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BBC: ‘Red Alert’ on funding

The BBC’s licence fee will be under severe pressure come 2020/2021, according to an analysis of the UK government’s ‘Green Paper’ proposals for funding the public broadcaster.

Enders Analysis’s Toby Syfret and Gill Hind, in a report published August 1 by the ‘Our Beeb’ website and which originated as a study by Enders, are blunt and uncompromising. They state that 2020/2021 is key because by then, the full costs of paying the licence fee for Britain’s ‘over 75’ viewers will have kicked in, and will thus represent a fall on “at least 20 percent” in the total funding of the BBC.

Indeed, say the pair, it could even be much worse and could represent a dangerous period for the BBC and its commercial rivals, including those depending on subscriptions.

Enders Analysis says that this year the BBC receives around £3.8 billion net income from licence fee, BBC Worldwide net revenues and other commercial revenues. Strip out the costs of funding the ‘over 75s’ and that cash inflow could tumble to barely £3 billion by 2020-2021 say Syfret and Hind. “The actual projections for 2020/21 could be worse, since our forecasts assume that the licence fee rises or falls in line with the CPI, which is the best possible outcome of the Charter Review. The only possible upside is the closure of the iPlayer loophole, by which a growing number of households can avoid paying the licence because they have no TV set, but still access BBC video content via online connections. However, we think the annual incremental payments are unlikely to amount to more than £100 million and the implementation is not straightforward.”

“Though not explicitly stated, the government appears to be keen on introducing some form of hybrid publicly funded and voluntary, in other words subscription, payment solution into selected areas of BBC funding. This would allow it to hive off the BBC into separate components, be they BBC Television, BBC Radio, BBC online, BBC Nations or BBC genres such as children’s or local news; or what is tantamount to the de-scaling and end of the BBC as we know it,” says the study.

Syfret and Hind are critical of the Green Paper in that it fails to present – they say – “any discussion of wider trends in the UK creative economy, including the consumption at home and abroad of UK-originated television content; or how this relates to the new online players like Netflix who are allegedly transforming the nation’s viewing habits.”

They admit that the public value of the BBC is broad and the bulk of its spend is on UK originated content, “which the likes of Google, Netflix and Amazon show no signs of wishing to invest in to any significant extent even if they do greatly expand the viewing options. In our view, the UK creative economy needs to be a core topic of the Charter Review, the more so in view of mounting concerns about the future of Channel 4, which makes the second largest annual contribution to the UK independent production sector, as a publicly owned national broadcaster.”

The report recognises that changes are likely, and some departments, divisions and channels might go. But just about every other form of funding has its own set of challenges, says the study.

Indeed, they conclude by warning that the UK broadcasting model, including the other public broadcasters such as Channel 4 and ITV, is unique in the world and “we tamper with it at our peril”. “In short, the TV industry needs to think through carefully the implications of the different courses of action being put forward by the Green Paper and be ready with its response by 8 October when the consultation closes. It is not just on the BBC, but on the entire television industry – pay-TV, advertising, free-to-air broadcasting and content production – that the government axe is poised to fall.”

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