Equity

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July 2002

DCMS Review of the BBC's Royal Charter

Introduction

• Equity welcomes this opportunity to contribute to the discussions surrounding the review of the BBC's Charter. As the trade union representing 37,000 performers and creative personnel, we recognise the importance of the BBC in our society. The BBC is our most significant employer and it plays an integral role in both the audio-visual environment and as a community focus for the United Kingdom.
• The BBC is one of four public service broadcasters in the United Kingdom, but it is arguably the most important. Each channel has a role to play in the public service television broadcasting ecology by providing a focus for communities, educating the public, and providing a shared sense of heritage. However, the BBC has a freedom to lead the other broadcasters on matters of standards, innovation and diversity only because of its unique source of funding. The BBC has a key cultural role within the UK - by setting programme standards and bridging the gap between the information-rich and the information-poor, as more quality programmes are drawn to subscription channels - it continues to be our main public service broadcaster.

What do you value about the BBC?

• The BBC is much more than a broadcaster. It is part of our society, it showcases the United Kingdom to the rest of the world, it plays a crucial role in our economy, both as an employer and an exporter of goods, and it acts as a standard bearer for the audio-visual sector in terms of quality, diversity, and innovation. Equity values each of these roles and recognises that it is able to fulfil each of them only because of its unique funding structure.
• The BBC produces high quality, original domestic programming that brings together people, whether through a 'water-cooler moment' or spearheading debate on issues such as domestic violence, cloning or immigration. We believe that there is a widely held view, so long as it is in a position to maintain its independence, that the BBC is able to hold to account Government, Parliament and other public institutions - a vital role for our major public broadcaster in a functioning democracy. Allied to this, is the role of the BBC in promoting citizenship and community. As it is available to all, it provides a constant focus for citizens and a reliable and trusted source of information on issues that affect them.
• Equity recognises the wider value of the BBC in setting standards for other public service broadcasters, both radio and television, and to incentivise multi-channel television broadcasters to offer more to attract viewers. This standard setting role should not be undervalued because without the BBC, we believe that viewers and broadcasters alike would suffer.
• Crucially for Equity members, the BBC is the most important employer and trainer in the audio-visual sector. It has provided a consistent source of employment in a variety of programming, both audio and visual, and heavily invested in the training and development of the industry. Despite increased efforts of the other public service television broadcasters through Skillset to invest in training, the BBC continues to far outstrip them in financial commitments and training opportunities.
• It also has an important role in sustaining the independent production sector. Without the BBC's investment and commissioning, the UK's production base, which also serves the UK film industry, would not be as strong as it is today. Even with the scaling down of BBC film production, its television production has supported the industry and benefited their in-house production. There does not appear to be any comparable investment by other broadcasters and in the case of channels only available through Sky, there is no indication that they ever intend to match this level of investment.
• Equity believes that while the BBC is far from perfect, it has generally met its Charter commitments since the last review. Whilst there has been an increasing commitment to populist programmes, such as reality programmes instead of other genres, the BBC has gone some way to address this over the last 18 months. The BBC is still the most popular broadcaster in the United Kingdom and is held in considerable affection by the viewing public.
• The BBC and ITV are the only public service broadcasters to make programming specifically for different national and regional boundaries. While Channel Four and Five share a commitment to produce a proportion of programmes outside the M25, the BBC and ITV the only channels that offer programmes for the viewer made in the region for the region they live in. Regional programme production should not be confined to news and current affairs. It should include drama and comedy for example, even if the broadcast is restricted to the region it is produced in. In this latter regard, the BBC falls short of meeting these commitments in a number of regions, but particularly in Northern Ireland.
• We understand that the former Director-General, Greg Dyke, had planned to move a national television channel, national radio station or a production department with significant output outside of London. This accords with Equity policy. We believe that for the BBC to have a significant presence in the United Kingdom as a whole, the BBC should be willing to de-centralise itself away from London. The BBC exists to serve the United Kingdom as a whole, and this move would be to ensure that it connects effectively with all its audience. We would therefore wish to see the BBC continue to consider this option under its new leadership.
• BBC Radio has demonstrated that their unique system of funding alongside their public service obligations can result in the production of high quality programming not available anywhere else. Radio drama and comedy is only found on the BBC. We believe that BBC Radio has fully met it obligations to 'inform, educate and entertain'. It produces a variety of programming across its channels, and continues to provide the United Kingdom with the finest radio broadcasting system in the world. To put this into context, in one year Radio Four produces 13,000 programmes. Additionally, developments with the Internet and Digital Satellite broadcasting means that BBC Radio is able to reach more people, including those resident outside the United Kingdom. This connection with other countries, also seen through the World Service, is one reason why the BBC radio is so internationally respected.
• Through BBC Radio, the United Kingdom is able to access a consistent choice of high quality programming across genres such as drama, comedy, music, schools, sport, education, arts, sciences, news and current affairs, not found on any other radio station. Each of those areas looked at in depth would produce a catalogue of achievement second to none and without the present system and level of funding the BBC that could not be achieved. The network channels provide thousands of hours of quality programming and this equally applies to the Nations and regions, which also offer a wide cross section of programming.
• This dedication to diverse genre provision is most evident in drama programmes. Drama programmes, including the single play, continues to excel and to push the barriers of imagination on radio. The initiatives with children's programming on BBC 7 have brought a new and growing audience of children. Radio is an important educational tool, and Equity welcomes the BBC's commitment in this area. Additionally, the BBC's support across a range of music is significant. Listeners are able to access classical, pop, middle range, jazz, folk music and the world music the choice is outstanding. It should also be noted that BBC support of orchestras, singers, new and established composers, the proms and live concerts around the UK makes a major contribution to this important aspect of the culture of the nation.

