MEDIA FORUM: Is Smith’s compromise on BBC funding a fair one? - The statement from the culture secretary, Chris Smith, on the future funding of the BBC was supposedly an act of tough love. Senior BBC management will obviously focus on the love sid

Those who were watching will not easily forget the chilling threat in Christopher Bland’s voice as he reminded a Newsnight interviewer that they both worked for the same organisation. Sometimes it’s just about possible to believe the stories about low BBC morale still doing the rounds.

Those who were watching will not easily forget the chilling threat

in Christopher Bland’s voice as he reminded a Newsnight interviewer that

they both worked for the same organisation. Sometimes it’s just about

possible to believe the stories about low BBC morale still doing the


Bland, who is of course the BBC’s chairman, was appearing on the show to

argue that the Government’s statement on the corporation’s future

funding should be welcomed as a victory. Unfortunately, he was acting

like a sore loser. Perhaps understandably. The BBC had asked for at

least pounds 700 million extra a year from licence-fee payers to fund

ambitious digital expansion plans. Instead, it was given pounds 200

million and told to do some serious rethinking.

So Bland was not amused when he was ambushed on Newsnight - not only by

the presenter but also by Andrew Neil, a man who began tweaking BBC

tails as a Rupert Murdoch employee more than a decade ago. Both Neil and

the presenter were suggesting that the BBC must focus its ambitions in

the future. Bland proceeded to question Neil’s mental health.

And as for the presenter - surely he can now look forward to many years’

incarceration in one of the corporation’s notorious Gulags. Radio

Scotland, perhaps. Or religious broadcasting.

BBC culture is clearly not going to change overnight; and if Bland’s

performance is anything to go by, it will not easily be deflected from

its territorial claims on large parts of the UK broadcast economy.

Indeed, you can interpret the Government statement as a classic

Whitehall compromise - a pounds 3 across-the-board licence fee increase

doesn’t wholly quash BBC grand designs, while the commercial sector will

be relieved that there will be no tax on digital early adopters.

In his Commons speech, the culture secretary, Chris Smith, underlined

the Government’s continuing commitment to public service broadcasting

with a strong BBC at its hub. But there will be a quid pro quo. ’The

BBC,’ he stated, ’needs to raise its game. It must become even more cost

effective and quality conscious. That is why we are not going to allow

the BBC the massive injection of funds it has sought from the licence

fee ... We are setting it a number of challenges in terms of sources of

finance and in operations.’

In particular, Smith insisted that the BBC look to ’self-help’ in its

quest for the money it wants to fund ambitious expansion plans.

Self-help means cutting costs and increasing revenues from commercial


The BBC will also come under greater scrutiny, particularly as to

whether it measures up to its public service remit. Specifically, the

Government will insist that the BBC does not waste public money in

launching digital services already being supplied by the private sector.

It will start by examining the rationale behind the expensive yet

amateurish News 24 and the corporation has already been warned off

launching dedicated film or sports channels.

Rival broadcasters were unanimous in welcoming the Government’s

intention to subject the BBC to greater scrutiny. For years, they have

been arguing that the BBC should be ’put back in its box’ - in other

words, forced to return to a strictly defined public service

broadcasting ethos. Tony Ball, the chief executive of British Sky

Broadcasting, is pleased with the Government’s decision not to proceed

with a ’digital poll tax’ but he adds: ’This is still a huge pay day for

the BBC. Despite the culture secretary’s recognition that the BBC needs

to raise its game and be more cost effective, the Corporation is being

given millions more in public money.’

Michael Jackson, the chief executive of Channel 4, is not surprised that

the BBC didn’t get exactly what it wanted. ’I thought it was a generous

statement but a good one for the industry in that it provides for the

BBC’s future but also sets important guidelines. It’s a pretty sensible

equation. It is important for us to know what the BBC is going to do and

how it’s going to happen.’

Most observers in the advertising industry agree that this is, to a

large extent, a holding exercise. The Government has deferred all the

important decisions, especially on public service broadcasting

requirements and the BBC’s status as a self-governing organisation,

until the forthcoming Broadcasting and Communications White Paper.

But Bob Wootton, the director of media and advertising affairs at the

advertiser trade body, ISBA, says that Smith’s statement gives

encouragement to ISBA’s fundamental argument, which is about opening the

BBC up to greater commercialisation.

He comments: ’It is the self-help side of the equation that we find so

intriguing. The BBC would have you believe that it has already generated

incredible savings through improved efficiency. So how much more is

there to be saved? Why hasn’t this huge potential for further savings

come to light before? Similarly with commercial revenues.

The received wisdom is that the BBC is already an extremely commercial

beast. So if it’s already busting a gut in this direction, how much

further should it be allowed to go? BBC1 and BBC2 may continue to be

ring-fenced in terms of advertising or sponsorship but perhaps we can

assume that Radios 1 and 2 are now in play. We will certainly continue

to press our message.’

In line with other industry bodies, the IPA welcomes some aspects of the

Government statement. But Ray Kelly, chairman of the IPA’s Media Policy

Group, says there are still grounds for concern: ’The IPA was deeply

concerned that the surcharge for a digital licence would arrest the

development of digital television in this country, so we are gratified

that the Government has decided to go for a general increase. However,

the IPA is not convinced that an increase is required. It believes that

the BBC is providing services for which there is no evidence of consumer

demand - for example, News 24. There are also other areas where the BBC

could reduce costs and where the commercial sector could better serve

the customer, most particularly in the area of radio.’