BBC faces OTT competition as its independence is tested

The number of licence fee payers has come down over the years, with youngsters choosing streaming services and other online platforms to access content, rather than television

By Prasun Sonwalkar

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Published: Sun 25 Sep 2022, 7:46 PM

Last updated: Sun 25 Sep 2022, 8:02 PM

There are times when visuals are enough, no words are needed. Queen Elizabeth’s funeral last Monday was one such event, when the BBC kept talking-heads and commentary to a minimum, at times conveying the solemn moment in total silence. The funeral was one of the biggest television events, with initial figures suggesting nearly 30 million viewers within the United Kingdom and billions more abroad. Technology enabled blanket coverage of the day, with plans put in place long ago implemented seamlessly, without any glitches or goof-ups. It was another example of the quality of broadcasting and journalism that the BBC brand is known for. Its other recent tests have been the Covid-19 pandemic and the Ukraine conflict, when the public service broadcaster justified its reputation and won wide praise.

The BBC has long made news as well as reported it, but its biggest test is yet to come: it faces an existential threat due to changes in the media’s ecology and the exponential rise of streaming platforms such as Netflix and Amazon Prime, and the UK government’s plans to scrap its major source of funding: the licence fee.

Established in January 1927 by a Royal Charter, the British Broadcasting Corporation was originally called the British Broadcasting Company, formed in October 1822 by a group of wireless manufacturers including Marconi. Its independence is written into the charter: “The BBC must be independent in all matters concerning the fulfilment of its Mission and the promotion of the Public Purposes, particularly as regards editorial and creative decisions, the times and manner in which its output and services are supplied, and in the management of its affairs”. The charter is due to come up for renewal in 2027, a deadline many in the BBC are dreading.

The BBC’s independence is largely ensured by its unique funding model: the licence fee of £159 per year that every household in the UK with a television set needs to pay. The licence fee raises £3.8 billion per year, which accounts for 75 per cent of its annual budget, the rest coming from advertising revenue. The licence fee allows the BBC to provide a wide range of television, radio and online content, besides allowing its UK services to remain free of advertisements and independent of shareholder and political interest. Its income is supplemented by three commercial subsidiaries: BBC Studios, BBC Global News and BBC Studioworks.

But its future is now under threat due to repeated claims by ministers in the Conservative government that the licence fee model of funding is outdated and is likely to be scrapped when its charter is renewed in 2027. The reason for scrapping the licence fee is likely to be couched in the larger stated objective to ensure the BBC’s sustenance through a better funding model that takes into account the new media ecology, but it is no secret that the BBC has riled recent prime ministers and ministers with its independent reporting of politics. The BBC has also attracted a range of criticism from various quarters, while insisting on its independence.

For a change, last week ministers praised the BBC for its coverage of the Queen’s funeral, admitting that streaming services could not provide that kind of live broadcast. But Michelle Donelan, the new culture secretary in the Liz Truss government, says: “It is no secret that I have been a long-term sceptic of the licence fee and that we need to make sure that the BBC is sustainable in the long term. So I’m looking at this…I think the BBC have done a tremendous job in the last few days and nobody could fault them. I went to see the operation and it was phenomenal and required everyone to get their heads down and prioritise public service through the period and they did that, spot on. It showed the true value of the BBC but for me that means it’s even more important that we make sure the BBC is sustainable in the long-term”.

The large organisation often goes through rounds of cost-cutting, scrapping programmes and shedding staff in domestic and international services, but continues to face dwindling revenue from licence fee. The number of licence fee payers has come down over the years, with youngsters choosing streaming services and other online platforms to access content, rather than television. Those over 75 years are exempted from paying it. Wider trends are also clear across the globe: linear television consumption is set for long-term decline, while digital alternatives are proliferating. Consumer habits are evolving rapidly. Production costs are rising and the global market is dominated by international giants that enjoy vast strategic advantages in financing, data, and economies of scale, transforming the way audiences choose and consume media.

A recent report by a House of Lords committee insists that some form of public funding for the BBC remains necessary: “The licence fee is one option, but not the only one. It retains several benefits, but its drawbacks are becoming more salient. The link to a television set looks increasingly outdated. Its regressive nature means that regularly raising the fee to the levels the BBC requires will hit the poorest hardest…There are alternatives to the current system…Substituting the licence fee entirely for advertising would provide insufficient income…A full subscription-based model would likewise deliver inadequate revenues and face major technical hurdles and accessibility barriers. Funding the BBC through a government grant would risk undermining editorial independence…The BBC has a central role to play in the life of the nation, the creative economy, and the UK’s soft power. But the status quo is not an option”.

Globally, the idea of public service broadcasting is mostly associated and aligned with the governments in power, raising questions about its credibility. The BBC, thanks to the funding model and independence written into its constitution, stands out as a model that many aspire to follow. But how long it can retain its unique status and position remains a concern, since any change in its structure and funding may threaten its independence, which would have implications for questions about democracy, citizenship and the news media’s normative role in a democracy: to hold power to account in the public interest. - The writer is a senior journalist based in London

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