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A BBC for the future: a broadcaster of distinction May 2016

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A BBC for the future: a broadcaster of distinction

Presented to Parliament by the Secretary of State for Culture, Media & Sport by Command of Her Majesty

May 2016

Cm 9242 © Crown copyright 2016 This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives. gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, Archives, Kew, TW9 4DU, or email: [email protected]. Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned. This publication is available at www.gov.uk/government/publications Any enquiries regarding this publication should be sent to us at [email protected] Print ISBN 9781474131674 Web ISBN 9781474131681 ID 22041603 05/16 Printed on paper containing 75% recycled fibre content minimum Printed in the UK on behalf of the Controller of Her Majesty’s Stationery Office Contents Contents

Foreword 5 3. Enshrining independence and accountability 46 Key recommendations 6 Creating a unitary board for the BBC 48 Introducing an external regulator 51 Executive summary 8 A new framework and licensing regime 54 Reforming regulatory processes and powers 56 1. Introduction: the BBC is much loved and A longer Charter 57 remains a central part of British society 18 Increasing accountability to the nations 59 Changing context 20 Continued partnership with 59 A central role for public service broadcasting 22 An easier, more efficient complaints system 60 Maximising public value, adapting further 23 Engaging with the public 61 What the BBC does and how it compares 24 4. Supporting the creative sector 62 2. Prioritising distinctiveness and serving Assessing market 65 all audiences 26 Making the BBC a better partner 66 The BBC’s mission 28 Content distribution 69 Reforming the public purposes 30 Promotion of services 70 Defining and evidencing distinctiveness 31 Maximising consumer choice 70 Achieving greater distinctiveness at service level 37 A new contestable fund 71 Protecting the World Service 39 BBC archive 73 Meeting the growing challenge of serving Supporting local 73 all audiences 40 Digital switchover for radio 74 Improving provision for Black, Asian and Minority Ethnic (BAME) audiences 40 Improving provision for nations and regions 42

Department for Culture, Media & Sport | A BBC for the future: a broadcaster of distinction 3 Contents Contents

5. Enhancing efficiency and transparency 76 7. Annexes 104 Competition in content production 78 Annex 1 – Charter Review timeline 105 BBC Studios 82 Annex 2 – Consultation and engagement 106 Delivering further efficiency 83 Annex 3 – Summary of consultation data 109 Increased transparency of BBC spending 85 Annex 4 – Summary of polling 112 Commercial subsidiaries and regulated 85 Glossary 116 The National Audit Office role 87 End notes 118 Research and development 89

6. Ensuring a modern, sustainable, funding model 90 The licence fee level 92 Closing the iPlayer loophole 94 Greater freedom to manage budgets 96 Using the licence fee for public service content 97 Greater transparency in future licence fee settlements 97 Investigation and prosecution of TV licensing offences 99 Introducing more flexible payment plans 100 Voluntary payments for over-75s 100 Paving the way for a new more sustainable funding model in the longer term 102

4 Department for Culture, Media & Sport | A BBC for the future: a broadcaster of distinction Contents Foreword

The BBC’s current Royal Charter, its We want the BBC to thrive in a world eighth, comes to an end in December. of increasing technological, social Over the last ten months we have and economic change. And we will listened to the views of hundreds of ensure the BBC has a governance and organisations and institutions and regulatory framework that guides it hundreds of thousands of members always to act in the public interest and of the public. We have also had deliver good value to the people who the benefit of expert input from pay for it. committees in Westminster, Holyrood, and Stormont, and there has The new Royal Charter will also go Secretary of State for Culture, been a vocal, and often passionate, further than ever before in protecting Media & Sport public debate. the fundamental principle of BBC independence. The BBC should always The proposals that we are have the editorial and operational To inform, educate and entertain. , therefore, are the result of independence to decide how best For almost 100 years the BBC of the largest and most open to serve its audiences and the BBC has been pursuing the vision consultations ever conducted, and will , for the first time, be able to of its founder and first Director- are informed by the evidence that appoint the majority of members to General, Lord Reith. It is a revered has been provided to us by those its sovereign board. national institution, and familiar who watch and listen to the BBC: those who rely on it, those who Like any organisation the BBC is not treasured companion. It is a love it, those who can be frustrated perfect. And it has made mistakes. cultural, economic and diplomatic by it and those underserved by it. What is important is that the BBC force that touches the lives of learns from those mistakes, and almost all of those who live in The proposals that the government that previous failings are addressed. has set out in this white paper are In renewing the BBC’s Royal Charter, the UK and hundreds of millions about ensuring the BBC has a bold, therefore, the government wants beyond these shores. It is the strong and stable decade ahead. to enhance the best of the BBC, of our public service They will embolden the BBC to take but address those areas where it broadcast system, and remains risks, confidently and unashamedly to could, and should, do better. the envy of the world in what create the highest quality, distinctive content for all audiences. The government is clear that the is a now a global media market. BBC has a vital and enduring role to At its best, the BBC makes play for the next Charter period and programmes that are popular as beyond. As the BBC approaches its well as individually and collectively centenary the government will provide unique – informing, educating and the foundations for a stronger, more entertaining in a way which serves independent, more distinctive BBC all nations, regions and communities that will inform, educate and entertain in the UK. The BBC can only be for many years to come. successful it continues to create new and innovative content which breaks boundaries and sets new standards through its creativity, ambition and innovation. John Whittingdale Secretary of State for Culture, Media & Sport

Department for Culture, Media & Sport | A BBC for the future: a broadcaster of distinction 5 Contents Key recommendations

−−Enable the BBC to make even −−Ensure the BBC’s market impacts −−Promote greater transparency more great programmes for are assessed more widely and within the BBC through enabling audiences to enjoy, by incentivising effectively by providing licence fee payers to understand more distinctive output that with powers to investigate any how the BBC spends its budget informs, educates and entertains. aspect of BBC services. between different types of −−Create a strong unitary board −−Open the BBC’s content programming, and through new for the BBC, enhancing its commissioning to greater transparency on remuneration independence. The board will be competition, by removing the of talent paid over £450,000. fully responsible for the governance in‑house guarantee for all −−Deliver a stronger role for of the BBC and the delivery of its content except news the National Audit Office to services. In contrast to the BBC and news-related current affairs. scrutinise BBC spending and Governors and the BBC Trust, this This will provide hundreds of millions value for money. The National new governance structure will see of pounds of new opportunities Audit Office will become the the BBC responsible for appointing for sector, help BBC’s financial auditor given the at least half of the board members. drive efficiency savings and provide £3.7 billion of public money that −−Appoint Ofcom as the external new creative opportunities for the it spends. The scope of its value independent regulator of the BBC. The government also provides for money investigations will be BBC, as recommended by the in-principle support for BBC plans explored further. independent review by Sir David to -off its in-house production −−Help make the BBC a better Clementi. Ofcom is the widely into a new subsidiary, BBC Studios, partner, with a new focus on respected and experienced media opening up new opportunities to partnership in the Charter. The BBC and regulator. produce programmes for the BBC should leverage its size and scale to and other broadcasters in the UK enhance and bolster the creative −−Increase the licence fee level in and internationally. line with inflation for five years industry sector by working more from 2017/18 so that the BBC −−Establish a new contestable public in productive partnership with UK can continue to provide high service content fund to create new players of all sizes so that others can quality, distinctive content for opportunities for others to provide benefit more extensively from its all audiences. It will consequently the best public service broadcasting expertise and reputation. remain one of the best-funded content in the UK and enhance −−Ensure that the BBC serves all public service broadcasters in plurality in the provision of public nations and regions in the UK the world. service content. through a clear focus on the BBC’s −−Enhance the efficiency of the obligations in the new operating BBC by expecting the board to licence regime, clear board-level investigate issues relating to responsibilities, and a continued excessive management layers, commitment to the out-of-London and overall staffing levels. This production targets. could deliver significant further efficiency savings by of the next Charter.

6 Department for Culture, Media & Sport | A BBC for the future: a broadcaster of distinction Key recommendations Contents

−−Enshrine a commitment to −−Modernise the licence fee by diversity in the Charter, as part requiring all those who consume of a new overall commitment BBC on-demand content (e.g. on to ensuring the BBC serves all BBC iPlayer) to pay the licence audiences. The BBC should be at the fee, introducing more flexible forefront of representing diversity payment plans and taking forward both on and off screen. recommendations from David Perry −−Ensure the BBC supports and QC’s review of fee invigorates local news provision enforcement. The Charter will also across the UK, through the delivery empower the BBC to some of proposals to work in partnership elements of subscription in addition with the local news industry to to their current services. support local democracy, including −−Provide greater freedom for the an additional 150 local news BBC to manage its own budgets journalists. by phasing out protected funding for −−Embed the principle of the broadband (£150 million a year) and impartiality of the BBC in its local television (£5 million a year), overall mission to ensure it remains while protecting the World Service, the most trusted provider of high which brings high quality and quality news for audiences in the UK impartial news to global audiences and abroad. including where free speech is limited. −−Establish an 11-year Charter to 2027, separating Charter Review from the political cycle and enhancing the BBC’s independence. −−Introduce a new regularised process for setting the licence fee, giving the BBC the financial certainty it needs by setting the licence fee every five years and ensuring that future licence fee settlements can be informed by independent advice for the benefit of licence fee payers.

Department for Culture, Media & Sport | A BBC for the future: a broadcaster of distinction 7 Executive summary Contents

Executive summary

Prioritising distinctiveness and serving all audiences 11 A better framework of governance and regulation 13 A BBC that partners with and supports the wider creative sector 14 Enhancing transparency and efficiency 15 Ensuring a modern, sustainable, funding model 16

8 Department for Culture, Media & Sport | A BBC for the future: a broadcaster of distinction Executive summary Contents

The BBC is one of this nation’s In renewing the BBC’s Royal Charter The proposals in this paper from most treasured institutions. The and Framework Agreement (the an extensive process of consultation Royal Charter, the constitutional Charter) it is right that we ask and evidence gathering, in line with questions of the BBC. We should the government’s commitment to basis of the BBC, guarantees celebrate the things it does well, an open and transparent Charter the BBC’s independence and and protect what licence fee payers Review process. This has included provides the framework for how cherish and value. But we shouldn’t a public consultation, to which over the BBC is governed and funded. shy away from seeking reform where 190,0001 people contributed, an The current Royal Charter is due necessary – to help the BBC thrive independent review of the governance to expire at the end of 2016. in the future, and to better meet the and regulation of the BBC led by Sir high expectations we all have of it. David Clementi, a public opinion study In reviewing the BBC’s performance considering in particular the views over the past decade, and setting its of underrepresented groups, and a framework for the future, we want review of the BBC’s market impact. to create a stronger BBC – one that In total over 300 organisations and continues to command a central role experts have engaged in the Charter in the lives of so many people here in Review process. Many others have also the UK and overseas. contributed formal reports including the Culture, Media and Sport Select This white paper sets out the Committee, Lords Communications government’s proposals for ensuring Committee, the BBC Trust and the right supporting framework is in the BBC Executive. In addition, the place to strengthen what is one of conducted a survey our greatest public institutions for on the BBC, which over 9,000 of its the coming decade and beyond. readers completed. The government considered all of these contributions.

An open and transparent Charter Review process

192,564 4,000 responses to the public adults across the UK participated in nationally consultation received representative polling, 16 focus groups and 12 in-depth interviews

The Clementi Review Independent report Over 300 looking at how the into market impact organisations and BBC is governed and and distinctiveness experts engaged in regulated published of BBC published Charter Review process 1 March 2016 1 March 2016

Department for Culture, Media & Sport | A BBC for the future: a broadcaster of distinction 9 Executive summary Contents

It was a clear message from our To enable the BBC to thrive over −−places supporting the wider UK consultation that the BBC remains the coming Charter period, the creative industries at the heart of its much loved and admired, and that government will therefore set a operations, taking care to minimise it plays an important role in the framework for the BBC which: any undue negative market impacts; daily lives of most of the population. −−allows it to focus its creative energy −−enhances its efficiency and A wide range of audiences rate transparency; and it highly – with 80 per cent of on high quality distinctive content consultation responses saying the that differentiates it from the rest −−allows it to be supported by a BBC serves its audiences well or of the media market while serving modern, sustainable and fair system very well.2 And its market share in all audiences; of funding. television, radio and online means it −−protects the fundamental principle This will mean the BBC can successfully remains a powerful media force in the of independence and ensures it is adapt to the changing environment UK, despite increased competition governed and regulated effectively, it finds itself in, continue to provide (see below and opposite). with clear accountability for great programmes and services for all promoting the public interest; For all these notable successes, the audiences, whilst ensuring it does so BBC has faced questions in recent in the public interest. years, including about its governance, its distinctiveness, the market impact of its more mainstream services, the The BBC in numbers extent to which it serves all sections The BBC is the largest and most influential player in the UK media market. of society, and its efficiency and It has: value for money. Furthermore, over the coming decade the BBC will need −−the highest audience share of any provider in UK television and radio to respond to a series of challenges, markets, with 33 per cent of the television audience and 53 per cent of including continued changes in the radio audience;3 technology which will further increase −−nearly £5 billion of annual revenue (including £3.7 billion from the choice for consumers. licence fee)4 making it one of the best-funded public service broadcasters in the world;5 −−one of the world’s leading websites (.com) with 101 million unique browser visits in January 20156 and a news and information site (bbc.co.uk) which is one of the most clicked online content portals in the UK;7 −−the most used on-demand service (iPlayer) provided by the major broadcasters and platforms in the UK, with around three in ten adults (31 per cent) using it in 2014;8 −−the largest production capacity in the UK, with an in-house facility that supplies 20 per cent of all originated non-news television content in the UK and around 65 per cent of all radio content;9 −−a global audience of 348 million reached weekly across radio, television and online – the BBC World Service audience now stands at 246 million and BBC Global News reaches 108 million on television;10 and −−through its commercial subsidiary BBC Worldwide, probably the largest distributor of secondary and ancillary television and audio rights outside the US studio system, with assets that include stakes in around 40 different commercial stations across the globe.11

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Prioritising distinctiveness The BBC is the largest radio operator in the UK – share of all and serving all audiences radio listening hours Q1 2015 The BBC, by virtue of its founding 43% public service ethos and unique 43% of the public believe BBC One BBC Orion Other network funding model, can afford to take and ITV1 are quite similar apart 0.9% 8.7% 46.0% UTV risks, to be innovative, ambitious, from the adverts 3.4% inspirational and bold. This means Communicorp UK that the BBC should, in these respects, Source: GfK Social Research, Research 2.4% be different to commercial providers, to explore public views about the BBC, giving listeners and viewers more May 2016 choice, more variety and more high quality content. The public are clear This is not an argument that the BBC about this: 80 per cent believe in the should not be popular. Some of the importance of the distinctiveness of 12 BBC’s most distinctive programming Bauer the BBC. 13.3% – from ’s Life on In many ways the BBC is different: Earth to ’s The Wonders BBC local/ 74 per cent of people believe the BBC of the Universe – reach very wide Global regional 18.2% 7.1% delivers ‘fresh and new’ programming13 audiences by virtue of their quality. and there are many examples of And the BBC can only be successful Source: Ofcom, The Communications outstanding BBC content, including in if it continues to reach people across Market 2015, based on RAJAR, all natural history, , science, arts, all nations, regions and communities adults (15+), 12 months to Q1 2015. news and current affairs. But as the in the UK. But with the BBC enjoying Base: National Total Survey Area BBC Trust and others14 have observed, 33 per cent market share in television, the BBC needs to be more ambitious 54 per cent market share in radio17 in certain areas. This is the case and the third most popular UK online particularly in its more mainstream service,18 commissioning editors services on television, radio and online, should ask first and foremost “is this such as BBC One (where 46 per cent programme sufficiently innovative and of the BBC content budget is spent15), high quality?” and not “where will this Radio 1, and Radio 2 (see chart). feature in the ratings figures in the The government therefore wants to next week or month?”. support the Director-General in his aim to create a BBC that is “more distinctive than ever – and clearly distinguishable from the market”.16

Department for Culture, Media & Sport | A BBC for the future: a broadcaster of distinction 11 Executive summary Contents

New public purposes New mission:

Providing impartial news and information to help people To act in the public interest, understand and engage with the world around them serving all audiences with The BBC should provide accurate and impartial news and impartial, high-quality and current affairs to build people’s understanding of all parts of the distinctive media content and UK and of the wider world. Its content should be provided to the services that inform, educate highest editorial standards. It should offer a range and depth of and entertain. analysis and content not widely available from other UK news providers, using the highest calibre presenters and journalists, Achieving this will require a change and championing freedom of expression, so that all audiences of culture within parts of the BBC can engage fully with major UK and global issues and participate – a change that the new BBC board in the democratic process as active and informed citizens. will need to support as one of its Supporting learning for people of all ages main priorities. To help achieve this, The BBC should help everyone learn about different subjects the government will: in ways they will find accessible, engaging, inspiring and −−place a requirement for distinctive challenging. The BBC should provide specialist educational services at the heart of the BBC’s content to help support learning for children and teenagers overall core mission of informing, across the UK. It should encourage people to explore new educating and entertaining – the subjects and participate in new activities through partnerships mission will also require the BBC with educational, sporting and cultural institutions. to give greater focus to serving Showing the most creative, highest quality the diverse nations, regions and and distinctive content communities of the UK through a The BBC should provide high quality output in many different requirement to serve all audiences; genres and across a range of platforms which sets the standard −−embed distinctiveness within a in the UK and internationally. Its services should be distinctive revised set of the BBC’s public from those provided elsewhere and should take creative risks, purposes – these will also highlight even if not all succeed, in order to develop fresh approaches the need for the BBC to be impartial; and innovative content. −−ensure the more mainstream Reflecting, representing and serving the diverse services of BBC One, Radio 1 and communities of all the UK’s nations and regions Radio 2 are more differentiated from The BBC should reflect the diversity of the UK both in its the rest of the market in areas such content and as an organisation. In doing so, the BBC should as playlists, genres, and levels of accurately and authentically represent and portray the lives of new programming through the new the people of the UK today, and raise awareness of the different operating licence regime; cultures and alternative viewpoints that make up its society. It should ensure that it provides content and services that meet the needs of the UK’s nations, regions and communities. It should bring people together for shared experiences and help contribute to the social wellbeing of the UK.

Reflecting the UK, its culture and values to the world The BBC should provide high-quality news coverage to international audiences, firmly based on British values of accuracy, impartiality, and fairness. Its international services should put the UK in a world context, aiding understanding of all parts of the UK. It should ensure that it produces content which will be enjoyed by people in the UK and globally.

12 Department for Culture, Media & Sport | A BBC for the future: a broadcaster of distinction Executive summary Contents

−−require the BBC to give greater A better framework of World Service future funding focus to serving those from Black, governance and regulation Asian and Minority Ethnic (BAME) backgrounds and from those nations £254m The framework of governance and and regions that are currently less Protected licence fee regulation is central to the success well-served, building on its new funding per annum of the BBC, as it is for other public diversity strategy; and and private sector bodies. The BBC −−support the World Service – £85m Trust model has been more effective arguably the BBC’s most unique and New funding from than the previous board of Governors distinctive service – by protecting government for in of respects, including its funding at £254 million per year additional services* through increased transparency. for the five years from 2017/18 and But as the independent review led by Sir David Clementi concluded, there providing £85 million per year of *2016/17: £34m, 2017/18-2019/20: government funding for increased £85m per year is a wide consensus that the current provision in specific areas. system needs substantial reform, in particular to provide a clearer division The government will also require of responsibilities. Ofcom’s licensing of the BBC to Performance scores serving include specific provision for the ethnic groups The new Charter will therefore: nations, retain its commitment to −−create a unitary board for the BBC quotas on the amount of shows made % with responsibility for governing outside London, and continue support 70 the BBC in the public interest, in for minority language broadcasting line with the mission and purposes services in partnership with S4C and 60 62% set for it in the Charter. At least MG Alba. Together, this will ensure the 50 55% 54% 50 per cent of the appointments to BBC continues to play an important 46% the new board will be made by the role in supporting a vibrant media 40 BBC itself; industry across the whole of the UK. 30 −−introduce external independent 20 regulation of the BBC by Ofcom, as recommended by the Clementi 10 Review. This will ensure a strong 0 regulator sits alongside a strong The BBC offers quite a bit, a lot, or everything need BBC; and White British/Irish −−reform the mechanisms and powers Chinese/Mixed/Other of regulation by requiring Ofcom Asian to establish a new operating licence Black regime for the BBC, backed with clear sanctions. Base: White: 1,721; Asian: 216; Black: 151; Chinese/Mixed/Other: 188 Source: NatCen Social Research for BBC Trust, Purpose Remit Survey, 2015

Department for Culture, Media & Sport | A BBC for the future: a broadcaster of distinction 13 Executive summary Contents

Alongside these key reforms to the BBC’s governance, the government Clearer roles and responsibilities will introduce four important other changes to the accountability Proposed model framework for the BBC: Governance Regulation −−separate the Charter Review process from the political cycle and enhance independence by establishing an BBC Executive Ofcom 11-year Charter to 2027, with a mid-term review to check the Set strategy Issue licences Deliver services Regulate editorial standards effectiveness of the core proposals Oversee operational delivery Arbitrate complaints established in this Charter; Measure performance Regulate commercial activity −−make the BBC more accountable Engage the public Regulate market impact Monitor and review performance to the nations of the UK; −−reform the BBC’s complaints system; and −−set new expectations for public A BBC that partners with But there is more that can be done, engagement and responsiveness. and supports the wider particularly as the BBC’s scale and creative sector resources can have a negative impact on individual services and offerings Lengths of Royal Charter The creative sector in the UK has in the UK media market by crowding flourished in recent years – it has been out investment or creating barriers to growing at twice the rate of the rest entry for new firms. The BBC needs to of the economy since 2008 and now from a mindset of minimising its negative market impact or seeing Length Number of accounts for £84 billion of Gross Value other media players primarily as Charters Added (GVA) and 8.7 per cent of total exports of services.19 But the sector is rivals, to one that proactively seeks More than ten years going to face a series of challenges in to enhance and bolster – and work 2 the coming years. In this context the in partnership with – the wider BBC must do what it can to support broadcasting and creative industries. Ten years the sector – from established players This is not about shaping the BBC 5 to micro and small and medium in the interests of competitors. It is Less than ten years sized enterprises. about maximising the net benefit of 1 public funding, for the benefit of the There is much that the BBC already public, the BBC, the creative sector Charter extensions does. It is a major purchaser, spending and the UK’s economy and soft power. (six months – 4 more than £1 billion on the services three years) of around 2,700 suppliers involved in making programmes for the BBC.20 Its presence can also drive up the quality of commercial programming and it works collaboratively in partnership with others, enabling them to benefit from its reach and reputation.

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To deliver this, the new Charter will: In addition, there will also be more Requiring further transparency and transparency about the volume and greater efficiencies across overheads, −−help make the BBC a better partner, impacts of the BBC’s promotion of distribution and content production leveraging its size and scale to its own services, with a requirement will therefore be a core ongoing benefit the creative industry sector for the BBC to take greater care to responsibility of the new unitary by working more in partnership steer its promotional activity towards board. Its analysis will need to include with UK players of all sizes, through areas of public value. The BBC will also what more can be done to lower a new focus on partnership in be expected to ensure its content is pay-bill costs, given only very modest the Charter; available as widely as possible. It will reductions in headcount in recent −−ensure the BBC’s market impacts be expected to lead the industry in years, despite the licence fee being are assessed more widely and any future digital switchover for radio. frozen since 2010.24 The government effectively. Under the current And it will be encouraged to open up will make a number of changes to the system the regulator can only assess its archive further so that the public Charter to support this work: the market impact of ‘significant’ and other organisations can benefit new services – the new Charter from its rich content. −−remove the in-house guarantee will provide Ofcom with powers for all BBC television content production except news and news- to investigate any aspect of BBC Enhancing transparency services, including where minor related current affairs, opening up changes have over time combined and efficiency hundreds of millions of pounds of to have notable impact, with production spend to competition. In The BBC has taken a number of light of the benefits of competition proportionate powers to sanction; steps to enhance the efficiency of its 21 for the creative industries and the −−ensure the BBC supports and operations in recent years, with plans licence fee payer, all productions, invigorates local news provision to deliver £1.5 billion of savings by the 22 including returning series, sports, across the UK, through the delivery end of this Charter alone. But with children’s and non-news related of proposals to work in partnership only 23 per cent of the public believing 23 current affairs will be tendered by with the local news industry to the BBC is efficient – and with the the end of the next Charter, unless support local democracy; and need to continuously bear down on there is clear evidence that this −−establish a new £20 million per costs to ensure the programmes and would not be value for money. There annum contestable public service shows audiences love are protected – will be a phased introduction of this content fund to create new further action is needed. requirement; opportunities for other broadcasters −−provide in-principle support for the and producers to make public BBC’s Studios proposal, provided service broadcasting content. the BBC design this in a way that The government will consult on delivers the necessary safeguards; the details of this in the autumn. −−enshrine greater public scrutiny of BBC spending and value for money through the National Audit Office (NAO) by making it the financial auditor of the BBC, reflecting that the BBC spends almost £4 billion of public money each year.25 The government will explore further the merit of giving the NAO powers to conduct value for money investigations of the BBC’s commercial subsidiaries;

Department for Culture, Media & Sport | A BBC for the future: a broadcaster of distinction 15 Executive summary Contents

−−require a review of the BBC’s −−require the BBC’s new unitary Ensuring a modern, commercial operations. The BBC board to ensure that the BBC is sustainable, funding model has three commercial subsidiaries, transparent and efficient in how it including two (Global News and spends its funding. The public has In order to provide the BBC with the Studioworks) that have been a right to know how its money is level of funding and certainty it needs loss‑making in recent years. The being spent. There will therefore be to deliver against its updated mission unitary board will be required to new requirements placed on the and purposes over the next Charter assess the extent to which these BBC to report spend by genre each period, the government will maintain commercial operations promote year, and to disclose the names of the licence fee as the main funding the public interest and deliver value talent paid more than £450,000. model for the BBC and will: for money for the BBC. Ofcom will be given powers to ensure that the In the light of the BBC spending −−increase the licence fee level in line 26 BBC’s commercial subsidiaries trade almost £170 million a year on with inflation to 2021/22 – this will fairly; and technology the government will mean the BBC will receive over also require the BBC to undertake a £18 billion of income from 2017/18- detailed review of its current research 2021/22 and will ensure that the and development (R&D) activity. BBC remains one of the best-funded public service broadcasters in the world (see chart opposite).27 The BBC is the largest content producer in the UK −−provide greater freedom to the (companies by revenue, 2014) BBC to manage its budgets – since 2006 the government has chosen to protect a number of areas of StudioCanal £34m spending from the licence fee, but Hat Trick £30m Red Arrow Productions £30m Others under the next Charter these will all £51m £230m be removed, with the exception of £52m the World Service; Avalon BBC £58m £741m William Morris −−provide additional support for BBC £62m finances by helping the BBC to Zodiak £69m address some of the challenges it Warner Brothers £85m faces in managing its cost pressures NBCU (as agreed at the 2015 Summer £101m ITV Budget), including allowing those £536m Tinopolis £140m aged 75 and over to make voluntary payments if they choose to, while

Fremantle All3Media EndemolShine continuing to protect the licence fee £147m £253m £425m concession during this Parliament; and −−enhance the BBC’s independence Source: Ofcom, Review of the operation of the television production sector, 2015 from government by introducing a new regularised licence fee settlement process once every five years.

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The government will also modernise −−improve the fairness and Given that the licence fee will continue the current licence fee system to make effectiveness of the process of to come under pressure in the coming it fairer. It will: investigation and prosecution of years in a continually evolving and licence fee evasion by taking forward diverse media environment, the −−close the ‘iPlayer loophole’ so that recommendations from David Perry government supports the first moves those who currently view BBC QC’s review of television licence fee towards a more sustainable funding on‑demand programmes only enforcement; and model in the longer term. The BBC has (e.g. on the iPlayer) for free pay the −−enable the BBC to make its content committed to consider and explore same as those watching or recording whether elements of subscription it on television as it is shown live; ‘portable’ so UK licence fee payers can access BBC iPlayer while on have a role to play alongside the −−introduce more flexible payment holiday in other EU member states. core licence fee model in its future plans to help those on lower incomes funding, as it aims to develop and test with paying the licence fee and the scope for additional sources of increase flexibility and convenience commercial revenue. It will be for the for all licence fee payers; BBC to set the scope of the plans, but the government expects that progress and success will be appropriately reviewed, with further development The BBC is the best-funded public service broadcaster in Europe potentially taking place in the second part of the Charter period, £ million in order to feed into the next Charter 4,000 Review process. 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2010 2011 2012 2013 2014 BBC () Télévisions (France) RAI () WDR – (Germany) SWR – Südwestrundfunk France Médias Monde (France) () RTBF ()

Comparison European public service broadcasters’ unconsolidated operating revenue.

Source: The Yearbook of the European Audiovisual Observatory 2015

Department for Culture, Media & Sport | A BBC for the future: a broadcaster of distinction 17 1. Introduction: the BBC is much loved and remains a central part of British society Contents

1. Introduction: the BBC is much loved and remains a central part of British society

The context the BBC is operating in will change dramatically over the next Charter period 20 There remains a central role for public service broadcasting in this changed and changing world 22 Maximising the public value it provides, the BBC will need to adapt further 23 What the BBC does… 24 …And how it compares to others 25

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The BBC plays a unique role At its best, the BBC makes superb There is nothing inevitable about in British society; very few programmes and serves a range the BBC’s success. From humble national institutions can claim of audiences, which it is hard to beginnings as the UK’s sole imagine any other broadcaster broadcaster in 1922, few would have to occupy such a heightened wanting or being able to do. Many anticipated the much-loved national place in the public consciousness play an important role in promoting institution that many take for granted and people’s affections. It is citizenship, education and learning, today – and certainly many other widely respected for the quality and cultural excellence. Beyond its celebrated British brands have failed and independence of its news programming, the BBC contributes to to survive into their ninth decade. and current affairs, and even the health of one of the most vibrant The BBC owes much of its success in a multi-media age its most creative economies in the world. The to its founder Lord Reith and his creative industry sector grew at twice enduring mission for the organisation popular programmes continue the rate of the rest of the economy in to inform, educate and entertain. to draw the country together, 2014, with film, television, , radio But it has also had to adapt to as with the London Olympics, and photography alone contributing remain strong, navigating a series of world-class like War and £10.8 billion to the UK economy.28 changing economic, social, political Peace and The Night Manager, or The BBC is therefore part of the social and technological tides. This has led to natural history such as Life Story. and economic fabric of , numerous changes in scale and scope and a source of great pride. No other and to governance and funding over country in the world has anything the past century: from being the UK’s quite like it. sole broadcaster to providing multiple radio, television and online platforms The BBC is widely respected abroad and services. as well as at home. It sets an international benchmark for quality, This pace of change is accelerating. producing outstanding television, radio The last ten years have arguably and online programmes and services seen the greatest period of change in that are exported throughout the broadcasting and telecommunications world. The World Service is one history, with increasing choice of the leading sources of international and competition, evolving viewing news and BBC services reach habits, ever-more diverse audiences, 348 million people around the world and shifting consumer and citizen each week.29 This helps ensure, along expectations all driving change within with other internationally respected the industry. The BBC has not been global UK media brands, that the UK immune from these structural forces, continues to lead the world in terms and has had to innovate and reform of soft power, measured for its global in response. Its 53 per cent audience influence through its culture, media market share of the radio market, and education.30 33 per cent market share of television audiences, and strong online presence shows that it is still a powerful media force in the UK (see box 4, page 25) despite increased competition.

Department for Culture, Media & Sport | A BBC for the future: a broadcaster of distinction 19 1. Introduction: the BBC is much loved and remains a central part of British society Contents

For all these successes, the BBC The context the BBC is −−Technological change. Around has faced questions in recent years, operating in will change two thirds of households now have including over its governance, its dramatically over the next a digital video recorder, take up of distinctiveness, the market impact of connected is growing and its more mainstream television, radio Charter period almost half of adults now watch on 34 and online services, accusations of The BBC, like every other broadcaster, demand catch-up services. The bias, and concerns about waste and is facing what it describes itself as a next ten years will see continued value for money. It has also been hit ‘world in transition’.33 It is difficult to changes in technology that will by a number of high profile scandals. predict the economic, political, social, have profound implications for how And there is a sizeable minority of technological developments and people consume media. Increasingly, people who do not think that the BBC behavioural changes we will see over people are enjoying what they want, is delivering for them – indeed over the coming decade. One of the few when they want and on a wider 20 per cent report that they would not things that is certain about the media range of platforms than ever before 31 miss the BBC if it didn’t exist. These landscape of the future is that it will – and may be using technology are all serious issues that the proposals look very different from that of today. and services in 2027 that either do in this white paper will seek to ensure But five forces may have a profound not exist or which are only in their are not replicated over the coming impact on the BBC and other major infancy now. Charter period. players in the UK media market over But despite these issues, overall the the coming Charter period. BBC approaches its centenary in good health, with a strong and widespread reputation for quality. This was borne Box 1. Media consumption via mobile will continue to grow out in many of our consultation responses: eight out of ten people feel hours, billion the BBC served audiences well or very well, three quarters of people believe 80 it produces high quality and distinctive 70 content, and an overwhelming 60 majority of the responses want the BBC to remain independent.32 50 40 30 20 10 0 2012 2013 2014 2015f 2016f 2017f 2018f 2019f 2020f PC Tablet

Excludes offline app and TV-based usage; PC 6+, smartphone/tablet 8+ Source: Enders Analysis, 2015

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−−Demographic change. The Box 2. People will increasingly access content on devices other than demographic makeup of the UK has their television changed in a number of respects over the past decade: the overall minutes/day population has grown, the number 500 and proportion of older people has increased and society has become more diverse overall.39 The 400 audiences which the BBC is seeking to serve will continue to change, 300 both at home and abroad over the coming Charter period. The BBC is 200 already facing particular challenges, for in meeting the needs 100 of people from black, Asian and minority ethnic backgrounds, and of 0 2015f 2020f 2015f 2020f 2015f 2020f 2015f 2020f younger audiences, who increasingly 16-24 25-34 35-54 55+ watch and consume content in markedly different ways to previous TV PC/tablet/smartphone generations.40 Increasing variations exist among the different nations Excludes offline app usage and non-viewing TV time (e.g. console gaming) and regions too.41 Source: Enders Analysis, 2015 −−Global instability. The world is facing a range of geopolitical −−Consolidation, competition and −−Increased public expectations. challenges, including instability in globalisation. The media market People rightly expect higher the , and the rise of has seen significant consolidation standards from public organisations: state sponsored media outlets with and convergence in recent years. integrity, openness, a focus on the large global audiences. Over the Media companies are increasingly public interest. One recent report course of the next decade there offering ‘all media’ packages, noted: “The public want all providers will almost certainly be areas of integrating mobile, broadband and of public services to adhere to the world where democratic values television services. Seven of the ten and operate by common ethical such as freedom of speech continue biggest UK independent production standards... for the public, ‘how’ to be suppressed or neglected and companies, for example, are now things are done are as important as when the BBC’s reputation for 36 integrated with major international ‘what’ is done”. However, although integrity and trust will never be broadcasting companies such as people expect more, they tend to more important. Europe, Global and trust less. Another report found Universal.35 But there have also been that: “trust in institutions is no powerful new entrants such as BT, longer automatically granted on the Amazon, Apple, Google and , basis of hierarchy or title. In today’s meaning, for consumers, there is world, that trust must be earned”.37 more choice than ever before. These Although trust in the BBC remains trends are likely to continue – and higher than in many institutions,38 perhaps accelerate – over the next the public rightly expects higher decade, and will clearly have an standards from the BBC compared effect on the market in which the to commercial broadcasters and BBC will be operating over the next other media companies and the Charter period. BBC is going to have to work hard to maintain its privileged position over the coming decade.

