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Guardian Media Group Guardian Media Group response to the BBC Trust Fair Trading Review About Guardian Media Group Guardian Media Group (GMG) is one of the UK's leading commercial media organisations and a British-owned, independent, news media business. GMG’s core business is Guardian News & Media (GNM), publisher of theguardian.com and the Guardian and Observer newspapers. As well as being the UK’s largest quality news brand, the Guardian and The Observer have pioneered a highly distinctive, open approach to publishing on the web and has sought global audience growth as a critical priority. Rapid technological change and the financial challenges facing the newspaper sector more broadly triggered GMG to drive a significant evolution in its business strategy. In 2011 GMG revealed plans to become a digital first news organisation, placing a distinctive, open approach to digital journalism at the heart of its strategy at a time when many other news brands were putting up digital paywalls and charging premiums for their online content. This open approach has seen GMG produce high-quality journalism, funded through a combination of advertising, sales, events, and sponsorship. GMG is increasingly connecting with new audiences via social media and other third party platforms, opening up our content to reflect changes in consumer behaviour. Online news services operated by GNM now include: theguardian.com website (optimised for desktop, tablet and mobile); a free iOS and Android app for mobile and tablet; and, a paid-for daily iPad edition. This open approach to journalism has also seen GNM enjoy significant growth as theguardian.com has become one of the world’s leading quality English language newspaper websites in the world1 with over 120 million monthly unique browsers2. Two thirds of the Guardian’s readership is now based outside of the UK3 and the Guardian is now a trusted, independent, global media brand that flies the flag for British values on a global stage: ● In 2011, the Guardian opened a digital newsroom in New York, capitalising on its growing online audience in the US. Guardian US has gone from strength to strength, topping 30 million unique browsers a year at the beginning of 2015, while its burgeoning office on the West Coast has opened a new frontier for commercial expansion. ● In 2013 the Guardian extended its global reach with the launch of a news digital edition in Australia, transforming the media landscape in the process. Currently one of the biggest newsbrands in the country - reaching 1 in 10 Australians4 - Guardian Australia has challenged the consensus with a raft of agenda-setting investigations and scoops, nurturing an engaged and loyal community of readers in a high-value and competitive market. 1 Source: comScore, desktop (August 2015) 2 Source: abc digital (August 2015) 3 Source: abc digital (August 2015) 4 Source: Nielsen (July 2015) ● The Guardian’s journey from a regional newspaper (established in Manchester in 1821) to a global news brand was confirmed in 2014, when Guardian US became the first news organisation of non-US origin to receive the Pulitzer Prize for Public Service for its investigation into NSA surveillance. Introduction GMG is a strong supporter of the BBC, its values and its contribution to British public life. GMG supports the fundamentals of the BBC in its current form and a universal service funded through a universal levy, at least for the period covered by the next BBC Charter. This funding structure has underpinned the BBC, enabling the BBC to create an unparalleled network of journalists across the world.5 However, GMG is also committed to ensuring that the Guardian’s news services thrive in a digital world, alongside those of the BBC. There is no contradiction in supporting a strong BBC at the heart of British public life whilst also calling for limits to be placed on the scope and role of the BBC in the next Charter period. The BBC is the most important cultural institution in the UK, sitting at the heart of British daily life. But if its place at the heart of British life is to continue, it will need to increase levels of transparency, openness and partnership. Digital news brands operate in an increasingly complex and dynamic digital economy. This dynamism is challenging the fundamentals of the business models of established media organisations at an unprecedented rate. The BBC’s near £4 billion of annual public funding represents a very substantial amount of guaranteed income with which the BBC can navigate these choppy digital waters. To put that guaranteed public income in context, following the sale of GMG’s 50.1% stake in Trader Media Group, GMG has a cash investment fund of £843 million to help ensure the Guardian’s future in perpetuity. £843 million represents just over 2.5 months of the BBC’s guaranteed annual income. Since