Memorandum submitted by the Institute
of Practitioners in Advertising (IPA)
The IPA welcomes the opportunity to submit views
to the Culture, Media and Sport Committee on the above inquiry.
1. ABOUT THE
IPA
1.1 The Institute of Practitioners in Advertising
is the trade body and professional institute for UK advertising,
media and marketing communications agencies. Our 220 corporate
members, who are based throughout the country, handle over 80%
of the UK's advertising agency business with an estimated value
of £9 billion in 2003, on behalf of many tens of thousands
of their client companies and organisations worldwide.
1.2 Since its inception, the IPA's consistent
objective has been to secure for British business cost-effective
media for promoting their products at all levels, with the end-benefit
of extending consumer choice and generating economic growth.
1.3 We believe the BBC, the nature of its
programming and how it schedules and promotes its output, have
a fundamental impact on this objective and it is against this
background that our present submission is made.
2. SCOPE OF
THE IPA'S
RESPONSE
2.1 As the trade body for marketing communications
agencies, our response has been constructed from our members'
commercial viewpoint versus that of the ordinary citizen—although,
as will be apparent, these will frequently coincide.
2.2 Inevitably our submission will also
repeat much of the argument we put forward in our earlier papers
to Ofcom on public service broadcasting and the DCMS in its review
of the Royal Charter—however since our views on this area
remain unchanged, it will reflect our on-going concerns.
3. SPECIFIC AREAS
FOR CONSIDERATION
3.1 Given expected growth in digital TV and
likely developments in the Internet and other new media, what
scope and remit should the BBC have?
Scope
— As has been pointed out in earlier
papers, the IPA is a considerable admirer of the BBC.
— As an informer, and educator, we
believe it has fundamentally helped shape the attitudes of the
nation and, via the World Service, has played a vital social and
political role through the provision of accurate and balanced
news programming across the globe.
— It is—both in addition and
in consequence—one of the few global brands the nation possesses
and one with which governments tamper at their peril.
— This is not, however, to blind us
to the necessity of both re-evaluation and change vis-a"-vis
the Corporation.
— The BBC was able to achieve almost
all the above from the ultimate position in broadcasting power—a
monopoly. Indeed while this situation may have altered with the
arrival of commercial competition in the TV (during the 50s) and
radio (during the 70s), the sheer size and multi-media nature
of the Corporation has still meant the BBC has tended to "call
the shots" with regard to innovation and technical development.
— Having once held this position, it
is easy to see why the Corporation should wish to perpetuate it
and indeed to future-proof its importance by having it written
into its Charter.
— This is, however, to miss the point
that the BBC led technological advance and participated in all
sectors of communications in the past—not primarily because
it was the repository of broadcasting wisdom nor because it had
the most money (both of which were true) but because it was by
Governmental decree "the only player in town".
— Clearly the advance of technology
and a freer broadcasting environment have altered this situation.
Equally, we believe it should signal a reassessment of the scope
of the BBC.
— No organisation used to setting the
pace in all areas of communications will give up its powers voluntarily—which
inevitably leads to debate on how should licence-fee payers' money
be spent to maximum benefit—and via this, to the ultimate
role of the Corporation.
— While mindful of the scale of this
discussion—from the IPA's point of view, the answer to these
questions is simple. The BBC should cease seeking to maintain
its historical dominance in all the multifarious areas in which
it operates and instead complement the market activities of the
commercial players in these areas—enriching the totality
of the offering before the public vs competing in a highly aggressive
(but ultimately pointless) way for maximum audiences.
— This is not to seek to belittle the
Corporation or, for political reasons, to reduce its importance
within the media as a whole. Instead it is to recognise the impracticality
of the BBC wishing to be in the vanguard of every new development—if
nothing else because of the finite nature of the licence fee.
Remit
— Just as the IPA believes in a reduced
scope for the BBC, it favours this reflected in a tighter, more
strictly defined operating remit for the Corporation.
— To recap, we believe the role of
the BBC should be to extend viewers'/listeners' choice by guaranteeing
access to everyone in the country, to programme/online services
that are of unusually high quality—and that would be unlikely
to be provided by the commercial sector. This was the broad purpose
that the BBC identified for itself in 1992 in its document Extending
Choice—and which we would see breaking down into three
key duties:
— the duty to fund and make important programming
which—either by reason of its niche appeal or because the
capital investment required would be too large—the commercial
sector would be unable to underwrite;
— the duty to innovate, challenge and provoke,
afforded by the absence of a commercial imperative;
— the duty to act as a benchmark of quality
to the rest of the market.
— It is our view that since 1992, the
BBC has not followed its own remit. Instead it has behaved increasingly
like a commercial broadcaster—adopting a policy of seeking
to maximise audiences as its end goal.