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Each of these drivers brings both There remains a central In fact, in an increasingly fragmented opportunities and threats for the role for public service world the provision of high quality, BBC. Political change, for example, broadcasting in this changed public service content is arguably may increase the value of bringing more important than ever. For impartial news to parts of the world and changing world example, the BBC helps the UK that would not otherwise enjoy it. But The government believes there is and its diverse communities have it may also mean that opportunities still a strong and enduring rationale shared conversations by reflecting for distributing high quality news are for the BBC continuing into the a wide range of mainstream voices, curtailed by those seeking to deny 21st century, despite – and at times which furthers understanding and 42 their citizens access to such services. because of – the changes identified tolerance. Technological change may mean that above. It is possible to overstate the licence fee payers access the BBC The BBC has played an important role extent to which the market cannot in these areas and the government in new ways, offering a degree of deliver socially-optimal broadcasting. personalisation previously not possible. expects the BBC to continue to take The private sector can and often does a leading role through the coming But it may also lead to fragmenting provide high quality broadcasting audiences, making it more difficult Charter period, consistent with its that rivals the best of the public editorial independence. for the BBC to bring people together. sector: , HBO and respected Globalisation can enhance the BBC’s international news outlets such as The central objective for the next ability to earn revenues from its and theguardian.com are all Charter period is therefore to ensure content abroad, lowering demands on evidence of this. This raises legitimate that the BBC can successfully adapt the licence fee payer. But it can also questions about the appropriate to the changing environment it finds mean that the BBC gets disconnected scale and scope of a BBC funded by itself in, so that it can maximise the from its core UK public service mission a compulsory flat-rate licence fee public value it provides for the by seeking to “compete” with global for those who watch television. But £3.7 billion of public money it players that have a very different set public service broadcasters such as receives each year. of objectives and incentives. If the BBC the BBC do still deliver positive effects responds successfully to these trends it for society by delivering programming will continue to operate as the world’s that a free market might under- leading public service broadcaster, provide by virtue of not valuing its delivering high quality programming social benefits, such as: to millions. If it fails to respond it risks potentially finding itself marginalised −−extending democratic knowledge in an ever-crowded media world. through independent news and current affairs; −−helping extend the principles of democracy and free speech abroad; −−inspiring audiences through programmes that expand their horizons in areas such as natural history, science and the arts; and −−addressing the needs of audiences such as minority language groups and children, and delivering other types of broadcasting such as arts and music that may not be provided by commercial providers to the same extent.

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Maximising the public value it More distinctive More efficiency and transparency provides, the BBC will need to At its best, the BBC provides high The drive for greater efficiency is a adapt further quality content which is distinctive discipline that all organisations should and different from that of other aspire to – but when entrusted with This white paper sets out the five broadcasters. But there is evidence almost £4 billion43 of public money priorities for ensuring the BBC can to show it can go further. This will that aspiration becomes a strong maximise its public value over the become increasingly important as obligation. The BBC has made progress next Charter Review period. It is choice and competition continue to over the last Charter period. It is based on a vision for a strong and expand and consumer habits evolve. undoubtedly more efficient than ten independent BBC that is accountable, To retain its unique status, the BBC years ago. But it should not rest on more distinctive, market sensitive, will need to do more to stand apart its laurels. The public consistently say efficient and transparent, and from the competition, rather than that value for money is something underpinned by sustainable and looking to replicate services consumers they expect the BBC to prioritise and secure funding. are already getting elsewhere. This is the BBC will lose public confidence if not to say that the BBC should not it cannot show that it spends its funds Accountable and well governed be popular – distinctive programmes wisely. In a time of constrained public No organisation can succeed can have widespread appeal. It is to spending the government wants to without effective governance. say that popularity should not be support and enable the BBC’s drive There is a wide consensus, including its primary objective; maximising its for greater efficiency – particularly in from the BBC Trust itself, that the public value must come first. This will the way it spends its money in making current structure and nature of the be captured in the new mission and television and radio content. We will governance and regulation of the public purposes. also introduce new measures to BBC has not met expectations and make how the BBC spends its money needs to change. The fundamental Greater sensitivity to market impact more transparent. principle of independence needs to be The creative industry sector in the UK protected and there needs to be clear has flourished in recent decades. But Sustainable and secure funding accountability, strong management it will face a number of challenges in It is vital that the BBC has a and a regulatory system that holds the the years ahead. Given its scale, the sustainable funding model, fit for the BBC to account for delivering against behaviour of the BBC is likely to have next decade. The licence fee, despite its public purposes and acting in the a significant influence on the future of some drawbacks, is the best way of public interest. the UK media market. Recent reforms funding the BBC for the next Charter have helped embed an awareness period. However, the licence fee of market impact amongst BBC needs to be fairer and easier to pay management but the BBC needs to for those on lower incomes and for move from a mindset of “minimising all licence fee payers. The licence fee its negative market impact” to one will rise with inflation over five years that proactively seeks to enhance from 2017/18 and this will provide and bolster – and work in partnership the BBC with the funding it needs to with – the wider broadcasting and thrive and deliver against its updated creative industries. This is not about mission and purposes. The BBC must, shaping the BBC in the interests of however, continue to deliver value for competitors, but about maximising the licence fee payer. the net benefit of public funding.

Department for Culture, Media & Sport | A BBC for the future: a broadcaster of distinction 23 1. Introduction: the BBC is much loved and remains a central part of British society Contents What the BBC does…

Box 3.

National services Television Radio

Eight channels available via , live online via channel Ten national radio stations, national radio stations for listeners websites and as video-on-demand via BBC iPlayer. in , and Northern , plus local radio stations throughout , available via analogue and , digital television, online via BBC iPlayer Radio on-demand.

bbc.co.uk/asiannetwork Online

Nations and regions services Production centres across the country make television and radio programmes for local audiences and the wider network.

International services Commercial services Internationally focused services available across the world, Profits from the BBC’s commercial services help support its public both publicly funded and commercial. service mission.

Licence Fee funded

BBC’s main commercial arm; Largest television studios and post investing in, commercialising and facilities provider in the UK. showcasing content from the BBC Radio, television, and online. News, information and around the world. comment gathered from around the world. BBC Store is a multi-channel retailer selling thousands of books, DVDs, Commercially funded Supplies television facilities to and toys for fans of overseas broadcasters transmitting our programmes. BBC Store sells from the UK. products online, by phone and post.

24 hours a day international The BBC’s international website news and information for a global audience. television channel.

24 Department for Culture, Media & Sport | A BBC for the future: a broadcaster of distinction 1. Introduction: the BBC is much loved and remains a central part of British society Contents …And how it compares to others

Box 4. The BBC is the biggest television provider in the UK Box 6. The BBC is the largest (viewing share of channel groups in all UK homes, 2014) radio operator in the UK (share of all radio listening hours, Virgin Q1 2015) Media 0.0% Other BBC 12.6% Orion Other network 2.3% 0.9% 8.7% 46.0% UTV UKTV BBC One 3.4% 4.9% 21.7% Communicorp BSkyB others UK 3.5% 2.4% /Two/Three (Pick TV) BBC Two 2.1% 6.1% channels 2.6% BBC other 5.4% Channel 5 others 1.6%

Channel 5 Bauer 4.4% ITV 13.3% ITV2 15.6% Channel 4 ITV ITV3 2.4% others 4.8% others 2.3% BBC local/ 6.1% 1.7% Global regional 18.2% 7.1%

Source: Communications Market Report 2015 Source: Ofcom, The Communications Market Report 2015, based on RAJAR, all adults (15+), 12 months to Q1 2015. Box 5. The BBC is the largest content producer in the UK Base: National Total Survey Area (companies by revenue, 2014)

StudioCanal Box 7. The BBC is the third most £34m Argonon Hat Trick £30m Red Arrow popular online service Productions £30m Others £51m £230m (top ten most popular Sony £52m websites visited on a property Avalon BBC level, March 2015)44 £58m £741m William Morris £62m Sky sites Apple Inc. Google sites Zodiak 28m 27m 46m £69m Warner Brothers Mail £85m Online/ NBCU 28m 41m £101m ITV £536m Tinopolis £140m

Fremantle All3Media EndemolShine £147m £253m £425m

eBay Source: Ofcom, Review of the operation of the television production sector, 2015 31m BBC sites 40m

Yahoo sites Microsoft sites 33m Amazon sites 37m 37m

Source: Ofcom, The Communications Market Report 2015, based on comScore MMX‑MP, UK, March 2015

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2. Prioritising distinctiveness and serving all audiences

Giving the BBC a mission to inform, educate and entertain distinctively 28 Reforming the public purposes 30 Defining and evidencing distinctiveness 31 Achieving greater distinctiveness at service level 37 Prioritising funding and protecting the World Service 39 Meeting the growing challenge of serving all audiences 40 Improving provision for Black, Asian and Minority Ethnic (BAME) audiences 40 Improving provision for nations and regions 42

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The BBC rightly strives to Ensuring the BBC is sufficiently be innovative, ambitious, distinctive – discernibly different in inspirational and bold. These approach, quality and content to Our aim… is to create a BBC that is commercial providers – is a central more distinctive than ever – and clearly are some of the things that we objective of this Charter Review. distinguishable from the market. most admire and value in the A distinctive BBC is a powerful tool; Lord Hall, Director-General50 BBC. It can push boundaries and expanding our knowledge, experience take creative risks because, in its and imagination, bringing the country The detailed independent study own words, it has “the privilege together in shared experiences and on the BBC’s impact on the market of being able to make good supporting our national culture and commissioned by government programmes without also having public life. also supported the view that the BBC needs to be more distinctive, to consider whether they will The notion of a distinctive BBC is not particularly on its more mainstream make a profit”.45 new. The last Charter Review in 2006 services, such as BBC One and Two, concluded that “the BBC’s content Radio 1, Radio 2, Radio 5 Live, and should offer something distinct from BBC Online.51 Recent reviews by other broadcasters”; and the BBC the BBC Trust reached some similar has worked over the last Charter conclusions.52 The government 46 to try to meet these expectations. therefore strongly welcomes the Research conducted for the BBC Trust vision expressed by the current found that 73 per cent of the public Director-General to make the BBC thought that the BBC’s content was more distinctive than ever.53 high quality, and 60 per cent agreed that it was distinctive.47 An even This is not an argument that the BBC higher proportion of those responding should cease to be popular. The BBC to our consultation agreed.48 Yet can only be successful if it continues in recent nationally representative to reach and provide public value to quantitative polling commissioned all nations, regions and communities by the government, only 38 per cent in the UK. The BBC has demonstrated thought that “the BBC makes lots of time and again that it can be both television programmes that no other popular and distinctive. It would be broadcaster could make” and only hard to imagine other broadcasters 27 per cent agreed that the BBC making the same volume and “makes lots of programmes which variety of high-quality public service are more daring or innovative than programmes such as The Great British those made by other broadcasters” Bake Off, , , (see box 8).49 and . These programmes are loved all across the UK. 80% 80% of the public think BBC distinctiveness is important Source: BBC Trust Consultation Response, October 2015

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This is, however, an argument that Giving the BBC a mission popularity itself must not be the to inform, educate and primary measure of success for the I think if the BBC has one issue that entertain distinctively BBC. We expect much more from our I wish it would deal with, it is that it BBC than that. Commissioning editors pays too much attention to ratings. Lord Reith, the first Director-General should ask first and foremost “is this I must say I thought that the first day I of the BBC, put informing, educating programme sufficiently innovative walked through the door and I thought and entertaining at the heart of the and high quality?” and not “where it more the last day I walked through BBC’s mission. This has remained part will this feature in the ratings figures the door, in the outward direction. of the DNA of the BBC to this day and in the next week or month?”. , former Chairman of the BBC, BBC Trust research indicates that there February 201454 is strong support for it to remain.55 The government is therefore clear Box 8. Public views on The government wants to ensure that the core of the BBC’s mission, distinctiveness the BBC retains its unique status to “inform, educate and entertain” and continues to thrive. To continue should endure. % to be successful in the future, and to merit its special privileges and 100 13% substantial public funding, the BBC 90 needs to stand apart from other We want the BBC in the next decade 80 35% broadcasters, distinguishing itself to be the place people come to make 70 from the market. This will become brilliant programmes, programmes of 60 increasingly important as choice and distinction. For producers, directors, 50 25% competition continue to proliferate, writers, artists to have the creative 40 viewing habits evolve, audiences freedom to do things they would find 30 fragment, and consumer and citizen it hard to do elsewhere. 20 27% expectations expand. The government British, Bold, Creative, The BBC’s Programmes 10 will therefore: and Services in the next Charter, 0 October 201556 The BBC makes lots of TV −−embed distinctiveness in the BBC’s programmes that are more daring or innovative than those made overall mission; by other broadcasters −−reform the public purposes making Agree them more clearly defined and Neither agree nor disagree emphasising key elements such as Disagree distinctiveness, impartiality and Don’t know diversity; −−require the BBC to provide more Base: all respondents in Wave 1 (2,093) distinctive services through Source: GfK Social Research, Research strengthening the existing content to explore public views about the BBC, requirements at service level on May 2016 television, radio and online; −−protect the World Service – arguably the BBC’s most unique and distinctive service; and −−require the BBC to meet the growing challenge of serving all audiences.

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The next Charter does, however, −−Recognise the core underlying All of these elements will therefore be provide the opportunity to more fully need for the BBC to promote the enshrined in the BBC’s mission in the explain what we expect from the BBC, public interest. This is set out in next Charter to encourage the BBC by expanding the existing mission. the current Charter, but there is to create new and innovative content Government will therefore: also merit in making explicit in the which breaks boundaries, sets new mission the ultimate responsibility standards, and serves all audiences. −−Add an explicit requirement of the BBC to act in the public to be distinctive, high quality interest. This is about ensuring that and impartial. Many, if not all, while the BBC must serve licence New mission: broadcasters seek to some extent to fee payers, it should do so taking a To act in the public inform, educate and entertain, and wide and balanced view of its direct it is hard to imagine a programme and indirect economic, social and interest, serving all that didn’t seek to achieve one of cultural impacts. It must seek to do audiences with impartial, these aims. But what sets the BBC what adds most public value in a high-quality and distinctive apart from others is the consistent diverse, competitive, and pluralistic media content and services high standard and quality expected environment, where viewers and that inform, educate and by its audiences, the impartiality listeners have an increasing choice entertain. that is core to its role of informing of media content and providers. and educating, and the degree to which its content should be −−Include a requirement to serve clearly distinguishable from that all audiences. This is not merely of other broadcasters. The public about making content available on support this view. A clear majority different platforms, although this of those polled for the public is important. Nor does it mean opinion study commissioned by the maximising audience share and government said that the balance ratings, meeting an overall ‘reach’ of the BBC’s overall content should figure each week, or increasing be distinctive and different from the amount of BBC content other broadcasters57 and the Trust’s consumed for its own sake. Serving research showed that high quality all audiences means making sure and impartiality were considered that the BBC is for the diverse to be amongst the most important communities across the UK and values for the BBC.58 that every demographic group is being served by the BBC to some extent. Being “served” means not just consuming content, but getting value from the BBC and so benefiting indirectly from its public mission.

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Reforming the public purposes The government therefore intends to retain the approach of public purposes The last Charter established six broad but will reform them to incorporate The Trust believes that clarification ‘public purposes’ (see box 9). These some constructive improvements that and simplification of the BBC’s current provide a framework for what the BBC were raised through the government’s public purposes would be helpful should be seeking to achieve beneath and the BBC Trust’s consultations, and proposes some revisions that are its mission, helping direct the activities reflecting the key areas of reform the result of extensive consultation of the BBC and enabling others to that the public, the BBC, and other and testing with the public. These hold it to account. The introduction stakeholders have called for. Revised should set out clearly what the BBC of purposes has been widely regarded public purposes are set out in box 10, is there to achieve. We also propose a as a positive innovation. Of those few which make a number of changes: measurement framework so that the respondents that addressed the issue impact of performance against those in the government’s consultation, the −−clarify the language particularly purposes can be monitored. majority felt they should be retained, in relation to news, creativity and BBC Trust response to either in their current form or with its international role (purposes one, government consultation60 some changes.59 four and five); −−emphasise the key factors that In addition to these revised purposes, the new Charter will recognise the Box 9. Current public purposes are central to the mission of the BBC; its impartial news and BBC’s important role in encouraging −−sustaining citizenship and current affairs, its distinctive creative the growth and success of the UK’s civil society; output, and its need to serve creative industries. It will set out how, diverse communities; in delivering its public purposes, the −−promoting education BBC will be expected to work with −−simplify the purposes with and learning; the UK’s creative industries through the removal of the current sixth partnerships, developing skills and −−representing the UK, its nations, purpose. While the BBC has an supporting training. In delivering its regions and communities; important role in technology (as set public purposes, the new Charter out further in Chapter 5) which will will also recognise the importance −−stimulating creativity and be reflected in the Charter, this is of the BBC working in partnership cultural excellence; not the core of its role; and with others to promote technological −−bringing the UK to the world −−include greater detail, to make innovation, knowledge sharing and and the world to the UK; and it clear to any reader what is continuing its leading role in research expected of the BBC. These new and development. −−in promoting its other purposes, purposes will be connected with the helping to deliver to the wider governance and regulatory public the benefit of emerging framework, set out in Chapter 3. communications technologies This follows the approach of the and services and, in addition, current Charter, with the purposes taking a leading role in the setting the objectives that all BBC switchover to digital television. activity should be working towards.

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Defining and evidencing Box 10. New public purposes distinctiveness Providing impartial news and information to help people Embedding distinctiveness within the understand and engage with the world around them mission and purposes of the BBC is The BBC should provide accurate and impartial news and intended to put distinctiveness at the current affairs to build people’s understanding of all parts of the core of the BBC’s culture, freeing its UK and of the wider world. Its content should be provided to the outstanding creative talent to take highest editorial standards. It should offer a range and depth of creative risks and push the boundaries analysis and content not widely available from other UK news of quality programming, and making providers, using the highest calibre presenters and journalists, sure its output as a whole will be and championing freedom of expression, so that all audiences distinct from the market. But it will can engage fully with major UK and global issues and participate also be important to ensure that the in the democratic process as active and informed citizens. Charter helps the BBC to make sure Supporting learning for people of all ages each and every individual service is The BBC should help everyone learn about different subjects sufficiently distinctive. in ways they will find accessible, engaging, inspiring and challenging. The BBC should provide specialist educational Box 11. Roundtable events with content to help support learning for children and teenagers the creative sector across the UK. It should encourage people to explore new subjects and participate in new activities through partnerships As part of the Charter Review with educational, sporting and cultural institutions. process, government arranged a set of roundtable events with Showing the most creative, highest quality and representatives from the creative distinctive content sector. In this forum, the need for The BBC should provide high quality output in many different the BBC to take more risks was genres and across a range of platforms which sets the standard a common theme,61 reflecting in the UK and internationally. Its services should be distinctive the Director-General’s view that from those provided elsewhere and should take creative risks, the BBC “must be more prepared even if not all succeed, in order to develop fresh approaches than ever to take risks”.62 There and innovative content. was a general view that the BBC Reflecting, representing and serving the diverse is in some ways less risk-taking communities of all the UK’s nations and regions than in the past, and that it is no The BBC should reflect the diversity of the UK both in its longer seen to have the licence to content and as an organisation. In doing so, the BBC should take risks which recognises that accurately and authentically represent and portray the lives sometimes they will fail. Under the of people across the UK, and raise awareness of the different new Charter, with a greater focus cultures and alternative viewpoints that make up its society. on distinctiveness, the BBC will be It should ensure that it provides content and services that given back that permission and meet the needs of the UK’s nations, regions and communities. the BBC will have the editorial and It should bring people together for shared experiences and help operational independence it needs contribute to the social wellbeing of the UK. for its creative talent to try, fail and succeed. Reflecting the UK, its culture and values to the world The BBC should provide high-quality news coverage to international audiences, firmly based on British values of accuracy, impartiality, and fairness. Its international services should put the UK in a world context, aiding understanding of all parts of the UK. It should ensure that it produces content which will be enjoyed by people in the UK and globally.

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At its best, the BBC already provides Box 12. A definition of distinctiveness distinctive content within each of its There is wide agreement that the BBC should be distinctive. What is less clear services. Radio 1Xtra, Radio 3, Radio 4, is how exactly this should be defined. At one end of the spectrum a narrow Radio 6, BBC Local and Nations Radio, definition can be drawn, where each and every programme on the BBC must the BBC Asian Network and BBC Four, be entirely unlike any other provider. The other extreme would allow a whole for example, are quite clearly distinct service to be called distinctive by virtue of a single factor, such as its mix of from commercial competitors. Even on genres. The right balance is between these two extremes. the BBC’s more popular services such as BBC One, BBC Two, Radio 1, Radio A description that captures the spirit of distinctiveness well comes from 2, Radio 5 Live and its online services a former BBC Chairman who, in setting out his vision for the BBC, said: there is much that is distinctive. But in these areas the evidence is “It means to inform, educate and entertain – and do it in a way that’s more mixed. original, distinctive, ambitious, ground-breaking, risk-taking, memorable, innovative, informative, stretching, inspirational. It means programmes that Television challenge, that open our eyes, and that bring delight. It means setting the There are a number of highly standard for every genre of content from news and current affairs to distinctive programmes on BBC One, drama, comedy and yes, games and everything in between. And doing which is the home to some of the it across television, radio, and online. most loved BBC content, from world class drama such as , to What is does not mean is patronising, derivative, formulaic commodity making ballroom dancing a spectator programming that may deliver value to shareholders or advertisers but can 63 sport for families with Strictly Come leave audiences short-changed.” Dancing, to holding current affairs For the purposes of the next Charter a more formal definition is needed. debates around the country each week Building on the BBC’s own definition, distinctiveness will be defined as: with Question Time. BBC One’s genre mix is different to ITV; for example, “A requirement that the BBC should be substantially different to other factual programming makes up providers across each and every service, both in prime time and overall, 26 per cent of BBC One’s genre mix and on television, radio and online, in terms of: in peak time compared to 11 per cent for ITV.64 Its acquisitions and repeats −−the mix of different genres, programmes and content; have decreased in recent years, with −−the quality of output; hours of repeats in peak time on BBC −−the amount of original UK programming; One falling from 138 to 78 between 2010/11 and 2014/15.65 Some key −−the level of risk-taking, innovation, challenge and creative ambition; and quality ratings have also improved −−the range of audiences it serves.” such as the BBC One ‘Fresh and New’ scores which have gone up to 72 per cent in the latest results.66

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However, there is evidence that −−there has been a decline in volumes BBC One could have greater levels of in certain public service genres creative ambition in its programming, in peak time (although this may Some viewers do not find BBC One while staying true to its overall to some extent reflect more sufficiently distinctive in some positioning as a more mainstream investment in fewer hours of these important ways and we believe it is TV channel. This is of particular genres rather than a reduced overall possible to continue to serve loyal significance given the service accounts commitment).69 For example, audiences well while taking more for by far the largest proportion of hours of comedy and arts and creative risks in programming and spend of any BBC service. In particular: music programming in peak time scheduling choices. on BBC One reduced by 11 per BBC Trust, Service Review of BBC One, Two, −−the BBC Trust argued in both 2010 cent and 35 per cent respectively Three and Four, July 201477 and 2014 that BBC One needed to between 2010 and 2014.70 This is be more distinctive, with the 2014 within the context of wider concern Box 13. BBC One could be report noting that some viewers about provision of certain types more distinct find the channel “over reliant on of programming raised in Ofcom’s familiar programmes and believe 2015 Public Service Broadcasting it has a tendency to ‘play safe’ in Review.71 The BBC Trust’s audience % programming and scheduling”. It research in support of its 2014 100 also noted that “nearly two-thirds 11% review of services report found that 90 of the pre-watershed weekday for some audiences in particular 34% schedule is composed of a small 80 magazine style factual programmes 70 number of long-established are seen as ‘patronising’ or ‘dumbed 67 60 programmes, shown year round”; down’ and are regarded as ‘cheap 50 11% −−the government’s market impact programming’;72 and 40 43% study suggested that BBC One’s −−public polling shows that 43 per cent 30 schedule has become less innovative agree “BBC One and ITV 1 are quite 20 and risk-taking over the past 10- 73 similar apart from the adverts”. 10 15 years, noting a decline in new 0 titles, bottoming out in 2010, and In terms of BBC Two, the BBC Trust BBC One and ITV1 a static daytime schedule highly found many things to praise in its are quite similar, reliant on long-running property and 2014 report74 and the distinctiveness apart from the adverts collectables programming: Homes appears to have been enhanced in Under the Hammer in its 20th series, recent years on some metrics.75 But Agree in its 43rd series, it has also seen a decline in certain Neither agree nor disagree and in its genres between 2010 and 2014, with Disagree Don’t know 16th series;68 current affairs and music and arts in peak time declining by 26 per cent and 18 per cent respectively, whilst Percentages shown in figure sum to less than 100% because of rounding entertainment increased by 15 per cent in the same period.76 Base: all respondents in Wave 1 (2,093) Source: GfK Social Research, Research to explore public views about the BBC, May 2016

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Box 14. BBC commitment Box 15. Radio 1 and 2 could be more distinct to UK film % % As part of its commitment to distinctiveness, the BBC should 100 100 36% 32% continue to showcase British film 90 90 and ensure that its film strategy 80 80 links both film production with 70 70 18% exhibition and coverage of British 60 14% 60 film on television and online. 50 50 18% 19% The BBC is one of the three 40 40 major public investors of film in 30 31% 30 31% the UK. Every year BBC Films 20 20 invests around £10 million in film 10 10 development and production, 0 0 supporting around eight feature Radio 1 and commercial pop Radio 2 and commercial pop films.78 The BBC also represents a radio stations like radio stations like Magic FM Network and and Heart Network huge opportunity for British film- are quite similar, apart from are quite similar, apart from makers and new talent in getting the adverts the adverts their films seen by UK audiences. In Agree developing a new film strategy and Neither agree nor disagree thinking about how it can enhance Disagree the distinctiveness of its output Don’t know the BBC should articulate how it can maximise the impact both of Percentages shown in figure sum to less than 100% because of rounding its role as an investor in, and an Base: all respondents in Wave 1 (2,093) exhibitor of, UK films. Given the Source: GfK Social Research, Research to explore public views about the BBC, May 2016 increased convergence between film and television, this should include further consideration Radio On Radio 1 this includes the extended of the role of BBC Worldwide The BBC’s most mainstream radio programme, The Surgery in promoting British film, as services, Radio 1 and Radio 2, are the with Gemma and Dr Radha, the Teen recommended in the 2014 Film most popular music radio stations in Hero Awards and the recent coverage Policy Review.79 the UK.80 They play an important role of refugees in Jordan on the Greg in the BBC’s public service offering, James Show. On Radio 2, this includes particularly in support of home-grown the Show and the popular talent in the music industry. Many 500 Words Competition. acts gained their breakthrough on BBC radio, for example , Sam Smith and all received their first track plays on Radio 1. Both Radio 1 and Radio 2 have broader playlists than their commercial rivals and a range of specialist music shows and live sessions. They deliver further public value through content that informs and educates.

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However, as with BBC One, there is −−both Radio 1 and Radio 2 currently In addition, some concerns were raised evidence that there could be even have relatively modest public service through the BBC’s consultation that greater levels of ambition to enrich the requirements (for example, two Radio 5 Live focuses too greatly on market and maximise the public value social action campaigns per year the most popular sports, especially these stations can offer, while still on Radio 184 and over 100 hours football, rather than covering a remaining channels of broad public per year of arts programming on wider range. It was also noted that appeal. For example: Radio 2).85 This content is often exclusivity arrangements can prevent pushed to the margins of the other broadcasters offering alternative −−while the BBC provide a figure schedule: Radio 1 documentaries, or additional coverage that would of just 3 and 13 per cent for for example, tend to be aired late increase choice for radio listeners. Radio 1 and Radio 2 respectively in the evening outside of peak time, The government’s market impact for playlist overlap with their meaning much of the “talk time” study also noted the perception of 81 nearest commercial competitors, during peak hours is similar to that Radio 5 Live as a sports station rather the average daytime listener will found on commercial stations;86 and than sports and news.88 experience a much higher degree of overlap than this might suggest.82 −−nearly a third of respondents to This is because the BBC’s figures do the nationally representative polling not take into account the number (31 per cent) agreed that BBC Radio of times a track is played, with more 1 and commercial pop radio stations popular tracks often played more like Capital Network and Absolute regularly. For example, Radio 1 can Radio are “quite similar” apart from play the same track around 100 the adverts and only 14 per cent times in a given month, with a disagreed (see box 15). This view “long tail” of tracks played just once was held most strongly among or twice.83 The BBC should play Radio 1’s target demographic of the a mix of popular tracks alongside under-25s, of whom 42 per cent new and less well known music to agreed. For Radio 2 only 18 per cent ensure that these tracks reach large disagreed that it was “quite similar” audiences, but a balance is needed to commercial pop radio stations to ensure it is sufficiently distinctive; like Magic FM and Heart Network apart from the adverts, with 31 per cent agreeing.87

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Online The government therefore welcomes Box 16. The BBC website could BBC Online is the third most viewed the BBC’s plans to make its online be more distinct online service in the UK, behind offering more distinctive and to reduce Facebook and Google, but far ahead its new magazine-style content. % of any other UK news outlet.89 The While the BBC will maintain a full 100 BBC’s online news has a far higher range of subjects and stories, its focus 28% trustworthiness rating than other will be on rigorous, impartial analysis 90 providers.90 However, in respect of of important news events and current 80 the BBC’s online provision, some affairs. Online content does not easily 70 17% stakeholders have raised concerns lend itself to the kind of quotas that 60 that the BBC provides ‘soft news’ currently exist for television and 50 17% and ‘magazine’ style content that Radio and as such it has relatively few 40 39% replicates what is provided elsewhere licence obligations, but with the move 30 and which contributes little to its towards increased online provision, 20 public service mission. It is difficult this will need to be kept under review. 10 to quantify the extent of this issue 0 given the lack of data in this area, The government’s market impact The coverage of news on study concluded that greater the BBC website is much and the potential for blurred lines the same as that available between what constitutes ‘news’ distinctiveness of the BBC’s on other websites as opposed to ‘soft news’. But the mainstream services could have not just a positive impact for the Agree market impact report for government Neither agree nor disagree also reflected these concerns, saying commercial market providers of Disagree that, while the provision of soft news up to £115 million per year by the Don’t know is relatively small, the BBC’s online end of the next Charter, but also an 92 offering would benefit from being overall positive net market impact. Percentages shown in figure sum to more more distinctive, particularly given The report suggests that if the BBC than 100% because of rounding the size of its readership. It suggested competed a little less for audiences Base: all respondents in Wave 1 (2,093) that distinctiveness in the online through content which is already sector would mean a “shift in the provided by the commercial sector Source: GfK Social Research, Research and instead focused a little more to explore public views about the BBC, positioning of the BBC’s online news May 2016 and information services away from on high public value programmes ‘softer’ news stories and towards more which people enjoy, everyone would in-depth analysis and explanation”.91 be better off, and the BBC would Given the predicted growth in online maintain levels of market share and traffic over the course of the next – crucially – would remain popular Charter period it will be particularly across television, radio and online, 93 important to ensure sufficient serving all audiences. People would distinctiveness of BBC services here. have more choice across different genres while allowing the wider sector to grow and encouraging the growth of the UK creative industries.

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Box 17: Examples of current requirements by service I want a system that holds our feet firmly to the fire on distinctiveness. That’s why I welcome an external regulator reviewing the delivery of the BBC’s remit. Lord Hall, BBC Director-General, 60 hrs 1,380 hrs November 201594 at least 60 hours of at least 1,380 hours of specialist music each week national and international The BBC’s new regulator, Ofcom news each year (explained in Chapter 3), will also have an important role in assessing 4 0 % 40 hrs the board’s performance in delivering at least 40 per cent of at least 40 hours of current a more distinctive BBC. As the music in daytime is from affairs in peak each year experience of the BBC Trust shows UK acts each year this will necessarily involve a degree of judgement. But to support Ofcom’s 45% 40 hrs delivery of this role and to ensure a at least 45 per cent of the at least 40 hours of music clear framework of expectations for music in daytime is new and arts programmes the BBC board the new Charter will each year each year retain and strengthen the existing system of content requirements 10 (see box 17). at least ten festivals and The BBC is already exceeding many significant live events of its existing requirements, an in the UK and abroad achievement for which it should covered each year rightly be proud. It has also made some modest proposals about Source: BBC Service Licences how these requirements could be reformed.95 The government welcomes the BBC’s recognition that obligations Achieving greater This is necessarily part of the process in relation to distinctiveness will distinctiveness at service level for creating distinctive content. be needed, but wants to set a This will not be simple to achieve, bigger ambition. The new BBC board (explained in particularly in television where next Chapter 3) will be central to driving day ratings can receive substantial the BBC to deliver more distinctive attention. Commissioners throughout mainstream services on television the BBC therefore need to feel radio and online, for embedding a confident that if in taking these risks culture of innovation, encouraging there are times when ratings dip as a risk-taking and supporting creative result, this is not a sign of failure. ambition amongst the strong creative talent at the BBC. To do this, commissioning editors will need to feel empowered to make creative choices and take risks. In taking risks, success can never be guaranteed.

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To achieve this: Box 18. Examples of potential reforms to content requirements −−there will be a presumption against removing any of the current requirements, which would result in a weakening of the distinctiveness of the BBC; −−consideration will be given to whether any additional requirements Radio Television are needed, for example the BBC has proposed to introduce a A clearer division of peak Greater coverage of public commitment to new UK music on and off peak requirements service genres – Ofcom Radio 1 and 2 in daytime;96 so that content of greatest has identified that some public value reaches large key genres are in general −−the level at which these new numbers. decline and there are requirements are set will consider the other categories where BBC’s existing performance in setting A greater focus on breaking the BBC could, potentially, a new baseline to ensure that they new UK acts and playlists deliver more such as arts, are meaningful. For example, BBC unlike other broadcasters. religion, current affairs and One and BBC Two broadcast 621 children’s programming. hours of current affairs programming An increase in some of in 2014/15, 70 per cent higher than ii the existing requirements Commissioning more their quota of 365 hours;97 relating to news, unique titles in peak and information, current affairs −−in some select areas with a strong non-peak – increasing and social action issues public interest, higher levels will be the volume of new on mainstream services. considered, for example the BBC programming on BBC One, has suggested extending the social Broader sports coverage to stimulate creativity and action activity on Radio 1 to four – that also support sports innovation and ensure a campaigns a year in daytime; which currently receive “fresh” look and feel to the core programming −−there will also be a focus on peak less coverage. schedule. time programming, so that valued public service content is more Fewer high-output long- directed towards periods of the term titles. There are many day when the greatest number long-term titles that the can benefit; and BBC runs that are hugely −−in addition to these content popular; it would therefore requirements, it will be important be inappropriate to to have a wider framework of introduce artificial caps to performance metrics that will help average run of titles. But in to inform any assessment of the light of the heavy reliance BBC’s performance over time. on long-run series (as noted above) there is the The case for clearer average age potential to reduce reliance targets for the more mainstream on long-term titles both in radio services will also be considered peak and off peak. further to ensure the BBC is serving distinct audiences. Further details on the process for establishing these new requirements and metrics are set out in Chapter 3.