How should the BBC adapt to cope with changes in technology and culture?

• Inevitably, it will be the responsibility of the BBC, while in receipt of public money, to be at the forefront of testing and developing new technologies. We agree with Government that the BBC should not be excluded from investing in the new digital channels, expanding the excellent Internet service or experimenting with broadcasting on mobile phones.
• While Equity accepts that the BBC has this role, we would not want to see it at the expense of programme production for its analogue radio and television channels. Unless a proper balance is struck between significant investment in the BBC's core activities and investing in quality programming, whilst allowing for innovation and expansion, it will be in danger of losing its audience and thereby its justification for the Licence Fee. The Government should not rely solely on the BBC for this innovation, especially because other broadcasters and platforms will equally receive any benefits.
• Additionally, we would want the BBC to be in a position to exploit new technology but it must be mindful of other commercial public service broadcasters and their ability to survive and also of the rights of those performers whose work they seek to exploit.

What do you think of the television, radio and online services the BBC provides?

• We have already made some comment above about Equity's perception of the services provided by the BBC. However, we recognise the BBC is far from perfect as a public service broadcaster. Like any organisation or institution, it had both its strengths and weaknesses and it cannot be totally exempt from the pressures of working within the commercial market. Therefore, we have noted that the BBC is increasingly succumbing to pressure to attract audiences instead of meeting its Charter requirements. As a result, the variety of programming has declined and investment in more vulnerable genres is threatened. While we do not want the BBC to become a ghetto for less popular programming, we do want the BBC to use its privileged position to experiment more and to take the lead in producing challenging programmes.
• The BBC has a freedom to innovate and fail, unlike other commercial public service broadcasters because they are not tied to shareholders or commercial advertising pressures. Equity believes that the BBC should exploit this freedom more, taking greater chances on new programme ideas and allowing itself to fail. Failure is typically seen in terms of ratings. While the BBC cannot escape its commitments to reach the population at large with its programming, ratings should not be the major driver in commissioning choices.
• One question raised is whether all of the BBC's output should be public service broadcasting when taken as a whole and judged in its entirety. Equity believes that it is inevitable that there will be some overlap of output with other broadcasters, and we would argue that this does not matter. As long as the programming is of the highest quality and offers alternatives that challenge other broadcasters within genres, viewers will be able to access a range of programmes and that is the most important measure for the BBC.
• The consultation paper asks whether the BBC should provide 'something for everyone'. This has long been a core feature of public service broadcasting and one consistently identified throughout Government and regulator inquiries and research. While the reasons for this requirement on public service television broadcasters have long gone, with the event of more channels and now new platforms, it is still very important. This is most evident for those who cannot afford to pay for subscription channels.
• Prior to digital switchover, there will be individuals who actively choose to receive only those channels available on analogue. Recent research by the Department of Trade and Industry suggested that 13% intend never to switch to digital, while a further 29% would do so when there was no other choice. Additionally, there will be those people who cannot afford to subscribe to channels or those that prefer linear viewing. If the BBC and other public service television broadcasters cherry-picked genres rather than providing programming for all, it would effectively exclude minorities, economic and geographically-difficult viewers. Additionally, while many niche channels continue to provide only poor quality cheap programmes that are broadcast on a repeated loop available by subscription only, there would be no justification for the BBC to streamline its programme provision.
• Viewers may or may not welcome more specialisation by PSB channels concentrating on the serious and more demanding types of programmes. It is notable, perhaps surprising, how popular mixed channels like BBC1 and ITV still are, even in multichannel homes. It may also not be in viewers' interests for PSB channels to specialise more. The principle that television should extend viewers' tastes and interests remains important. At present viewers may try out a programme, which they would not normally watch because it is next to one which does appeal to them. A channel, which appears worthy and highbrow, will mainly attract viewers who seek out such material.
• Equally, it should not be the BBC's responsibility to only provide for genres in the public service environment not produced by commercial public service broadcasters. This would risk ghettoising the BBC and prevent it from setting standards for all broadcasters. Equity believes that the BBC is at the core of PSTB, and as such it is important that it should be allowed and encouraged to continue its range of programmes and be supported by the Licence Fee. We believe that the BBC should set standards for all broadcasters, whether or not they have public service obligations and that they have a greater responsibility to the broadcasting environment because of the privileges of the Licence Fee.
• Finally, Equity recognises the value of the BBC's patronage of the arts including film and the creative industries. Their support for The Proms, for example, is invaluable and allows every member of the UK to access music otherwise unavailable through television, or to some geographical locations.