— As the trade body for UK advertising
agencies, wishing to protect the commercial sector as a vehicle
for our clients' messages, we could be accused of biased pleading
in this respect. Yet it is clear, this concern is also held in
many quarters of the Corporation itself—with no lesser figure
that Jane Root, the controller of BBC2, speaking out against what
she termed "the tyrannical obsession with viewing figures"
as a result of which new BBC programming has either to achieve
instantly high viewing figures—as measured by BARB "overnights"
or be terminated (Royal Television Society—10 February 2004).
— Such a philosophy, we would argue,
runs contrary to the BBC's PSB requirement to provide challenging,
innovative output, which through its very nature will either take
more time to gain a public following or alternatively appeal to
more discreet, and consequently, more limited audiences.
— As we are all aware, the Corporation
is often portrayed as being on the horns of a dilemma. If it is
too specialist in its output, it is accused of being elitist with
the public's money. If it is too popularist, it is charged with
stealing the bread from the mouth of the commercial sector.
— Clearly neither position is acceptable,
instead we would suggest it is a matter of balance. Historically
the freedom granted the Corporation to make its own interpretation
of its remit in accordance with the views of the prevailing Director
General has resulted in the BBC adopting an increasingly entrepreneurial
approach to programming and scheduling which has amounted to a
gross abuse of power. That this has been unchallenged by its regulator
(ie the BBC Governors) will be a matter for discussion later in
this paper. That it has occurred at all, however, is yet another
indication of the need to set the Corporation firm operating guidelines
to be effectively policed.
3.2 How should the BBC be funded?
— Given the IPA's earlier statements
with regard to restricting the scope of the Corporation and providing
it with a tight remit against which to operate, it might be supposed
that we should equally favour an alternative method of funding
the BBC. We do not.
— Although the Davies Committee completed
its review of BBC funding five years ago, the IPA continues to
believe that the licence fee remains the most appropriate means
of paying for the Corporation.
— While what amounts to an hypothecated
tax is clearly not a perfect means of supporting the BBC within
a multi-channel environment, it nevertheless remains, we believe,
the fairest method and that least open to adverse political or
commercial pressures.
The basis for the viewpoint largely reflects
the views expressed by the Davies Committee in 1999. Specifically:
— Direct funding: As with Davies,
we believe any funding method which relies either on general taxation
or grant, would render the Corporation vulnerable to political
mood and the potential loss of editorial or political independence.
(Irrespective of the validity of the views expressed by either
side in the recent Hutton Inquiry, the strength of Governmental
opposition to the BBC served to underline the potential risk to
Corporation finances should it have been reliant on direct funding.
The independence of the licence fee guards against such a threat.)
— Advertising: Likewise, we
have been consistent in our opposition to the BBC taking commercials
on the grounds that:
— Advertising on the BBC would inevitably
alter the nature of the Corporation's programming toward output
capable of attracting large audiences (thereby sacrificing the
raison d'etre for the Corporation and bringing it into direct
competition with the commercial sector.)
— Suggestions that such activity might
be limited to certain advertisers and/ or time slots are unrealistic
(governments faced with the unpopular alternative of raising licence
fees would inevitably favour an extension of advertising activity.)
— Irrespective of this, it is unlikely
that there is sufficient money in the market to support both the
BBC and the current commercial operators. Given that the BBC's
funding is approximately £2.7 billion, it would seem highly
improbable that TV advertising monies would grow sufficiently
above their current £3.5 billion to finance both the BBC
and the independent broadcasters—leading immediately to
a greater emphasis on less expensive bought-in programming and
longer-term either to the possibility of ITV moving to a subscription
basis and/or the potential failure of a number of the market's
current key players. (Either way we believe this would result
in less choice and lower quality viewing for the current "free-to-air"
consumer.)
— Sponsorship: Similarly, we
have little faith that sponsorship would provide an alternative
means of funding the Corporation—and we would concur with
Davies's conclusion that it could potentially result in the least
satisfactory of all solutions ie that it would be incapable of
generating sufficient income to support the Corporation while
at the same time potentially unbalancing schedules by encouraging
producers towards the creation of programmes which might be attractive
to sponsors.
— Subscription: Finally, we
should reject subscription outright in that it would immediately
negate the fundamental public purpose of the BBC as a free-to-air
broadcaster—effectively destroying the social role of the
Corporation and potentially dividing society into those who can
afford to be entertained and informed—and those who cannot.
No responsible individual, company or government could countenance
such a situation.
— By a process of elimination, therefore,
we are left with the licence fee as the most universally acceptable
method of financing the Corporation which is least open to political
and/or commercial pressures.