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Box 19. BBC content spend on services Box 20. World Service future funding Television £254m Protected licence fee funding per annum £1.1bn £404m £46m £85m Funding from government for Radio additional services per annum*

*2016/17: £34m, 2017/18-2019/20: £41m £46m £38m £88m £49m £85m per annum The government will therefore ensure that the BBC protects licence fee funding for the World Service at £8m £6m its current level of £254 million per annum.101 Source: BBC, Annual Report and Accounts 2014/15 The BBC will also receive additional funding from the government for the World Service of £34 million in Prioritising funding and Matching investment to the strategic 2016/17 and £85 million a year in the protecting the World Service priorities for the BBC is generally a three subsequent years, a significant matter for the BBC board. But there proportion of which will be Official The decisions that the BBC makes in is one area so critical to the public Development Assistance. As a provider allocating funding between services interest role of the BBC that it is of accurate, impartial and independent will have important consequences for appropriate for the Charter to be more news the BBC World Service helps to the overall distinctiveness of the BBC. directive. The World Service is one of strengthen democratic accountability In radio, budgets have a broad spread the BBC’s most distinctive services. and governance, and promote Britain 98 across the wide range of services. It is hugely valued by audiences and our values around the world. This is not the case in television and a vital part of the UK’s ability where BBC One receives a far greater to lead the world in terms of soft The languages in which the World concentration of funding (see box power and influence,99 with its reach Service operates, and the objectives, 19). While of course the BBC needs and reputation helping to project priorities and targets of the World to invest in its flagship services, the UK’s cultural and democratic values Service will continue to be agreed BBC board will need to give careful to more than 246 million people with the . consideration to its service-level worldwide.100 funding decisions.

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BBC World News is the prime means by which the BBC distributes Box 21. The BBC can improve its performance in representing different its television news and current ethnic groups affairs programmes to international audiences. But it does not have the The BBC helps me understand what is going on 78% in the wider world same reputation for quality as the World Service – which is renowned The BBC makes high quality programmes or 76% for its radio output. This is in part online content a question of funding: BBC Global The BBC provides programmes and online content News, the commercial subsidiary that which cover a wide range of cultural activities 75% operates the service, had revenues in 2014/15 of just £94 million, less The BBC is good at representing my ethnic group 39% than 10 per cent of the revenues of BBC Worldwide, and a staff of just 120. The BBC must ensure that all its Base: all respondents, 2,298 except for “BBC is good at representing my ethnic group” prominent international services have where the base is all respondents, 623 a reputation for delivering high quality, Source: NatCen Social Research for BBC Trust, Purpose Remit Survey, 2015 distinctive output. The new unitary board should therefore consider what reforms are needed to improve the Improving provision for Black, Box 22. Performance scores quality of BBC World News. Asian and Minority Ethnic serving ethnic groups (BAME) audiences

Meeting the growing challenge % Ofcom’s third review of public service of serving all audiences broadcasting in July 2015 found 70 that satisfaction with and positive The BBC has an important role in 60 62% portrayal amongst BAME audience reflecting and serving the full range is a problem across all public service 50 55% 54% of diverse communities within the broadcasters.102 They found that half UK, including in terms of age, gender, 40 46% of all black ethnic groups (55 per cent) sexual orientation, religion, disability, felt under represented and a similar 30 ethnicity, nation and region. When proportion (51 per cent) felt negatively considering how well these different 20 portrayed on television. This was audiences are served the evidence can 10 reflected in the BBC Trust Purpose give conflicting results, depending in Remit Survey which found that part upon the metric chosen. Young 0 in 2014, less than four in ten people, for example, on average use The BBC offers quite a bit, a lot, or everything I need (39 per cent) of non-white British BBC services less than older people but participants agreed that the BBC is often report equivalent satisfaction White British/Irish Chinese/Mixed/Other good at representing their ethnicity, levels. But there are at least two areas Asian making this the lowest scoring area where a broad range of evidence Black (see box 21).103 shows the BBC needs to reform, and which the government would like to Base: White: 1,721; Asian: 216; Black: 151; see addressed in the coming Charter Chinese/Mixed/Other: 188 period: to better serve black, asian and Source: NatCen Social Research for BBC minority ethnic audiences and people Trust, Purpose Remit Survey, 2015 in the nations and regions.

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There is also data suggesting The wider media sector is starting to The government welcomes this some core BBC services are respond to the challenge. A number strategy. The key aspects are: disproportionately watched by of broadcasters (including the BBC) white people. These issues of BAME have come together in the Creative −−new portrayal targets: with audiences feeling underserved by the Diversity Network to promote 15 per cent of lead roles going to BBC was flagged by , diversity through initiatives like the BAME by 2020 and 50 per the former head of the Equality and Senior Leadership Programme.105 cent of lead roles going to women; Human Rights Commission who Others have set targets, such as −−new workforce targets: with labelled BBC Two “Britain’s whitest Channel 4, which is aiming to increase 15 per cent of senior leadership roles station” and the proportion of executives from for BAME, ten per cent LGBT and claimed “people of colour are paying BAME backgrounds from eight per eight per cent for disabled staff and a hundred and fifty pounds a year for cent to 15 per cent by 2020,106 and to have a gender balanced senior the upkeep of services that actually Sky Entertainment, which has set a leadership team by 2020; 104 do not serve them.” target of 20 per cent of writers and −−new commissioning guidelines: significant on-screen roles from BAME ensuring that independent producers 107 backgrounds. The government notes have diversity in their thinking from Box 23. Performance scores the broadcasting sector’s commitment representing ethnic groups the very start of the creative process; to tackling diversity and welcomes the and positive interventions, like the British % Film Institute’s (BFI) very successful −−new initiatives: to gather views from diverse audience members via 60 ‘three ticks’ funding scheme, now ‘BFI Diversity Standards’, which has been diverse audience panels, improved training for managers and recruiters, 50 52% extended to all projects in receipt 108 an overhaul of recruitment practices 47% of BFI lottery funding. However, 40 the pace of change is too slow. Our and tracking of social mobility television screens and radio waves still amongst BBC staff. 30 34% 32% do not adequately reflect the society 20 we live in. The BBC has recognised that it must do better, and set out its 10 commitment to tackling diversity on and off screen in its diversity strategy. 0 The BBC is good at representing my ethnic group White British/Irish Chinese/Mixed/Other Asian Black

Base: White: 56; Asian: 216; Black: 156; Chinese/Mixed/Other: 195 Source: NatCen Social Research for BBC Trust, Purpose Remit Survey, 2015

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But more still needs to be done. The BBC must also give consideration Improving provision for Given its role and public service to the full range of ideas for how it can nations and regions mission the BBC should lead the enhance its performance, such as the way in truly representing the diverse proposal for a BBC centre of excellence Just as the BBC also has an obligation communities it serves. Over the for diversity programmes and BAME to serve diverse audiences, as outlined next Charter period, the government programme makers in , above, it also should have an explicit wants the BBC to be the leading as suggested by Sir . duty to serve and reflect licence fee broadcaster in addressing diversity payers from across all parts of the issues on and off screen, by bringing In addition and recognising that UK and to bring to them the issues a realistic and positive portrayal and portrayal and satisfaction of minority that are relevant for their individual representation of underrepresented audiences is an issue for all the communities. groups, such as BAME and women public service broadcasters, the into the mainstream, having a higher government will also introduce a pilot proportion of groups consuming for contestable funding (as set out in its content and providing specific Chapter 6). This will mean that funds programmes and services. The will be available for making shows government will enshrine diversity about and for diverse audiences, in the new Charter’s public purposes, helping aspiring talent from minority which along with a commitment to communities to get commissioned, serve all audiences enshrined in the and onto the schedules. BBC mission, will help hold the BBC to account for delivering for everyone in the UK.

Box 24. How well the BBC represents life in the nations and regions through its content

Northern Ireland Scotland Mean nations, regions and Mean nations, regions and communities performance communities performance 51% 44%

Wales England Mean nations, regions and Mean nations, regions and communities performance communities performance 48% 53%

Mean nations, regions and communities performance UK total 52% Base: England: 1,217, Wales: 364; Scotland: 359; : 358 Source: NatCen Social Research for BBC Trust, Purpose Remit Survey, 2015

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Box 25. BBC content supply in the nations and regions Across the nations and regions of the Producing more network TV content in the nations and regions is a priority UK we know that the public want us for the BBC in order to address the perception amongst audiences outside to do more to portray the full diversity London that it could represent them better. The BBC produced over 50 per of life across the UK throughout our cent of its content out of London with 18 per cent spent in Scotland, Wales programmes and services. The UK is and Northern Ireland in 2014/15. changing and it is not straightforward to represent or portray every aspect of British life across all of our services. However, the BBC has a major role Network TV programming spend BBC local radio and nations radio to play here, and in the next Charter by region as a percentage of hours output: we will evolve our programmes and eligible spend (2014): services to meet these changing audience demands. London 46.7% London 8,260 hrs British, Bold, Creative, BBC, p.46.112 Scotland 9.2% Scotland 12,494 hrs Northern Ireland 2.5% Northern Ireland 8,722 hrs Wales 6.5% Wales 13,784 hrs England (ex London) 35.2% England (ex London) 225,084 hrs Total nations: 18.1% Total out of London: 53.3%

Source: BBC Annual report and Accounts 2014/15

The government’s consultation was However, the results of BBC Trust clear that, overall, people think that research, the Ofcom Public Service the BBC serves its audiences well.109 Broadcasting Review and the Respondents agree that the BBC has government’s public opinion research made clear its commitment to the all show that audiences in the nations UK’s constituent nations and regions and in some English regions feel less and feel this is reflected in some of its well represented and reflected by the best content, such as Gavin and Stacey, BBC, with viewers in Scotland and The Fall, Peaky Blinders, Shetland and Northern Ireland scoring the BBC Poldark.110 less favourably than England and Wales (see box 24), and those in the North of England scoring the BBC less favourably than their counterparts in the South.111

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The government has challenged the The BBC has the editorial and −−To increase nation-specific BBC to address the issues raised by operational independence to decide content: the BBC already spends the public and has consulted with how best to serve its audiences. more per head on services in the administrations and legislatures of To address the challenges the nations than for audiences in Scotland, Wales and Northern Ireland government set, the BBC has made England. The BBC plans to protect to understand their concerns in more the following commitments and the spending in the nations relative detail. This includes specific concerns government understands it will be to other areas, and to make some raised in the consultation about imminently publishing details of these: additional funding available to the lack of decentralised decision- further improve existing dedicated making and budgets for parts of the −−To improve commissioning: services in the nations, as well as BBC based in the nations and about In the current Charter, the BBC has investing in a new digital offer with aspects of the BBC’s commissioning made significant strides in moving more content and personalised process which appear to work less well television production outside of services for the nations and regions. for the nations and regions. London. In 2014/15 it exceeded In addition, the BBC is carrying out a the 17 per cent target for content review looking at whether it has the production in the nations, producing right balance between the provision 18 per cent (see box 25). But it of pan-UK news and dedicated news is not just about spending the services in the nations.114 licence fee across the UK, it is also important that the BBC’s services reflect the whole country. The current commissioning structure for BBC network channels (e.g. BBC One and BBC Two) was seen as a barrier to the BBC creating content which is representative of each nation, as commissioners for these channels are generally not based in the nations.113 The BBC is proposing reforms to address this – it will create drama commissioning roles in all nations and will ensure that commissioners across all genres have specific objectives to improve portrayal. They will also fund BBC ‘Writers Rooms’ – a programme to work with and develop new writing talent – in each of the nations. These moves will support both the creation of more content that reflects the diverse nature of the UK, through commissioning more programmes like The Fall, made in Northern Ireland, but also potentially greater investment in production in the nations where some of this content will be made, and also help sustain the creative economy and the TV production sector outside London.

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The government welcomes the BBC’s −−Maintain the commitment −−Maintain a commitment to efforts and believes this will address to ‘out-of-London’ quotas minority language broadcasting a number of the key issues relevant enabling a healthy independent services. Evidence from the to the nations and regions. But in production sector in the nations government’s public consultation addition, the government will: and regions. Quotas for content and qualitative research production outside London are demonstrated that people in −−Require the licensing of the BBC the largest current intervention in the nations really value minority to include specific provision for generating value and driving the language broadcasting services, for the nations. The government wants content production industry in the the support it provides in helping to enable the BBC to better serve nations and regions. There was to ensure the continued use of its audiences in the nations and overwhelming support for the out- minority languages115 of the British to be held to account in doing so. of-London quotas from stakeholders Isles and for its importance in terms To address the concerns raised by in the nations and as such they will of cultural diversity and national the public about portrayal requires remain unchanged. Stakeholders identity. The government expects a change in the way in which the in Scotland raised concerns about that the BBC will continue to BBC manages its services in the the ‘lift and shift’ phenomenon; support minority languages through nations, to allow more localised when shows produced in Scotland its partnerships with S4C and MG decision-making and flexibility in may have been commissioned Alba to deliver television services managing budgets across services. in London and transferred to in Wales and Scotland respectively, Following the recommendations Scotland for production, rather than and with made by Sir David Clementi (as set originating in Scotland, resulting to deliver a range of television out in Chapter 3) the government in content that is not ‘of Scotland’ programmes in Irish and Ulster-Scots. will require Ofcom’s licensing of the even though it is produced there. BBC to include specific provision for The need for more nation-specific the nations. This will provide the content which is ‘of that nation’ has regulatory basis against which the been recognised by the BBC and BBC’s provision for the nations can the government expects this to be be held to account. addressed through their changes to commissioning processes. The BBC’s network television supply target of 17 per cent for content spending in the nations will be maintained with spend being proportionate to the population of each nation.

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3. Enshrining independence and accountability

Creating a unitary board for the BBC 48 Introducing an external regulator 51 A new framework and licensing regime 54 Reforming regulatory processes and powers 56 Separating the Charter Review from the political cycle 57 Increasing accountability to the nations 59 Continuing the partnership with S4C 59 Introducing an easier, more efficient complaints system for audiences 60 Engaging with the public as citizens as well as consumers 61

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How the BBC is governed The current system of governance and and regulated is crucial to its regulation for the BBC was introduced success, as it is for other public ten years ago, with the establishment There is now a large degree of of the BBC Trust. This system consensus amongst witnesses and private sector bodies. improved on the board of Governors that the BBC’s present structure is It requires building the right in a number of respects, including unsustainable. In particular, most framework of accountability, increased transparency and more argued that, whatever the merit incentives and checks and effective engagement with licence fee of seeking to move on from the balances necessary to ensure the payers. There were also high hopes combined cheerleader/accountability BBC acts in the public interest, that this structure would provide mechanism provided by the BBC Governors, with the establishment maintains its independence, greater accountability and ensure the BBC acted in the public interest. But in 2007 of the BBC Trust, the changes delivers for licence fee payers, it has become increasingly clear that were not radical enough, failing takes account of its market the BBC has been constrained by the either to meet the BBC’s needs for impact and operates efficiently governance reforms of the last Charter, clear management structures and and transparently. which have in practice confused rather responsibility or to give the public than clarified responsibilities. confidence that the BBC was being rigorously held to account by an The government commissioned an independent body representing independent review of the governance licence fee payers’ interests. and regulation of the BBC, led by Culture Media and Sport Select Committee Sir David Clementi (the Clementi Report, p8117 Review) to investigate these issues.116 The Clementi Review published The new Charter will therefore: its findings in March 2016 and recommended fundamental change to −−create a unitary board for the BBC; the current system. The government −−introduce full external regulation accepts these recommendations and of the BBC by Ofcom; is therefore committed to major −−reform the mechanisms of reform of the system of governance regulation including establishing and regulation of the BBC – keeping a new operating framework and the good, but changing where operating licence regime; necessary – to ensure that the BBC can continue to thrive in the next −−separate the Charter Review process decade and beyond with a strong from the political cycle; unitary board balanced by strong, −−make the BBC more accountable independent external regulation. to the nations of the UK; −−reform the BBC’s complaints system; and −−set new expectations for public engagement and responsiveness.

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Creating a unitary board −−division of governance and Role for the BBC regulation – a unitary board in The new BBC board will be combination with an external collectively responsible for ensuring The Clementi Review made clear that regulator will ensure that important that the BBC acts in the public clarity of responsibilities is essential regulatory functions are kept interest and meets its wider Charter for effective and accountable decision outside of the BBC, as the current obligations. It will therefore have making. This is the case for any Chair of the BBC Trust has called overall responsibility for governance organisation, but particularly for one for. Under the current system, for of the BBC which will involve a range as important as the BBC. It found example, there is no appeal external of duties: that the current Trust model confuses to the BBC Trust for either editorial governance and regulation and keeps decisions about political impartiality −−creating an effective BBC by important regulatory functions, which or decisions about the introduction overseeing strategy, service should be undertaken by an external or closure of services. This will be delivery, operational delivery body, within the BBC. This led Sir avoided in future; (including management structures, David Clementi to describe the current finance, staffing levels, audit and system as ‘flawed’.118 risk, procurement, compensation and partnerships). It will also have The Clementi Review recommended The strongest case for more significant primary responsibility for ensuring that the BBC should have a single change is in this area of oversight, the BBC takes account of both public unitary board, collectively responsible where a fault line continues to lie in and market impacts; the blurred accountabilities between for everything the BBC does, for −−delivering an efficient BBC, that the Trust and the Executive board. delivering against the public purposes delivers value for money for the And that’s why we want to propose and other obligations of the Charter, licence fee payer, both in its public reform. Responsibilities for strategy, and for acting in the public interest. service and commercial operations; It also recommended independent financial and operational management regulation by Ofcom. The government need to sit with the BBC Executive – −−measuring performance, including agrees. This model will address to allow them to respond to a rapidly of programmes, services and the two main criticisms of the changing environment. Responsibilities standards; and current system: for regulation and broader −−public engagement, taking account accountability need to sit at one of both consumer and citizen −−clarity of governance – a single BBC remove. That way, there should be no interests. unitary board will ensure there is no possibility of vagueness or uncertainty confusion of governance issues. It about who will be held responsible for In fulfilling its responsibilities the board will make it clear who in the BBC is what, when the are down. should seek to maximise transparency. responsible for what. This will help In doing this, as recommended by the to avoid situations that have arisen The cleanest form of separation Clementi Review, it will need to report recently in areas such as the Digital would be to transfer the Trust’s annually in a range of areas to ensure Media Initiative which the NAO responsibilities for regulation and transparency (see box 26). 119 found to have wasted £100 million accountability to an external regulator. and executive pay, where the NAO There should be a single body found that “decisions to award responsible for setting those standards severance payments that exceed for the BBC, licensing and regulating contractual entitlements were its activities, and holding it to account subject to insufficient challenge for the way it spends public money. and oversight”.120 The Public Accounts Committee said their Rona Fairhead, BBC Trust, Media Convention Speech 2015122 investigation of executive pay “exposed a dysfunctional relationship between the BBC Executive and the BBC Trust”;121

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The responsibilities that fall upon The government agrees with the Box 26. BBC board reporting the board and the activities it will Clementi Review that these four need to undertake are significant. members “will need to be able to −−Audit: how finances are The board will need to provide clear balance their representative role with managed as well as looking at public reports on each of these areas their legal duty under the Charter to wider issues that the board is showing how the BBC has performed, serve the BBC as a whole; and given responsible for such as value for providing public accountability the need to limit the size of the board money. for how the BBC has delivered its they will need to bring specific skills −−Remuneration: how senior objectives. All members of the BBC to complement the skills of others.”123 executive pay is determined. board will be expected to undertake There will then be no fewer than four roles that contribute to the discharge further non-executive members and −−Nominations: the appointment of these functions in line with the no fewer than two further executive of senior executives and some wider duties on the board, such as members of the board, with the exact non-executive board members. the important and enduring role to number of each to be determined by −−Operating framework and uphold the independence of the BBC. the Chair of the board, consistent with licensing: how it has met its The board will also need to be self- the upper limit of 14 total members. regulatory obligations and critical, making sure that as a group delivered against its Charter it operates effectively to promote the Appointments objectives overall. BBC’s public service objectives. For the new BBC board to be effective in meeting all of its duties it will need −−Editorial and complaints: how The government accepts the Clementi to have the right people on it who it has ensured the BBC meets Review’s recommendation about the have the skills, knowledge, experience, its high editorial standards, how size, constitution and role of the board. stature and independence to hold an complaints have been handled As such, it will consist of between organisation as large and complex and what it has learned. 12 and 14 members, reflecting the as the BBC to account. Given the −−Distribution: how it has made need for a breadth of expertise and responsibilities set out above, the content available to the public. experience, accepting that in general time commitment required of non- −−Competition and fair trading: smaller boards are to be preferred executive members of the board is how it has properly managed for reasons of both effectiveness and likely to be more substantial than is its commercial and non- accountability. The board will be made usual in other organisations. For a commercial activities. up of a majority of non-executive public service organisation, spending members with a non-executive chair £3.7 billion of public funds each year, −−Consultation and outreach: how and deputy chair. There will also be it is essential that these appointments it has engaged with the public non-executive members designated are also made with due transparency and what it has learned from for each of the four constituent and scrutiny. It is equally important this activity. nations of the UK. that the BBC board is able to ensure it has the right mix of skills and that the process of appointments and make up of the board is compatible with the fundamental principle of the independence of the BBC.

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The government accepts the proposal Whether made by public appointment In addition, the candidate identified of the Clementi Review that both the or by the BBC board, all appointments for appointment as the Chair will be government and the BBC should have will be expected to follow public subject to a confirmatory hearing a role in appointing members to the appointments best practice, including before the Culture, Media and board, with all appointments following independent members on selection Sport Select Committee ahead of a robust and transparent process. The panels. The government intends to appointment, as is currently the government will enshrine this in the go even further than this. All public case. The appointments for members new Charter. Following the proposals appointments to the BBC board from each of the four nations of the and recommendations in the Clementi will have a triple lock to ensure the UK will carry forward the current Review, a Public Appointments best candidates are identified and arrangements for involving each process, led by the government, appointed for these positions: of the nations in the process. will be used to appoint the Chair, Deputy Chair and members for each −−the appointments will follow the Transitional arrangements, including of the four nations of the UK (a total best practice of public appointments in respect of the BBC board, are of six members). Both the remaining guidance including specifying the discussed on page 56. non-executive members and executive skills and criteria; members of the board will be −−there will be a requirement for the appointed by a nominations BBC Chair to be closely involved committee of the board. This means at each stage of the appointments that for the first time the BBC itself process including in the drafting of will be empowered to appoint role specifications; and members to its sovereign board. −−the Queen-in-Council will It also ensures that the BBC board will ultimately appoint each member always have at least 50 per cent of its on recommendation from the members appointed by the BBC itself, government. compared to the current Trust model which is entirely appointed by government via a Public Appointments process. This will strengthen the Box 27. Appointments to the unitary board independence of the BBC for the future. Member Appointment process Non-executive chair of the BBC Public appointment followed by parliamentary scrutiny Non-executive deputy chair of the BBC Public appointment Non-executive member for England Non-executive members for Scotland, Public appointment involving the Wales and Northern Ireland relevant government or executive as under current arrangements Other non-executive members BBC board appointment Executive members

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While the board will collectively have Introducing an The Clementi Review considered responsibility for all that the BBC does, external regulator two broad options for how external it is important to distinguish between regulation of the BBC could work: the role of the executive and non- The BBC requires regulation for a executive members particularly in combination of different reasons. −−‘Ofbeeb’: creating a new bespoke relation to editorial matters. The board It needs editorial regulation to make regulator for the BBC that would as a whole will have responsibility for sure it meets the standards that sit alongside the existing regulator setting the overall editorial direction we expect, for example in terms of Ofcom. and the framework for editorial avoiding harm and offence. Regulation −−Ofcom: giving the existing standards. The Director-General is needed to check that the BBC is communications and broadcasting will remain the editor-in-chief and delivering against the strong duties regulator responsibility for regulating chief executive of the BBC. Executive placed on it under the Charter. It is the BBC in its entirety. members of the board will rightly have also important that a regulator is able functions in relation to the day-to- to consider the impact of the BBC The Clementi Review set out the day operation of the BBC and making on the wider market. arguments in favour of both models specific editorial decisions. Non- but it concluded that the arguments executives may have specific roles in The BBC Trust has introduced some for consolidating regulation of the regard to the editorial framework, but regulatory rigour to the BBC’s BBC within Ofcom heavily outweigh not making pre-broadcast case-by- activities, with ‘Public Value Tests’ and those in favour of setting up a bespoke case decisions. extensive consultation with industry regulator. The main reasons for and licence fee payers. But this work this are: The Charter will enshrine the is hindered by the current Charter independence of the BBC and it will which states that the BBC Trust is −−scale and credibility of Ofcom – be a duty of each and every board ultimately the ‘sovereign body’ of the Ofcom is the existing public service member to uphold and protect BBC, and giving the Chair of the Trust regulator for the broadcast industry, this independence. In addition, and the honorary title ‘Chair of the BBC’. with a successful track-record, the recognising the importance of the This amounts to the BBC itself making scale and credibility to deliver and editorial decision making of the the final judgements about whether an overview of the sector that Director-General as editor-in-chief, its programmes have met the editorial allows for informed decision-making; we will enshrine in the Charter the standards required and taking the final −−need to avoid dual-regulation – Director-General’s independence determination about the introduction the Ofbeeb model cannot avoid and final responsibility for the BBC’s or closure of services. the situation of having the BBC editorial decisions and creative output. regulated by two separate bodies. The regulation of the BBC must be, Even if ‘Ofbeeb’ took on all of the In order for the board to be able and must be seen to be, separate from functions that have been suggested, to discharge its duties it will need and independent of the BBC. The it would necessarily rely on Ofcom to be properly supported. It will BBC Executive itself recognises this, to be able to undertake the be important that it has access with the Director-General saying in competitive regulation functions; to independent advice and to the November 2015: and wider organisation so that it can properly scrutinise and challenge “I welcome an external regulator recommendations it receives. Some reviewing the delivery of the BBC’s have suggested that a separate remit. And having the power to would be required to ensure this. impose remedies if we fail to meet our purposes or breach our service While it is crucial that the board 124 receive this support, the decision as licences.” to exactly what is required and how it is provided is rightly a matter for the board to determine.

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−−need to avoid regulatory capture The conclusion that the regulatory Ofcom will be responsible for and conflict – a model that sets role should move wholly to Ofcom assessing of the a regulator up with responsibility was also the position held by many BBC board in meeting its Charter for only one body is now generally of the stakeholders that responded obligations. It will therefore have considered to be problematic, as to the public consultation. Those overall responsibility for regulating it risks either capture or conflict. who argued for a different model to the BBC. This will involve: As Burns noted, “It is increasingly that of the Trust, such as the House regarded a poor regulatory practice of Commons Culture, Media and Sport −−monitoring and reviewing to institute regulators with only one Select Committee, recognised that performance including by assessing ‘client’”125 and since then we have an increase in Ofcom’s regulatory role on a periodic basis the extent to seen a further move away from is desirable. which the BBC is meeting its overall this practice, for example with the mission and its accompanying public merger of Postcomm and Ofcom. The government agrees with the purposes, with powers to remedy conclusion that Ofcom is the best any identified failings; body to take on full regulation of −−establishing a licensing regime the BBC. As the regulator for the setting out regulatory requirements The strongest, and simplest, argument broadcast and communications and expectations; in favour of the Ofcom model is sector it looks across the whole that Ofcom is already the public of an increasingly interconnected −−regulating editorial standards to service regulator for the United technological and commercial ensure the BBC meets requirements Kingdom’s broadcasting industry. landscape. It already regulates the in areas such as accuracy, It already has regulatory powers rest of the broadcasting sector in impartiality, harm and offence; in respect of the BBC, already has respect of content regulation, issuing −−holding the BBC to account considerable experience in almost licences, looking at media plurality for its assessment of both all of the regulatory issues that the and competition issues. And under market impact and public value, BBC gives rise to, and has during its section 198 of the Communications alongside regulation of commercial twelve years of existence built up a Act 2003, Ofcom already has activity; and significant reputation for dealing with significant powers to regulate the −−acting as the appeal body in terms competition issues that are likely to BBC, insofar as the Charter permits. of complaints. come increasingly to the fore. Ofcom Ofcom will need to change to take has scale and credibility. It would on these responsibilities and there are Under the new Charter therefore the be a strong regulator to match a some important issues for the Ofcom BBC will, for the first time, be wholly strong BBC. board to consider about how as an regulated by an external regulatory Sir David Clementi, A Review of the organisation it will approach this. The body. This will introduce wholly Governance and Regulation of the BBC, government will make sure Ofcom has independent scrutiny of what the March 2016 the powers it needs to do this. As the BBC does, ensuring that it is held to Clementi Review summarises, Ofcom account in delivering its obligations “would be a strong regulator to match under the Charter and acting in the a strong BBC”.126 public interest.

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Box 28. Clearer roles and responsibilities

Current trust model

Governance Regulation

BBC Executive It is hard to define BBC Trust Both Ofcom and the Ofcom where ‘operational’ BBC Trust have roles Deliver services ends and ‘strategic’ Set strategy in regulating the same Editorial standards Operational begins, often Issue licences content, requiring a Complaints activities depending on the MOU to set out how scale and context of Measure performance Market impact it works in practice. the issue, as seen in Approve guidance Assessment executive pay. Regulate commercial activity Check value for money Public Engagement

Proposed model

Governance Regulation

BBC Executive Ofcom

Set strategy Issue licences Deliver services Regulate editorial standards Oversee operational delivery Arbitrate complaints Measure performance Regulate commercial activity Engage the public Regulate market impact Monitor and review performance

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A new framework and Licensing regime The government agrees with both of licensing regime Alongside these three documents these recommendations. In addition, will sit a new operating licence the new licensing regime will need For Ofcom to do its job properly, it framework. The BBC currently has to reflect the reformed mission will need to have the right tools. There 26 service licences which are set by and purposes set out in Chapter 2, is currently a wide array of protocols, the BBC Trust. These licences cover particularly in relation to the focus on remits, licences and other documents each of the BBC’s television channels distinctiveness. The government will that set out what the BBC should and radio stations, as well as one do this in two ways: be doing and how it should be doing licence that covers its online portfolio, it. With Ofcom as a new regulator including iPlayer, the red button −−building on the existing system, the government wants to see a new service and BBC Three. These are require the licensing of the BBC framework and new licensing regime important documents – setting out to include content requirements that consolidates and streamlines what is expected of the BBC in each that provide a set of measurable the existing documents into a clearer particular service and providing the outputs to which the BBC can system that can be more easily means for assessing whether the BBC be held, the majority of which understood. is delivering. will be at service level. The BBC will be obliged to report against Operating framework The Clementi Review recommended these content requirements, and At the highest level the Charter sets this new regime would contain more the regulator will enforce against out the BBC’s mission, purposes and detail than the licences currently them, ultimately with the ability overarching constitution. Beneath provided for Channel 3 and Channel to sanction the BBC if required. that a more detailed Framework 4 by virtue of the unique funding In the light of the need for a more Agreement sets out the detail such model of the BBC, the standards that distinctive set of BBC services there as saying what the licensing regime the public expects as a result and the will be a strengthening of overall should include. The Clementi Review obligations placed on it by the Charter. requirements; and recommends that beneath the It would also be different from the −−require the regulation of the BBC Charter, there should then be an current model in two respects: to include a framework of further operating framework, setting out the performance metrics to provide detail of how the relationship between −−greater focus on quantitative metrics – the new regime should a wider evidence base against the regulator and the BBC will operate which the BBC’s performance can which should “build on relevant be moved towards a more clearly regulatory approach with a greater be assessed. These new measures regulatory elements within existing will be a resource that will provide Trust documentation, such as the focus on measurable quantitative obligations that specify desired a guide to the work of the BBC’s ‘Fair Trading Policies and Framework’, board, their commissioners and ‘Purpose Remits’, and ‘Distribution outputs and outcomes rather than the more qualitative approach of editors, and will build in real Framework’ that the Trust has incentives for the BBC to focus 127 the existing service licences; and developed over the past decade”. on the public purposes and to The government will give Ofcom −−streamlined scope – there is the produce innovative, distinctive flexibility in how it designs this new potential to reduce the number content and services. framework to meet these objectives. of licences. The Clementi review But the government agrees that a highlighted options relating to consolidation of the various policies licences based around genre and that currently govern the relationships groups of services (e.g. television). between the BBC Executive, Trust and There is also the option of having Ofcom would help to simplify and just one licence document setting clarify roles and responsibilities. out what is expected of the BBC across the range of its services.

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The government will provide BBC publications This framework is set out in the table guidance to the regulator on content In addition to these regulatory below. Together these documents requirements and performance documents, The Clementi Review will provide a clear framework for metrics to set clear policy parameters recommended that the BBC be the BBC that will make it clear which for the creation of this new regime. required to publish documents organisation is responsible for what. Ofcom will then be expected to in relation to both its output and It will bring together the various consult to establish the final set of corporate activities, referred to as the elements of existing regulation into requirements and metrics in line with Creative Remits and Workplan, giving a clearer framework that will support this guidance. Some of the areas which a transparent account of its plans on the increased accountability of the government is considering to an annual basis, including budgets for the BBC. include in its guidance are set out in services. The government agrees that Box 18 in Chapter 2. These will need these will be serve an important role to be kept under review by Ofcom in ensuring the BBC is accountable over the period of the Charter and to the public and clear about its it will have the power to revise and intentions. The Charter will enshrine amend the content requirements and the obligation for the BBC to produce performance metrics following due these documents. consultation. The government will also require the BBC to publish its audience ‘’ data that will allow the public and the regulator Box 29. New framework and licensing structure to assess how well it is serving its audiences. The Charter is the constitutional basis of the BBC BBC Charter setting out its mission and public purposes as well as These metrics will help Ofcom and Framework its governance structures. The Framework Agreement assess the performance of the BBC Agreement provides further details including setting out the detail of what is required in the licensing regime. in meeting its public purposes in Government an objective way. But coming to a view about the BBC’s performance will always require complex and This is where the detail for how Ofcom and the BBC will Operating interact is set out, including the detail setting out the nuanced judgement: not all aspects Framework processes that Ofcom will use to regulate the BBC. of performance are susceptible to quantitative measures, and metrics that do exist may not always point in Ofcom This will contain the content requirements (primarily the same direction. The regulator will Operating quantitative service level obligations) placed upon the Licence Regime BBC by the regulator as well as setting out performance therefore need to apply its experience metrics that will measure the BBC’s performance. and skills in taking an approach to monitoring the overall performance of the BBC that recognises these The BBC will be required to set out in advance its plans Creative Remits for the year ahead, providing transparency of its strategy complexities. This will need to be BBC and Workplan and spending plans. reflected in how Ofcom organises itself to perform the role.

