BBC commercialisation plans ‘hard to resist’ but ‘wrong way to go’
The BBC is looking to “more actively utilise commercial partners”, director-general Tim Davie announced yesterday, with the goal of driving revenue for the organisation beyond the licence fee.
BBC Studios, the commercial arm of the BBC, which sells advertising outside the UK, will aim to double its revenue over the next five years, Davie said in a speech. The goal is for BBC Studios to deliver over £3.2bn in revenues by 2027-2028.
One way BBC Studios is looking to do so is by commercialising podcasts in the UK on sites like Apple and Spotify. Announced last week, media industry bodies panned the proposal, with News Media Association CEO Owen Meredith warning it would “profoundly distort competition, wreaking havoc on commercial players right across the media and advertising sector.”
Another approach to commercial growth, as outlined by Davie, is to target growth through partnerships with overseas-based content producers, such as the recent deal with Disney on Doctor Who.
In response to the speech, Meredith said Davie’s vision “overreaches its remit”, adding: “We urgently need to see the detailed proposals behind Tim Davie’s announcements and expect Ofcom to thoroughly scrutinise them.”
Analysis: Not level playing field
Adam Foley, CEO of Bountiful Cow, told The Media Leader that, from an agency perspective, it would “be very hard to resist” investing in the BBC.
“Our job as an agency is to place our client’s money where it will be most effective,” he said. “Often that can mean where there is the most reach. The BBC has the resources, owned inventory and famous talent to create successful properties — an advantage that’s hard to compete with for the commercial broadcasters, let alone smaller entities at the other end of the scale like solo podcast producers.
“That’s not a level playing field.”
Meanwhile, Davie also said the BBC was exploring reforms to its license fee.
“It is right to ask fundamental questions about [the license fee’s] longevity,” he suggested, although he criticised recent budget cuts to the organisation. In real terms, the BBC’s budget fell 30% between 2010 and 2020.
Davie announced that an additional £200m in savings would need to be made in response to budget pressures. That is on top of £500m in annual savings the BBC is already having to make because of the two-year licence fee freeze announced in January 2022.
“To strip money from the BBC during this period has been particularly short-sighted,” he said.
Short-termist approach
Liz Duff, head of commercial and operations at Total Media, was sympathetic to the BBC’s funding conundrum. “Its recent announcement to place adverts in podcasts for British listeners is a difficult one for some, but understandable given the licence fee freeze,” she told The Media Leader.
EssenceMediacom chief strategy officer Geoff de Burca added that while it is “understandable” for the BBC to become more commercial, “there is a right way and a wrong way to go about it”.
“Taking advertising or sponsorship within their core AV, audio and digital channels may seem superficially attractive (increasing supply would almost certainly combat media inflation), but this would be a short-termist approach,” he explained. “Taking advertising revenue away from commercial broadcasters and publishers would reduce the money available to invest in content, therefore eroding their ability to compete for audiences effectively with the BBC.”
Still, de Burca noted that “there are many brands who would salivate at the idea of working with some of the BBC’s biggest shows”, such as through other opportunities to extend the use of BBC talent and intellectual property outside core channels, including for events, co-branded products and in marketing.
A starved beast
As the BBC has faced the need to cut budgets, the quality of its services is under threat. Top talent, such as Emily Maitlis, Jon Sopel and Ken Bruce, have left the broadcaster for the commercial sector. Meanwhile, local radio has received deep and controversial cuts and programmes like Newsnight have been slimmed down.
The risk, as Davie alluded to in his speech, is that the BBC’s lessened services make increased licence fee payments harder to justify. With regard to the World Service, for example, Davie said: “We cannot keep asking UK licence fee payers to invest in it when we face cuts to UK services.”
In other words, by depriving the BBC of revenue and therefore forcing it to cut spending, the sustainability of the licence fee appears even less tenable. To borrow from economist Paul Krugman: “The beast is starving, as planned.”
Foley said he believes cuts to the BBC’s budget are reasonable, but are not being applied in a way that benefits the corporation or its consumers. Rather than cutting essential services that would otherwise have trouble sustaining commercial business models, like local news or programmes like Newsnight, he would prefer the BBC cut entertainment products.
But the BBC is not just concerned with the fate of its own budget, but also its place in an increasingly competitive TV ecosystem. As Davie said: “We are deeply impacted by the forces reshaping the market and creating huge disruption to traditional broadcast-based organisations. And it’s not just the future of the BBC and the public-service broadcasters that are at stake; it’s the future of our wider creative industries.”
The BBC’s licence fee is up for renewal in December 2027, when its current charter ends. Davie outlined that he will seek to discuss a “long-term funding solution […] from central government budgets” and that the corporation would “proactively research how to reform the licence fee post-2028”. That includes undertaking the largest public consultation in its history, beginning next year.
Core institution
“We now have business models and political systems that profit from polarisation, and a burgeoning global industry of monetising offence,” he wrote.
Davie continued: “Our institutions evolved to help support and nurture democracy, and preserve society’s equilibrium against the pull of extremes. It will always be important to debate the role of these institutions and hold them to account. They are here to serve the public and not themselves, and must always be transparent and open to criticism.
“But it is also vital that we never allow their independence to be weaponised or falsely characterised as taking a position in areas of fiercely polarised debate.
“Unbalanced, unfair and overtly politicised attacks on institutions erode the very essence of what makes us so globally admired. Surely our focus should be on simultaneously championing, investing in and reforming our precious institutions instead?”