3 The cost of the BBC's radio presenters
13. The cost of presenters (the 'talent') makes up
a significant proportion of the BBC's radio production costs,
although the cost varies from programme to programme. For the
reasons set out in paragraph 2 above, the Comptroller and Auditor
General did not have access to information on presenters' salaries.
The BBC confirmed, however, that for most radio programmes, presenters'
salaries represent the majority of programming costs. In respect
of the BBC's breakfast and 'drive-time' shows, presenters' salaries
account for over three-quarters of total staff costs.[14]
14. In May 2008, the BBC Trust published a report
by its consultants—On-screen and on-air talent—which
examined whether the BBC was paying more than the market price
for its presenters and whether the BBC was, as a consequence,
creating inflationary pressure in the market for on-air talent.
The BBC Trust told us the consultants' report concluded that the
BBC was not paying more than the market price for talent and,
indeed, that it may well be paying less. While this was the consultants'
conclusion for the BBC as a whole, the report in fact concluded
that "fees paid by the BBC for a small number of top talent
working in Network radio are much higher than those offered on
commercial radio".[15]
15. The BBC justifies the high costs for some presenters
because of the large audiences they reach and the resulting low
cost per listener hour. The 2008 consultants' report recommended
that the BBC uses a wider range of data, benchmarking information
and internal challenge, to assist it in considering talent policy
and specific deals, rather than a heavy reliance on comparing
relative cost per listener hour.
16. The 2008 consultants' report, to which the BBC
referred us, found that on average the BBC had until recently
been increasing Network radio talent fee rates per hour, while
commercial radio had been cutting rates to reflect a depressed
radio advertising market and increased audience fragmentation.
The consultants suggested that the BBC does not always realise
the strength of its own bargaining position when negotiating contracts
with presenters and performers, and the benefits to talent of
exposure on the BBC. The BBC said it was now challenging individual
Divisions to drive better value out of their contract negotiations
and that it expected the current market conditions and the BBC's
attractions as a broadcaster to result in it spending less on
top talent than in the past.[16]
17. The BBC has agreed confidentiality agreements
with some presenters even though the agreements cover the use
of public money. This Committee is against the use of confidentiality
agreements which places public money outside of parliamentary
scrutiny. According to the BBC, confidentiality agreements in
relation to presenters' salaries are standard practice in the
media industry. While the BBC assured us that it has attempted
to use the BBC's status and range of broadcasting opportunities
to negotiate talent contracts at a discount to their commercial
value, it has not used its position in the market to influence
the terms of contracts with talent.[17]
14 Q 4; C&AG's Report, para 55, Figures 16, 17 Back
15
Qq 16, 38; BBC Trust Report, On-Screen and On-Air Talent including
an independent assessment and report by Oliver and Ohlbaum and
Associates, May 2008 Back
16
Q 38; BBC Trust Report Back
17
Qq 19, 34, 38 Back
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