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The Clementi Review recommended −−In addition to these annual and Reforming regulatory that the BBC board should have periodic reporting requirements, processes and powers responsibility in the first instance for Ofcom will have the ability publicly reporting its performance. to undertake any additional For Ofcom to be an effective regulator The government agrees that the first investigations of BBC activity falling of the BBC, it will need appropriate duty falls on the BBC board to account under its regulatory remit that it processes and powers. A number of for its activity which is why there will deems necessary, and to publish changes are needed to the current be strong obligations placed on the its findings. It could, for example, system to deliver this. BBC board, as set out earlier in this choose to investigate the BBC’s chapter. The role for Ofcom, then, is performance in particular genres One area in which reform is needed one of holding the BBC to account and or in how it is supporting certain is the way in which changes to BBC setting out how it has discharged its audiences where there is clear services are approved – for example own duties. The Charter will therefore evidence that the BBC is failing to the opening or closing of a channel. set out Ofcom’s role in reporting on meet its audiences’ expectations, Under the current model the BBC Trust both an annual and periodic basis: and where it is proportionate to is ultimately the responsible body for do so. Further information about determining whether a change is in −−Annually Ofcom will need to report Ofcom’s powers in this regard is the public interest and whether any on the BBC’s compliance with set out in Chapter 4. market impact is justified, drawing its licence obligations and on its on work from Ofcom and the BBC performance metrics, as discussed Timing and transition Executive in doing so. The Charter in Chapter 2. It will also need to The fundamental changes to sets out the mechanism for doing say what else Ofcom has done as governance and regulation set out this, called a Public Value Test (PVT). a regulator of the BBC (e.g. how in this section will require time for Such an assessment is needed, but it has handled complaints and if the bodies involved to implement, the current arrangements have proven it has made an adjudications on given the complexity of the changes, cumbersome, expensive and time- new services). the need for a smooth transition, consuming, blurring governance and −−Periodically Ofcom must take and the requirement to consult on regulatory functions. This is bad for a more detailed look at the BBC some elements of the new structures. the public and bad for the industry and how it is delivering against Recognising the need for stability at because it means that decisions can its purposes. This provides this time, the current Chair of the BBC take years to work their way through opportunities to look both broadly Trust will continue as Chair of the the system. For example, the most across the range of services and BBC through to the end of the current recent regulatory decision, to move specifically at any issues of concern. term (October 2018). The government BBC Three online, was announced in will work closely with the relevant March 2014 but not agreed by the organisations and will set out further BBC Trust until November 2015. details on transition in the summer.

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The Clementi Review proposed Separating the Charter Review This raises the question of the that the BBC board should take from the political cycle appropriate length of the next Charter. responsibility in the first instance A longer Charter period would give for taking account of the public The BBC has been constituted by the BBC freedom to operate with value and impact on the market in Royal Charter since 1927. While other greater certainty and confidence. But their decisions, in line with its role approaches such as a statutory basis a shorter Charter would ensure it does in overseeing all of the BBC’s work have been suggested, responses to our not become out of date in an era of and ensuring it delivers in the public consultation emphasised continued ever increasing technological change. interest. It balanced this by saying support among both industry There is also a benefit in further that Ofcom should be able to make stakeholders and the general public distancing the Charter renewal process a final determination on whether a for maintaining the Royal Charter as from the UK national electoral cycle: change is acceptable. This puts the the method by which to constitute with fixed term parliaments of five responsibility for considering the the BBC. This includes the BBC Trust, years this could favour either a shorter public interest in the right place, which believes that a Charter “is the Charter of seven to eight years or a with the BBC board setting the BBC best method for guaranteeing the longer one of 11. Charters have been strategy and having responsibility for independence of the BBC.”128 of varying length in the past so there delivering against the BBC’s Charter is no precedent for a particular length. obligations, while ensuring that there The Royal Charter as the foundation is a hard edge of regulation to make of the BBC has stood the test of time sure this is done properly, holding the and while some reforms are needed, Box 30. Lengths of BBC to account with particular regard these don’t mean the whole process of Royal Charter to market impact and protecting the enshrining the BBC by Royal Charter legitimate interests of third parties should be abandoned. The government to the extent that the BBC has failed will therefore continue the unbroken to give them due consideration. The line of Royal Charters from 1927, ensuring that there is a constitutional Length Number of new Charter will set out a model for Charters a reformed process that follows this basis for the BBC and laying out the principle. The Framework Agreement public purpose of the corporation More than ten years will also specify time-frames by which guaranteeing its independence and 2 such a process should be conducted, outlining its governance structures. Ten years given the market uncertainty that The government will also enshrine 5 can be caused by a protracted period in the Charter those important of assessment. Further detail about conventions that have been Less than ten years Ofcom’s regulatory powers and established over time, to ensure future 1 sanctions are set out in Chapter 4. Charter Reviews are appropriately Charter extensions transparent, open and democratic. (six months – 4 This will include the requirement for three years) a future Charter Review to undertake public consultation and to allow parliamentary scrutiny through debates in Westminster and in the devolved legislatures.

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Given the priority the government It will be for the government of the places on protecting the independence day to determine the precise scope of of the BBC, the next Charter period this review, consulting the BBC unitary will be for 11 years to 31 December board and Ofcom. The review will 2027. But given the speed of change not, however, consider changes to the within the sector and the fundamental fundamental mission, purposes, and reform of the governance and licence fee model, as these have been regulatory structures that this Charter determined by the current Charter will make, it would not be appropriate Review process. This will provide long- to wait over a decade to review term stability to the BBC on these how the reforms are bedding in and central issues. whether any changes are needed. The Charter will therefore make provisions The continuance of the Royal Charter for a review to provide a health check system in this reformed manner focusing on the governance and will ensure that the right balance regulatory reforms at the mid-term. continues to be struck between This review will take into account scrutiny and independence; ensuring the relevant findings of the most the BBC has clarity about its long recent review of BBC performance term objectives and is protected from that Ofcom will have published. political influence and ensuring that Future funding issues, including an the reforms proposed in this Charter assessment of the BBC’s commercial are having the desired effect. income and activities, should be considered alongside the review. To perform this review the government will have full access to information and co-operation from the BBC management.

Box 31. Charter timeline

Start of UK Mid Term Review UK End of 11 year National National 11 year Royal Election Election Royal Charter Charter

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

BBC Royal Charter Length and Mid Term Review

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Increasing accountability Additionally, the memoranda of Continuing the partnership to the nations understanding agreed with each of with S4C the devolved administrations and The BBC is our national broadcaster, legislatures committed to three The BBC Trust and have acting in the interests of the whole further measures which will be had a strong and successful funding of the UK. But it must also reflect enshrined in the new Charter: and accountability partnership since the democratic makeup of the UK. 2011. In addition, S4C and the BBC As noted in Chapter 2, the BBC needs −−the devolved administrations will have developed a wider strategic to be better at representing the have a formal, consultative, role relationship that is delivering for audiences it serves, particularly in the in any Charter Review, including audiences in the and nations where views on the BBC are providing the devolved governments has shown the benefits of the two generally less positive than England.129 with copies of the draft Charter to organisations working closely together This situation has not been helped by lay in the devolved legislatures; – for example, the inclusion of S4C the current Charter which distances −−the BBC will lay their annual content on iPlayer has meant that the responsible trustees for the reports and accounts in each of Welsh language content can reach a nations from the BBC’s delivery. the devolved legislatures; and wider audience. To ensure appropriate accountability −−the BBC will be required to submit In the new Charter period it is with the nations, the new Charter will: reports to, and appear before, important that the funding and committees within the devolved accountability arrangements in place −−require specific non-executive legislatures on the same basis as between the two continue to protect members of the unitary board to the UK Parliament. the independence of both parties provide accountability to each of and provide certainty and clarity of the nations of the UK, alongside funding for S4C. Both the BBC and wider responsibilities placed on S4C believe this is possible – both in them. These members will have the short term as the BBC moves to an important obligation to engage new governance arrangements and with the public in the nations and also in the longer term, where the to understand their needs as well S4C Review will be able to assess as providing other relevant skills these in detail. The S4C Review, and expertise to the board. This will which will be carried out in 2017, bring the voices of the nations right will be a comprehensive review to the heart of BBC decision making; looking at a range of issues including and remit, accountability, governance −−give the regulator the power to and funding arrangements. The scrutinise the BBC’s performance government, the BBC and S4C are in delivering for the nations, and confident that any new arrangements make sure the people of those between S4C and the new BBC board nations can be clear about what will protect the issues of independence they can expect from the BBC. that are important to S4C and the As such, we support the proposal stakeholder community during the from the Clementi Review that the review period. licensing regime should set out the obligations and measures that the BBC is required to meet and report against in serving their audiences in Scotland, Wales and Northern Ireland.

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Introducing an easier, more There are two main reasons why This approach will require Ofcom efficient complaints system the reforms have not satisfied critics. to take on responsibility for the for audiences First, there remains confusion around regulation of aspects of BBC content responsibilities. Currently, one currently outside of the Broadcasting An important way in which audiences complaint can be handled by two Code. The government will work can hold the BBC to account is by different regulators, the BBC Trust with Ofcom and the BBC to make telling the BBC what they think about and Ofcom. Hundreds of complaints sure that the BBC is held to the high its services and programmes directly: about the BBC go to both. Second, editorial standards that the public the BBC receives more than 250,000 Ofcom is specifically precluded from rightly expects. editorial complaints every year. regulating the BBC’s accuracy and impartiality record – the subject of The current complaints system was a large proportion of complaints. described by the Clementi Review as This means that the BBC Trust deals 130 “complicated and confusing”. This with this important area without any reflects long-standing concerns about external oversight. the complaints systems in the BBC. For example, in evidence to the House The reformed model of governance of Lords back in 2011 Lord Grade, provides an opportunity to improve former Chair of the BBC, described and streamline the way audience the situation as “hopeless, absolutely complaints are considered and make hopeless”.131 Since then the relevant it easier for the public to engage bodies – the BBC Executive, the BBC with the BBC. The new Charter will Trust and Ofcom – have worked introduce two changes: together to try and make things work −−a single complaints system as well as possible, implementing with regards to the BBC in relation changes following the 2012 to editorial matters. In the first complaints framework review,132 but instance the BBC will handle the they are hampered by the structures complaint. Where a complainant in which they work. A number of is unsatisfied with the response, or consultation responses reflected where the BBC fails to respond in a this concern. timely manner, the complainant will then be able to complain to Ofcom; −−external regulatory oversight of editorial matters. Ofcom will be able to consider complaints about all BBC content, including accuracy and impartiality in BBC programmes. This means the BBC will continue to be held to the high editorial standards that the public expects. It will build on the expertise and experience that Ofcom already has in considering complaints about the BBC and the rest of the broadcasting sector.

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Engaging with the public as Given how crucial it is to understand Ofcom, as regulator, will also have citizens as well as consumers how well the BBC delivers for the UK an important supplementary role to as a whole, the government wants play. In the first instance it already The BBC does more than provide this engagement to become better, undertakes a significant amount of content to viewers as customers. more flexible and driven by real need. research to understand how people Being publicly funded it needs to use Under the new model of governance are using media and communications its resources to benefit the UK as a the primary responsibility for this technology, such as through the whole – capturing the wider social will fall squarely on the BBC’s board. Communications Market Review benefits that justify the provision of The government expects the BBC to and in support of its Public Service publicly funded broadcasting. As do much more to engage audiences. Broadcasting Reviews. With its new Sir David Clementi said in his review, This is not the kind of activity where responsibilities to hold the BBC to “The BBC will need to do more to government can be prescriptive and it account, it will need to make sure engage licence fee payers, and be would not be right to impose analogue it has sufficient understanding of accountable to them, in the next solutions for a digital age. But this what the public needs and expects Charter period. It needs to engage the only makes the duty on the board of the BBC. public as citizens as well as consumers stronger – it must actively develop its of BBC content.”133 This will ensure the own approach to make sure audience BBC is providing the right services for and citizen engagement informs its the country as a whole, beyond the decision making. preferences of individuals. This means that the BBC will need One of the central functions of the to spend a considerable amount of BBC Trust under the current Charter time and effort understanding and has been to represent the interests of reaching out to people in all parts of licence fee payers, with the definition Britain so that it can shape its services of ‘licence fee payer’ being very broad, to create the greatest public value, effectively meaning everyone living focusing on engagement with the in the UK. To engage with licence fee public as citizens as well as consumers. payers the BBC Trust has developed It will be able to build on some of a range of tools to understand the foundations that the Trust has people’s views. Some of these, such laid in this area. Complementing the as Audience Councils, are mandated existing outreach programmes with by the Charter, others have been new digital tools should allow the developed by the Trust itself. For BBC to do this even more effectively example, the Trust publishes its annual than has been possible to date. It will ‘Purpose Remit Survey’ showing also need to understand the views research about how audiences rate the and citizen/consumer interests of its BBC’s performance against its public international audiences. purposes, and how they prioritise what the BBC should be focussing on.

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4. Supporting the creative sector

Assessing the BBC’s market impact more effectively 65 Making the BBC a better partner 66 Sharing content and services as widely as possible 69 Increasing transparency about the volume and impacts of the BBC’s promotion of its own services 70 Maximising consumer choice – avoiding bidding wars and scheduling sensitively 70 Establishing a new public service content fund 71 Opening up the BBC archive further 73 Supporting and invigorating local news provision across the UK 73 Leading the industry in a potential future digital switchover for radio 74

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The UK creative sector has Box 32. The creative industries have grown at twice the rate of the UK thrived in recent years, and economy since 2009 the BBC is a contributor to its success. The sector has grown % growth at twice the rate of the rest of 50 the economy since 2009 46%

(see box 32), generating 40 £84 billion, or 5.2 per cent, of Gross Value Added, for the UK 30 economy, supporting almost 20% two million jobs and contributing 20 8.7 per cent of UK service exports.134 It is critical to both 10 the economic health and wider 0 ‘soft power’ of the UK that this 2009 2010 2011 2012 2013 2014 robust growth continues in the Creative industries growth UK economy growth decade ahead. The BBC, given its size and scale, has an important Source: Department for Culture, Media & Sport, Creative Industries Estimates, January 2016 role in enabling this. A number of studies, including the −−direct contracting: the BBC is a government’s market impact study major purchaser, spending more conducted by Oliver & Ohlbaum and than £2 billion, including its in-house Oxera, have highlighted a variety production spend, on the services of of ways in which the BBC can have around 2,700 suppliers involved in positive effects on the rest of the making its content. It accounts for market, these include: around 50 per cent of all original UK content spending by PSBs, of which −−crowding-in: the BBC’s in recent years over £400 million commitment to content spending as per year has been contracted out to a whole, and to UK content spending independent production companies specifically, can encourage other rather than delivered in-house.136 commercial players to spend more of their income on UK content in −−partnership working: the BBC areas such as news, drama and arts often works in partnership with than they otherwise might – the so others, enabling other creative called ‘crowding-in’ effect.135 organisations to access the creative talent within the BBC and benefit from its reach and reputation. −−technology spillovers: the BBC’s role in developing platforms such as Freeview, Digital Audio Broadcasting (DAB) and iPlayer has reduced the risks in these developments for commercial broadcasters and has established new patterns of consumer behaviour.

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The BBC can, therefore, evidently be The government wants to see a The following further measures will a force for good for the broadcasting thriving, successful BBC enabling a enable the BBC to be more market sector and the creative industries thriving, successful and diverse UK sensitive in the new Charter period: as a whole. However, there is also a media landscape. Given the UK’s range of evidence which suggests that broadcasting and creative industries −−the BBC’s market impacts will be the BBC can have a negative impact are going to face a series of challenges assessed more effectively; on parts of the UK media market. in the coming years, including −−the BBC will become a better The government’s market impact increasing competition for audiences partner; study, for example, noted that the and content from global platforms −−the BBC should share its content as BBC could push up input costs which like Google, Netflix and Amazon, widely as possible; create barriers to entry, or hamper and with audiences making increasing commercial market growth when use of audiovisual content online, −−there will be more transparency public investment through the BBC it is critical that the BBC leverages about the volume and impacts of increases the risk or reduces the return its size and scale to maximise its the BBC’s promotion of its own to new commercial investment and positive potential impacts on the services; so crowds it out.137 These impacts creative sector and minimise any −−the BBC should avoid bidding may be unintended consequences, undue negative impact. This will allow wars and the BBC board should but they are no less real as a result. both the BBC and the wider sector carefully consider the impacts of its There is also some evidence to suggest to flourish in the face of globalisation scheduling decisions; that some of the positive market and technological change. −−the licence fee will create new impacts of the BBC may be lower than The new Charter will therefore opportunities for others to they were at the start of the current provide pluralistic public service Charter ten years ago.138 emphasise that the BBC needs to tread more lightly and considerately around broadcasting content in the UK; Recognising these effects, regulators its commercial competitors and that −−the BBC will open its archive further; have previously blocked some BBC it should promote positive outcomes −−the BBC will support and invigorate proposals for new services, including for others as well as for itself wherever local news provision across the UK; the video-on-demand joint-venture possible. The proposals already set and between BBC, ITV and Channel 4,139 out in Chapter 2, aimed at making the and the proposal for BBC One catch- BBC’s larger services more distinctive, −−the BBC will lead the industry in a up services (BBC One+1).140 Concerns will have a role here. The plans set potential future digital switchover have also been expressed, as part of out in Chapter 5 to open up more of for radio. the government’s consultation, about the BBC’s spend to the independent the potential wider impact of some of production sector will also benefit the the BBC’s future plans, including the wider creative economy. impact of proposed music streaming services on commercial providers, and the further commercialisation of bbc.com on other UK media players with global offerings, such as theguardian.com and the MailOnline.

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Assessing the BBC’s market In order to ensure that Ofcom can −−Sanctions: Under the current impact more effectively carry out these functions effectively, system there has been insufficient the current system of assessing incentive for the BBC Executive to As set out in Chapter 3, the BBC’s new market impacts will be strengthened take account of the rulings of the board will have initial responsibility in two important respects: BBC Trust in its regulatory role. for assessing whether the introduction In its service licence reviews, for of new services by the BBC promotes −−New powers: the reformed regime example, on a number of occasions the public interest by striking the right will give Ofcom broad powers as recommendations were made that balance between benefitting viewers recommended by the Clementi were then not followed through and listeners (and thus creating public Review. As set out in Chapter 3, by the Executive, or only belatedly. value) and avoiding undue impacts on there are two important aspects The 2010 Service Licence Review other services and companies. This is of this approach: (a) Ofcom will for BBC One, for example, called an important responsibility, and given freely determine when an issue or a for the channel to improve its concerns that the BBC has not always change requires investigation, giving distinctive offering by “being more been as sensitive to its potential it wider powers than the BBC Trust ambitious and taking more creative impact on third parties as it needs to which must meet a ‘significance’ risks in peak time”,143 but although be, the new unitary board will need test; and (b) intervention will not some progress had been made, the to ensure that it firmly keeps sight of just be limited to new services: if, for 2014 Service Licence Review for the these considerations. example, incremental changes over channel noted that some viewers time led to notable changes to the still didn’t “find BBC One sufficiently But the ultimate decision on these BBC’s market share the regulator distinctive in some important issues will lie with Ofcom. Ofcom could assess the appropriateness of ways”.144 A system of regulation already has a wealth of experience that independently of whether the that is not backed by sufficient in ensuring that the introduction BBC had introduced a new service. force is clearly an inadequate one, of BBC services does not cause These broad powers will allow the and the new system needs to disproportionate market impacts. Its regulator to take a proportionate improve on this. The regulator will recent assessment of the BBC’s plans approach, able to scale the intensity therefore have a range of powers to to introduce a BBC One+1 channel, of investigation and remedy sanction the BBC, including where for example, found this would likely depending on the significance of an appropriate through proportionate lead to decreased profitability of issue or change. This will help ensure fines, and the ability to direct the commercial competitors,141 and led to the strong unitary board is balanced 142 BBC, for example to stop proposed the BBC Trust declining this proposal. by a strong regulator. changes or to reduce the scale of services or activities. Systems will be put in place to ensure that any proceeds from financial sanctions on the BBC are not mingled with general taxation.

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The regulator will also need to ensure Making the BBC that the nature of decision-making in a better partner terms of assessing the public value Under the current Public Value Test of BBC proposals does not bias non- regime, where a decision is debatable, The BBC is a diverse organisation with commercial interests over commercial the default position appears to be to outstanding creative resources and ones: concerns have been raised that approve a new service. For example, skills at its disposal. Reaching almost under the previous system the ‘benefit the BBC Trust recently provisionally the whole of the UK’s population via of the doubt’ has at times been given approved the extension of CBBC’s television, radio or online, it is uniquely in favour of proposed changes even hours to 9pm. This was despite the placed to connect large audiences when there were significant negative Trust’s audience research finding that with ideas and content. However, impacts on the wider market and ‘respondents were, on the whole, the BBC can be even more successful the public value was questionable. opposed to extended hours.’ if it harnesses the creativity and It would not, however, be appropriate COBA145 inventiveness of others and can create – as some have proposed – to go enormous value by lending its reach further and formally bar the BBC from and expertise externally. Working and any actions that might have a major delivering in partnership with others potential negative market impact. is a key theme for the BBC and for Ofcom will need to take a view on the organisations who seek a platform benefits identified and will carefully for public value content, particularly consider the proportionality of those in the educational, sporting and gains against any downsides, paying cultural sectors. particular attention to the question of whether a proposal may cause The BBC has delivered very successful significant harm to competition. projects with a range of cultural partners during the current Charter, and there is a general consensus that it has improved its partnership working in recent years, in part due to the leadership shown on this issue by the current Director-General. Flagship partnerships have been delivered with the , the (see box 33), and the Royal Shakespeare Company (RSC) for the 400th anniversary of Shakespeare. There are a wide range of other cultural partnerships which provide great value for viewers and listeners. Radio 3, for example, has supported live classical music events outside of London, including festivals in Lichfield, Cheltenham, Bath and Huddersfield.

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Similarly, the BBC worked closely Box 33. The BBC as a successful partner with partners such as the National Theatre Wales, with whom it First World War Centenary:146 the BBC worked with established the Wales Drama Award, the Imperial War Museum (supported by the Arts and and in Scotland the BBC joined a Humanities Research Council) to mark the Centenary number of partners to deliver a of World War 1. This landmark four-year programme 16‑day cultural programme of free (2014-18) has already helped to create over 130 specially and live BBC events to accompany commissioned programmes and around 2,500 hours of the . programming including World War One At Home, which is The BBC can also deliver important collecting over 1,400 stories from places around the UK outcomes through working in which still bear traces of war. The BBC also worked with partnership with sports organisations. the Imperial War Museum to preserve and digitise the Many respondents to both the archive material of the landmark 1964 series The Great War. Charter Review consultation and the consultation on the government’s ‘A History of The World in 100 Objects’:147 the new sport strategy150 highlighted partnership between BBC Radio 4 and the British Museum the important role the BBC plays produced the hugely successful radio show and book, for sports in Britain. which explored the history of the world through a series of The BBC has a long history of showing manmade objects in the British Museum’s collections. The nationally significant live sporting 100-part radio series was described by as a moments, from Wimbledon to the ‘broadcasting phenomenon’,148 and the interactive website Olympic Games. It also helps to encourages museums and individuals to submit objects introduce audiences to sports that relating to different time periods or themes. Visitors to may not otherwise reach mainstream the British Museum can view the original 100 objects on audiences, for example in its coverage display in its galleries. of World or European Championships in sports like swimming, gymnastics 149 ‘This Girl Can’: the BBC continues to support Sport and hockey. And its partnership work England’s highly successful ‘This Girl Can’ strategy, a such as its support for ’s national campaign to inspire women of all ages to exercise. ‘This Girl Can’ campaign, for example, This includes producing a ‘This Girl Can Too’ promotional further promote sport participation. video featuring the BBC’s female presenters and providing The government wants to see the BBC links and promotion through its own participation-oriented further enhance the partnerships it sporting initiative, ‘Get Inspired’. builds in sport to help deliver the key outcomes that we know engagement in sport and physical activity can bring.

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−−Focusing more on potential −−Incentivising partnership working market impact – the BBC needs to on television – it is not clear that We are often told that partnership is be sensitive to the market impact of all those responsible for budgets something we seem to do to people, some of its partnerships. Its heavy in the BBC are appropriately rather than with them. In the next promotion of certain large festivals, incentivised to prioritise partnerships Charter, that must change, as we for example, can have negative (or the public value they can learn how to work in a genuinely impacts on smaller local and provide) over delivering on other collaborative way with like-minded regional festivals. aspects of their day-to-day role. institutions, with suppliers, individuals −−Engagement with SMEs – while This is particularly the case with and competitors. it is right that the BBC also works television which has, in general, far British. Bold. Creative. BBC, September 2015 with large established players such less of an established track record as the , RSC and of successful partnership working However, while many stakeholders the British Museum, it should also than radio, and where stakeholders have told the government that the ensure that in its tendering and have said that the BBC appears to BBC remains a coveted partner, there partnership strategy it is placing be less open to taking the associated 151 are areas where it could improve. sufficient priority on engaging risks. Opening up television to These include the following: smaller organisations as well as more partnership working should individual artists. therefore be a priority for the BBC −−Partnering ‘with’ not ‘to’ – and the board may want to assure some have described the BBC as −−Integrating editorial and itself that the depth and breadth of previously taking an approach of commercial negotiations – partnerships on radio is replicated having partnering done ‘to’ them, while the BBC effectively integrates on television. not collaboratively and mutually editorial and commercial issues ‘with’ them. Some of the BBC’s most relating to rights and contracting in These issues are primarily matters successful partnerships have been its negotiations with its commercial for the new unitary board to consider those where it has been partnering broadcasting partners, it is less clear and address. But the government also ‘with’ not ‘to’ and the BBC appears that this is the case with some of sees that working in partnership is a to have learnt from some of its past its more ‘creative’ partnerships: way in which the BBC can multiply experiences here, but as it itself discussions about commercial the public value that comes from acknowledges (see quote above), issues can take place at a late stage the licence fee, by enabling others to further progress is possible. and therefore risk jeopardising the connect with audiences. Therefore the −−Focusing on the long term – success of the partnership. new Charter will ensure that positive the long-term funding and Charter engagement with the wider market, framework for the BBC makes it and partnership working in particular, uniquely well placed to focus on is a natural part of the BBC’s way longer-term horizons, and avoid a of operating. The new Charter short-term style of ‘fly-in, fly-out’ will require the BBC to prioritise partnership. collaborative working where to do so would provide public value, and to −−Better coordination – the Director- ensure that its partnerships are fair General has recently appointed a and beneficial to both parties. The Head of Creative Partnerships to government also expects that the new improve coordination and clarity of board will consider how best to report the BBC’s partnership approach, but on working in partnership with others there is more that could be done. and what metrics it could include in the relevant regulatory documents to ensure that the public can assess whether the BBC is enhancing the breadth, depth, quality and positive impact of its partnerships.

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Sharing content and services During the government’s consultation, as widely as possible pay-TV operators highlighted that the BBC relies on the iPlayer as the As the media environment has main way in which viewers can access 56% changed substantially, there are BBC content. While the government 56 per cent of UK increasingly more ways in which believes that the BBC must make households have a BBC services and content can be sure that viewers have appropriate pay TV subscription, consumed, on a wide range of devices access to BBC content – whether up from 44 per cent and through many different portals that be on its own platform (the 10 years ago and platforms. The BBC itself is BBC iPlayer), or those operated by committed to a strategy of making others – the BBC also has a duty as a Source: Oliver & Ohlbaum and Oxera, its full range of content available public service broadcaster to ensure BBC television, radio and online services: where the consumer would expect it that its content is given appropriate An assessment of market impact and and in ways that secure appropriate prominence, findability and attribution distinctiveness, 2016 prominence, attribution, quality and on those platforms run by others, value for money. The BBC iPlayer is and should have the flexibility to the most widely available video-on- secure these public benefits in demand service in the UK, available commercial negotiations. on over 10,000 devices and platforms. However, BBC video-on-demand The BBC should look to maximise content is not currently available to the opportunities it has to make watch outside BBC iPlayer on some its services and content as widely leading pay-TV apps. available as possible and it should only place reasonable conditions on how As viewing habits change and services its content is distributed. The BBC can develop, the BBC’s approach to where rely on a proprietorial approach but and how it shares services and content only where the public interest is best will need to keep pace with where served by this. and how audiences consume content, ensuring that it delivers against its It is for the BBC board to set and commitment to make BBC content publish a strategy and policy on as widely available as possible. With distribution – consulting industry – more than half of all households and for the BBC to pursue distribution taking subscription-based services, arrangements in line with that the BBC needs to consider how it strategy. The regulation of this part can continue to make services and of its work will be part of Ofcom’s content available to viewers who use Operating Framework for the BBC as other platforms and applications to set out in Sir David Clementi’s review. watch content. Any complaints about the BBC’s distribution arrangements should go to the new BBC unitary board with appropriate appeals to Ofcom.

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Increasing transparency about This is particularly the case given the Under the current Charter the BBC the volume and impacts of lack of clarity about the extent to Trust regulates the BBC’s cross- the BBC’s promotion of its which the BBC’s promotion activities promotion of its commercial services are focused on drawing attention through its UK public services, as own services to less well-known or high-value part of its fair trading guidelines. The BBC, like other broadcasters, public service content, as opposed In the next Charter period Ofcom promotes its programmes and services to advertising already popular will regulate such cross-promotion across its television channels, radio programmes and stations with a activity (the BBC’s promotion of stations and online services via trailers view to maximising overall audiences. commercial propositions) within the new Operating Framework. As part of and links. Promotion of this kind can The new Charter will make clear benefit audiences, allowing them to the process of issuing this Framework, that any promotion should focus on Ofcom will consult publicly, giving hear about programmes which might showcasing high public value content interest them, and thereby bring the industry an opportunity to comment and that this needs to be carried out on the impact of these current BBC’s unique public service content in a way that is sensitive towards the to the widest range of audiences. practices. This will enable Ofcom rest of the market. This will be the to set rules around the BBC’s cross- However, given that the BBC is responsibility of the BBC board. But promotion of commercial services perceived as being ‘advertisement the government is clear that the board through its UK public services. free’ there are legitimate questions should ensure that promotions should to be raised about the extent to be tied closely to supporting the BBC’s which it should be using its valuable public purposes rather than driving Maximising consumer choice airtime on either television or on radio market share. – avoiding bidding wars and scheduling sensitively advertising its own programmes. Under the new Charter the BBC The BBC also needs to balance the board will also need to publish The extent and potentially adverse positive impacts on audiences with information or relevant metrics on effect of competitive scheduling the potentially difficult consequences all its promotion activities, including between the BBC and competitors of this for other providers: the BBC’s the amount of promotion of public was an issue raised during the course popular television services can confer service content. This should include of Charter Review. The government’s significant reach when they promote the number of minutes of promotion recent market impact study conducted shows on BBC radio stations. While it undertakes and time of day. This will by Oliver & Ohlbaum and Oxera commercial television channels provide greater transparency relating analysed this issue and concluded have the same ability as the BBC to the BBC’s operations and allow that overall the extent of competitive to promote their own programmes the public and the wider market to scheduling was unclear. How schedules across their own portfolio of channels, assess whether the BBC’s activities are made and agreed is a complex the BBC is the only scale broadcaster are proportionate. and dynamic process. However, with an extensive portfolio of services econometric analysis of scheduling across television, radio and online slots and associated revenue impacts platforms, and only it can promote its for ITV did suggest that scheduling own radio services on television for on BBC One is probably reducing the free. It therefore occupies a position relative profitability of drama series in which it needs to be mindful of the in particular, with ITV drama viewing consequences of its own actions. down around six to eight per cent when clashes occur.152 ITV has in turn indicated that this loss of viewers and advertising revenue has a potential adverse effect on incentives to invest in such content.

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While the use of digital recorders But while the government would like It is the government’s view that while and catch-up viewing is increasing, to see the BBC continue to ensure the licence fee continues to be paid the majority of people still watch that UK audiences have access to for receipt of television services a television live and scheduling does quality content from abroad, it small proportion of the licence fee effect which programmes licence fee would also like to see due restraint may be available to organisations payers can watch and enjoy. by the BBC through a focus on other than the BBC to help deliver buying programmes which would quality and pluralistic public service The government is clear that it cannot be unlikely to be shown by other content, using competitive forces to and indeed should not determine free-to-air broadcasters in particular. ensure the highest quality for the best either the content or scheduling of Guaranteed income via the licence value for money. This approach may programmes. And schedule clashes fee allows the BBC to take risks and help deliver appropriate volumes of are clearly not the responsibility of trial new things with British audiences. certain valued public service genres one particular operator in the market. If other free-to-air broadcasters are which Ofcom recently identified as in We expect the BBC board to consider willing to pay for acquired content decline, and stimulate plurality within the best interests of viewers – giving made overseas and make it available public service broadcasting in areas them a choice and variety of shows to UK audiences there will often be such as children’s programming where to watch, and carefully consider any little or no public interest in the BBC the BBC has a near-monopoly and potential undue negative impacts of becoming engaged in a battle for that where contestability might deliver its scheduling decisions. content (particularly for rights other new, fresh content. This system has There is a further issue relating than sports) bidding up the price, operated abroad in both New Zealand to ‘bidding wars’ for programme or spending licence fee income on and Ireland for a number of years. rights. In general, the BBC should be something which could be provided by others. The government therefore intends to commissioning new content rather pilot – on a small scale – a contestable than buying previously made content fund for public service content in from others and it is indeed the largest Establishing a new public the next Charter period. This will be investor in original UK programming. service content fund available to organisations to create Purchasing ready-made content from public service broadcasting content others can provide public value at The licence fee is a fee paid by the which would need to be shown to times by bringing previously unseen, general public to watch or record the UK population on a platform high quality programmes to UK television programmes. This applies with an appropriate reach and be audiences. The BBC introduced ‘Scandi regardless of which television channels free-at-the-point-of-use (for example, drama’ in the UK through The Killing, a person receives or how those content could be shown on Channel 4, for example, which was first aired on channels are received. The licence fee Channel 5 or ITV). BBC Two. is not a payment for BBC services or any other specific television service, The contestable public service content although licence fee revenue is used fund will receive up to £60 million of to fund the BBC. While almost all funding for two-three years (planned the licence fee income is currently £20 million per annum) after which provided to the BBC, that has not the impact of the scheme will be always been the case – indeed 12 per assessed and a decision taken about cent was used for other purposes prior whether to close, maintain or grow to 1962 and £75 million of the licence the scheme. Funding will be directed fee is still used to fund public service from unallocated funding from the content on S4C, for example. 2010 licence fee settlement, to help support a series of priority areas in public service broadcasting provision. This money is additional and separate from the funding agreement that the government and the BBC reached in July 2015.

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The government will consult on the most appropriate body to administer Box 34. New public service content fund this new fund and on the criteria for the scheme over the coming months. A fund of £20 million a year for a two-three year trial period, starting in It is anticipated that the scheme 2018/19. Available for content on television or shown online and focused on will include funding for children’s under served genres, as identified by Ofcom, and under served audiences. programming (where there has been a 21 per cent reduction in public service Possible underserved genres the fund could focus on: broadcast investment since 2009153 −−children’s programming; in part due to stricter advertising −−religion and ethics; restrictions) and potentially one or more of the other genres identified as −−formal education; and ‘at risk’ by Ofcom in its third public −−arts and classical music. service broadcasting review.154 It could also be used to support content for Underserved audiences: those audiences that are underserved −−diverse audiences/BAME and groups with protected by public service broadcasters at characteristics; and present (such as BAME audiences −−nations and regions. or audiences in the nations and regions) to support greater diversity in programme making, both on and In addition the scheme will need evaluation criteria off screen. The intention is that the against which bids will be assessed; government will fund will be operational to make its consult on these in the autumn. These could include: first grants in 2018/19, subject to −−value for money (including likely impact and reach); state aid approval from the European −−creative risk-taking; Commission. −−innovation; −−leveraged funding (to allow co-funded bids); and −−content in English or a UK minority language.

