HC 743 Support for the creative economy

Supplementary written evidence submitted by the BBC [SCE 087a]

This note provides the BBC’s response on how much we commission from independent radio producers, in terms of spend, following the Culture, Media and Sport Select Committee hearing of 12 March 2013 into Support for the Creative Economy.

In its support for the independent radio production market, the BBC operates a quota and a "Window of Creative Competition" ("WoCC") for radio independent supply. In 2006, the commitment to independent radio productions was formalised within the BBC Charter Agreement and a quota is set at 10% of eligible hours [1] . More recently, the BBC has made an overall minimum of 20% of eligible hours available (including the 10% quota) through the operation of a WoCC whereby independent producers have the opportunity to pitch for commissions. The content commissioned from independent producers represents programming of varying costs from a broad range of genres, many different parts of the schedule and from a range of different independent producers.

Also, as explained by John Tate, BBC Director of Policy & Strategy, the UK radio independent production market is different to television not only in terms of scale, but also in structure and competitive dynamics. Unlike television, the BBC is the predominant purchaser of radio programmes from the independent market, and international and secondary markets for rights have not developed. This is due partly to the nature of radio programming, which is typically live and of interest mainly to national, regional or local audiences. It also reflects the fact that commercial radio companies operate an integrated model of production in which the vast majority, if not all, broadcast content is created in-house. Given the low variable cost of radio production, it is important for radio broadcasters to be able to leverage their fixed costs across a cost effective in-house production base.

In FY 2011/12, the BBC’s direct spend with radio independent production companies was £20.9m. This reflects the production fee paid to independent companies. Separate to the production fee, the BBC directly meets the music copyright costs [2] and station management costs associated with all independent programming, as well as talent costs in some programme areas. Given the use of shared resources by BBC in-house production and independent production partners, these central costs cannot be apportioned to independent companies in a meaningful way and it is for this reason that the BBC considers hours to be the most informative measure.

Lastly, the Committee may wish to note that operating the radio quota and the WoCC on the basis of hours is also the most editorially sound approach in our view, as it allows competition for the best ideas to be paramount.

March 2013

[1] Clause 58 of t he BBC Agreement.

[2] The BBC meets copyright costs for all recorded music and the vast majority of live performances with just a few exceptions .

Prepared 18th April 2013