Should the BBC run commercial services?

• Equity understand that some commentators argue that allowing the BBC to operate commercially alongside it Licence Fee funded services is unfair and puts additional pressures on the market, disadvantaging purely commercial organisations. Equity believes that the BBC's commercial ventures are sufficiently separate from its public service activities. If a decision was taken to privatise sections of the BBC, we believe that the effects would undermine any aesthetic value of separating them from the public service obligations.
• Additionally, revenue from the BBC's commercial ventures is reinvested back into the industry, which can only help and support the overall public service broadcasting ecology. The BBC is committed to investing in programme production and this money is vitally important for the independent production sector as well as other broadcasters.
• One result of any separation would be the dilution of the BBC brand and the ability to market programmes to a global market. This could also reduce the BBC's abilities to exploit its archival material and hence income streams for that material, especially if the decision was taken to privatise BBC Worldwide.

How should we pay for the BBC?

• Equity believes that, despite it imperfections, the continuation of the Licence Fee is essential for the survival of high quality, diverse and original public service programming on the BBC. We believe that without the Licence Fee, the BBC would be unable to continue to meet its public service obligations. It would not be able to act free of market concerns and trends and it would be forced to react to developments in the way the commercial PSBs have had to do repeatedly over the last five years. Operating in a market-orientated environment would put a huge strain on the BBC (and the commercial broadcasters) and we do not believe that any of the alternatives suggested by commentators would allow the BBC to be as significant and respected as it is now.
• If further convincing were necessary, the Government only needs to look at the experiences of other countries to see the possible implications of changing the BBC's funding. ABC in Australia, TVNZ in New Zealand, CBC in Canada and PBS in the United States are all poor examples of public service television broadcasting when compared to the BBC. These channels are forced to weather advertising slumps, seek sponsorship, raise money through telethons or beg Government's for public subsidy. As a result, they fail to live up to their potential and are often criticised for poor, unimaginative programming or worse, that their editorial independence is questioned.
• Additionally, a recent report by Oliver & Ohlbaum Associates called UK Television Content in the Digital Age identified that redirecting BBC funding may increase commercial audiences but the consequent pressure on airtime prices would limit actual revenue increases for commercial broadcasters. As commercial broadcasters recycle a lower proportion of revenue into original production, the net effect would be to lower the overall level of domestic content investment in the UK market. Additionally redirecting existing or new public funds to commercial broadcasters to subsidise high cost genres could result in these funds being distributed to shareholders or new ventures which do not rely on quality, home-grown programmes, effectively crowding out new commercial investment.
• Public service broadcasting often relies on broadcasters to act in a way in which the private sector, left unregulated, would not. While the Communications Act defines that those obligations should be, it is only the BBC without the concerns of shareholders or failing advertising prices that can truly embrace them. In doing so, it provides a standard of programming that the commercial PSTBs can measure themselves against and other commercial broadcasters can aspire to meet. It has only been able to do that because it operates in a mixed broadcasting economy, using significant public investment in the form of the Licence Fee.
• We have detailed below our consideration of each of the proposed alternative funding possibilities for the BBC. It is important to consider the experiences of other countries when considering these alternatives.

a) Advertising:

Advertising is being spread among more and more broadcasters, and it is still suffering from the effects of an economic downturn. ITV reports an 18% downturn in advertising since 2000. It makes no sense for the BBC to share a diminishing source of revenue, especially as it is likely to result in irreparable damage to all broadcasters. As well as reducing Channel 4's ability to produce high-quality programming, introducing advertising to the BBC threatens the quality and diversity of BBC programming. Producers would seek programmes generating high audiences to ensure high advertising.