How would bids be assessed? −−Applications considered by a small panel of industry figures who would be appointed by the organisation administering the fund. −−All funding applications to have secured distribution on a free-to-air broadcaster/online publisher so available free to those who have funded it. −−Could require investment to be balanced between a variety of mainstream programmes for large audiences and specialist or niche audience output.

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Opening up the BBC As part of the Ideas Service, the Supporting and invigorating archive further BBC already has plans to make local news provision across available a significant amount of its the UK The BBC has a rich, near 100-year historical content in digital format as legacy of programme making. That well as act as a platform for digital Local and regional news provision in content, besides offering the potential content from partner organisations the UK is a key element of our plural to be exploited commercially, can such as museums and universities. media landscape – reporting on issues act as a unique lens on British and The government welcomes this that matter to the communities they global history, as well as informing commitment and encourages the affect and helping hold decision- and inspiring those in education and BBC to do more to open up its archive makers to account. However, the academia. and ensure that it can be used by industry has faced challenging times: the public and as wide a range of the circulation of regional The BBC archive is, therefore, a institutions and organisations as has seen an average annual decline of valuable asset for the nation. The possible. There should be particular almost seven per cent between 2009 BBC’s Genome Project (launched in scope to do more to enable access to and 2013 and revenues have suffered 2010) estimated there to be more BBC historic news archive given the similarly (see box 35).155 This is in large than a million archived programmes, low costs of securing rights relative part attributable to the increased as well as extensive collections to other output. role of the internet: while many local of documents, still images, sheet news providers are making great music, artwork and physical objects. strides in transitioning their audiences Although the BBC has made great online, the monetisation of this move strides towards digitisation in recent remains challenging. years, much of the archive remains in its original state – only a small proportion of its archive has been digitised to date. Box 35. Regional press revenues have been in decline In ‘British, Bold, Creative’, the BBC set £ millions out a vision for the creation of a new ‘Ideas Service’, which could have a 900 Decline in total revenue on prior year significant impact on how audiences 800 -7.1% and third party institutions access 700 -6.0% and use the BBC’s archive. The BBC -4.1% 600 sees significant potential in curating content from across the BBC and from 500 partners – using both new content 400 -12.1% -11.2% and mining the richness of the archive 300 -8.9% to help explain the world around us. 200 -2.7% -3.7% -3.8% Of course there are limits to what 100 can be achieved cost-effectively, as 0 securing rights for that content can 2008 2009 2010 2011 2012 2013 2014 be complex, time-consuming and Trinity Mirror therefore costly.

Note: Trinity Mirror numbers include both national and regional revenues, since these are not reported separately in recent years. Source: O&O for NMA, The news market in the 21st Century and the likely implications for the BBC’s role, 2015

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The government expects the BBC to The government welcomes this Leading the industry in use its privileged position to support focus, but recognises that these a potential future digital the provision of news and information plans will need to be implemented switchover for radio and specifically we expect to see a in consultation with industry. In positive partnership with the local particular, there are details about Over the current Charter period the news sector. The BBC has set out the Local Public Sector Reporting BBC has played an important role proposals about how it would like Service which still need to be resolved. in developing the market for digital to do this: The BBC has been working with the radio in the UK, which has seen Association (NMA) to significant growth over the past few −−a News Bank – syndicating audio develop proposals and good progress years (see box 36). The BBC has four and video content for local and has been made in agreeing the national digital-only radio stations regional news organisations across principles of such a service that sees and has extended Digital Audio the UK; the BBC providing some funding for Broadcasting (DAB) coverage of its −−a Data Journalism Hub – partnering local journalists to provide reporting national services to over 97 per cent with a university to make data for use by the BBC and other news of households. The BBC has also journalism available for news providers. These proposals could supported the investment being organisations across the UK; provide a positive contribution to the made by the Department for Culture, −−an Independent Audit of Local diversity and quality of local news Media & Sport and commercial radio Content – looking at usage of local provision. The government welcomes to extend local DAB coverage to press content by the BBC on its the BBC’s commitment to continue match commercial FM coverage by media platforms and vice versa; and to work with the industry to develop the end of 2016. The government and implement these plans and its expects that over the next decade −−a Local Public Sector Reporting commitment to provide funding for the BBC will continue to support Service – investing in a service to 150 journalists from 2017, given the the transition from analogue to report on local institutions. public interest in a plurality of local digital radio and to strengthen its and regional news provision. This partnerships with commercial radio number could rise to 200, subject to and industry stakeholders. the outcome of a joint review of usage and funding in 2019. These proposals will sit alongside the BBC’s existing local services which the government wants to see continue to thrive. The provision of local news and current affairs are vitally important to the communities they serve, for example, BBC local radio provided essential information to listeners during the floods resulting from Storm Desmond.

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In addition, the BBC should develop Box 36. Digital radio listening in the UK has seen a steady increase arrangements to deliver and procure with third party organisations, % as appropriate, support for the 60 most vulnerable listeners at risk of losing BBC radio services after a 50 switchover, and to make appropriate arrangements to deliver this 40 scheme with or through third-sector organisations. These arrangements 30 would need to be agreed as part of 20 the government’s decision to proceed and in the context of future funding 10 settlements for the BBC.

0 2009 2010 2011 2012 2013 2014 2015 Weekly Reach Share

Weekly Reach: The number as a percentage of the UK/area adult population who listen to a station for at least five minutes in the course of an average week Share: The percentage of total listening time accounted for by a station in the UK/area in an average week Source: RAJAR, Market Trends, 2015

A decision about whether or not to In response to a decision to proceed proceed with a radio switchover is with a future radio switchover, likely to be taken by the government the government would expect the at some point during the next Charter BBC to complete the final phase of period. This is not a decision that its national DAB network so that can or should be taken at this stage. its coverage is equivalent to FM However, if the decision is taken to coverage, subject to value for money switch, the government expects that considerations. In doing so, the BBC the BBC will take a leading role in that will need to ensure that coverage of transition, working in partnership with BBC Nations services in Scotland, commercial radio. In doing so the BBC Wales and Northern Ireland in DAB must consider the best way to enable also fully matches FM coverage the wider radio market to flourish ahead of a switchover taking place. whilst managing its own impact. The government would also expect the BBC to ensure that appropriate enhancements were made to its local DAB coverage in England – subject to value for money – and to reach agreement with commercial radio on sector-wide marketing plans, as well as the arrangements and funding for the delivery phase of switchover.

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5. Enhancing efficiency and transparency

Opening up more commissioning to competition 78 Providing in-principle support for the BBC’s proposal to establish its production arm as a new commercial subsidiary (BBC Studios) 82 Giving the new unitary board responsibility for delivering efficiency across the BBC’s activities, including pay and staffing 83 Increasing transparency of BBC spending 85 Reviewing and regulating the BBC’s commercial subsidiaries and ensuring they operate fairly and efficiently 85 Introducing more independent scrutiny about how effectively the BBC spends its funds 87 Continuing and improving the BBC’s leading role in technology and research and development 89

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The BBC is a publicly-owned The BBC has operated a rolling series As part of this Charter Review, the institution granted unique and of efficiency programmes over the government has therefore considered significant privileges, including last two decades, beginning with how the BBC can better harness the the ‘Producer Choice’ programme, full potential of the funding it receives nearly £4 billion of public funding which began the process of opening and how the BBC’s management can 156 a year. While it is editorially up BBC production to competition, be set the right incentives to ensure and operationally independent, and culminating in ‘Delivering the efficient use of public funds. this position requires that it Quality First’, its current efficiency This will, of course, be a central area is scrutinised effectively for programme. As part of this the BBC of the of the new unitary board’s is planning to make £1.5 billion of responsibilities. In addition, during the decisions it takes and the 157 efficiency with which it spends savings by 2016/17. the next Charter the BBC will be both enabled and compelled to operate its money. The Delivering Quality First more efficiently through competition, programme has already delivered transparency and scrutiny. significant results: the BBC has reduced its management costs by Specifically, the government will: 13 per cent since 2011158 and its overhead costs stand at 7.6 per cent, −−open to full competition the 162 with the BBC planning to be in the top £740 million the BBC spends each quartile of comparable organisations year on in-house television content by next year.159 production (with the exception of news and news-related current But it is clear that significant challenges affairs), concluding a process first remain. Only 23 per cent of people started in the 1990s; said in nationally representative −−provide in-principle support for polling that the BBC is efficient in how the BBC’s proposal to establish it spends its money. And the BBC itself its production arm as a new recognises that striving for greater commercial subsidiary (BBC Studios); levels of efficiency is a continuous process.160 Its own analysis suggests −−enshrine greater public scrutiny of that £200 million of additional annual BBC spending through the National savings can be delivered by 2021/22,161 Audit Office; and there are legitimate questions −−require greater transparency of BBC about the extent to which the BBC is spending on its staff, talent and operating as efficiently as possible in its output; a range of areas. −−ensure the BBC’s commercial subsidiaries are reviewed and regulated to operate fairly and efficiently; and −−require the BBC to undertake a detailed review and value for money assessment of its current R&D activity.

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Opening up more Box 37. Main existing BBC content quotas (in per cent) commissioning to competition Statutory BBC Trust-imposed The BBC is a substantial commissioner quotas framework and producer of original public service content. It currently spends Television Radio Online over £1 billion a year in the UK’s A creative economy,163 in addition In-house production 50 80 75 to the £740 million it spends on Independents 25B 10 25C producing television content in- house.164 During this Charter period, Open to full competition 25 10 n/a the BBC has opened up more of its A A minimum guarantee for television and a maximum for in-house radio and online content production to competition via content supply. a ‘Window of Creative Competition’ B Qualifying independents only. for its television and radio content C In fact, 30 per cent of qualifying online content spend was allocated to independent production. There are now also suppliers in 2014/15. quotas for the amount of BBC content that must be made by Competition has increased qualifying independent producers Box 38. Overview of BBC commissioner choice, making sure across television, radio and online. original UK television content that commissioners have access In television, for example, 50 per cent spend 2014 to and can choose from the best of qualifying hours are guaranteed to creative talent to drive up the quality in-house production, 25 per cent are Non-qualifying Qualifying spend (e.g. news) in-house production of the shows we watch and listen to, allocated to independent production 31% 35% and has also helped ensure licence companies not owned by broadcasters fee payers get value for money by (qualifying independents), and subjecting a proportion of the BBC’s 25 per cent are competed between budget to market forces. Notably, of BBC in‑house production and the 25 per cent of television content qualifying and non-qualifying £1.2bn production for which the BBC’s independents, with less competition in‑house production unit competes in radio and online (see box 37). with independent producers, the latter typically win 80 per cent, although this varies substantially by genre. This regime has also helped the UK’s Qualifying external production independent television production to 34% grow to £2.9 billion165 a year (see box 39), and Ofcom’s latest analysis shows Source: Based on data published by BBC 166 Trust and Ofcom that 259 companies are producing content for the public service broadcasters.

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This raises the question of whether Box 39. Independent producer revenues by TV and non-TV activities further reforms could deliver further benefits: for the BBC, for £ million the independent sector in television 3,500 production, for the burgeoning and Revised Methodology emerging independent sector in radio 3,000 and online content production, and 2,500 most importantly, for licence fee payers, by making the best content in 2,000 the most efficient and cost-effective 1,500 way. As the BBC Trust has noted, “the BBC’s current framework of quotas 1,000 needs to be reconsidered to ensure the 500 Corporation retains the ability to secure high-quality and creative content on 0 165 2004 2006 2007 2008 2009 2010 2011 2012 2013 2014 behalf of the licence fee payer.” (2005 (2007 (2007/ (2010 (2010 (2011 (2012 (2013 (2014 (2015 Census) Census) 2008 Census – Census – Census) Census) Census) Census) Census) Census) restated) restated) TV revenue Non-TV revenue

* Non-TV revenue includes corporate production, new media and other non-TV activities such as online publishing, talent Source: Oliver and Ohlbaum report for Ofcom, Trends in TV Production, 2015

The market has been characterised in The content production reforms of recent years by mergers and buy-outs the last Charter have undoubtedly of some of the UK’s most successful been successful. Many of the BBC’s independent producers – a sign of best-loved programmes are made the commercial and creative success by independent producers, including of the UK production industry – but Sherlock, Question Time, the Graham the market remains dynamic with Norton Show, between 77 and 136 new companies and numerous others (see box 40 starting up in each of the last for award-winning examples). four years.167

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The Director General, in a speech in Box 40. Examples of award-winning independently-produced content 2014 said that “competition is good for the BBC for the BBC and I want more of it.”169 The government agrees. While the BBC’s own proposals for content Television Radio production reform go some way to harnessing the benefits of greater Sherlock Radcliffe and Maconie competition (the BBC has proposed produced by 6Music, produced by Smooth lowering the level of in‑house Operations −−Winner, Best Drama Series at 2011 guarantees from 50 per cent in some BAFTA Awards −−Silver, Music Radio Personality genres and entering into a voluntary commitment of 60 per cent of radio −−Winner, Outstanding Lead of the Year award at the Radio hours being opened up to the market in a miniseries (Benedict Academy Awards 2014 within six years), the BBC can be Cumberbatch) and Outstanding more ambitious in its approach to Supporting Actor in a miniseries Just Silence commissioning content, particularly (), at the 66th Radio 1, produced by Just Radio television content, such that licence Primetime Emmy Awards −−Gold in the Best Documentary fee payers get both the best possible award, Awards content and value for money from the 2013 funds the BBC invests, at the earliest produced by possible opportunity. The Show −−Winner, Best TV Drama at the The government therefore proposes 2014 TV Awards 5Live, Produced by Campbell Davison Media full competition for all the BBC’s −−Winner, Drama Series at the 2015 television and online content spend, Awards −−Gold, Speech Radio Personality and will remove all existing in-house of the Year, Radio Academy guarantees, with the exception of news My Life: I Am Leo Awards 2014 and news-related current affairs. This produced by Nine Lives Media −−Gold, Best Entertainment change will empower commissioners Programme, Radio Academy to select the very best content for −−Winner, Children’s Programme at Awards 2013 licence fee payers, from the BBC’s own the 2016 Royal Television Society producers and creative talent as well Awards as from independent producers. −−Winner, Best Factual at the 2016 Online The BBC will continue to have to meet International Kids’ Emmy Awards the independent production quota in −−Winner, Best Factual at the 2015 The Dumping Ground: television, and the government will BAFTA Children’s Awards You’re The Boss also retain production quotas in the developed and produced by CBBC nations and regions. Interactive and Somethin’ Else This is a significant change for the −−Winner, Best Interactive (Adapted) BBC. It goes further than the BBC at the 2015 BAFTA Children’s agreed with the Producers Alliance Awards for Cinema and Television (PACT) in December 2015 as in addition to that agreement, which the government expects the BBC to deliver whether or not BBC Studios receives regulatory approval, there will also be full competition in television for children’s, sports, non-news related current affairs content and returning series.

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A change of this magnitude in markets −−the government’s proposed The mid-term review will also assess at very different stages of development mid-term review will assess the the effectiveness of this new approach needs sufficient transitional time. effectiveness of the approach to to competition in radio and online. Therefore, in addition to the opening content commissioning; and As noted above, there will be one up agreed by the BBC and PACT, −−children’s, sports and non-news namely at least 40 per cent of the exception to this new regime. To related current affairs will be fully ensure there is sufficient plurality existing in-house guarantee within the competed by 2019; first two years to 2018, the government in the supply of news, and given the proposes that: For radio, the new Charter will require practical difficulties in opening up the the BBC to compete a minimum of BBC’s news provision to competition, −−the BBC will reach 100 per cent 60 per cent by 2022, in line with the the government will continue to competition (except in news and agreement with Radio Independents exempt the BBC’s news and news- news-related current affairs) by Group (RIG). related current affairs output from the end of the Charter period, the approach of full competition. demonstrating immediate progress, For online, 100 per cent of the BBC’s subject to the new BBC unitary non-news online content will be open board identifying any exceptions on to full competition by the end of the value for money grounds; Charter period.

Box 41. Overview of BBC television content production quotas (excluding news and news-related current affairs)

Current situation

Independent production In-house guarantee (50%) WOCC (25%) quota (25%)

BBC + PACT proposal

In-house guarantee BBC Studios Independent production (20%) contracts WOCC (45%) quota (25%) (10%)

No less than: Potentially open No more than: No less than: 40% in Current Affairs to competition in 20% in Current Affairs 40% in Current Affairs 40% in Children’s future depending 20% in Children’s 40% in Children’s 50% in Sport on decisions by BBC Commissioners

White paper proposal

Full competition for commissions Independent production (75%) quota (25%)

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But importantly, it would also make Box 42. The BBC is the biggest player in the UK content the BBC more efficient. On the production market (companies by revenue, 2014) basis of positive experiences in the past, the BBC believes that exposing StudioCanal £34m Argonon BBC productions to the discipline Hat Trick £30m Red Arrow Productions £30m Others and competition of the market will £51m £230m Sony result in improved efficiency of £52m its productions: the BBC achieved Avalon BBC £58m £741m significant efficiencies of around six William Morris per cent a year during the 1990s after £62m Zodiak the Broadcasting Act 1990 opened up £69m 25 per cent of television content to Warner Brothers £85m external producers.172 NBCU £101m ITV Establishing the BBC’s production £536m Tinopolis £140m unit as a commercial player is a significant move. The BBC believes

Fremantle All3Media EndemolShine its production arm, housed in a new £147m £253m £425m commercial subsidiary, would initially receive around 15 per cent of all UK Source: Ofcom, Review of the operation of the television production sector, 2015 commissioning spend. This would make it one of the largest production Taken together, these reforms Providing in-principle support companies in the UK with estimated will open up hundreds of millions for the BBC’s proposal to revenues of approximately £400 million at launch.173 of pounds of BBC spend to establish its production competition.170 This will provide Noting the potential for market a welcome boost to the creative arm as a new commercial distortion from a change of this economy but fundamentally it is subsidiary (BBC Studios) nature, a number of stakeholders about ensuring the BBC secures The BBC first announced in voiced concerns about this proposal the best possible creative ideas and 2014171 that it plans to move a during the government’s consultation. provides audiences with the best significant proportion of its in-house Some of these related to the number possible content at the best possible programme-making capacity into of returning series transferred price. Not only does competition BBC Studios, a new commercial automatically to BBC Studios at its bring in new ideas – it also drives and subsidiary. This new company would launch, which is addressed above. inspires the BBC’s own creative talent compete for programme commissions But there are also concerns about the and production staff to new heights. from the BBC as well as from other potential lack of effective separation broadcasters both in the UK and of BBC Studios from the rest of the internationally. BBC group. A lack of clarity over this separation could result in market The BBC proposals are designed to distortion, since BBC Studios is make its own production capability supposed to operate as a commercial resilient for a future with increasing business without any element of competition for commissions, public subsidy through the licence including from global players. The BBC fee, operating on a level playing hopes that giving BBC production staff field with commercial producers. By the opportunity to work for more than winning contracts from others there one potential customer, as is currently is also the risk that this could shrink the case, will give more creative a flourishing sector. freedom to the people that BBC Studios will employ and make it an attractive employer for the best talent.

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The BBC has worked with PACT to The government hopes these concerns As set out in Chapter 3, the tailor the BBC Studios proposal174 can be addressed and overcome government is creating a new unitary to address some of these concerns. and believes that the new approach board which will be uniquely well- However, their agreement also notes to competition in BBC spend and placed to ensure that the BBC is that BBC Studios needs to be subject the establishment of BBC Studios run efficiently and that the BBC is to a number of safeguards to make as a new commercial subsidiary transparent to allow effective scrutiny. sure that it operates fairly. This view could offer significant creative and Among other issues, the government was endorsed by Ofcom, which noted economic benefits for the BBC, the expects it to address the following that BBC Studios had the potential wider production sector and most challenges, which focus on pay-related to be a pro-competitive development importantly licence fee payers. issues given the high proportion of if appropriately regulated. the overall budget this represents: Radio falls outside of the BBC’s Recognising Ofcom’s preliminary proposals for Studios. But through Layers of management view that BBC Studios could be Charter Review we have considered As the BBC’s Director-General has a pro-competitive move for the what the appropriate framework recently acknowledged, the BBC UK’s television production market, should be for independent production continues to have a reputation the government is pleased to give in radio. The BBC agreed in June for excessive management layers. ‘in-principle’ support to the BBC’s 2015 that 60 per cent of radio hours The BBC itself notes that it still faces proposals, subject to them passing would be available to independent challenges in achieving its target the appropriate regulatory tests and production by 2022, an increase from of senior management representing requirements: it is essential that the 20 per cent now. The government at most one per cent of the total new BBC Studios will trade fairly and welcomes this agreement as workforce.176 without advantage through the licence contributing to the overall move fee. This support is also dependent towards greater competition and Management and talent pay on the successful adoption of the will enshrine this commitment in In recent years the BBC has taken government’s proposed approach the Charter. steps to bring under control the of full competition in content amounts it spends on its senior spend and the removal of the BBC’s Giving the new unitary board management. Talent spend is down 177 existing in-house guarantees (except responsibility for delivering by 15 per cent since 2008 and its for news and news-related current total management bill has reduced efficiency across the BBC’s 178 affairs) as outlined above. When the by 13 per cent since 2011. Some of activities, including pay its top earners also have lower total BBC provides further detail about and staffing BBC Studios the whole proposal remuneration packages than those of will be subject to rigorous scrutiny, The BBC clearly has a range of costs competitors: the Director-General’s consultation with industry and final beyond content production, and while total remuneration package in 179 approval by the BBC’s regulator, it has proposals to deliver annual 2014/15, for example, was £466,000 while the Chief Executive of Channel to ensure appropriate separation efficiencies of at least one per cent of 4, a much smaller and less complex from the BBC’s public services. its addressable cost base,175 the BBC will need to develop strategies for organisation than the BBC, earned 180 in the same year. further efficiencies in other areas. £855,000

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However, in a survey for in Overall staffing levels Other areas 2014 almost eight out of ten people Many public sector organisations There is a range of other costs thought that the BBC paid its top have recently delivered substantial the board will need to investigate management and talent too much,181 efficiencies through headcount including property costs, where the with 87 earning more than the Prime reductions, with overall Civil Service BBC performs poorly on certain Minister (£150,000).182 In light of staff numbers, for example, falling benchmarks, particularly regarding the the public’s views, the BBC’s new by over 15 per cent since 2009. price per square metre of Broadcasting unitary board should take a robust A number of media organisations have House.184 And the BBC has already approach to remuneration for talent experienced similar reductions. Despite demonstrated that savings can be and management. The BBC must an extensive efficiency programme, made to certain programme budgets continue to strive to be an ever-more BBC staff numbers grew by 300 without there being a corresponding efficient, lean organisation and be between 2013/14 and 2014/15183 and drop in audience appreciation. seen to be bearing down on costs – only fell by 1 per cent since 2010 paying particularly close attention to (see box 43). This suggests that greater As we set out in Chapter 3, the how much it pays those who earn the focus is needed in this area. BBC board will need to report on highest salaries – paid for with licence areas such as value for money on fee payers’ money. an annual basis.

Box 43. Staff reductions at the BBC have been very modest compared to those in the Civil Service since 2010 In relation to the perception of excessively high pay, this is first and foremost the responsibility of the remuneration committee of the unitary board. But the new body 5% reduction responsible for accountability should be actively prepared and seeking to 10% reduction hold the board accountable for overall 15% reduction levels of pay across the BBC. CMS Select Committee Report, 2015185 20% reduction

25% reduction

2009 2010 2011 2012 2013 2014 2015 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Civil service staff numbers BBC public service group employees

Source: Institute for Government; BBC Annual Report and Accounts

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Increasing transparency The BBC will maintain the current Reviewing and regulating the of BBC spending cap on talent spend of a maximum BBC’s commercial subsidiaries of 16 per cent of internal content and ensuring they operate The new board can also go further costs. The new BBC board will also on improving the transparency of have a duty to manage talent costs fairly and efficiently how the BBC spends the licence fee. and conduct and report on a rolling The BBC commissions and owns The BBC publishes a lot of information programme of talent pay reviews, globally sought-after content: shows about how it does its business and with independent, expert advice. The like Doctor Who and formats such as how it spends the licence fee on the BBC board’s remuneration committee, are international various services it runs. At present, chaired by a non-executive director, hits, showcasing the best of British for example, the BBC publishes will also approve the pay levels creativity. BBC content, beyond the information on its aggregate spend of new staff and freelance talent direct enjoyment it brings to UK on individual services, such as BBC above £250,000. The government audiences, is therefore a valuable One, and on the number of hours also expects the new BBC board commodity that can be marketed to of content it broadcasts in different to consider other ways in which provide licence fee payers with the genres. However, the BBC can go it can improve transparency and best return on their investment. further in becoming more transparent management of talent pay. to licence fee payers. There are two The BBC uses its commercial particular priorities: Spend by genre subsidiary BBC Worldwide to distribute As the Select BBC content in the UK and overseas. Talent spend Committee on Communications It currently has the right of first refusal 186 The BBC already publishes data on noted, transparency about the over the ability to invest in, and later the number and salaries of talent in BBC’s spend on particular genres is on to exploit, BBC content, making it news, radio, television and digital by crucial in holding the BBC to account, a stable and reliable investor in BBC broad bands in its annual report, and particularly against the background content. BBC Worldwide’s returns to the names and detailed remuneration of reductions in overall funding for the BBC, in the form of programme packages of management earning the BBC which have been reflected investment and the dividend it pays, more than £150,000. The public have in reduced investment in individual are equivalent to 12 per cent of a right to know what the highest genres, including key public service the BBC’s television budget.188 It is earners the BBC employs are paid out genres such as specialist factual and also a significant intervention in the 187 of their licence fee. The new Charter current affairs. market, being the biggest distributor will therefore require the BBC to go 189 The public has a right to understand outside the US Studios and owning further regarding the transparency 50 per cent of UKTV, which owns of what it pays its talent and publish the financial choices the BBC makes on the types of content it is and operates ten commercial UK the names of all its employees and linear television channels including freelancers who earn above £450,000 prioritising. There will therefore be a new duty placed on the BBC in the Dave, the UK’s most popular (the current Director-General’s salary) non‑public service channel.190 There in broad bands agreed with the BBC. next Charter period to provide annual reporting on its spend by genre, in is substantial private capital linked line with industry standard genre to BBC Worldwide: 49.9 per cent of classifications developed by Ofcom BBC America, for example, is owned where appropriate. by entertainment company AMC, to whom the BBC also ceded operational control of the channel (but which is required to maintain the BBC’s editorial standards).

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Questions have been raised regarding BBC Worldwide’s commercial Box 44. The BBC’s commercial subsidiaries record – sales and profits in 2015/16 were both lower than those in 2009/10191 – and whether it indeed delivers as much value as possible for Revenue Staff the licence fee payer: the House of Commons Culture, Media and Sport BBC Worldwide Select Committee considered issues around the transparency of BBC £1bn 1,800 Worldwide’s accounts as well as the fairness of its interaction with the BBC BBC Global News public services in a recent report.192 Decisions early in this Charter period, £94m 124 such as the loss-making acquisition of the travel guide (subsequently sold), have led to BBC Studioworks considerable controversy. £30m 120 The content supply market is going through a period of rapid Source: BBC Commercial Holdings 2014/15 Statutory Accounts change, seeing the consolidation and integration of content suppliers and distributors internationally. The As with BBC Worldwide, questions An increasing amount of the BBC’s government believes that the current have been raised about the economic activity is being undertaken content distribution arrangements commercial performance of the BBC’s in commercial subsidiaries and this will through BBC Worldwide should other commercial subsidiaries. For increase further if BBC Studios gains therefore be re-assessed in light of most of the current Charter, both BBC regulatory approval. It is vital that the developments in the international Global News and BBC Studioworks these businesses do not gain an unfair market for content. have been loss‑making.193 Moreover, advantage over commercial rivals due the BBC has not always been able to to their privileged link with the BBC’s Though the largest, BBC Worldwide assure the broader market that the public services. The BBC’s commercial is not the only commercial subsidiary relationships between its commercial subsidiaries should ultimately serve the BBC operates (see box 44). The subsidiaries and the public service are the BBC public service, not the other BBC also owns BBC Global News, its compliant with the BBC’s Fair Trading way around. commercial international English- obligations due to a perceived lack of language news operation, and BBC transparency. The model of commercial services Studioworks, a resource company regulation introduced in the last offering studio and post-production Charter sought to ensure the BBC’s services. If it achieves regulatory commercial activities: fit with approval, BBC Studios will become the the BBC’s public purposes, were BBC’s fourth commercial subsidiary. commercially efficient, did not jeopardise the BBC’s reputation, and did not distort the market.

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While the government considers that −−require the BBC board to be Introducing more independent this framework remains appropriate, more transparent about how scrutiny about how effectively it wants to see the BBC held more the BBC operates its commercial the BBC spends its funds accountable for the performance of subsidiaries: in consultation with its commercial subsidiaries in the industry and with agreement In addition to increased competition next Charter and more transparent from Ofcom it will need to publish in commissioning, a focus on about how it operates them. The new enough information to provide transparency and value for money at Charter will therefore: confidence that relationships the board level, and tougher and more between the public service and transparent regulation of the BBC’s −−split responsibility for the the commercial subsidiaries are commercial operations, the BBC will existing ‘four commercial compliant with regulation (without receive more external scrutiny during criteria’ between the BBC board jeopardising the ability of such the next Charter period from the NAO. and Ofcom. The BBC board will businesses to operate commercially); have responsibility for ensuring and All public bodies are required to spend the subsidiaries fit with the BBC’s their funds in accordance with four public purposes, are commercially −−provide for Ofcom to develop a key principles: regularity, propriety, efficient and uphold the reputation fair trading framework, following feasibility and value for money of the BBC (the governance criteria) consultation with stakeholders, (see box 45). These principles set while Ofcom will have ultimate which will set out broad principles of out the very high standard people responsibility for ensuring they fair trading and rules to ensure that expect for any public organisation in do not distort the market (the the interaction between the BBC’s receipt of public funds, even if they regulatory criterion). As a last resort, public service broadcasting activities are operationally independent from Ofcom would be able to direct the and its commercial activities do not central government. The government BBC to stop commercial ventures unduly distort competition in the will therefore enshrine these principles where there is clear evidence that market. The BBC board will take in the new Charter to apply to the public and commercial activities are primary responsibility for ensuring way the new BBC unitary board makes not effectively separated and where compliance with these rules. To spending decisions for the BBC. commercial operations may be give industry confidence that the unfairly subsidised by the BBC; BBC is operating fairly, Ofcom will be responsible for considering −−ensure the board undertakes appeals from stakeholders under strategic reviews of each the framework about the BBC’s commercial subsidiary on a activities, and how the BBC has periodic basis, considering whether assessed fair trading complaints. the current arrangements best Ofcom will also have the ability to serve the public interest. This step-in to review concerns about fair should also include the case for trading and to impose requirements closing or reorganising loss‑making in relation to interaction between subsidiaries, such as Global News, the BBC’s public service broadcasting particularly given concerns over its activities and new commercial quality record. It will be required subsidiaries. to publish summary details of these strategic reviews and the commercial efficiency benchmark each subsidiary will be held to. The first of these reviews should be completed by the end of 2018;

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While the NAO’s recommendations Box 45. Principles of public spending in the UK are not binding on any of the Regularity – The management of public resources should accord with the organisations it audits, its findings relevant legislation and other statutory frameworks, delegated authorities will provide valuable direction and and government guidance. For the BBC these are established through its challenge for the BBC’s board. The Charter, and other agreements it makes with government. Charter will therefore establish the Comptroller and Auditor General Propriety – Management of public resources should meet high standards as the BBC’s financial auditor, in of public conduct, robust governance and the expectations of Parliament, line with the normal arrangements including its conventions and control procedures, and any requirements of for public bodies such as the BBC. the Public Accounts Committee. In 2014/15 the NAO audited 442 accounts196 for 344 public bodies, Value for money – Procurement, projects and processes are systematically ranging across central government evaluated and assessed to provide confidence about suitability, effectiveness, departments, independent regulators prudence, quality, value and avoidance of error and other waste, taking into and arm’s length bodies operating in account the wider public interest, not just that of the BBC itself. a commercial setting such as Network Feasibility – Proposals using public funds should be implemented accurately, Rail. The NAO’s work will support the sustainably and to the intended timetable. BBC board in ensuring that the BBC is performing effectively with the necessary financial controls. This will The NAO scrutinises how effectively Past NAO scrutiny for the BBC also give the NAO a more in-depth public funds are spent and whether has been shown to work well and understanding of the BBC’s operations, these principles are observed by to be compatible with the BBC’s aiding the value-for-money work, public bodies. Under the current editorial independence. The NAO is and will also allow Parliament to hold arrangements the NAO already carries uniquely placed to scrutinise public the BBC to account for whether its out value-for-money studies on the bodies, including the BBC, from a public resources are managed in line BBC’s publicly-funded operations, fully independent perspective: the with the requirements of regularity a crucial way in which external, Comptroller and Auditor General, and propriety. independent scrutiny on behalf of the the head of the NAO, is an officer taxpayer is applied to the BBC. These of the House of Commons, and the The government will also consider reports have increased transparency: NAO does therefore not report to any further the potential merit of letting on the BBC’s record on severance minister. The NAO does not question the NAO carry out value for money payments the NAO found that in a government policies, but challenges reports about the BBC’s commercial number of cases the BBC paid senior whether government delivers these operations: as set out above, the managers more salary in lieu of notice policies in a cost-effective way. activities of the BBC’s commercial than they were contractually entitled Similarly, the NAO also does not subsidiaries do not receive public to, costing licence fee payers at least question the merits of the BBC’s money but do return profits to the £1 million.194 In its report on the BBC’s editorial or creative judgements, for BBC’s public service division. failed Initiative the NAO which the BBC has, and will retain, It is therefore in licence fee payers’ concluded that there had been failings an exemption in the Charter. interests to know whether these regarding the BBC’s procurement activities are carried out efficiently, process and that the financial benefits As set out in Chapter 3, the new effectively and with economy. of this £100 million project had been Charter will put in place a much However, the government will need to overstated.195 stronger governance framework for consider further the possible impacts the BBC, with a powerful unitary of this on the ability of the BBC’s board that is responsible for running commercial operations to compete the BBC. However, this also calls for effectively in the open market. a stronger element of scrutiny that is truly external to the BBC.

