BBC and The TV Licence

All profits made by BBC Worldwide go back into the BBC.

BBC Worldwide is the commercial arm of the BBC it sell magazines, programme libraries etc to either publice direct (e.g. Magazines, Videos, DVD's etc) or to other broadcasters (e.g. UKTV, BBC America, TEN, NINE, Proseiben etc - mainly programme libraries). The profits from BBC Worldwide is ploughed back into the BBC.

It is one good major point of the BBC it is supposedly a non-profit organisation. Even so non-profit organisations have to be well and truly scrutinised just like any government quango, pensions schemes or even charities.

Would any of the above actually happen if the BBC was a private company, funded by advertisments and owned by shareholders - which would happen if the licence fee was taken away.

One may argue it could follow the same route as Channel4 - another government semi-quasi quango, but for the government to get the best deal for the BBC it would privatise it. If anything the Government are already thinking of privatising Channel 4 (e.g. the aborted merger with Five!!!!!!!!), so what would they do with the BBC?????????????

The point Mich makes about advertising on the BBC leading to less money for other commercial advertisers is, I think, a misreading of the advertising market. I don't think advertising is a zero sum game. Companies pay for advertising in proportion to their audience. If ITV1 suddenly started getting an extra million viewers every night, then they could quite rightly raise their ad rates. Why? Because they're reaching more people. And companies would pay for that. The problem with the BBC actively seeking ratings is that they ultimately take viewers away from other commercial networks. There is only a finite amount of viewers, after all. So, if viewers are watching the BBC, then that means they're not watching a commercial operation, which means lower ratings for them, which in turn means they can't get as much money from advertising revenue. The challenge for ITV is that much greater, because its main free-to-air competitor is funded by taxpayers.

I don't think public service broadcasting should ever be about chasing ratings points. Yet in many areas, this is precisely what the BBC does. It takes your money, so it can try and screw over the commercial operations. It's anti-competitive behaviour, because it restricts investment by the private sector.

Ultimately, if BBC1 was commercialised or privatised, and started accepting advertising, the amount spent on media advertising in the UK would increase. There are so many programmes on the BBC that given their ratings, companies would be scrambling to get a piece of the action. That doesn't mean they'd sacrifice the money they spend on advertising on ITV or other channels. There may in the short term be a moderate decline, but ultimately, advertisers are buying audience reach. At the moment, a large portion of the audience is off watching the BBC at any given time and is completely inaccessible. You open that sector up, and it would be one of the single biggest steps forward for British business - and that would ultimately be good for consumers.

So your suggesting that the BBC should make programmes that purposefully aim to get low ratings?

Surely if the BBC aims to make programmes that will get the highest audience, licence fee payers will be getting the best deal out of the money they are paying. I'm not suggesting for one minute that the Beeb shouldn't make minority programmes, but I think there IS also room for those populist ones too, especially in one off drama and documentaries that are under-served by other providers.

[quote="Mr Q"]The point Mich makes about advertising on the BBC leading to less money for other commercial advertisers is, I think, a misreading of the advertising market. I don't think advertising is a zero sum game. Companies pay for advertising in proportion to their audience. If ITV1 suddenly started getting an extra million viewers every night, then they could quite rightly raise their ad rates. Why? Because they're reaching more people. And companies would pay for that.[quote]

To an extent you have a point, but not fully.

In your example of ITV audiences rose the advertising revenues would rise, this is plausible. However the total advertising expenditure of a single company is unlikely to rise significantly; indeed some companies may divert resources from other forms of advertising to television but this would not be by a significant amount.

It isn't reasonable or likely that companies in general will increase their advertising budgets by around 1/3 - that money in many cases simply wouldn't be available or it's spend desired.

It's not about "value for money". That's not the point of a public service operation. The public service exists to correct "market failure" - to provide the services that the private sector can't or won't. Some of those ventures will be low rating, yes. Obviously businesses exist to make profits - therefore commercial networks will seek to have high rating programmes because that's how they get the most money from advertisers. If you've got a high rating programme, it stands to reason that the private sector would want to provide it, so why do we have the public sector doing it?

Ultimately, British taxpayers are paying for programmes that if they were on a commercial network would be paid for by advertisers and other forms of revenue. You're directly paying for the BBC. You at best only indirectly pay for commercial TV on free-to-air, and you pay for any additional subscription services at your choice. To me, the better value proposition stands with the latter option.

I'm not saying abandon the license fee entirely. What I am saying is that you could trim it right down if you allowed for the privatisation or commercialisation of those elements of the BBC that can and do fiercely compete at the moment in the marketplace. The BBC has a valuable role to play as a public service broadcaster - there's no doubt about that - but at the moment it goes well beyond the scope of that role, and distorts the market through government provision of what the private sector is more than capable of offering, which ultimately has a negative effect on private sector investment.


It depends on where you're advertising. I suspect in the short term there would be a decline in advertising revenue for all other media operators - but this would be spread across various media, not just TV, so the net effect would be minimal. Advertisers may conclude that they can reach a greater audience from advertising on the BBC instead of, say, a newspaper or a commercial radio station. But at the same time, given that any move would be well planned in advance rather than the country just waking up one morning to see BBC Breakfast "brought to you by Tesco's", you'd also see planning by companies, with a likely increase in advertising budgets for some in order to promote their products and services on the BBC, rather than completely sacrificing their advertising spending elsewhere.

Keep in mind as well that if you give back the license fee (in proportion to the amount of services that would remain public service) to British taxpayers, then that's more money for them to go out and spend in the market, giving companies more money that they can potentially spend on their advertising - but in the end, admittedly, only a small (although not entirely neglible) proportion would end up directly allocated to advertising budgets.