b) Sponsorship:

Programmes would become reliant on their sponsors and editorial values could be threatened. The risk of sponsorship withdrawal would make planning for the future less certain and is likely to result in a decrease in worldwide recognised quality of programming.

c) Subscription

Making the BBC a subscription only service will create a number of problems. Firstly, while the Broadcasting Policy Group may consider that the BBC will be able to offer a selection of packages of their services, we believe that for the current television services to be financially viable, they would need to be either sold as a group or part of a bundled package with other broadcasters. The latter would cause problems for European audiovisual regulations. Additionally, it is likely to cost viewers more than the current Licence Fee to access these services, if the current quality and range levels are maintained. At present, figures show it costs £4 to collect the BBC Licence Fee per head, compared with £24 per head to collect one year's subscription to BSkyB. This would be reflected in any subscription costs. If the Licence Fee were to supplemented by subscription this would also increase the burden on viewers, including those poorer people, who would be deprived of the full range and quality of the BBC, which would otherwise be universally available. Finally, we are unsure as to how this approach could be applied to radio services. It would mean separating the BBC into radio and television organisations and we believe that in order for them to continue to produce a range of high quality programming, they need to operate together.

d) Combination of Commercial and Public Funding:

If the BBC was funded by a licence fee and commercial funding, future European rules could turn the BBC into a ghettoised public service, providing a limited range of "worthy" programming equivalent to PBS in the USA.

e) PSB fund - 'Arts Council for the Air':

Some commentators argue that the Licence Fee money could be made available to other broadcasters to produce 'worthy' programming. We are concerned both about how that 'worthy' programming will be judged, and also how the BBC could continue to act as a public service broadcaster is any of the Licence Fee was diverted away from it. If the intention were to ensure that money is made available to the industry as a whole, Equity would argue that this is already the case through the BBC's independent production obligations. This in effect means that independent production companies are able to pitch for Licence Fee money. One other issue to consider would be the fate of advertising revenue earned for advertisements placed around a programme that has been produced using money from the fund. It would be difficult to agree that this money should not be returned to the fund, but should instead be absorbed by the commercial broadcaster. We would also be concerned that any body created to administer a PSB fund would result in another level of bureaucracy that all broadcasters would have to accommodate.

Furthermore, we believe to enable innovation and allow the BBC to fulfil its Public Service remit, the Licence Fee should rise by above RPI annually with concessions to certain sections of society such as the old and the disabled. Any concessions need to be revenue neutral to the BBC, be perceived to be fair by the public, but also affordable in terms of administration and finite.

Is the BBC organised in the most effective and efficient way?

• Equity welcomes moves originated by Greg Dyke to divert money from administration to programme making. As the positive results of this exercise can already be seen, we would want to see a continuation of this policy.
• Equity believes that the BBC has achieved the right balance between in-house and independent production commissions, a position that was endorsed by the ITC programme supply review.
• As we have outlined above, Equity considers the BBC to be the most important organisation in the provision of training and development for people working in the audio-visual sector.

How should the BBC be governed and regulated?

• Equity considers the Royal Charter to be the most effective way for sustaining unique nature of the BBC. We believe the Charter provides the BBC with independence that could otherwise be compromised.
• With regard to the regulation of the BBC, we would advise against incorporating the Corporation under the remit of Ofcom. This regulator is new and untested, and it already has significant responsibilities in the telecommunications and broadcasting sectors to get to grips with. We believe the additional pressure in regulating the BBC at this stage would be too much and therefore unwise. Unless therefore, the Government can propose an alternative, Equity considers the BBC should remain under the regulatory control of the Board of Governors.
• However, this does not mean that the Governors should remain untouched. Instead, we believe a lot can be learned from the debates surrounding the creation of Ofcom especially regarding transparency. We consider there is a need for a greater clarity of the role and function of the Governors, and that they should be separated from the day-to-day functions of the BBC. However, we do believe that there is some value in the Governors having a professional background, including some experience of managing a large business. Additionally, the amount of information available about the decisions and working policy of the Governors should be increased as an overall strategy to be more transparent in their operation.

How do we ensure that the BBC is properly accountable to the public and Parliament?

• Equity believes that the current checks and balances are sufficient to ensure that the BBC is accountable both to the public and Parliament. We would not want to see an increase in the amount of bureaucratic checks placed on the BBC or any changes that could diminish its independence.

On behalf of Equity: Kelly Wiffen, Research and Parliamentary Officer 020 7670 0260

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