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Under the current Charter, the sixth The government wants to see the Box 46. The National public purpose sets out the BBC’s BBC retain a role in technological Audit Office role in digital switchover. As set out development and R&D, and for in Chapter 2, since this has now been this the BBC needs to improve its 442 successfully completed, this purpose understanding of the value it adds in audited 442 accounts has become outdated and will be this area. The BBC should therefore for 344 public bodies removed. However, technological undertake and publish a detailed change over the next Charter period is review and cost-benefit analysis of likely to continue at pace and the BBC its R&D activity, including the iPlayer, £1tr will need to continue to adapt to this, looking at its successes to date, audited £1 trillion and to changing audience demands, in objectives for the future, and potential combined revenue cost-effective ways. The government ways in which it might be able to and expenditure of believes the BBC has an important role improve collaboration with others. government bodies to play in technological innovation This should also include an analysis of and development. While a specific the value delivered for the licence fee £ £1.15bn public purpose may not be the best payer, and the creative economy more helped deliver audited way in which to enshrine this role, broadly, as a result of this investment. savings of £1.15 billion this activity is important for effective across government delivery of the BBC’s public purposes, In response to our consultation, the in 2014 and can have large wider public idea was also raised of introducing 198 benefits. This is why the government a Technology Advisory Board, in Source: The National Audit Office, Annual order to improve the way the BBC Report and Accounts 2014/15 proposes to include specific reference to this activity, in explaining how the governs its technology projects and purposes will be delivered as set out to encourage an increased importance Continuing and improving above in Chapter 2. being placed on working in effective partnership with others in this sphere. the BBC’s leading role in The BBC clearly plays an important Such a board would act as a ‘critical technology and research and valued role in R&D and friend’, asking questions, and offering and development technology. Stakeholders have voiced insight and expert advice, to ensure positive views about the BBC in consistent standards are applied, the The BBC has, since its inception, this space in response to our public right people are involved, and the work played an important role at consultation. However, a number of is offering the most value for licence the forefront of technological stakeholders also suggested ways fee payers. The government supports development and promotion in the in which the BBC can improve, the idea but believes it is for the BBC broadcasting sector. Its stable income primarily through more effective and to decide how to take it forward and has meant that it has been able collaborative partnerships, but also in how to ensure a board membership to innovate and make early stage ensuring it spends its not insubstantial which reflects the wide range of investments where other commercial R&D budget of about £75 million197 technology sectors the BBC impacts. broadcasters have not. The BBC led per year in a more effective way. the way for the rest of the industry with the development of the iPlayer, and more recently the BBC has played a role in the development of HD standards in collaboration with others, including international technical standards bodies.

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6. Ensuring a modern, sustainable, funding model

Inflation-linking the licence fee, with additional support to sustain BBC income 92 Closing the iPlayer loophole 94 Giving greater freedom for the BBC to manage its budget in the way it sees fit 96 Using the licence fee for public service content 97 Ensuring greater transparency in future licence fee settlements 97 Improving the fairness and effectiveness of the process of investigation and prosecution of TV licensing offences 99 Introducing more flexible payment plans 100 Allowing those aged 75 and over to make voluntary payments if they choose to while protecting the concession during this Parliament 100 Paving the way for a new more sustainable funding model in the longer term 102

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It is vital that the BBC has a However, the funding of the BBC −−Ensure the BBC has greater freedom sustainable funding model that needs to be modernised and so the to manage its budget in the way is fair, accountable and fit for the government proposes to: it sees fit by giving the BBC more freedom over its funding by future. The government is clear −−Provide the BBC with the level of removing protected funding for that the licence fee continues to funding and certainty it needs to local television and broadband. be the most appropriate funding thrive and deliver against its updated mission and purposes by: −−Pave the way to a more sustainable model for the BBC for the next funding model in the future by Charter period. • granting the BBC a funding empowering the BBC to consider settlement based on the licence and explore the scope for additional fee linking to inflation from sources of commercial revenue, 2017/18 to 2021/22; including testing whether some • allowing those aged 75 and over elements of subscription – to make voluntary payments if in combination with the licence they choose to, while continuing fee – could achieve this. to protect the concession during this Parliament; and The government will also continue to fund public service content from the • ensuring certainty over the licence fee, including S4C. process for setting the BBC’s funding settlement beyond 2021/22, enhancing the BBC’s independence from government by introducing a new regularised process once every five years. −−Modernise the licence fee to make it fairer and easier to pay for all by: • closing the iPlayer loophole so that those who currently consume BBC programmes on-demand (e.g. on the iPlayer) for free pay the same as those watching or recording it on television as it is being shown live; • improving the fairness and effectiveness of the process of investigation and prosecution of licence fee evasion; and • introducing more flexible payment plans.

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Inflation-linking the licence −−a frozen licence fee would continue −−the licence fee is a household fee, fee, with additional support to ensure that the BBC is challenged and so even if the rate of the fee to sustain BBC income to make efficiencies – as set out is frozen the revenue generated in Chapter 5 the BBC is planning from it can still rise if the numbers The licence fee system will be to deliver £700 million a year of of households rise; indeed new maintained for the coming Charter efficiencies by the end of 2016, households are forecast to form at period. While no system of funding following the freeze in the licence a rate of 219,000 a year in England meets all the criteria of an fee introduced in 2010; alone between 2017-2027;204 and funding system, the current system −−BBC income has risen since 2010 −−the BBC’s commercial revenue may provides the BBC with a sustainable relative to European public service well increase over the next Charter core income paid by all households broadcasters (see box 47) and the period: the BBC is forecasting a who watch or receive television, and it BBC remains one of the best-funded 15 per cent increase in returns from commands wider public support than public service broadcasters in the its commercial holdings over the 199 any alternative model. However, world in terms of overall revenue.201 next five years,205 with new ventures the current licence fee of £145.50 is a It also benefited from above such as BBC Store having the considerable amount for households inflation growth in the licence fee202 potential to increase this. on lower incomes. And, as a flat rate from 2000-2007 and increases of fee, the government must ensure the between two and three per cent licence fee delivers value for money from 2007-2011;203 for all licence fee payers. Inflation-linked licence fee Since 2010, the licence fee has been Box 47. The BBC is the best-funded public service broadcaster frozen at £145.50. There are a number in Europe (Comparison of European public service broadcasters of arguments for continuing to freeze unconsolidated operating revenue) the licence fee at its current level: −−evidence from the polling carried £ million out as part of the government’s 4,000 consultation showed that the majority (61 per cent of people), 3,500 wanted the licence fee to remain 3,000 frozen or to be reduced, while only 2,500 a minority (22 per cent), favoured an 2,000 increase of any kind. Those on lower incomes were even less likely to 1,500 favour an increase;200 1,000 500 0 2010 2011 2012 2013 2014 BBC (United Kingdom) France Télévisions (France) RAI (Italy) WDR – Westdeutscher Rundfunk (Germany) SWR – Südwestrundfunk France Médias Monde (France) (Switzerland) RTBF (Belgium)

Source: The Yearbook of the European Audiovisual Observatory 2015

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However, the government wants to This settlement will provide the BBC The government expects that the ensure that the BBC has sufficient with sufficient income to deliver the licence fee will increase as set out funding to invest in high quality, reforms required in the next Charter in box 48 below, on the assumption distinctive output that audiences as well as allowing it to meet its that inflation is in line with current enjoy and value at a time when the ambition to invest in some of the new Office for Budget Responsibility (OBR) revenues of some leading commercial services outlined in its paper, ‘British. projections.212 If inflation is on average providers have been growing.206 Bold. Creative.’211, but with the clear higher or lower than this, the actual This rising public investment in the expectation and incentives to ensure level of the licence fee will accordingly BBC will also continue to result in the BBC uses public money in the be higher or lower. continued value in the UK’s creative most efficient way possible. industries. With the licence fee frozen for the past six years the BBC has been required to make 16 per cent cash releasing savings.207 This is a significant Box 48. Licence fee – historical and forecast levels to 2020/21 assuming challenge for any organisation. In inflation is in line with OBR projections addition the BBC has agreed to take £ on the cost of licences for those aged 2010 settlement 2016 settlement 75 and over (costing an estimated 180 £745 million by 2020)208 and has 160 absorbed other costs, with the licence 157.50 160.50 151.50 154.50 fee now funding the World Service 140 145.50 145.50 145.50 145.50 145.50 145.50 148.00 and S4C. Given these challenges, the 120 efficiency savings the BBC has and will 100 continue to make, and the fact that the public does not want a significant 80 change in the scale and purposes of 60 the BBC, the government will provide 40 the BBC with a licence fee settlement 20 rising with inflation209 for the first five years of the Charter period, from 0 2017/18 – 2021/22. This will mean the BBC will receive over £18 billion of 2011/122012/132013/142014/152015/162016/172017/182018/192019/202020/212021/22 public money between 2017/18 and 2021/22.210 Source: OBR inflation projections, Budget 2016

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Additional support for BBC finances Given these measures, agreed in Closing the iPlayer loophole As well as an inflation-linked licence July 2015, the BBC estimate that the fee settlement the government will result of the agreement is a flat-cash The public have mixed views on the further help support BBC finances settlement overall by 2021/22.213 This licence fee, but there remains strong (as agreed at the 2015 Summer is a firm but fair settlement for the support for the continued provision Budget) by: BBC, consistent with the cuts currently of a sustainable source of funding being asked of unprotected central for the BBC that is both paid for by −−closing the ‘iPlayer loophole’ so that government departments. It will result everyone and which is separate from those watching BBC programmes in a funding pressure that is less than general taxation, helping maintain the on-demand for free (e.g. on the some of those in the industry are BBC’s editorial independence from the iPlayer) will also be subject to the facing (the , for government. However, changes in the licence fee for the first time by 2017 example, is reportedly facing 20 per viewing habits of audiences and the generating additional revenue for cent cuts to running costs over the proliferation of devices, platforms and the BBC; next three years)214 and less than services mean that it is increasingly −−phasing the costs of the over- those faced by many in the public difficult for the licence fee to remain 75s concession over three years, sector (the Department for Work fit-for-purpose in the modern 216 with the BBC only taking on full and Pensions and the Ministry of media age. responsibility for these costs Justice, for example, are both facing The success of BBC iPlayer has helped from 2020/21, and then taking cuts to administrative resource develop the UK on-demand market responsibility for the concession spending of over 22 per cent in real to become the largest in Europe. policy in the next Parliament; terms).215 Within this settlement the However, as viewing habits shift away BBC will need to make savings to −−allowing those aged 75 and over from linear television, viewers paying allow reinvestment in new services to make voluntary payments if for a television licence to watch or and ensure more money for quality they choose to, while continuing to record any television as it is being content. Overall the settlement protect the concession during this shown will increasingly foot for provides a fair balance between Parliament; and public service content that many enjoy sustainable funding for the BBC without any payment. −−phasing out some areas of protected and value for money for the licence funding to give the BBC greater fee payer. freedom about how it spends its budgets, as set out later in this chapter.

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Box 49. Television ownership is declining while on-demand usage is growing

2009 2012 2015

UK households that own a TV set 97% 96.6% 94.9%

iPlayer TV requests (millions) 722 1,773 2,870

Source: Based on BARB data on television ownership in private domestic households and BBC iPlayer Monthly Performance Pack, December 2015

The government has therefore In order to improve enforcement and committed to modernise the licence allow BBC content to be ‘portable’ fee to include BBC on-demand for UK licence fee payers (so they programmes, and close the so-called could gain access while on holiday in iPlayer loophole, and intends to Europe, something which is currently lay a statutory instrument before not offered) the government thinks Parliament to enable this shortly. there is a case for iPlayer to require This will ensure that the television- verification – i.e. access should be watching public gets a fair deal, that conditional upon verification of licence those who enjoy licence fee funded fee payment – so that individuals on-demand programmes are also in other countries, and those in contributing to the cost of producing the UK not paying the fee, cannot it, and that the funding of the BBC access licence fee funded content remains robust for the future. for free. The government will discuss verification and other options with the BBC and look at the best way of implementing this, including through regulations if needed. It will be up to the BBC to determine whether this is an appropriate means of charging international viewers.

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Giving greater freedom for the Box 50. Phasing out of protected funding for broadband and BBC to manage its budget in local television the way it sees fit

217 The government also intends to Broadband roll-out provide the BBC with greater freedom within its funding settlement by Nearly 4 million UK homes and businesses reducing the number of protected now have access to superfast broadband areas. While there are clearly some areas where protection of budgets is 90% of UK premises are now covered important, such as the World Service (where the government will introduce In the case of broadband, funding from the licence fee has meant that nearly protection from 2017/18, as set out 4 million homes and businesses are now able to access superfast broadband in Chapter 2), we will phase out the for the first time. A proportion of licence fee funding will continue to allow protections for broadband and local the completion of this phase of the roll-out up until 2020/21. Protected television funding (worth £155 million funding for broadband will then be phased out entirely, reducing to £80 a year) as these important public million in 2017/18, £20 million in 2018/19, £10 million in 2019/20 and policy interventions will no longer ceasing in 2020/21 in line with the conclusions of this phase of the roll-out be required beyond this period. Over programme. the last licence fee period three areas of the BBC’s budget were protected Local TV – by 2020, this will have reduced so that only the World Service will be 20 stations already launched protected, giving the BBC greater A further 11 stations due to freedom within its funding settlement. launch in 2016 Three further stations expected in 2017

The 2010 licence fee settlement218 provided up to £25 million to build the transmission network to support new local television services and up to £5 million per year over three years to enable local television stations to access content funding from the BBC. This focused on acquiring a fixed volume of content for a fixed price, totalling £300,000 per station over the course of the first three years of their operation, thus supporting the establishment and growth of a new sector with 20 stations launched since November 2013. In phasing out this protection, the government will ensure that local television stations that are launched by 31 July 2017 and wish to receive this BBC support for their first three years of operation will receive it. Funding for these arrangements only will be provided by the BBC from an underspend of the £15 million funding that was protected in the last licence fee settlement for local television content but has not been spent in its entirety. This funding will be rolled-forward for the above purposes and made available between 2017/18 – 2019/20. No further funding for local television will be protected in the licence fee settlement starting in 2017/18 but the BBC will continue to work and develop its partnerships with local television and other local news providers.

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Using the licence fee for public It is appropriate, therefore, that the fee Ensuring greater transparency service content is used to fund public service content in future licence fee both by the BBC, for example BBC settlements In maintaining the licence fee model, radio and online content, and beyond the government is clear that the the BBC – for example, where public The government recognises that licence fee remains a licence to watch service content can be delivered more the level and stability of funding or receive television programmes, and efficiently and effectively by others or are important factors for the BBC. is not a fee for BBC services – to support plurality in public service But transparency of how the BBC’s although licence fee revenue is used to content provision. Funding for S4C will funding is set, and how the BBC fund the BBC and other public service therefore continue to be provided, in spends the money it is allocated, is objectives. While almost all licence part, through the licence fee by the equally important. The government fee income is currently provided to the BBC and the Charter will make clear wishes both to set the BBC’s funding BBC, as noted previously, that has not that the licence fee is not solely for on a stable footing to enhance always been the case – indeed 12 per the use of the BBC. its independence and, to address cent was used for other purposes prior concerns that the BBC spends its to 1962. money efficiently and delivers value for money, to ensure there is rigorous scrutiny of the funding needs of Box 51. Continued funding for S4C from the licence fee the BBC ahead of future licence fee settlements. There was strong support from stakeholders in Wales for the continuation of licence fee funding for S4C.219 A number of public consultation responses The Lord’s Communications and focus group participants also called for continued funding for S4C. Committee also considered this issue Participants in Wales were aware of the input the BBC had to S4C and and recommended in its report that greatly valued this channel.220 the level of the licence fee should be set along the lines of the German The BBC currently provides £74.5 million to S4C and has confirmed this level model – whereby an independent of funding will continue until 2017/18. The BBC may choose to reduce the regulator would recommend the grant to S4C by an equivalent percentage to the percentage reduction in licence fee level to the government BBC funding over the period 2018/19-2020/21. However, the government is and the Secretary of State would encouraged to see that the BBC has stated that it intends to protect funding then be required to approve the for the nations and regions relative to other areas. recommendation or publish their 221 The government expects the BBC to continue to work in close partnership reasons for not doing so. with S4C to maximise value for money for the licence fee payer and the taxpayer, including in the proposed co-location of S4C and BBC Wales. Beyond 2017/18, consideration needs to be given to the ongoing funding of S4C from government, to ensure that the broadcaster remains on a stable footing. Government is committed to carrying out a comprehensive review of S4C in 2017. This will look at S4C’s remit, funding and accountability arrangements, including the element of funding from the licence fee. Following this review the Secretary of State maintains the power to amend the process for setting S4C’s funding.

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The government is clear that the In addition to regularising the timings −−commercial revenues – the BBC’s licence fee is a tax, and therefore of licence fee settlements, the commercial structures may change should be set by government and not government will require the BBC to (as set out in Chapter 5) and this by an independent body. However, provide a set of data on its funding could result in a change in revenue to improve scrutiny of the BBC’s needs, including proposals for any for the BBC which may affect its funding needs, provide the BBC with new activities or services, and forecast ability to deliver against its Charter greater certainty around its funding, income ahead of each licence fee objectives. Alternatively, the BBC’s and to allow Parliamentary scrutiny settlement. Elements of this data commercial revenues may increase of the licence fee-setting process, the may be independently assessed in and could result in a greater return government believes that the process helping the government to determine to the BBC public service; of setting the licence fee should be the right level of funding for the −−evasion rates – introducing regularised. The licence fee will be BBC. The level of the licence fee will verification for BBC iPlayer may help set once every five years with the then be set in a statutory instrument to reduce evasion and therefore next settlement taking place in 2021. ensuring suitable Parliamentary increase the amount of licence fee Given the 11-year Charter period scrutiny (via the negative resolution income collected; and consideration will need to be given procedure as is currently the case). to whether an one-off settlement of This will improve the transparency −−industry costs – the media industry a different length should be made in of the licence fee-setting process may continue, through digitisation 2021 to align the settlements with and ensure that scrutiny of the BBC’s and technological change, to find the Charter period. This process of finances is carried out in an open and more efficient ways of working, setting new fixed funding terms, and accountable way. meaning that the same quality the scrutiny that will be undertaken and quantity of output could be in setting the level of the licence fee The first time this process will be delivered at lower cost; though will be set out in the Charter. This undertaken is in 2021 when the conversely cost inflation above the will enable the BBC to plan with government will review and set a new level of general inflation in parts greater certainty while ensuring funding settlement for the BBC. This of the sector could add to cost that there is sufficient flexibility for will enable the government to assess pressures. change if needed during the length whether the revenue generated from of each Charter. the licence fee has been as expected over the first five years of the Charter and what the level of the licence fee should be. The following factors will be relevant to that decision: −−household growth – the number of households paying the licence fee may increase or decrease due to household growth, in variance to forecast levels, as it has in the last Charter period. An increase in the number of households paying the fee would result in additional revenue being generated which could be returned to the licence fee payer in the form of a reduction to the licence fee;

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Improving the fairness and Box 52. TV licence fee enforcement effectiveness of the process of investigation and prosecution The BBC Trust is responsible for overseeing the licence fee collection of TV licensing offences arrangements put in place by the BBC Executive Board, and ensuring they are While the licence fee remains the “efficient, appropriate and proportionate”. This responsibility was set out for preferred funding model for the BBC the first time in the 2006 Royal Charter. The Trust provides a review of licence among the public, there is an ongoing fee collection each year as part of the BBC’s Annual Report and Accounts. debate about whether evasion of the licence fee should be decriminalised. Number of people Number of people There is some support for this idea 222 convicted of a TV licence imprisoned for non- from the public and in Parliament. offence in 2013/14: payment of fines relating However, the independent TV to a TV licensing offence Licence Fee Enforcement Review 153,369 in 2013/14: (Perry Review) concluded that while decriminalisation of the TV licensing 32 offences might be preferable in theory, it is difficult or impractical Amount of Magistrates’ Number of licensed to achieve under the current licence Court time taken up by households: fee framework.223 TV licensing cases: 25.4m The government has examined the 0.3% case for decriminalising the licence fee offence, in light of this range of views Source: TV Licence Fee Enforcement Review, 2015 and the recent Perry Review.224 David Ministry of Justice Quarterly Statistics, Outcomes by offence, May 2014 Perry QC led an open, independent, TV Licensing Freedom of Information Release 2014 and evidence-based review which concluded that while the licence fee framework remains, there should be no fundamental change in the sanctions regime. The review also noted very few individuals are imprisoned for non-payment of a fine related to the TV licensing offence and the proportion of magistrates’ time taken up is much lower than sometimes claimed (see box 52). The government agrees with the review’s assessment that the current regime represents a broadly fair and proportionate response to the problem of licence fee evasion and provides good value for money (both for licence fee payers and taxpayers). However it is not the case that the criminal sanction is endorsed; rather it is necessary because of the characteristics of the licence fee framework.

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The Perry Review also recommended Introducing more flexible This would help those who struggle a number of options for improving payment plans to make higher initial payments, and the fairness and effectiveness of increase flexibility and convenience for the process of investigation and Affordability of the licence fee also all licence fee payers. prosecution. Some of these, such continues to be a key issue of concern. as closing the iPlayer loophole, Government is acutely conscious In addition, the government welcomes have already been addressed – of the impact of raising the licence recent moves by the BBC and TV the government plans to lay a fee at a time of constrained public Licensing to simplify the licence fee statutory instrument to close the spending and when family budgets refund policy to make it fairer and loophole shortly. Others are being continue to be challenging.226 It is more transparent. The current system taken forward by the BBC. The notable in our research that support means that refunds are only able to government is pleased to note that for the licence fee declines based on be paid for every three month period the BBC is taking steps to increase the socio-economic grouping.227 While left on a television licence, so in order transparency of its prosecution policy, an increase in the licence fee at the to be eligible for a refund there needs including by publishing its ‘Prosecution level of inflation is the right decision to be at least three months remaining Code’, which sets out how customers for both the BBC and the public, the on the licence. This leads to losses can take steps to avoid prosecution. government intends to help those on of one or two months’ worth of The BBC has also shared evidence lower incomes by making the licence payments for those who do not meet that it is addressing the review’s other fee easier to pay through proposals to this criteria, and for those who have recommendations, including better provide more flexible payment plans. not yet reached the threshold required targeting of unlicensed addresses, for the next three month refund – for investigating the gender disparity in The Perry Review highlighted that example, if there are five months left prosecution and conviction statistics, the current payment plans for paying on a licence, only a refund for three the licence fee, which are set out months will be paid. However, TV and adjusting the tone and content 228 of its written communications. in legislation, inhibit the ability Licensing has confirmed that from the of TV Licensing to help those on beginning of the first full financial year In addition, the Perry Review lower incomes to pay the fee and of the new Charter period (April 2017), recommended that TV Licensing may avoid prosecution, as it is unable to monthly refunds will be available. be better able to target households offer alternative, more manageable This is a welcome step in improving without a TV licence if there were a payment schemes. For example, the fairness of the current licence fee requirement for cable and satellite individuals are currently required to collection system for the public. television companies to share their pay the cost of a 12-month licence subscription information with TV over six months. This can be hard Allowing those aged 75 Licensing. The review suggested for some people who are struggling this could improve value for money to pay their monthly bills. This and over to make voluntary for the licence fee payer.225 The requirement to pay 12 months over a payments if they choose government intends to explore this six-month period is currently set out to while protecting with subscription providers. in regulations which means that the the concession during BBC is unable to collect payments this Parliament on a different basis. The government intends to update legislation to allow Television, radio and online services clearer and more flexible payment are an important part of many older schemes, especially for those facing people’s lives, providing information difficulty in paying the licence fee. This and entertainment and keeping will enable the BBC to trial alternative them connected. That’s why the payment plans, including removing the government has committed to up-front payments. protecting the concession providing free television licences for those aged 75 and over for the remainder of this Parliament.

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The BBC agreed last year to take A number of individuals aged 75 and Given the desire amongst some people on the cost of these concessionary over included in their consultation aged 75 and over to pay for the cost licences from government, and responses that they wished to of a television licence, the government requested that responsibility for contribute towards the cost of the will make changes to allow those who the policy be transferred to them in services they received from the BBC, wish to make a voluntary payment to 2020/21.229 The agreement allows the and felt that they should be able to the BBC including updating regulations BBC to contribute towards reducing make a voluntary payment. Others if needed. However, the government the deficit along with all other emphasised the value they got from is committed to protecting pensioner publicly-funded organisations. The being able to access television content benefits, so will ensure that this is government agreed that this cost will which they otherwise could not have a voluntary option for those who be phased in over three years, to allow afforded, underlining the importance can afford it, while protecting the the BBC to prepare for the removal of of the concession to these individuals. concession for all those aged 75 and government funding for the cost of over in this Parliament. In 2020/21, these licences. the BBC will take on responsibility for the policy.

Box 53. Public views on the BBC’s funding model

Q2. Currently, the BBC is funded via the licence fee which costs £145.50 a year – the equivalent of £12.13 a month. There are a number of ways in which people might pay for the BBC in the future. For each of them, please tell me if you think it would be a good or bad way of funding the BBC.

%

100 6% 6% 6% 6% 7% 90 24% 22% 34% 38% 43% 80 70 21% 25% 60 23% 50 22% 49% 22% 40 47% 37% 30 34% 20 28% 10 0 Lower licence fee The licence fee Universal Lower licence fee Current licence fee for some as now household levy and subscription and subscription

Good Neither good nor bad Bad Don’t know

Base: all respondents in Wave 2 (2,119) Source: GfK Social Research, Research to explore public views about the BBC, May 2016

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Paving the way for a new But audience habits and attitudes So while the licence fee is the most more sustainable funding are changing and there has never appropriate funding model for the model in the longer term been so much choice for audiences, next 11-year Charter period, it may both in terms of content and access. or may not be the best option in the In order to ensure that the BBC Conditional access technology will decades beyond, as technology and continues to flourish, and is able to also become increasingly available; media consumption habits continue provide world class public service and support for flat-rate fees could to develop. content and services in an evolving decline, particularly with changes in media environment, the long-term consumption habits. security of its funding should continue to be considered alongside the impact on the public of the licence fee model. None of the funding models set out in Box 54. The popularity of subscription services is growing the government’s consultation230 – the licence fee, a household levy, and a % UK market penetration mixed public fee/subscription model – fulfil all the criteria for an ideal 60 funding mechanism for the BBC, and it is clear that there are a range of views 50 among the public as to which is most 40 appropriate. Indeed, the most recent survey by the BBC on this issue found 30 support for the licence to be below 50 per cent.231 However, as this 20 chapter has already set out, the 10 government believes that the licence fee remains the most appropriate 0 funding model for the BBC for the 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 coming Charter period. Digital satellite Digital cable Pay DTT IPTV While a levy may have the potential to address some of the criticisms of Source: Oliver & Ohlbaum and Oxera, BBC television, radio and online services: An assessment of market impact and distinctiveness, 2016 the current system, including the criminal sanction for TV licensing offences, and the regressive nature of the charge, it currently does not command significant public support. Furthermore, it would also mean a significant number of people who do not directly consume BBC services would be asked to fund the BBC in a way they do not do so now.

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There are additional opportunities The government is clear that the Additionally, due to the BBC’s global for the BBC to maximise revenue licence fee should remain the bedrock reputation, international demand for consumption of its services, and of funding for the BBC, and there for its content is high. It has been to explore options for providing are no plans to replace it with a estimated that as many as 65 million content for which it could charge. subscription model in the coming people around the world access The government supports the BBC Charter period.233 This is because BBC content for free via the BBC continuing to develop such initiatives a subscription model would need iPlayer.234 While the BBC disputes domestically as well as abroad. Indeed to take account of the fact that this figure, and believes that at least the BBC already offers commercial unless subsidised, it would likely 95 per cent of viewing of television services for an additional charge in the only capture the private rather than programmes on BBC iPlayer is from UK: the exploitation of its archive via the social value of BBC output. It within the UK,235 the government the commercial channel portfolio of could therefore risk distorting BBC supports any initiatives to use the the broadcaster UKTV which it jointly priorities away from the wider public international demand for BBC content owns; the new ‘BBC Store’, which interest and negatively impact on to maximise revenue, and to address allows digital downloads of favourite the market. However, this should the situation whereby international BBC shows to be purchased; and the not prevent or deter the BBC from audiences are accessing content for BBC has for many years supplemented adapting to a world in which paying free that is funded by UK licence its income through the sale of DVDs for ‘top-up’ services is becoming more fee payers. The BBC is already and VHS.232 commonplace. Elements of additional considering the best way to monetise subscription revenue should, therefore, its content abroad, and whether an be considered and explored. international subscription model could be developed to address these issues. The government welcomes the BBC’s BBC Worldwide has recently launched commitment to develop and test BBC Extra as a subscription service in some form of additional subscription the and will evaluate services during the first part of the further markets. The government will next Charter period, and to consider support such initiatives, and enable whether elements of subscription the BBC to do what is needed to could provide a more sustainable achieve the most value for licence funding model in the longer term. fee payers. It will be for the BBC to set the scope of these plans (subject to appropriate regulatory scrutiny) and the BBC board will need to ensure progress and success are appropriately reviewed. The government is clear that this would be for additional services only. Licence fee payers will not be asked to pay for ‘top-up’ services for anything they currently get. The BBC may therefore lead further developments, pilots and exploration of elements of subscription in the second part of the Charter period, if justified and required, in order to inform the next Charter Review process and for potential wider roll-out in the next Charter.

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7. Annexes

Annex 1 – Charter Review timeline 105 Annex 2 – Consultation and engagement 106 Annex 3 – Summary of consultation data 109 Annex 4 – Summary of polling 112 Glossary 116 End notes 118

104 Department for Culture, Media & Sport | A BBC for the future: a broadcaster of distinction 7. Annexes Contents Annex 1 – Charter Review timeline

Independent reports 1. The Clementi Review looking at how the BBC is governed and regulated published 1 March

2. Independent report into market impact and distinctiveness of BBC published 1 March

3. BBC Charter Review Summary of Consultation Responses published DCMS BBC 1 March Charter Review 9 INDUSTRY ROUNDTABLES Advisory Group WITH 72 ORGANISATIONS established Roundtables: White paper published 12 July Children’s TV 12 May Commercial broadcasters Creatives (2) Local Press Report of polling and focus Online content groups research BBC Charter Partnerships 12 May Review Public Radio Consultation Technology published 16 July 16 FOCUS GROUPS AND POLLING Nationally representative polling 192,564 >300 of over 4,000 adults across the UK, responses received organisations 16 focus groups and 12 in depth and experts Draft Charter Parlimentary New Charter PUBLIC interviews. CONSULTATION engaged published debates comes into effect 1 January

ENGAGEMENT WITH PUBLIC AND INDUSTRY ACROSS THE UK NEXT STEPS

JULY 2015 JAN 2016 JULY 2016 JAN 2017 7 BBC TRUST Transition to new PUBLIC SEMINARS model of governance and regulation 9,085 Radio Times survey responses House of Lords Select Committee on Communications BBC Charter Review: BBC Trust publishes Reith not revolution formal response to 24 February Charter Review Public Consultation 8 October House of Commons Select Committee on Culture, Media and Sport BBC publishes BBC Charter Review ‘British, Bold, Creative’ 11 September

BBC Trust publishes a second phase of consultation 7 September DCMS engagement and research BBC Trust and Executive input in Charter Review BBC Trust initial Other research and evidence gathering response published and Charter Review next steps consultation launched 22 July

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The government committed to Nine roundtable events Local press an open and transparent Charter Archant Review. In considering the Creatives (I) CN Group Andy Pryor Johnston Press 192,564 responses to the public consultation, 9,085 responses KM Group (writer and producer) Local World to a Radio Times survey and the & Sports Relief 4,000 people that participated Directors UK News Media Association in nationally representative Hat Trick Society of Editors polling, 16 focus groups and Tindle News Group 12 in-depth interviews, DCMS Trinity Mirror has heard from or engaged with over 300 organisations and Outline Online content PBJ Management ArtUK industry experts. We are grateful Founders Factory to everyone who has contributed Creatives (II) Guardian News & Media to the process to date. Abi Morgan ITV Boundless Johnston Press Advisory panel Curve Media News Media Association Panel members were acting as Directors UK Reed Smith individuals, and not representing the Douglas Road Productions Trinity Mirror views of their organisations. Neal Street Productions Partnerships Alex Mahon Agency, The Association of British Orchestras Former CEO Shine productions Association of Independent Festivals Children’s TV British Museum Andrew Fisher Aardman Animation Creative Industries Federation Executive Chairman of Shazam Baroness Floella Benjamin National Theatre Wales Blue Zoo Productions Open University Children’s Media Foundation (CMF) Chief Executive of Johnston Press Royal Shakespeare Company Entertainment One Family UK Music Colette Bowe, Dame Chairman of the Banking Standards Novel Entertainment Radio Board, President of the Voice of the Producers Alliance for Cinema and Listener and Viewer and former Television (Pact) Folder Media Chair of Ofcom Jeanette Steemers, Prof Global Radio Writer’s Guild’s Children’s Committee Jazz FM Zodiak Kids Studio CEO of and former Managing Director Commercial broadcasters UTV (Talk Sport) of Classic FM Commercial Broadcasters Association Technology Dawn Airey (COBA) CEO of Getty Images and former Discovery Networks Cisco Chairman of Channel 5 Disney Digital Television Group (DTG) QVC UK Fujitsu Lopa Patel Scripps Networks International Founder of NewAsianPost.com and Sky Tech UK inclusion think tank Diversity UK Turner Broadcasting Systems Stewart Purvis Professor of Journalism and former CEO of ITN

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Additional organisations and experts engaged included: C E Campaign for Broadcasting Equality Education Broadcasting Council for Campaign for Press and Broadcasting Northern Ireland A Freedom Einar Thorsen, Dr AM for Blaenau Gwent Carntogher Community Association Enders Analysis AM for Cardiff Central Ceredigion County Council England and Wales Cricket Board (ECB) AM for South Wales West/ Channel 4 Equality and Human Rights Commission Welsh Lib Dems Channel 5 Equity Amazon Chartered Institute of Library & Ericsson An Comunn Gaidhealach Information Professionals (CILIP) European Audiovisual Observatory An Ghaelárais Centre CMS Select Committee European Broadcasting Union (Broadcaster and Comhairle nan Eilean Siar Journalist) Commercial Broadcasters Association Apple (COBA) F Argyll and Bute Council Communications Consumer Panel Football Association, The Arts Council England and ACOD Facebook Arts Council of Wales Comunn na Gaidhlig Federation of Small Businesses Association of Independent Music Consultation Institute, The Fèisean nan Gàidheal Austrian Broadcasting Corporation Freedom Association, The Convention of Scottish Local Authorities G B Co-operative Party, The Glasgow City Council Cornhairle nan Eiliean Sur Google BBC Executive Development Department BBC Trust Cornwall Council BBC Studios Councillor Upper Bann Sinn Féin H BBC Worldwide CPNI Highlands and Islands Enterprise Broadcasting, Entertainment, Creative England Cinematograph and Theatre Union, Creative Industries Council The (BECTU) Creative Scotland I BFI Creative Skillset Independent Producers Scotland Birmingham County Council Cymdeithas yr Laith Institute of Engineering and Technology Bord na Gaidhlig Cytûn – Churches Together in Wales Institute of Welsh Affairs Bournemouth University International Broadcasting Trust British Academy of Songwriters, Invest NI Composers and Artists D Gov British Horseracing Authority Daniel Jackson, Dr Incorporated Society of Musicians (ISM) British Recorded Music Industry (BPI) David Clementi, Sir Broadcast David Ellis, Dr Broadcasting Spectrum Collaborative David Puttnam, Lord J Projects Des Freedman, Prof John Birt, Lord BT Dock10 Dwr Cymru Welsh Water L Learned Society of Wales, The Chamber of Commerce Lenny Henry, Sir Local press owners Local TV Network (LTVN) London First LyleBailie International

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M P U Malaria Consortium Parliament Soft Power Committee UK for Israel Mark Thompson (former Director Patrick Barwise, Prof UK Interactive Entertainment Industry General of the BBC) Piers Vitbsky, Dr UK Screen Association Mechanical Copyright Protection Pinewood Studio UK Sport Society Ulster Orchestra Media Reform Coalition PRS for Music Ulster Orchestra Society Merched y Wawr Publishers Association, The United Against Separation Metaglue Urdd Gobaith Cymru MG Alba R Mo-Sys Camera Motion Systems Revision World Networks V Music Publishers Association Robert Beveridge, Prof Voice of the Listener and Viewer (VLV) Rondo Media Voice of British Advertisers Royal National Institute of Blind Viacom International Media Networks N People (RNIB) (VIMN) National Assembly for Wales’ Cross Rugby Football League Party Group on the Welsh Language Voice of the Listener and Viewer National Audit Office National Press Owners S National Union for Journalists S4C W NBC Universal Save BBC 3 Wellcome Trust Netflix Save Our BBC NESTA Scottish Government Welsh Language Commissioner Wales Campaign Scottish Professional Football League What Next? Cardiff (Broadcaster) Scottish Sports Association Live Northern Ireland Executive A number of Members of Parliament Northern Ireland Screen Shotoku Broadcast Systems Snell Advance Media also responded to the public Northern Film and Media consultation. Northern Visions/NVTV Social Democratic Labour Party (SDLP) NUJ Glasgow Broadcasting Branch Society of Authors, The Somethin’ Else Sound Start O South Wales Police Commissioner Ofcom South West News Service Ofcom Advisory Committee Sport England for England Steven Barnett, Prof Ofcom Advisory Committee STV () for Northern Ireland Ofcom Advisory Committee for Scotland T Ofcom Advisory Committee techUK for Wales Teledwyr Annibynnol Cymru (TAC) Older People’s Commissioner Telesgop for Wales Third Age Trust, The Oliver & Ohlbaum Traditional Music & Song Association openDemocracy of Scotland Oxera

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19 questions asked Annex 3 – Summary 12 week consultation period 192,564 responses received – 184,898 emails and 7,666 online of consultation data Over 60,000 responses arrived on final 2 days of consultation period 81% of responses said BBC serving audiences very well

Question Response % of valid responses General Don’t like or understand the consultation/question 6% The BBC should remain independent 20.7% Responses with anti BBC/BBC Bias/abolish the BBC comments 2.3% Q1: How can the BBC’s public No changes are needed to the public purposes 2.8% purposes be improved so there is more clarity about what the BBC Changes should be made to the public purposes 1.9% should achieve?

