Annex
OFCOM REVIEW OF PUBLIC SERVICE TELEVISION
BROADCASTING— PHASE 2 PROPOSALS ON THE BBC
(Numbers are paragraph references to the Executive
Summary of the Meeting the digital challenge report.)
2.20 The BBC should remain the cornerstone
of public service TV broadcasting. An effective, strong and independent
BBC is essential to the health of PSB in the UK. It should continue
to be properly funded by a TV licence fee model.
2.21 The length of the next Royal Charter
should run for 10 years until December 2016 to take the BBC through
the period of digital switchover, but it should include a substantive
mid-Charter 2011 review of the BBC's funding and its progress
in meeting PSB purposes and characteristics.
2.22 The mid-point review would coincide
with Ofcom's next quinquennial PSB review. The two reviews should
examine in detail the role and the funding of the BBC in a fully
digital world.
The advantage of a mid-Charter review is:
— that it would provide the BBC with
a strong incentive to contribute to the purposes and characteristics
of PSB for the whole period of its next Charter; and
— that it would ensure that preparation
for the postswitchover world occurs well in advance of 2016.
2.23 The BBC should strive to ensure that
all its programmes, not just its services, reflect the purposes
and characteristics of PSB to some degree. This should also apply
to the way the BBC schedules its programmes. Our Phase 1 report
identified copycat and derivative programming, and competitive
head-to-head scheduling as particular concerns. We welcome the
fact that some of the weaknesses in BBC schedules are being addressed
by recent moves made by the BBC Governors. In future, the BBC
should have regard to the extent to which Hollywood films and
other expensive acquired programming meet its own public value
test and could not be provided equally well, at no direct cost
to the public, by free-to-air commercial broadcasters.
2.24 As the commercial sector faces increasing
competition, there will be more responsibility on the BBC to provide
those aspects of PSB which are most at risk. In particular, we
believe that the BBC may need to play a greater role in the provision
of a wider range of regional programming in the English regions,
where the cost of provision relative to commercial value is high
for other broadcasters.
2.25 Our Phase 1 report proposed that the
BBC's other activities, including commercial activities, studio
and other production resources, and indeed production should be
reviewed carefully against their distinctive contribution to PSB
purposes. We therefore welcome the BBC's reviews of its production
and of its commercial operations. This should form an important
part of the BBC's Charter review process. The review of commercial
strategy should be subject to thorough independent external validation
before any decisions are taken about the future of BBC Worldwide
or the use of the proceeds from asset sales.
2.26 In relation to production, we believe
the BBC should be expected to demonstrate that it has clear plans
to introduce a commissioning system, outside news programming,
which has fair access for independent suppliers and which commands
widespread confidence across the sector. If this does not happen,
and if the new codes of practice prove ineffective, further action
will be needed to secure a fair role for independent producers
as suppliers to the BBC.
2.27 In future, any BBC plans for new services
should be subjected to a rigorous independent evaluation to ensure
that they add public value and would not unduly displace commercial
activities. Where it is unclear from independent analysis that
the benefits of any new service outweigh the costs, the BBC Governors
should decline to take the project forward.
2.28 To maintain its role at the heart of
broadcasting in the digital age, the BBC should be properly funded.
For the period of the next Charter, a TV licence fee model should
continue to fund the BBC; the BBC should not carry advertising,
nor should existing services become subscription funded. We have
not carried out a detailed assessment of the BBC's future funding
requirements, but we think that there are two important considerations
for the funding settlement over the next Charter period:
— the BBC does not envisage any growth
in the breadth of its services and is rightly committed to further
efficiency savings; and
— the BBC's income will increase by
more than the annual rise in the TV licence fee because the number
of UK households is projected to grow. After 10 years, the BBC
can expect to receive an extra £230 million every year, from
the projected growth in households alone.
2.29 In order to ensure a robust financial
model in the more distant future, the Government should consider
the case for the BBC to supplement its income with limited subscription
services to fund any future expansion. The BBC should be asked
to report on the case for limited subscription services at the
time of a mid-point review of its next Charter.
2.30 The BBC should take a leading role
in the UK plans for digital switchover. As part of the moves towards
switchover, the BBC should consider the scope for using new technology
in the collection of the licence fee to reduce collection costs,
evasion and the consequent burden on the judicial system. TV licence
fee collection costs and licence fee evasion exceeded £300m
in 2003-04.
2.31 Over the past few years the BBC has
been subject to a proliferation of reviews: various services have
been scrutinised internally, by Government, by Parliament, by
Ofcom, by advisers on its Royal Charter and by independent experts.
Our observation is that there are two underlying causes of this
undesirable trend: first, that the BBC already receives a very
high and rising share of public funding for PSB; and second, that
there is a lack of a clear separation between the governance and
the regulation of the Corporation. We believe:
— that maintaining a plurality of recipients
of public funding is vital to the health of the PSB environment;
and
— that clarifying the separate roles
of governance and regulation of the BBC should be a central objective
of the Charter review process.
2.47 Our ambition is to build a sustainable
and well-resourced model for PSB in the nations and regions after
switchover. A new framework would include:
— a new commitment to regional programming
from the BBC, in line with the Corporation's own proposals. This
would include a rebalancing of obligations for non-news English
regional programming between ITV1 and the BBC, which does not
currently provide such programming on any scale, as well as a
new local BBC news service. In adopting any new regional commitments,
we suggest the BBC should undertake to support a plurality of
regional producers.
21 October 2004
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