— As far as arguments raised that such
a charge is somehow immoral when its revenues are directed toward
a single broadcaster (vs being shared or competed for by other
operators) we would suggest:
— these objections have historically
been the result of the BBC abusing its income base to compete
for audience with its commercial rivals (vs complementing their
output);
— this grievance has been compounded
by the remaining commercial terrestrial broadcasters having to
fund their PSB output from their own pockets.
Both the above, we would suggest would be relatively
simply addressed by:
— ensuring the BBC operates strictly
to its PSB remit;
— reducing the PSB requirements placed
on the commercial sector to those key areas likely to emerge from
Ofcom's current analysis of the area.
— In sum, given the absence of an appropriate
alternative funding mechanism which would preserve the independence
and effectiveness of the BBC, we view the licence fee as a necessary
evil for the foreseeable future.
3.3 How Should the BBC be Governed and/or
Regulated and what Role Should be Played by the Office of Communications?
— The IPA has been consistent in its
call for the governance of the BBC to be removed from its Board
of Governors and placed into the hands of an independent and professional
regulator.
— While concern has been expressed
in some quarters that the transference of such power to Ofcom
would result in the latter acquiring a dangerous level of power
over UK broadcast media, we believe that the benefits of creating
a uniform approach to regulation will far outweigh any remote
anxieties that the regulator might abuse its powers.
— What is clear, in the light of the
Hutton inquiry, is that the BBC's current Board of Governors is
insufficiently distanced from the Corporation to exercise an effective
policing role, while—for our part—we should question
its professional qualifications for judging matters of commercial
activity.
— The whole Gilligan episode, we believe,
has highlighted the extent to which the Governors have ceased
to operate as the independent regulator of the Corporation and,
under fire, become its champion. At the same time, it has led
to profound concerns that a patrician body comprising representatives
from the regions, social groups and the "great and the good"
can ever hope to understand the potentially enormous economic
implications of sanctioning activities by the UK's largest single
broadcaster, standing as it does at the centre point of the nation's
entire political—media—communications structure. As
has been pointed out—even at the relatively mundane level
of operations—none of the current incumbents "has any
close knowledge of the world of mass media—the payment for
sports rights, the scheduling of entertainment or the development
of reality shows" (Independent, 12 February 2004).
— This may be contrasted effectively
with the behaviour of a professional regulator, like the old Independent
Broadcasting Authority (IBA), which when caught in the cross-fire
between Thames Television and the Conservative government under
Margaret Thatcher over the Death on the Rock programme, was able
to act convincingly as a regulator because it was visibly—and
emotionally—at a distance from those in the editorial front-line.
If the BBC Board of Governors is unqualified for its economic
and business responsibilities—and unable by its very structure
to divorce itself from the body it is meant to regulate—there
is an unquestionable need for change.
— In these circumstances, the IPA would
concur with recommendations that the structure of governance at
the BBC should become more like that of Channel 4, with its board
of directors responsible for operational decisions and strategy,
answerable to Ofcom as an independent regulator.
— Moreover, in addition to Ofcom regulating
the BBC's commitment and adherence to a tightly defined public
service broadcasting brief, we should see this control also extending
to the content of the Corporation's trailers/programme advertisements,
as it does all other commercial broadcasters. Although on a lesser
scale to issues of governance, it is nevertheless wholly unsatisfactory
that such "advertisements", remain outside Ofcom's remit
(even more so, in the light of recent research that such trailers
contain a disproportionate level of inappropriate sexual and violent
behaviour—frequently broadcast before the watershed).
— Although we recognise that the Corporation
has resolutely resisted any move toward outside regulation in
the past, post Hutton we believe it represents the surest and
most secure method of preserving its independence—and indeed
protecting it from the repercussions of its own mismanagement.
— Simultaneously, it would ensure—in
as far as their different funding mechanisms allow—that
commercial and licence funded media companies would be subject
to the same rules, equally applied.
3.4 Does a 10 year Royal Charter and Agreement
with the Secretary of State, together, provide the most appropriate
regime for the BBC?
— Allowing for our earlier comments
recommending that regulation of the BBC should be brought more
fully under Ofcom, we would not recommend any significant change
to the current Royal Charter and Agreement arrangements through
which Government is able to exercise control over the remit and
funding of the BBC.
— As a system we believe it has worked
well in preserving the independence of the Corporation; while,
as reluctant believers in the licence fee as its least hazardous
method of funding the BBC, we see no reason for more fundamental
change.
— Our only possible comment might be
to question the ten year duration between reviews. While it is
noted that the build up to Charter Renewal is a prolonged one—and
we should not wish to see the Corporation perpetually engaged
in preparing its case for the next review—nevertheless the
media sector is extremely fast moving and ten years' grace between
Charters does seem extremely generous.
— If the UK Government is able to develop
and introduce its policies within a maximum Parliamentary life
of five years—to grant the BBC double this period before
it can be called to account does appear excessively prolonged.
April 2004
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