Q2: Which elements of All elements of universality are important for the BBC 34.6% universality are most important for the BBC? The BBC should provide all types of content and meet the 41% needs of everyone Covering single unifying events such as , Royal 9.9% Weddings, major sporting events and elections is most important The BBC should be available and accessible on all platforms 11.6% The BBC should not seek to be universal 2.4% Q3: Should Charter Review No – the BBC should not establish a set of values 1.7% formally establish a set of values for the BBC? Yes – the BBC should establish a set of values 0.8% Q4: Is the expansion of the Yes – expansion of the BBC’s services is justified 68.5% BBC’s services justified in the context of increased choice for No – expansion of the BBC’s services is not justified 5.5% audiences? Is the BBC crowding Yes – the BBC is crowding out competitors but this is justified out commercial competition and, 3.3% if so, is this justified? Yes – the BBC is crowding out competitors and this is not 0.5% justified No – the BBC is not crowding out competitors 15.2% Q5: Where does the evidence The evidence suggests the BBC has a positive wider impact on 65.9% suggest the BBC has a positive the market or negative wider impact on the The evidence suggests the BBC has a negative wider impact on 3.3% market? the market Q6: What role should the BBC The BBC should have very little or no role 0.3% have in influencing future technological landscape including The BBC should have a leading or very big role 1.5% in future radio switchover? The BBC should have a partnership or moderate role 0.2% The BBC should have a positive role in radio switchover 0.4% Q7: How well is the BBC serving The BBC is serving its audiences well or very well 81.4% its national and international audiences? The BBC is not serving its audiences very well or could improve 6.3% Q8: Does the BBC have the right Yes it has the right genre mix (including generally/mostly/ 15.8% genre mix across its services? probably/think so responses) No, the BBC does not have the right genre mix 3.7% Q9: Is the BBC’s content The BBC’s content is sufficiently high quality and distinctive 74.2% sufficiently high quality and distinctive from that of other The BBC’s content is not sufficiently quality and distinctive 8.2% broadcasters? What reforms could improve it?

Q10: How should the system of The system should be changed 0.6% content production be improved through reform of quotas or The system should not be changed 0.7% more radical options?

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Question Response % of valid responses

Q11: How should we pay for the No change is needed 59.8% BBC and how should the licence fee be modernised? Licence fee – reform of the fee is required (see consultation 15.1% document definitions) including closing the iPlayer loophole Universal Household Levy (see consultation document 3.9% definitions) Mixed public funding and subscription (see consultation 2.3% document definitions) Full subscription 3.1% Advertising 1.4% Q12: Should the level of Yes – the level of funding for certain services should be 4.7% funding for certain services protected or programmes be protected? No – funding for certain services should not be protected 1% Should some funding be made available to other providers to Yes – funding can be offered to others with conditions 0.8% deliver public service content? No – funding should not be made available to other 1.3% broadcasters Q13: Has the BBC been doing Yes – the BBC has done enough to deliver value for money 75.7% enough to deliver value for money? How could it go further? No – the BBC has not done enough to delivery value for money 10.7% Q14: How should the BBC’s No reform to the BBC’s commercial operations is needed 4.5% commercial operations, including BBC Worldwide, be reformed? Reform to the BBC’s commercial operations is needed 1.6% Q15: How should the current The BBC’s governance should not be changed 1.9% model of governance and regulation for the BBC be The BBC Trust should be reformed 1.3% reformed? There should be a standalone regulator 5.3% Ofcom should regulate the BBC 3.5% Other reform to the BBC’s governance is required 3.1% Q16: How should Public Value Public Value Tests and Service Licences shouldn’t change/ 1.1% Tests and Service Licences be should stay the same/there are no problems with them reformed and who should have Reform of the Public Value Tests and Service Licences is 0.7% the responsibility for making required these decisions?

Q17: How could the BBC improve The BBC should improve by engaging more 4.4% engagement with licence fee payers and the industry, including No change is needed to improve engagement 1.2% through research, transparency and complaints handling?

Q18: How should the relationship The BBC’s relationship with government/Parliament/Ofcom 4.4% between Parliament, Government, should not change Ofcom, the National Audit The current relationship and accountability structures should 9.7% Office and the BBC work? What change accountability structures and The BBC should remain independent from government/ 72.8% expectations, including financial Parliament/Ofcom transparency and spending controls, should apply?

Q19: Should the existing Yes – the BBC should have the same Charter 1.2% approach of a 10-year Royal Charter and Framework No – the BBC should have a longer Charter 0.3% Agreement continue? No – the BBC should have a shorter Charter or a break point 0.4%

Responses from organisations and industry experts The responses received from organisations and industry experts generally contained a great deal of detail, as they were received from organisations with a large amount of expertise in their area. These responses were analysed against the consultation areas they covered and the specific points raised

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Radio Times ‘Give your views on the BBC’ survey

In August 2015, the Radio Times conducted a survey of its readers, asking 16 questions related to the Charter Review. 9,085 responses were received and have been considered as part of the Charter Review process. The results, published by the Radio Times, show that respondents: −−Support the principal of a publicly funded broadcaster (95.7%), supported by the licence fee (91.4%), which rises with inflation (88.1%); −−Would consider paying for a TV licence even if entitled to a free one (80.5%); −−Don’t think the BBC tries to cover too much (75.2%); −−Shouldn’t try to avoid high profile scheduling clashes (57.7%) and shouldn’t make fewer entertainment shows (59.5%); −−Think the BBC’s content is sufficiently high quality and distinctive from other broadcasters (84.9%), and has the right mix of genres (78.9%); −−Don’t think that licence fee funds should be made available to other broadcasters (80.4%); −−Support three mainstream popular music stations (56.8%); −−Shouldn’t divert money from other genres to sport (83.3%) and shouldn’t create a dedicated sports channel (56.3%). Two of the questions allowed respondents to make additional comments. Analysis of these responses has shown that: −−3% indicated that there should be some sort of licence fee reform – including closing the iPlayer loophole or changing arrangements for those over 75. −−On the BBC’s genre mix, 7.1% indicated that there should be less light entertainment programmes and 4.9% indicated that higher quality and distinctive services and content were needed.

Department for Culture, Media & Sport | A BBC for the future: a broadcaster of distinction 111 7. Annexes Contents Annex 4 – Summary of polling

−−DCMS commissioned GfK Social • Wave 1 (16 questions) was conducted −−The focus group sessions were held Research to conduct quantitative and between 20th and 26th January 2016 all over the country, with some being qualitative research to explore public with a sample of 2,093. specifically for underserved audiences views of the BBC. • Wave 2 (10 questions) was conducted (young people aged 18-24 and BAME −−The quantitative research consisted between 26th February and 1st audiences). All of the telephone of 2 waves of nationally representative March 2016 with a sample of 2,119. interviews were with speakers of minority languages. polling with a sample of approximately −−The qualitative research involved 16 2,000 UK adults aged 16+ each wave. mini focus groups (5-6 people in each) −−Below is a summary of the key Random location sampling was used and 12 in-depth telephone interviews to findings – the full report will be in both waves and interviews were explore people’s views in more detail, published separately. conducted face to face in people’s conducted between 26th January and −− The findings indicated that most people homes. 5th February 2016. were happy with the BBC’s recent expansion but very few of those asked supported increases in the licence fee in the future: 61 per cent would rather it was frozen or .

Question Response % of all respondents Thinking about the BBC generally, Mean score 6.4 what is your overall impression, on a scale of 1 to 10, where 1 means extremely unfavourable and 10 means extremely favourable?

The BBC’s mission is to inform, To inform: performs well 73% educate and entertain audiences with programmes and services To educate: performs well 70% of high quality, originality and To entertain: performs well value. Thinking about the aim to 71% inform/educate/entertain, how well do you think the BBC serves your household?

There are different views on the I am glad that the BBC now has more TV channels, radio 55% expansion of BBC services. Which stations and online services – it gives me much more choice – of the two views on this card and I am happy to continue paying for this at the level I comes closest to your own?* do now I think that the expansion of the BBC services has gone too far 32% – I would rather pay less than I do now and lose some of these extra TV channels and radio stations and online services Don’t care 8% Don’t know 5% The BBC has introduced a wide Proportion agreeing with “The BBC should continue to 58% range of new channels, radio expand its services to take full advantage of developments in stations and online services. technology but without adding TV channels” At the same time, commercial Proportion agreeing with “The fact that commercial services 52% broadcasters have also expanded have expanded or been established (e.g. ITV digital channels what they do. There are many and Netflix) at the same time as the BBC has expanded shows different views on the expansion that the BBC is not crowding out the competition” of BBC services. Please indicate how much you agree or disagree Proportion agreeing with “As there are so many new 46% with the following statements. types of media services provided by other organisations (e.g. Netflix, Amazon Prime plus channels like and new Sky channels), the BBC does not need to further expand its services” Proportion agreeing with: “As the BBC has national, regional 31% ad local radio stations it is very hard for commercial providers to get many listeners”

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Question Response % of all respondents

The BBC licence fee costs £145.50 Good value 45% a year – the equivalent of £12.13 per month. Thinking about this Bad value 32% and the services the BBC offers, Neither in particular TV channels, radio, 19% online services and website, do Don’t know 4% you think that the BBC offers good or bad value for money?

As indicated, the BBC is funded Should be increased above inflation 2% via the licence fee which costs £145.50 a year – the equivalent Should be increased in line with inflation 20% of £12.13 per month. It will stay Should be frozen frozen at this rate until 2017. 30% Thinking about the five years Should be reduced 31% after this, which of the following statements is closest to your None of these 10% own view? Don’t know 6% People have differing views The BBC is efficient in how it spends its money 23% around whether the BBC spends its licence fee funding The BBC is not efficient in how it spends its money 35% efficiently. Which of the Neither following statements comes 25% closest to your view? Don’t know 16% Currently, the BBC is funded Proportion saying good: The licence fee as now 47% via the licence fee which costs Proportion saying good: The same licence fee as now £145.50 a year – the equivalent 49% of £12.13 per month. There are for most people but a lower or no charge for those on the a number of ways in which people lowest incomes might pay for the BBC in the Proportion saying good: Universal household levy 37% future. For each of them, please tell me if you think it would be Proportion saying good: Lower licence fee and subscription 34% a good or bad way of funding Proportion saying good: Current licence fee and subscription the BBC. 28% If you had to choose just one of The licence fee as now 29% these options, which would you prefer to be used for the future The same licence fee as now for most people but a lower 25% funding of the BBC? or no charge for those on the lowest incomes Universal household levy 11% Lower licence fee and subscription 14% Current licence fee and subscription 8% Don’t know 12%

Wave 1 survey data Wave 2 survey data

* Prior to this question participants were shown an infographic illustrating the expansion of BBC services between 1995 and 2015

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Question Response % of all respondents

£3.7 billion is raised through the Yes 49% licence fee each year – currently almost all of this is spent on No 39% the BBC’s own radio and TV Don’t know programmes and services, 12% including public service content. Should more of this money be made available to other free-to- air broadcasters and independent producers to commission and make public service content? This might be shown on the BBC or on other networks.

Should the government require Yes, the government should require minimum funding 50% the BBC to guarantee a minimum level of funding for any of No, decisions should be left to the BBC 38% these types of public service Don’t know broadcasting or should these 12% decisions be left to the BBC? The 803 participants who News 55% supported government ring fencing were shown a list of Children’s (under 16s) 43% public service genres and asked: Current affairs programmes (e.g. Panorama and Question Time) Please read out any that you 40% think should be protected. The World Service 37% Local TV 35% Younger people’s (16-34) 27% Music (e.g. and the Proms) 24% Religious programmes 21% Arts (e.g. ) 20% Minority language services 17% Don’t know 13% Thinking about the quality of Proportion agreeing with: The BBC makes consistently high 59% BBC content, please indicate quality TV and radio programmes and online content how much you agree or disagree Proportion agreeing with: The BBC shows too many repeats with the following statements. 49% Proportion agreeing with: Other broadcasters content is 32% generally less high quality than the BBC’s Proportion agreeing with: The BBC shows too many 24% imported programmes, rather than showing enough British made programming Do you think the balance Yes 59% of the BBC’s overall content should be distinctive because No 29% it is publicly funded? By that Don’t know I mean being different to that 12% from other broadcasters.

Wave 1 survey data Wave 2 survey data

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Question Response % of all respondents

Thinking about whether the Proportion agreeing with: It is okay for the BBC to show the 50% BBC’s content is distinctive same sorts of programmes as commercial broadcasters as long compared to that from other as they aren’t on at exactly the same time broadcasters, please indicate Proportion agreeing with: BBC1 and ITV1 are quite similar, 43% how much you agree or disagree apart from the adverts with the following statements. Proportion agreeing with: The BBC makes lots of TV 38% programmes that no other broadcaster would make Proportion agreeing with: The BBC makes lots of 27% programmes that are more daring or innovative than those made by other broadcasters Proportion agreeing with: Radio 1 and commercial pop radio 31% stations like Capital Network and Absolute Radio are quite similar, apart from the adverts Proportion agreeing with: Radio 2 and commercial pop radio 31% stations like Magic FM and Heart Network are quite similar, apart from the adverts Proportion agreeing with: The coverage of news on the BBC 39% website is much the same as that available on other websites Proportion agreeing with: Other than news, the content on 34% the BBC website is much the same as available on other websites Proportion agreeing with: The BBC makes lots of online 27% and website content that no other organisation would make The BBC sometimes promote Yes 54% their television programmes No on BBC radio and their radio 41% programmes on BBC television Don’t know – so for example you may hear 4% information about a new BBC1 drama series on Radio 2 or you may see a promotion for Radio 1’s Breakfast show between programmes on BBC1. This is known as ‘cross promotion’. Have you seen or heard any of this kind of cross-promotion on the BBC?

The 1,113 aware of cross Yes 59% promotion were asked: Have you ever then chosen to watch or No 39% listen to another BBC programme Don’t know as a result of any cross promotion? 2%

Still thinking about ‘cross Proportion agreeing with: The BBC should be able to 65% promotion’ please indicate how promote its services across its television channels and radio much you agree or disagree with stations, however it likes the following statements. Proportion agreeing with: As the BBC can promote for 30% free its television programmes on its radio stations and its radio stations via its television channels this gives it an unfair advantage over other broadcasters Proportion agreeing with: As the BBC offers lots of different 67% services it makes sense to tell people about what is available in different ways including cross-promotion The 1,113 aware of cross Proportion agreeing with: I like hearing about BBC television 68% promotion were asked: Still programmes on the radio or radio programmes via the thinking about ‘cross promotion’ television as I learn about new programmes which I may please indicate how much you otherwise not have heard about agree or disagree with the Proportion agreeing with: The BBC does too much cross 23% following statements. promotion – it wastes air time which should be dedicated to programming Proportion agreeing with: The BBC does too much cross 21% promotion – it wastes air time which should be dedicated to programming

Department for Culture, Media & Sport | A BBC for the future: a broadcaster of distinction 115 7. Annexes Contents Glossary

BBC Executive Catch-up TV NAO The Executive Board is responsible or TV ‘’, is a system for National Audit Office. for the operational management watching TV programmes after they of the BBC. have been broadcast using a computer, Ofcom phone, etc. that is connected to The Office for Communications BBC Trust the internet. – independent regulator and The BBC Trust is the governing body competition authority for the of the BBC. Clementi Review UK communication industries. Independent review into the BBC Group governance and regulation of the On-demand The BBC Group refers to the BBC BBC led by Sir David Clementi. see ‘catch-up TV’ above. and its commercial subsidiaries. DAB Operating Licence BBC Studios Digital Audio Broadcasting. New licensing regime for the BBC to The BBC’s proposed new commercial be administered by Ofcom, replacing production subsidiary. DCMS the existing Service Licence regime Department for Culture, Media administered by the BBC Trust BDUK & Sport. (see Service Licence). Broadband Delivery UK – the delivery arm for the government’s Delivering Quality First Peak time broadband programmes (and part Delivering Quality First (DQF) is the Peak time is when consumption of the Department for Culture, BBC’s plan for delivering efficiency of content is usually highest. Media & Sport). savings of £700 million per year by For television Ofcom define this 2016/17. as 6pm to 10.30pm. Broadband A term used by retail internet service Digital switchover Perry Review providers to describe their high‑speed, The process of switching over the Independent review into the always‑on, access to the internet. analogue decriminalisation of the licence fee, The term broadband originally refers system to digital, as well as ensuring led by Sir David Perry. to the range of high frequency that people adapted or upgraded their signals used to carry the data being televisions and recording equipment PSB transmitted. Broadband is most often to receive digital TV. This process was Public Service Broadcaster delivered via connection through a completed across the UK in 2012. (or Broadcasting) – in the UK these telephone line or cable service, but are: the BBC, ITV, Channel 4, S4C can also be delivered using MIA and Channel 5. and satellite connections. A potential Market Impact Assessment – an element of the Public Value Test PVT access speed of less than 512 kbps Public Value Test – the process set is deemed not to be broadband. that looks at the impact of any new BBC service or significant change to out in the current Charter for how the an existing BBC service. BBC Trust determines whether new BBC services and changes to services should go ahead, taking into account the public value and market impact.

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S4C Superfast Broadband Unitary board A Welsh language public service BDUK (see previous) defines A structure for governing an television channel based broadcast Superfast Broadband as having a organisation whereby a single throughout Wales. potential headline access speed of board made up of executive and at least 24mbps, with no upper limit. non-executive members has The first television channel to be Typically, at a wholesale level, the collective responsibility. aimed specifically at a Welsh-speaking underlying capability can be measured audience, S4C is (after BBC One, ITV, in gigabits. The retail market then WOCC BBC Two and Sky1) the fifth-oldest takes this capability and delivers Window of Creative Competition. television channel in the United affordable propositions. Kingdom (Channel 4 was launched in the rest of the country one day later). Telecommunications Conveyance over distance of speed, Service Licence music and other sounds, visual images Services Licences are issued by the or signals by electric, magnetic or BBC Trust for every UK public service. electromagnetic means. It defines the scope, aims, objectives, headline budget and other important Terms of Trade features of each service and states Guidance produced by Ofcom (in their how performance is assessed by ‘Code of Practice for Commissioning the Trust. from Independent Producers’) setting out how public service broadcasters Smart television should negotiate agreements with the The integration of the internet independent production sector over (and associated software applications) the commissioning of new works. into television sets and associated devices such as Blu‑Ray players, Ultra HD games consoles and set‑top boxes. Ultra-high-definition television (also Consumers can browse the internet known as Super Hi-Vision, Ultra HD and access a range of services television, UltraHD, UHDTV, or UHD) (catch‑up TV, video‑on-demand, includes 4K UHD (2160p) and 8K UHD user‑uploaded content), as well as (4320p), which are two digital video linear broadcast TV content, via their formats proposed by NHK Science TV screen. & Technology Research Laboratories and defined and approved by the Spectrum International Radio spectrum – those sections Union (ITU). of the electromagnetic spectrum (typically defined as between 3KHz and 300GHz) which are used by a wide range of wireless based services including broadcasting, telecommunications and business radios.

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1 DCMS, BBC Charter Review 6 BBC, BBC Full Financial Statements 13 BBC Audience Information Data Public Consultation: Summary of 2014/15, Jul 2015, p.11: http:// Tables, April – June 2015, p.6: Responses, March 2016,p.5: Total downloads.bbc.co.uk/annualreport/ http://downloads.bbc.co.uk/ number of emails, letters and pdf/2014-15/BBC-FS-2015.pdf aboutthebbc/insidethebbc/ online survey responses received howwework/accountability/pdf/ 7 Ofcom, The Communications by closing date: 192,564; Duplicate summary_audience_information_ Market Report, August 2015, p.358: responses, blank responses, and april_june_2015.pdf http://stakeholders.ofcom.org.uk/ non‑consultation responses such binaries/research/cmr/cmr15/CMR_ 14 Stakeholder responses to DCMS as spam and general queries UK_2015.pdf consultation. BBC Charter Review identified during the analysis Public Consultation: Summary of process: 7,304: https://www.gov. 8 Ofcom, The Communications Responses, March 2016, pp.19-20: uk/government/uploads/system/ Market Report, August 2015, p.5: https://www.gov.uk/government/ uploads/attachment_data/ http://stakeholders.ofcom.org.uk/ uploads/system/uploads/ file/504099/BBC_Charter_Review_ binaries/research/cmr/cmr15/CMR_ attachment_data/file/504099/ Public_Consultation-_Summary_ UK_2015.pdf BBC_Charter_Review_Public_ of_Responses.pdf 9 Oliver & Ohlbaum and Oxera, Consultation-_Summary_of_ 2 DCMS, BBC Charter Review BBC television, radio and online Responses.pdf Public Consultation: Summary services: An assessment of market 15 46% of spend regulated by of Responses, March 2016, p.39: impact and distinctiveness, service licence and 41% of total https://www.gov.uk/government/ February 2016, p.28: https://www. service spend. BBC Full Financial uploads/system/uploads/ gov.uk/government/uploads/ Statements 2014/15, p.13: http:// attachment_data/file/504099/ system/uploads/attachment_data/ downloads.bbc.co.uk/annualreport/ BBC_Charter_Review_Public_ file/504012/FINAL_-_BBC_market_ pdf/2014-15/BBC-FS-2015.pdf Consultation-_Summary_of_ impact_assessment.pdf 16 Lord Hall Speech at the Science Responses.pdf 10 BBC Media Centre, BBC’s weekly Museum on the future vision 3 Oliver & Ohlbaum and Oxera, global audience rises to record of the BBC, 7 September 2015: BBC television, radio and online 348m , 29.04.2016: http:// http://www.bbc.co.uk/mediacentre/ services: An assessment of market www.bbc.co.uk/mediacentre/ speeches/2015/tony-hall- impact and distinctiveness, latestnews/2016/bbc-weekly- distinctive-bbc February 2016, p.9: https://www. global-audience 17 Oliver & Ohlbaum and Oxera, gov.uk/government/uploads/ 11 BBC Worldwide Annual Review BBC television, radio and online system/uploads/attachment_data/ 2014–2015, p.13: http://www. services: An assessment of market file/504012/FINAL_-_BBC_market_ bbcworldwide.com/media/109098/ impact and distinctiveness, impact_assessment.pdf annualreview2014-15.pdf 4 February 2016, p.9: https://www. BBC, BBC Full Financial Statements 12 BBC Trust, Response to the DCMS’s gov.uk/government/uploads/ 2014/15, Jul 2015, p.7: http:// Charter Review Consultation, system/uploads/attachment_data/ downloads.bbc.co.uk/annualreport/ October 2015, p.7: http:// file/504012/FINAL_-_BBC_market_ pdf/2014-15/BBC-FS-2015.pdf downloads.bbc.co.uk/bbctrust/ impact_assessment.pdf 5 The Yearbook of the European assets/files/pdf/about/how_we_ Audiovisual Observatory 2015 govern/charter_review/dcms_ ranked the BBC number one in response.pdf the 50 leading European PSBs in terms of unconsolidated operating revenues: http://www.obs.coe.int/ en/home

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18 Oliver & Ohlbaum and Oxera, 22 BBC Trust, Reducing costs through 29 BBC Media Centre, BBC’s weekly BBC television, radio and online ‘Delivering Quality First’: Report global audience rises to record services: An assessment of market by the Comptroller and Auditor 348m, 29 April 2016: http:// impact and distinctiveness, General presented to the BBC www.bbc.co.uk/mediacentre/ February 2016, p.148: https:// Trust Value for Money Committee, latestnews/2016/bbc-weekly- www.gov.uk/government/uploads/ NAO, February 2015, https:// global-audience system/uploads/attachment_data/ www.nao.org.uk/wp-content/ 30 Portland and Professor Joseph file/504012/FINAL_-_BBC_market_ uploads/2015/03/Reducing-costs- Nye, Soft Power 30 Index 2015, impact_assessment.pdf through-delivering-quality-first.pdf July 2015: http://softpower30. 19 GVA of the Creative Industries 23 GfK Social Research for the portland-communications.com/ was £84.1bn in 2014 and DCMS, Research to explore public 31 NatCen Social Research for exports of services from the views about the BBC, May 2016, BBC Trust, Purpose Remit Survey Creative Industries accounted for p.33: www.gov.uk/government/ UK report, July 2015, p.8: 8.7 per cent of total exports of publications/research-to-explore- http://downloads.bbc.co.uk/ services for the UK in 2013, DCMS, public-views-about-the-bbc bbctrust/assets/files/pdf/review_ Creative Industries Economic 24 BBC Annual Report and Accounts report_research/ara_2014_15/ Estimates, January 2016, pp.5-6: 2014/15, July 2015, p.84: uk.pdf https://www.gov.uk/government/ http://downloads.bbc.co.uk/ uploads/system/uploads/ 32 DCMS, BBC Charter Review annualreport/pdf/2014-15/bbc- attachment_data/file/494927/ Public Consultation: Summary annualreport-201415.pdf Creative_Industries_Economic_ of Responses, March 2016: Estimates_-_January_2016.pdf 25 BBC Full Financial Statements BBC served audience well or 2014/15, p.26: http://downloads. very well (81 per cent); the BBC’s 20 Frontier Economics for BBC, bbc.co.uk/annualreport/pdf/2014- content is sufficiently high quality The contribution of the BBC to the 15/BBC-FS-2015.pdf and distinctive (74.2 per cent); UK creative industries, April 2015, BBC should remain independent p.22: http://downloads.bbc.co.uk/ 26 BBC Annual Report and Accounts (72 per cent), p.39: https://www. aboutthebbc/insidethebbc/reports/ 2014/15, July 2015, p.14: http:// gov.uk/government/uploads/ pdf/bbc_report_contribution_to_ downloads.bbc.co.uk/annualreport/ system/uploads/attachment_data/ the_UK_creative_industries.pdf pdf/2014-15/BBC-FS-2015.pdf file/504099/BBC_Charter_Review_ 21 PwC, BBC Efficiency Review, 27 The Yearbook of the European Public_Consultation-_Summary_ July 2015: http://downloads.bbc. Audiovisual Observatory 2015 of_Responses.pdf co.uk/aboutthebbc/insidethebbc/ ranked the BBC number one in 33 BBC, British, Bold, Creative, The reports/pdf/bbc_report_pwc_ the 50 leading European PSBs in BBC’s Programmes and Services update_overheads_efficiency_ terms of unconsolidated operating in the next Charter, September review.pdf BBC, Driving Efficiency revenues: http://www.obs.coe.int/ 2015, p.6: https://downloads.bbc. at the BBC, November 2014: en/home co.uk/aboutthebbc/reports/pdf/ http://downloads.bbc.co.uk/ 28 Creative Industries Economic futureofthebbc2015.pdf aboutthebbc/insidethebbc/ Estimates January 2016, p.12: howwework/reports/pdf/bbc_ https://www.gov.uk/government/ efficiency_report_2014.pdf uploads/system/uploads/ attachment_data/file/494927/ Creative_Industries_Economic_ Estimates_-_January_2016.pdf

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34 Ofcom, PSB Annual Report, 38 NatCen Social Research, British 44 All sites listed are at the Property July 2015. Around two thirds Social Attitudes: the 30th Report, (including all the sites and apps (67 per cent) of households now 2013, p.16: http://www.bsa. owned by the organisation) level. have a digital video recorder, take natcen.ac.uk/latest-report/british- Please note MMX Multi-Platform up of connected TVs is growing social-attitudes-30/key-findings/ includes laptop/desktop browsing, and almost half of (48 per cent) of introduction.aspx laptop/desktop video steams adults watch on demand/catch-up and mobile use. Mobile includes 39 Population Estimates for UK, service, p.7: http://stakeholders. Android and iOS England and Wales, Scotland ofcom.org.uk/binaries/broadcast/ smartphones and tablets. Only and Northern Ireland, mid-2014: reviews-investigations/psb-review/ those entities that have been http://webarchive.nationalarchives. psb2015/PSB_Annual_Report_ tagged as part of the census gov.uk/20160105160709/http:// summary.pdf network report Android usage data. www.ons.gov.uk/ons/rel/pop- Google sites include YouTube. 35 Ofcom, Review of the operation estimate/population-estimates-for- of the television production uk--england-and-wales--scotland- 45 BBC, British, Bold, Creative, The sector: A report for the Secretary and-northern-ireland/index.html BBC’s Programmes and Services of State for Culture, Media & in the next Charter, September 40 Ofcom, PSB Annual Report 2015, Sport, December 2015: http:// 2015, p.24: https://downloads.bbc. July 2015, p.7: http://stakeholders. stakeholders.ofcom.org.uk/binaries/ co.uk/aboutthebbc/reports/pdf/ ofcom.org.uk/binaries/broadcast/ broadcast/reviews-investigations/ futureofthebbc2015.pdf reviews-investigations/psb-review/ tv-production-sector-review/ psb2015/PSB_Annual_Report_ 46 DCMS, BBC white paper: A public TV_Production_Sector_Review.pdf summary.pdf service for all: the BBC in the digital 36 Committee on Standards in Public age, March 2006, p.10: https:// 41 Ofcom, PSB Annual Report 2015, Life, Ethical standards for providers www.gov.uk/government/uploads/ July 2015, p.16: http://stakeholders. of public services, June 2014, p.5: system/uploads/attachment_data/ ofcom.org.uk/binaries/broadcast/ https://www.gov.uk/government/ file/272256/6763.pdf reviews-investigations/psb-review/ uploads/system/uploads/ psb2015/PSB_Annual_Report_ 47 BBC Trust, Response to the DCMS’s attachment_data/file/498235/ summary.pdf Charter Review Consultation, CSPL_EthicalStandards_web.pdf Technical Annex A: Purposes, 42 This fits within the government’s 37 Edelman, 2016 Edelman Trust Values and Scope, November Counter-Extremism Strategy Barometer: Executive Summary, 2015, p.48. When asked “The BBC which notes the important role p.3: http://www.edelman. offers content and programmes of broadcast media: https://www. com/insights/intellectual- which are distinctive”, 60 per cent gov.uk/government/uploads/ property/2016-edelman-trust- agreed, 18 per cent disagreed, system/uploads/attachment_data/ barometer/executive-summary 21 per cent neither agreed nor file/470088/51859_Cm9148_ disagreed. When asked “The BBC Accessible.pdf offers content and programmes 43 BBC, BBC Full Financial Statements which are high quality”, 73 per cent 2014/15, Jul 2015, p.7: http:// agreed, 10 per cent disagreed, downloads.bbc.co.uk/annualreport/ and 16 per cent neither agreed nor pdf/2014-15/BBC-FS-2015.pdf disagreed: http://downloads.bbc. co.uk/bbctrust/assets/files/pdf/ about/how_we_govern/charter_ review/annex_a.pdf

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48 DCMS, BBC Charter Review 51 Oliver & Ohlbaum and Oxera, 55 BBC Trust response to DCMS’s Public Consultation, Summary of BBC television, radio and online Charter Review Consultation, Consultation Responses, March services: An assessment of market Technical Annex A: Purposes, 2016, p19: Almost three quarters impact and distinctiveness, Values and Scope, November 2015, (74 per cent) of the responses to February 2016, p.13, p.18: https:// p.14. When asked “The BBC’s main the consultation indicated that www.gov.uk/government/uploads/ mission is to ‘inform, educate the BBC’s content is sufficiently system/uploads/attachment_data/ and entertain’ its audiences. high quality and distinctive from file/504012/FINAL_-_BBC_market_ To what extent do you agree or that of other broadcasters: https:// impact_assessment.pdf disagree that this should continue www.gov.uk/government/uploads/ to be the BBC’s main mission?”, 52 BBC Trust, Service Review system/uploads/attachment_data/ 49 per cent said they “definitely of BBC Television, July 2014, file/504099/BBC_Charter_Review_ agree”, 36 per cent “tend to p.32: http://downloads.bbc. Public_Consultation-_Summary_ agree”, 10 per cent “neither agree co.uk/bbctrust/assets/files/ of_Responses.pdf of disagree”, 2 per cent “tend to pdf/regulatory_framework/ disagree”, 1 per cent “definitely 49 GfK Social Research for DCMS, service_licences/service_reviews/ disagree”, and 2 per cent “don’t Research to explore public views television_services/television_ know”: http://downloads.bbc.co.uk/ about the BBC, May 2016, p.63. services.pdf BBC Trust, Service bbctrust/assets/files/pdf/about/ When asked whether the BBC Review Radio 1, 1Xtra, Radio how_we_govern/charter_review/ “makes lots of TV programmes 2, Radio 3, 6 Music and Asian annex_a.pdf that no other broadcaster could Network, March 2015, p.7: http:// make”, 38 per cent “agreed”, downloads.bbc.co.uk/bbctrust/ 56 BBC, British, Bold, Creative, The 27 per cent “disagreed”. When assets/files/pdf/our_work/music_ BBC’s Programmes and Services asked whether the BBC make lots radio/music_radio.pdf in the next charter, September of programmes which are more 2015, p.5: https://downloads.bbc. 53 BBC, A distinctive BBC, April 2016: daring or innovative that those co.uk/aboutthebbc/reports/pdf/ http://downloads.bbc.co.uk/ made by other broadcasters, futureofthebbc2015.pdf aboutthebbc/insidethebbc/ 27 per cent “agreed”, 34 per cent reports/pdf/bbc_distinctiveness_ 57 GfK Social Research for DCMS, “disagreed”: www.gov.uk/ april2016.pdf Research to explore public views government/publications/research- about the BBC, May 2016, to-explore-public-views-about- 54 Oral Evidence to the Culture, p.62. When asked the question: the-bbc Media and Sport Select “Do you think the balance of the Committee: Future of the 50 Lord Hall Speech at the Science BBC’s overall content should be BBC HC 949, 11 February Museum on the future vision distinctive because it is publicly 2014, Q111, p.17: http://data. of the BBC, 7 September 2015: funded?” 59 per cent said “Yes”, parliament.uk/writtenevidence/ http://www.bbc.co.uk/mediacentre/ 29 per cent said “No”, and committeeevidence.svc/ speeches/2015/tony-hall- 12 per cent said “Don’t Know”: evidencedocument/culture-media- distinctive-bbc www.gov.uk/government/ and-sport-committee/future-of- publications/research-to-explore- the-bbc/oral/6170.pdf public-views-about-the-bbc

