Friday round-up…
Hello everyone, just (hopefully) emerging from a bad cold and thought I would see what’s about:
– Nick Reynolds recently commented on our site, asking ‘What exactly are the arguments FOR top slicing or indeed the PSP?’. While my thinking is evolving the more I learn about the UK system, I actually favour four things: (i) reducing the BBC licence fee significantly in the next five years; (ii) privatising Channel 4; and (iii) distributing the proceeds of the licence fee amongst multiple providers during an interim period; and (iv) eventually abandoning a mandatory licence fee. There are many arguments for doing this:
+ State-owned entreprises are usually bastions of employment patronage and inefficiency. This is why the EU, the OECD, etc., all recommend eliminating state-owned entreprises where possible. I have not studied the BBC in this respect, but the occasional headlines about Jana Bennett’s taxi fares or stars’ salaries support this. The BBC has about 26,000 employees — too many people doing too many things. The tendency in organisations like this is to seek increases each year from the state using quality and universality as justifications. These are often weak justifications because the quality is broadly comparable to what non-state owned entreprises offer.
+ The BBC funding model does not provide a ‘line of accountability’. I don’t even know what this means?!! People just watch what suits them and the evidence shows that the more choice you give people, the less often they choose any one source of entertainment or news. That’s not saying much — it just means the audience is fragmenting. And asking a fragmenting audience to pay more each year for something they watch less of … well, you can see where that is headed.
+ I wonder if the majority of UK residents know that Channel 4 is state-owned? I suspect not. Channel 4 should be privatised immediately. It is advertiser-funded and its output, again, is broadly comparable to what the non-stated owned firms offer.
+ I do not support the PSP concept if it involves the allocation of new state funds. Surely, there is enough public money already out there going towards government media / arts / IT. If Ofcom can better coordinate that and eliminate waste and overlap — great! Someone recently — I cannot remember who — remarked that Ofcom have not shown it is the proper entity to manage this type of activity. There is much truth to that. Ofcom started life as a framework regulator — is it really seeking to become a media manager?
– Purnell out / Burnham in at DCMS. Not much to say about this except three things: (i) Under Purnell’s watch the phone-in TV scandals resulted in some fairly light punishment for the major offenders — I’ve heard fraud on DWP benefits is much worse, so hopefully he will take a different approach there. (ii) Hearing about the DWP in the news yesterday makes you understand how really small and unimportant the DCMS post is by comparison. (iii) I wonder what this means for the Convergence Think Tank?
– There is news out this week reporting that Ofcom will not be directly over-ruled by the government on its junk food advertising policies at this time. No thoughts on this yet…
– And a little film to start your weekend. The Japanese have created junk food adverts that are more disturbing than enticing:
Two points:
roughly 20000 people work at the BBC – not 26000
“the quality is broadly comparable to what non-state owned entreprises offer.” – I disagree strongly. The market will not provide Radio 3, Radio 4, a news website and newsgathering operation the size and depth of the BBC, the BBC’s local radio services, childrens services etc etc
indeed one of the arguments put forward for a PSP is that “the market will not provide”
The BBC by the way is not “state owned” – I think its owned by licence fee payers.
http://nickreynoldsatwork.wordpress.com/2008/01/24/bet-on-the-licence-fee/
Hey Nick,
20,000 is still quite a large number…. but the 26,000 figure comes from the BBC’s own website: http://www.bbc.co.uk/music/artist/rvzf/ — maybe your website is out of date…
Your website also says the BBC is state-owned. Legally it is state-owned. If it were owned by the licence-fee payers in the manner of News Corp (shareholders), then the licence-fee payers would be able to vote on the board, sell their shares, etc. This is not the case: The UK government, acting through the DCMS, exclusively controls the funding, governance and activities of the BBC. It is a classic state-owned entreprise.
I really enjoy Radio 4. I listen nearly every day. But, there are many examples of good news organisations that are not state-owned: Google, Reuters, CNN, Guardian Media Group, Sky News, MSNBC/CNBC, Al Jazeerah, etc. But everyone has an opinion on what the BBC does well, or those things that it might do which would be impossible for the market to do.
I’ll concede this — there may be some things the BBC does that the market won’t do. That’s probably true. But I would imagine those things are quite isolated and small. Running Radio 4 and some daytime children’s television, for example, would only cost a fraction of the BBC’s total costs. That model already exists in the US, where NPR / Children’s Television Workshop / PBS do take public money, but only a very small amount. If I recall correctly, they get significant amounts from charitable donations, corporate (sponsorship) and individual donations.
But what about the rest of the BBC — the sports, the comedy, the soaps, the DIY, etc. Why does the state think it needs to supply those things to UK residents?
Russ
Without the public investment that the BBC puts in there would be very little domestic UK comedy as the commercial providers like ITV do less and less. Comedy is a high risk investment and needs public intervention.
You keep talking about “the state” as though this is the same as the BBC. It’s not. A universal licence fee means all people need to get something, including those who like Eastenders and DIY programmes. The BBC exists to make “good things popular” and “popular things good”.
And with respect you have not answered my original question, which was not about whether the BBC or Channel 4 should exist, or whether there should be public/state intervention in broadcasting or content (indeed OFCOM itself agrees that there is a need for public intervention, hence the PSP idea).
My question was “what are the arguments FOR top slicing?” (indeed top slicing is a form of public intervention).
Thanks for responding, Nick… good to get a small debate going!
I’m from the U.S., but I think Brits are brilliantly funny group of people and I wonder if the UK state really needs to support their desire to express themselves with the licence fee. Maybe comedy is a high risk investment — I don’t know — but London seems full of bankers and hedge funds who are willing to take on risk.