the Government’s decision in 2014 to end public funding for the BBC World Service through the Foreign & Commonwealth Office, the BBC has also sought to commercialise its news content published outside of the UK through advertising and sponsorship6. Following this change in policy, in the UK the Guardian now competes for audiences with a licence fee funded, ad free BBC, while in the rest of the world the Guardian competes with an ad and sponsorship funded commercial BBC news. The BBC’s recent response to BBC Charter Review set out plans to “aggressively commercialise” the BBC’s global news operations, meaning that the Guardian will come into even closer competition with an increasingly commercial BBC in the years ahead.7 However, the existing oversight and transparency arrangements governing how the BBC creates new and shares existing news media content between the UK licence fee funded, and 5 See, for example, the GMG submission to “Public Service Content in a Connected Society, Ofcom’s third review of Public Service Broadcasting”, 2015. 6 http://www.theguardian.com/media/2014/jan/10/mps-bbc-commercialisation-world-service 7 http://www.bbc.co.uk/aboutthebbc/insidethebbc/howwework/reports/future_of_the_bbc_2015 1 commercially focused news operations were built for a different age. It is therefore essential that as the BBC seeks to compete more aggressively with the commercial sector, that the BBC is subject to a much more thorough oversight and transparency regime than it is today. These reforms should include a full, independent, public audit of the activities of BBC Worldwide and BBC Global News Ltd. GMG’s proposals for reform of the BBC through Charter Review In wider representations on Charter Review8, GMG proposes five points which it believes would result in a more open, transparent and productive relationship between the BBC and commercial news providers – a new settlement that would, in turn, bring real benefits to licence fee payers, industry and society. At their core, these proposals are about how we build on and grow the strength and value of the BBC: how we protect and enshrine it, while acknowledging the rapidly-shifting media landscape and the need to promote media plurality rather than cultivate media dominance. This short submission focuses on just one of those proposals, namely that Charter Review – and indeed a proper re-examination of the BBC’s Fair Trading principles - must encourage greater transparency around the way in which the BBC’s commercial activity functions alongside its public offering. The BBC’s recent decision to bring the international operations of BBC Global News Ltd together with those of the licence fee-funded BBC News has seen much closer working between licence fee and commercially funded arms of the BBC’s news operations. In February 2015, the Chair of the BBC Trust said that she was “struck by the benefits of the changed approach – co- locating World Service, Foreign Language Services, the UK TV newsroom and the talents of the BBC’s multi-skilled journalists, has allowed it to operate with lower costs and enhanced authenticity”. In 2012, Peter Horrocks, Director of BBC World Service Group, wrote to all staff, in both commercial and licence fee funded divisions, to say that one of their objectives should be to “let us know if you have any ideas on how we can strengthen our commercial focus and grow income".9 Comments which led Steven Barnett, professor of communications at the University of Westminster, to say "Everybody understands that the BBC is under huge pressure to generate more revenue after the licence-fee freeze. If they're going to start putting revenue- raising before the highest editorial standards it does raise serious questions about whether they have got their priorities right. We expect the BBC to promote journalism but not necessarily entrepreneurialism."10 8 See, for example, our submissions to the September 2015 inquiries in the BBC by both the Lords Communications Committee and the CMS Committee. 9 http://www.independent.co.uk/news/media/tv-radio/shock-at-the-bbc-as-reporters-are-told-to-start-making- money-7879748.html 10 ibid. 2 While de-duplication and smarter use of resources is positive, the BBC’s licence fee funding has enabled the BBC to build a formidable, world-leading news organisation. As the BBC sets out in its initial response to Charter Review, “The licence fee allows us to invest in the resources to do this in a unique way. The BBC reports from more countries, and to more people than any other international news broadcaster. It sustains an extensive newsgathering operation at a global, national and local level.” The Guardian’s future is increasingly as an international news brand, with the vast majority of the Guardian’s audience - around two thirds - now based outside of the UK. This is positive for Britain.
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