuts. The BBC has so much in reserve, not just in cash terms but in talent and strategic thinking."

MAYBE - Richard Oliver, managing partner, investment, UM

"If the BBC had less money, that should lead to a diminishing of the quality of its output. The implications for advertisers would then depend on how companies in the commercial sector chose to react."

YES - Steve Hatch, managing director, MEC

"For me, it should be about the long game. It should be about how the BBC can be persuaded to refocus on its role in providing the nation with a better digital infrastructure. That would be of real benefit to the commercial sector in the long run."