The BBC is an agent of the state. I’m more of a student of public policy than a student of the media, and in policy terms, the BBC functions as the state. It is owned and directed by the state and supported by a state-mandated tax. There is nothing voluntary or private about it. So while you claim that the BBC makes popular things good, I’m not as sure. It makes popular things like dance competitions or chat shows, that’s certain. But does it make them in such a way that we can say it was worth the state subsidy? I doubt it in most cases. But that’s precisely the question we should ask when a state subsidy is granted.
I think the main argument for top-slicing (as you know I would go further and reduce the state subsidy) is: Assume the UK government needs to build and maintain roads. It can create a state-owned entreprise called RoadUK and give it the entire road building and maintenance budget, or it can allocate the money by bidding specific projects to private firms, or by perhaps having a handful of approved contractors that are allocated road building work (by area or by type of work) provided they meet a quality standard.
Me personally — I would not opt to create RoadUK. It would institutionalise the arrangement and probably not be as efficient as firms that compete for the road work. RoadUK would / may also have issues with pensions, government guarantees for liability. But the biggest problem with RoadUK would be the ‘capture’ element — RoadUK would over time likely become entrenched in the policy of road building; its senior officials would have a revolving door with government and other influential policy circles, etc. When it comes to road building — as a member of the public — I would want MPs and government ministers considering what is best for the public, not RoadUK. I would not want RoadsUK to mean ‘roads’ … that would not be good for anyone.
Now in the BBC debate, those who favour top-slicing are called enemies of the BBC. Imagine that same mentality applied to the roads. Just because someone advocates competition amongst road building firms would not make them an enemy of the roads.
I’m sure there are more sophisticated arguments in favour of top-slicing, but those are mine…
Firstly I don’t think that content/broadcasting is like roads.
The roads in this case are either the transmitters that send the TV or radio signals or the internet/infrastructure that serves up the content.
The transmission for TV and radio was sold off some time ago in the UK – so is not owned by the state.
Content/programmes are like the traffic on the roads. There’s a lot of traffic – some of it from the BBC, some of it from commercial providers (some of it from Channel 4 – a public service outfit funded by commercial revenue). The broadband network is not owned by the state in the UK, although the state did as I recall give some pretty signicant help to cable companies.
The BBC is not an “agent of the state”. The beauty of the UK system is that while the BBC is funded by public money, that money is collected by a seperate agency, not through tax. And the regulatory system creates an “arms length” relationship with government. The BBC is required to be impartial in its editorial. And now we have the BBC Trust, whose jobs is to represent licence fee payers, not government this strengthens the BBC’s independence.
Not all people who propose “top slicing” are “enemies” of the BBC.
But their arguments seem to be based on fixed positions (”I don’t like the BBC”, “the state is always bad”) rather than evidence.
The UK’s broadcasting culture is very different from the US which is why people from the US often struggle with it. In the US the system was entirely commercial/market driven from the very start with a small and weak PBS service set up later. In the UK the position was reversed. For roughly the first thirty years of the BBC’s life there was no commercial broadcasting in the UK.
The BBC is like the National Health Service. A small number of people in the UK object to it on principle on the grounds that health care should be left to the market. But most people like it, because it gives them a high quality service, regardless of the ideological arguments.
And although there have been periods in the BBC’s history where it has come into very unpleasant conflict with government (Suez, Hutton), it has always managed to survive and keep its independence. See here for more about the history of the BBC:
http://www.bbc.co.uk/heritage/in_depth/pressure/index.shtml
Hey Nick,
I wasn’t using roads / traffic as an analogy to show how networks work, or illustrate the difference between content and distribution. I was using roads as a common example of a state expenditure designed to provide a facility or service to benefit all of society. (I presume that’s how most people would consider public service broadcasting). The EU calls this a ’service of general economic interest’. I used roads as an example to show that the state can spend money on services that benefit everyone and yet still not give all the funds to one facility provider.
The licence fee is most definitely a tax. It is a compulsory payment required by the state. Non-payment leads to criminal sanctions. The Office of National Statistics changed its classification from a ‘charge’ to a ‘tax’ in 2005. We colloquially refer to this tax as a licence fee, but the reclassification by the ONS is official.
The relationship between the government and the BBC is most definitely not arm’s length. The relationship instead is one of control. Now the government does not seek to control the BBC’s output on a daily basis. The government has instead decided to permit the BBC to operate under the broad constraints of a charter. The charter specifies the duties and obligations of the BBC. That is not an arm’s length relationship. If I fund a business, appoint its senior officials, set its structure and remit, you would say I control it, right? Well, we need to use the same cold logic with the BBC.
You say the BBC is well-liked — that may be true — I certainly like it and watch and listen to it. I’m sure Channel 4 is well-liked, and so is ITV… But being well-liked is different from what the public might pay if the licence fee were voluntary. For example if the BBC were a subscription service. I might pay some money for access to the BBC’s services — as I do for Sky — but I certainly would not pay 150 GBP per year. It’s just not worth that much to me. Others would pay more, maybe. It’s hard to know. But saying something is well-liked does not mean the 3.5 billion GBP subsidy is therefore justified. Everyone likes art, culture, sports, etc. No one questions that — what is questioned is the amount of the subsidy, and its placement with just one entity.
You make much of the fact that the BBC is independent. I’m not as sure. The BBC had to convince the DCMS to renew its charter in 2006 and negotiated a licence fee settlement with the government shortly thereafter. That does not sound independent to me. Sky and ITV are much more independent from the government and they are also impartial like the BBC — all broadcasters in the UK must be. So, if you value independence from government, then the commercial broadcasters — with the exception of Channel 4 which is state owned — should be much more to your liking.
Interesting times …