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58 BBC Trust response to DCMS’s 60 BBC Trust response to DCMS’s 67 BBC Trust, BBC One, Two, Three Charter Review Consultation, Charter Review Government and Four Service Licence Reviews, October 2015, p.7. When asked Consultation, October 2015, 2014, p.6: http://downloads. “Do you think it is important or p.4: http://downloads.bbc.co.uk/ bbc.co.uk/bbctrust/assets/files/ not important that the BBC…?”, bbctrust/assets/files/pdf/about/ pdf/regulatory_framework/ 91 per cent said that quality and how_we_govern/charter_review/ service_licences/service_reviews/ high editorial standards were “very dcms_response.pdf television_services/television_ important” or “fairly important”, services.pdf 61 Government roundtables with and 88 per cent said impartiality Creative Industry Experts, 20 and 68 Oliver & Ohlbaum and Oxera, was “very important” or “fairly 27 January 2016. BBC television, radio and online important”: http://downloads.bbc. services: An assessment of market co.uk/bbctrust/assets/files/pdf/ 62 BBC, A Distinctive BBC, April impact and distinctiveness, about/how_we_govern/charter_ 2016, p.3: http://downloads.bbc. February 2016, pp. 96-99: https:// review/dcms_response.pdf co.uk/aboutthebbc/insidethebbc/ www.gov.uk/government/uploads/ reports/pdf/bbc_distinctiveness_ 59 DCMS, BBC Charter Review system/uploads/attachment_data/ april2016.pdf Public Consultation, Summary of file/504012/FINAL_-_BBC_market_ Consultation Responses, March 63 speech at the impact_assessment.pdf 2016, p.7: When asked the question IPPR Oxford Media Convention, 69 Oliver & Ohlbaum and Oxera, “How can the BBC’s public 20 January 2005: http://www.bbc. BBC television, radio and online purposes be improved so there co.uk/pressoffice/speeches/stories/ services: An assessment of market is more clarity about what the grade_ippr.shtml impact and distinctiveness, BBC should achieve?”, 3 per cent 64 Ofcom, PSB Annual Report 2015 February 2016, p.18: https://www. said that said that no change was Output and Spend Annex (Fig 21), gov.uk/government/uploads/ required, and 2 per cent indicated p.24: http://stakeholders.ofcom. system/uploads/attachment_data/ that some change was required org.uk/binaries/broadcast/reviews- file/504012/FINAL_-_BBC_market_ (only 5 per cent responded overall). investigations/psb-review/psb2015/ impact_assessment.pdf The majority of organisations who PSB_2015_Output_and_Spend.pdf responded said that the current 70 DCMS analysis of data submitted 65 structure of public purposes with DCMS analysis using data by the BBC to DCMS. Comedy more specific purpose remits, submitted by the BBC. hours on BBC One in peak were provided a “helpful framework” 66 BBC, Audience Information 79 hours in 2010 and 70 in 2014. for the BBC to operate within: Data Tables, April – June 2015, Arts and Music hours on BBC One https://www.gov.uk/government/ p.6: http://downloads.bbc.co.uk/ in peak were 20 hours in 2010 and uploads/system/uploads/ aboutthebbc/insidethebbc/ 13 in 2014. attachment_data/file/504099/ howwework/accountability/pdf/ 71 Ofcom, Public Service Broadcasting BBC_Charter_Review_Public_ summary_audience_information_ in the Internet Age, July 2015, Consultation-_Summary_of_ april_june_2015.pdf p.4: http://stakeholders.ofcom. Responses.pdf org.uk/binaries/consultations/ psb-review-3/statement/PSB_ Review_3_Statement.pdf

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72 BBC Trust, Service Licence 76 DCMS analysis of data submitted 81 BBC, British, Bold, Creative, Review of BBC TV: BBC One, by the BBC to DCMS. Current The BBC’s Programmes and BBC Two, BBC Three and Affairs on BBC Two in peak fell Services in the next charter, BBC Four Analysis of Responses from 82 hours in 2010 to 61 hours September 2015, September to Public Consultation, April in 2014. Music and Arts on BBC 2015, p.30: https://downloads.bbc. 2014, p.11: http://downloads. Two in peak fell from 142 hours co.uk/aboutthebbc/reports/pdf/ bbc.co.uk/bbctrust/assets/files/ in 2010 to 117 hours in 2014. futureofthebbc2015.pdf pdf/regulatory_framework/ Entertainment hours on BBC Two 82 RadioCentre Response to DCMS service_licences/service_reviews/ in peak rose from 197 hours in Green Paper on BBC Charter television_services/consultation_ 2010 to 227 hours in 2014. Review, October 2015, p.18, analysis.pdf 77 BBC Trust, Service Review of RadioCentre have estimated that 73 GfK Social Research for DCMS, BBC One, Two, Three and Four, the degree of overlap to be 53% Research to explore public views July 2014, p.7: http://downloads. for Radio 1 and 65% for Radio 2, about the BBC, May 2016, bbc.co.uk/bbctrust/assets/files/ but this compares the stations p.63: www.gov.uk/government/ pdf/regulatory_framework/ with a broad range of commercial publications/research-to-explore- service_licences/service_reviews/ providers: http://www.radiocentre. public-views-about-the-bbc television_services/television_ org/wp-content/uploads/2015/10/ services.pdf Radiocentre-response-to-DCMS- 74 BBC Trust, Service Review of Green-Paper-on-BBC-Charter.pdf BBC Television: BBC One, BBC 78 BFI, Public Investment in Film in Two, BBC Three & BBC Four, the UK, BFI Research and Statistics, 83 CompareMyRadio, By the July 2014: http://downloads. December 2015, p.4: http://www. Ocean by Dnce has been played bbc.co.uk/bbctrust/assets/files/ bfi.org.uk/sites/bfi.org.uk/files/ 100 times in the previous 30 days pdf/regulatory_framework/ downloads/bfi-public-investment- on Radio 1: http://comparemyradio. service_licences/service_reviews/ in%20film-in-uk-2015.pdf com/stations/BBC_Radio_1 television_services/television_ 79 DCMS report, It’s still all about 84 Radio 1 Service Licence: http:// services.pdf the audience: two years on from downloads.bbc.co.uk/bbctrust/ 75 BBC, BBC Two fresh and new the film policy review, January assets/files/pdf/regulatory_ scores have increased from 2014, p.19: https://www.gov.uk/ framework/service_licences/ 73 in July – September 2011, government/uploads/system/ radio/2013/radio_1.pdf to 79 in April – June 2015. uploads/attachment_data/ 85 Radio 2 Service Licence: http:// DCMS analysis of ‘Fresh and file/274265/1316-A_Film_Policy_ downloads.bbc.co.uk/bbctrust/ New’ scores from BBC audience Doc_ACCESSIBLE.pdf assets/files/pdf/regulatory_ information: http://www.bbc. 80 RAJAR Quarterly Report, December framework/service_licences/ co.uk/aboutthebbc/insidethebbc/ 2015, Radio 1 has 10.3 million radio/2014/radio2_apr14.pdf howwework/accountability/ weekly listeners. Radio 2 has audienceinformation/ 15.5 million listeners a week: http://www.rajar.co.uk/listening/ quarterly_listening.php

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86 Oliver & Ohlbaum and Oxera, 89 Oliver & Ohlbaum and Oxera, 94 Speech by Lord Hall, Director- BBC television, radio and online BBC television, radio and online General of the BBC, at the Cardiff services: An assessment of market services: An assessment of market Business Club on 23 November impact and distinctiveness, impact and distinctiveness, 2015: http://www.bbc.co.uk/ February 2016, p.123: https:// February 2016, p.148: https:// mediacentre/speeches/2015/tony- www.gov.uk/government/uploads/ www.gov.uk/government/uploads/ hall-cardiff system/uploads/attachment_data/ system/uploads/attachment_data/ 95 BBC, A Distinctive BBC, April 2016, file/504012/FINAL_-_BBC_market_ file/504012/FINAL_-_BBC_market_ p.4: http://downloads.bbc.co.uk/ impact_assessment.pdf impact_assessment.pdf aboutthebbc/insidethebbc/ 87 GfK Social Research for DCMS, 90 BBC’s response to DCMS Green reports/pdf/bbc_distinctiveness_ Research to explore public views Paper: BBC Charter Review, april2016.pdf about the BBC, May 2016, p.69. Audience Appendix, p.46: 96 BBC, A Distinctive BBC, April 2016, When asked the question: “Radio 1 http://downloads.bbc.co.uk/ p.29: http://downloads.bbc.co.uk/ and commercial pop radio stations aboutthebbc/insidethebbc/ aboutthebbc/insidethebbc/ like Capital Network and Absolute reports/pdf/bbc_charter_review_ reports/pdf/bbc_distinctiveness_ Radio are quite similar, apart from audiences_appendix.pdf april2016.pdf the adverts”, 31 per cent said they 91 Oliver & Ohlbaum and Oxera, “agree”, and “15 per cent said they 97 BBC, Performance Against Public BBC television, radio and online “disagree”. Of those under 25, Commitments, 2014/15, p.2: http:// services: An assessment of market 42 per cent they “agree”. When downloads.bbc.co.uk/annualreport/ impact and distinctiveness, asked the question: “Radio 2 and pdf/2014-15/bbc-papc-2015.pdf February 2016, p.8: https://www. commercial pop radio stations 98 gov.uk/government/uploads/ GfK Social Research for DCMS, like Magic FM and Heart Network system/uploads/attachment_data/ Research to explore public are quite similar, apart from the file/504012/FINAL_-_BBC_market_ views about the BBC, May adverts”, 31 per cent said they impact_assessment.pdf 2016, pp.57‑59. When UK-based “agree” and 18 per cent said participants were asked about 92 Oliver & Ohlbaum and Oxera, they “disagree”: www.gov.uk/ their views regarding ring fencing BBC television, radio and online government/publications/research- of licence fee funds for particular services: An assessment of market to-explore-public-views-about- BBC services, the World Service impact and distinctiveness, the-bbc was highlighted as an important February 2016, p.8: https://www. 88 Oliver & Ohlbaum and Oxera, service for people from other gov.uk/government/uploads/ BBC television, radio and online countries living in the UK and for system/uploads/attachment_data/ services: An assessment of market those from the UK living overseas, file/504012/FINAL_-_BBC_market_ impact and distinctiveness, such as members of the armed impact_assessment.pdf February 2016, p.123: https:// forces: www.gov.uk/government/ www.gov.uk/government/uploads/ 93 Oliver & Ohlbaum and Oxera, publications/research-to-explore- system/uploads/attachment_data/ BBC television, radio and online public-views-about-the-bbc services: An assessment of market file/504012/FINAL_-_BBC_market_ 99 Portland and Professor Joseph impact and distinctiveness, impact_assessment.pdf Nye, Soft Power 30 Index 2015, February 2016, pp. 17-22: https:// July 2015: http://softpower30. www.gov.uk/government/uploads/ portland-communications.com/ system/uploads/attachment_data/ file/504012/FINAL_-_BBC_market_ impact_assessment.pdf

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100 BBC Media Centre, BBC Global 107 Sky, Press Notice, August 2014: 112 BBC, British, Bold, Creative, Audience Estimate, 29 April https://corporate.sky.com/media- The BBC’s Programmes and 2016: http://www.bbc.co.uk/ centre/news-page/2014/sky- Services in the next charter, mediacentre/latestnews/2016/ unveils-new-targets-to-improve- September 2015, p. 46: bbc-weekly-global-audience bame-representation https://downloads.bbc.co.uk/ aboutthebbc/reports/pdf/ 101 BBC, Full Financial Statements 108 BFI, Diversity Standards, futureofthebbc2015.pdf 2014-15, p. 13: http://downloads. November 2015: http://www. bbc.co.uk/annualreport/pdf/2014- bfi.org.uk/sites/bfi.org.uk/files/ 113 National Assembly for Wales 15/BBC-FS-2015.pdf downloads/bfi-film-fund-diversity- Communities, Equality and standards-2015-11-27.pdf Local Government Committee 102 Ofcom, PSB Diversity Research Inquiry into the BBC Charter Summary, June 2015: 109 DCMS, BBC Charter Review Review, March 2016, pp. 18-20: http://stakeholders.ofcom.org. Public Consultation: Summary http://www.assembly.wales/ uk/binaries/consultations/psb- of Responses, March 2016, p.15: laid%20documents/cr-ld10602/ review-3/statement/PSB_Diversity_ https://www.gov.uk/government/ cr-ld10602-e.pdf and Scottish Report.pdf uploads/system/uploads/ Parliament Education and attachment_data/file/504099/ 103 NatCen Social Research for BBC Culture Committee’s report on BBC_Charter_Review_Public_ Trust, Purpose Remit Survey UK the renewal of the BBC Charter, Consultation-_Summary_of_ report, July 2015, p.33: http:// February 2016, pp.14-15: http:// Responses.pdf downloads.bbc.co.uk/bbctrust/ www.parliament.scot/S4_ assets/files/pdf/review_report_ 110 BBC, British, Bold, Creative, EducationandCultureCommittee/ research/ara_2014_15/uk.pdf The BBC’s Programmes and Reports/ECS042016R03.pdf Services in the next charter, 104 Trevor Philips, Speech at the 114 We understand the BBC is September 2015, p.46: Oxford Media Convention, 2 March currently conducting a news review https://downloads.bbc.co.uk/ 2016: http://www.ippr.org/files/ that will be looking at various aboutthebbc/reports/pdf/ events/files/events-speech- different programme formats futureofthebbc2015.pdf phillips-160302.pdf?noredirect=1 and will be carrying out audience 111 GfK Social Research for DCMS, 105 The Creative Diversity Network research as part of that process. Research to explore public views is a forum, paid for by its member 115 Gaelic, Welsh, Irish language and about the BBC, May 2016: www. bodies. Its role is to bring together Ulster-Scots. gov.uk/government/publications/ organisations, who employ and/ research-to-explore-public-views- 116 Sir David Clementi, A Review of or make programmes across the about-the-bbc and BBC Trust the Governance and Regulation UK television industry to promote, Response to the DCMS’s Charter of the BBC, March 2016: https:// celebrate and share good practice Review Consultation, October www.gov.uk/government/ around the diversity agenda. 2015, Annex A, 2015: http:// uploads/system/uploads/ 106 Channel 4, Channel 4 launches downloads.bbc.co.uk/bbctrust/ attachment_data/file/504003/ 360° Diversity Charter, January assets/files/pdf/about/how_we_ PDF_FINAL_20160224_AM_ 2015: http://www.channel4. govern/charter_review/annex_a.pdf Clementi_Review.pdf com/info/press/news/channel-4- launches-360-diversity-charter

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117 Culture, Media and Sport Select 124 Lord Hall Speech to the Cardiff 130 Sir David Clementi, A Review of Committee, BBC Charter Review, Business Club, November 2015: the Governance and Regulation p.8: http://www.publications. http://www.bbc.co.uk/mediacentre/ of the BBC, March 2016, p.77: parliament.uk/pa/cm201516/ speeches/2015/tony-hall-cardiff https://www.gov.uk/government/ cmselect/cmcumeds/398/398.pdf uploads/system/uploads/ 125 Independent’s Panel’s Report, attachment_data/file/504003/ 118 Sir David Clementi, A Review of Emerging Themes, 2004: http:// PDF_FINAL_20160224_AM_ the Governance and Regulation webarchive.nationalarchives.gov. Clementi_Review.pdf of the BBC, March 2016, p.17: uk/+/http://www.bbccharterreview. https://www.gov.uk/government/ org.uk/pdf_documents/050123a_ 131 Communications Committee, uploads/system/uploads/ Governance.pdf 2nd report, The governance and attachment_data/file/504003/ regulation of the BBC, June 2011: 126 Sir David Clementi, A Review of PDF_FINAL_20160224_AM_ http://www.publications. the Governance and Regulation Clementi_Review.pdf parliament.uk/pa/ld201012/ of the BBC, March 2016, p.8: ldselect/ldcomuni/166/16606.htm 119 NAO Report, Digital Media https://www.gov.uk/government/ Initiative, January 2014, p.11: uploads/system/uploads/ 132 BBC Trust, 2012 Complaints https://www.nao.org.uk/wp- attachment_data/file/504003/ Framework Review, 30 May 2012: content/uploads/2015/01/BBC- PDF_FINAL_20160224_AM_ http://www.bbc.co.uk/bbctrust/ Digital-Media-Initiative.pdf Clementi_Review.pdf governance/complaints_ framework/framework_review 120 NAO Report, Severance payments 127 Sir David Clementi, A Review of and wider benefits for senior BBC the Governance and Regulation 133 Sir David Clementi, A Review of managers, June 2013, p.8: https:// of the BBC, March 2016, p. 52: the Governance and Regulation www.nao.org.uk/wp-content/ https://www.gov.uk/government/ of the BBC, March 2016, p.64: uploads/2013/07/10193-001_BBC_ uploads/system/uploads/ https://www.gov.uk/government/ BOOK.pdf attachment_data/file/504003/ uploads/system/uploads/ PDF_FINAL_20160224_AM_ attachment_data/file/504003/ 121 House of Commons Committee Clementi_Review.pdf PDF_FINAL_20160224_AM_ of Public Accounts, BBC Severance Clementi_Review.pdf Packages, Recommendation #7 128 BBC Trust, Response to BBC p.6: http://www.publications. Charter Review Consultation, 134 Creative Industries Economic parliament.uk/pa/cm201314/ October 2015, p.70: http:// Estimates, DCMS, January 2016, cmselect/cmpubacc/476/476.pdf downloads.bbc.co.uk/bbctrust/ p.5: https://www.gov.uk/ assets/files/pdf/about/how_we_ government/uploads/system/ 122 Rona Fairhead, BBC Trust, Speech govern/charter_review/dcms_ uploads/attachment_data/ at Oxford Media Convention, response.pdf file/494927/Creative_Industries_ March 2015: http://www.bbc.co.uk/ Economic_Estimates_-_ bbctrust/news/speeches/2015/ 129 NatCen Social Research for January_2016.pdf oxford_media_convention BBC Trust, Purpose Remit Survey UK report, Appendix Table D:4 135 Ohlbaum and Oxera, BBC 123 Sir David Clementi, A Review of Performance in general measures, television, radio and online services: the Governance and Regulation by nation, Autumn 2013, p. 58: An assessment of market impact of the BBC, March 2016, p.36: http://downloads.bbc.co.uk/ and distinctiveness, Oliver &, https://www.gov.uk/government/ bbctrust/assets/files/pdf/review_ February 2016, pp.11-12: https:// uploads/system/uploads/ report_research/ara2013_14/uk.pdf www.gov.uk/government/uploads/ attachment_data/file/504003/ system/uploads/attachment_data/ PDF_FINAL_20160224_AM_ file/504012/FINAL_-_BBC_market_ Clementi_Review.pdf impact_assessment.pdf

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136 2,700 suppliers: Frontier Economics 140 BBC Trust, Final decision on 146 Imperial War museum, First World for BBC, The contribution of proposed changes to BBC television War Centenary Partnership: the BBC to the UK creative and online services, November http://www.iwm.org.uk/corporate/ industries, April 2015, p.22: 2015: http://www.bbc.co.uk/ projects-partnerships/first-world- http://downloads.bbc.co.uk/ bbctrust/our_work/services/ war-centenary-partnership aboutthebbc/insidethebbc/reports/ service_changes_decision 147 The British Museum, A History of pdf/bbc_report_contribution_ 141 Ofcom, Proposed changes to BBC the World in 100 objects: http:// to_the_UK_creative_industries. Three, BBC iPlayer, BBC One and www.britishmuseum.org/explore/a_ pdf £400 million per year: Ofcom CBBC Market Impact Assessment, history_of_the_world.aspx PSB Annual Report 2015, output June 2015, p.2: http://stakeholders. and spend annex, July 2015, p.5: 148 The Guardian, Maev Kennedy: ofcom.org.uk/binaries/research/ http://stakeholders.ofcom.org. Radio 4’s A History of the World tv-research/bbc-mias/market_ uk/binaries/broadcast/reviews- in 100 Objects draws to a close, impact_assessment_report.pdf investigations/psb-review/psb2015/ 14 October 2010: http://www. PSB_2015_Output_and_Spend.pdf 142 BBC Trust, Final decision on theguardian.com/media/2010/ proposed changes to BBC television oct/14/radio-4-history-world- 137 Oliver & Ohlbaum and Oxera, and online services, November objects BBC television, radio and online 2015: http://www.bbc.co.uk/ services: An assessment of market 149 Sport England, This Girl Can: bbctrust/our_work/services/ impact and distinctiveness, http://www.thisgirlcan.co.uk service_changes_decision February 2016, p.12: https://www. 150 HM Government, Sporting Future: 143 BBC Trust, Service Licence Review gov.uk/government/uploads/ A New Strategy for an Active for BBC One, Two and Four, system/uploads/attachment_data/ Nation, December 2015: https:// November 2010, p.2: http:// file/504012/FINAL_-_BBC_market_ www.gov.uk/government/uploads/ downloads.bbc.co.uk/bbctrust/ impact_assessment.pdf system/uploads/attachment_data/ assets/files/pdf/regulatory_ 138 See, for example, Oliver & file/486622/Sporting_Future_ framework/service_licences/ Ohlbaum and Oxera, BBC ACCESSIBLE.pdf service_reviews/one_two_four/ television, radio and online services: 151 tv_services_final.pdf Partnership roundtable. An assessment of market impact 152 and distinctiveness, February 144 BBC Trust, Service Licence Review Oliver & Ohlbaum and Oxera, 2016, p.12: https://www.gov.uk/ for BBC One, Two Three and Four, BBC television, radio and online government/uploads/system/ July 2014, p.7: http://downloads. services: An assessment of market uploads/attachment_data/ bbc.co.uk/bbctrust/assets/files/ impact and distinctiveness, file/504012/FINAL_-_BBC_market_ pdf/regulatory_framework/ February 2016, pp. 197-214: impact_assessment.pdf service_licences/service_reviews/ https://www.gov.uk/government/ television_services/television_ uploads/system/uploads/ 139 Competition and Markets services.pdf attachment_data/file/504012/ Authority case: BBC Worldwide FINAL_-_BBC_market_impact_ 145 The Commercial Broadcasters Ltd, Channel Four Television assessment.pdf Corporation and ITV plc joint Association, Response to venture: https://www.gov.uk/cma- the DCMS’s Charter Review cases/bbc-worldwide-ltd-channel- consultation. four-television-corporation-and- -plc-joint-venture-cc

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153 Ofcom, PSB Annual Report 2015, 160 BBC, British, Bold, Creative, The 166 Ofcom, Review of the operation Output and Spend annex, July BBC’s Programmes and Services of the television production sector, 2015, p.14 (Figure 12): http:// in the next charter, September December 2015, p.14: http:// stakeholders.ofcom.org.uk/binaries/ 2015, p.93: https://downloads.bbc. stakeholders.ofcom.org.uk/binaries/ broadcast/reviews-investigations/ co.uk/aboutthebbc/reports/pdf/ broadcast/reviews-investigations/ psb-review/psb2015/PSB_2015_ futureofthebbc2015.pdf tv-production-sector-review/ Output_and_Spend.pdf TV_Production_Sector_Review.pdf 161 BBC, British, Bold, Creative, The 154 Ofcom, Third Review of Public BBC’s Programmes and Services 167 Oliver & Ohlbaum, Trends in TV Service Broadcasting, 2 July 2015: in the next charter, September Production for Ofcom, December http://stakeholders.ofcom.org.uk/ 2015, p.96: https://downloads.bbc. 2015, p.30: http://stakeholders. consultations/psb-review-3/ co.uk/aboutthebbc/reports/pdf/ ofcom.org.uk/binaries/broadcast/ futureofthebbc2015.pdf reviews-investigations/tv- 155 Oliver and Ohlbaum for NMA, production-sector-review/O_O_ The news market in the 21st 162 Ofcom, Review of the operation Annex_Trends.pdf Century and the likely implications of the television production sector, for the BBC’s role, September 2015, December 2015, p.13: http:// 168 BBC Trust, The supply arrangements p.41: http://www.newsmediauk. stakeholders.ofcom.org.uk/binaries/ for the production of the BBC’s org/write/MediaUploads/PDF%20 broadcast/reviews-investigations/ television content, radio content Docs/OandO_NMA_-_UK_news_ tv-production-sector-review/ and online content and services, provision_at_the_crossroads.pdf TV_Production_Sector_Review.pdf June 2015, p.8: http://downloads. bbc.co.uk/bbctrust/assets/files/pdf/ 156 BBC, Full Financial Statements 163 BBC Annual Report and our_work/content_supply/2015/ 2014/15, p.26: http://downloads. Accounts 2014/15, July 2015 content_supply_review.pdf bbc.co.uk/annualreport/pdf/2014- p.4: http://downloads.bbc.co.uk/ 15/BBC-FS-2015.pdf annualreport/pdf/2014-15/bbc- 169 Tony Hall – speech at the ‘Future annualreport-201415.pdf of the Licence Fee’ seminar, City 157 BBC, Reducing Costs Through University, London, 10 July 2014: ‘Delivering Quality First’, 164 Ofcom, Review of the operation http://www.bbc.co.uk/mediacentre/ BBC Executive response: http:// of the television production sector, speeches/2014/dg-city-university downloads.bbc.co.uk/bbctrust/ December 2015, p.13: http:// assets/files/pdf/review_report_ stakeholders.ofcom.org.uk/binaries/ 170 BBC Trust, The supply arrangements research/reducing_costs/reducing_ broadcast/reviews-investigations/ for the production of the BBC’s costs.pdf tv-production-sector-review/ television content, radio content TV_Production_Sector_Review.pdf and online content and services, 158 BBC Annual Report and Accounts June 2015, p.50: http://downloads. 2014/15, July 2015 p.25: 165 Ofcom, Review of the operation bbc.co.uk/bbctrust/assets/files/pdf/ http://downloads.bbc.co.uk/ of the television production our_work/content_supply/2015/ annualreport/pdf/2014-15/bbc- sector, December 2015, p.2: http:// content_supply_review.pdf annualreport-201415.pdf stakeholders.ofcom.org.uk/binaries/ broadcast/reviews-investigations/ 171 Tony Hall – speech at the ‘Future 159 PwC, BBC Efficiency Review, tv-production-sector-review/ of the Licence Fee’ seminar, City July 2015, p.1: http://downloads. TV_Production_Sector_Review.pdf University, London, 10 July 2014: bbc.co.uk/aboutthebbc/ http://www.bbc.co.uk/mediacentre/ insidethebbc/reports/pdf/bbc_ speeches/2014/dg-city-university report_pwc_update_overheads_ efficiency_review.pdf

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172 BBC, British, Bold, Creative, The 179 BBC, BBC Annual Report and 186 House of Lords Select Committee BBC’s Programmes and Services Accounts 2014/15, July 2015 on Communications, BBC Charter in the next charter, September p.110: http://downloads.bbc.co.uk/ Review: Reith not revolution, 2015, p.89: https://downloads.bbc. annualreport/pdf/2014-15/bbc- February 2016, p.25: http:// co.uk/aboutthebbc/reports/pdf/ annualreport-201415.pdf www.publications.parliament. futureofthebbc2015.pdf uk/pa/ld201516/ldselect/ 180 Channel 4, Britain’s Creative ldcomuni/96/96.pdf 173 BBC, British, Bold, Creative. Greenhouse: Channel Four BBC Studios: Strengthening the Television Corporation Report 187 Ofcom, Public Service Broadcasting BBC’s role in the creative industries, and Financial Statements 2014, in the Internet Age, Ofcom’s September 2015, p.17: http:// p.125: https://c4-cp-hosting. Third Review of Public Service downloads.bbc.co.uk/aboutthebbc/ s3.amazonaws.com/annualreport/ Broadcasting, July 2015, p.28: reports/pdf/bbc_studios_2015.pdf Channel%204%20Annual%20 http://stakeholders.ofcom. Report%202014_2.pdf org.uk/binaries/consultations/ 174 Ofcom, BBC Content Production psb-review-3/statement/PSB_ Options, Ofcom’s advice to the 181 YouGov/The Times Survey Review_3_Statement.pdf Secretary of State for Culture, Results, March 2014: https:// Media & Sport, December 2015, d25d2506sfb94s.cloudfront.net/ 188 BBC Annual Report and Accounts p.8: http://stakeholders.ofcom.org. cumulus_uploads/document/ 2014/15, July 2015 p.136: uk/binaries/broadcast/reviews- l9krw6z8vo/YG-Archive-Pol- http://downloads.bbc.co.uk/ investigations/tv-production- Sunday-Times-results-140314.pdf annualreport/pdf/2014-15/bbc- sector-review/BBC_Content_ annualreport-201415.pdf 182 BBC, Inside the BBC: Salaries Production_Options.pdf and Expenses, 11 April 2016: 189 BBC Annual Report and 175 BBC, British, Bold, Creative, The http://www.bbc.co.uk/ Accounts 2014/15, July 2015 BBC’s Programmes and Services corporate2/insidethebbc/ p.61: http://downloads.bbc.co.uk/ in the next charter, September managementstructure/ annualreport/pdf/2014-15/bbc- 2015, p.93: https://downloads.bbc. biographies/#heading-a-to-c annualreport-201415.pdf co.uk/aboutthebbc/reports/pdf/ 183 BBC, BBC Annual Report and 190 UKTV, Corporate Site: futureofthebbc2015.pdf Accounts 2014/15, July 2015, http://corporate.uktv.co.uk/about- 176 BBC, BBC Annual Report and p.84: http://downloads.bbc.co.uk/ /article/who-we-are-and- Accounts 2014/15, July 2015 annualreport/pdf/2014-15/bbc- what-we-do/ p.25: http://downloads.bbc.co.uk/ annualreport-201415.pdf 191 BBC Worldwide Annual Report annualreport/pdf/2014-15/bbc- 184 NAO, Managing the BBC’s estate. and Accounts, 2009‑10 annualreport-201415.pdf Report by the Comptroller and and 2014-15: http://www. 177 Oliver & Ohlbaum for the Auditor General presented to bbcworldwide.com/media/109098/ BBC Trust, A review of the BBC’s the BBC Trust Value for Money annualreview2014-15.pdf arrangements for managing on- Committee, 3 January 2014, #13, 192 House of Commons Culture, screen and on-air talent, February p.7: https://www.nao.org.uk/ Media and Sport Committee, 2015, p.6: http://downloads.bbc. wp-content/uploads/2015/01/ BBC Charter Review, February 2016 co.uk/bbctrust/assets/files/pdf/ Managing-the-BBC-estate.pdf p.15: http://www.publications. review_report_research/managing_ 185 House of Commons Culture, parliament.uk/pa/cm201516/ talent/managing_talent.pdf Media and Sport Committee, BBC cmselect/cmcumeds/398/398.pdf 178 BBC, BBC Annual Report and Charter Review, February 2016, 193 BBC, full financial statements Accounts 2014/15, July 2015 p.44: http://www.publications. 2014/15: http://downloads.bbc. p.25: http://downloads.bbc.co.uk/ parliament.uk/pa/cm201516/ co.uk/annualreport/pdf/2014-15/ annualreport/pdf/2014-15/bbc- cmselect/cmcumeds/398/398.pdf BBC-FS-2015.pdf; Full financial annualreport-201415.pdf statements 2007-2014: http:// www.bbc.co.uk/annualreport/2014/ download.html#section-3

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194 NAO, Severance payments and 200 GfK Social Research for DCMS, 204 2,182,190 households/10 years wider benefits for senior BBC Research to explore public views (from 2017 to 2027) = 218,219 managers, June 2013 p25: https:// about the BBC, May 2016 p.31: households, DCLG live tables on www.nao.org.uk/wp-content/ Of those asked ‘As indicated, the household projections, 2012 based uploads/2013/07/10193-001_BBC_ BBC is funded via the licence fee tables, table 406: https://www.gov. BOOK.pdf which costs £145.50 a year – the uk/government/statistical-data- equivalent of £12.13 per month. sets/live-tables-on-household- 195 NAO, BBC It will stay frozen at this rate projections report, January 2014: https:// until 2017. Thinking about the www.nao.org.uk/wp-content/ 205 ‘We forecast that the impact of five years after this, which of the uploads/2015/01/BBC-Digital- these new initiatives, coupled with following statements is closest Media-Initiative.pdf continuing strong returns from to your own view?, 31 per cent the underlying BBC Worldwide 196 NAO website, about us, our work: thought it should be reduced’, portfolio, would be around https://www.nao.org.uk/about-us/ 30 per cent thought ‘it should £1.2bn in cumulative returns to our-work/ be frozen’, 20 per cent that the public service BBC over the 197 ‘it should be increased in line with BBC, full financial statements next five years – a more than inflation’, 2 per cent that ‘it should 2014/15: http://downloads.bbc. 15% increase on returns over the be increased above inflation’, co.uk/annualreport/pdf/2014-15/ previous five years.’ BBC, British 10 per cent said ‘none of these’ BBC-FS-2015.pdf Bold Creative, September 2015, and 6 per cent said ‘don’t know’. 198 p.94: https://downloads.bbc. Digital TV Group and Institute Only 12% of DEs opted for the co.uk/aboutthebbc/reports/pdf/ of Engineering and Technology fee to be at least maintained via futureofthebbc2015.pdf response to DCMS’s Charter inflation, compared to 22% of all Review Government Consultation, respondents (including 36% of 206 ITV financial accounts: total October 2015. ABs): www.gov.uk/government/ revenue 2015: £2,972m, 2010: 199 ICM/Ipsos MORI polling on publications/research-to-explore- £2,064m: http://www.itvplc. behalf of the BBC from 2004 public-views-about-the-bbc com/sites/itvplc/files/ITV%20 Annual%20Report%202015.pdf to 2015 (2015 findings are from 201 The Yearbook of the European Sky Annual Reports: UK revenue fieldwork conducted in May); Audiovisual Observatory 2015 2015: £7,820m, 2010: £5,709m: Online survey of 2,000 people ranked the BBC number one in https://corporate.sky.com/ conducted on behalf of cable.co.uk the 50 leading European PSBs in documents/annual-report-2015/ between 19 and 20th September terms of unconsolidated operating annual-report-spreads-2015.pdf 2015; Polling data from 12 large revenues: http://www.obs.coe.int/ nationally representative surveys en/home 207 Letter from the Culture Secretary conducted between 2013 and to Sir Michael Lyons, 21 October 202 The licence fee settlement in 2000 2015 (two conducted for the BBC 2010: http://downloads.bbc. was based on an increase of RPI specifically) cited in the BBC’s co.uk/bbctrust/assets/files/pdf/ +1.5% per annum. consultation response; all from news/2010/sos_letter.pdf 2009 showed the licence fee as 203 The 2007 licence fee settlement the first choice of funding model. was based on an increase of 3% BBC, British, Bold, Creative, The for the two years from April 2007, BBC’s Programmes and Services followed by 2% for the three years in the next charter, September following that. 2015, p.12: https://downloads.bbc. co.uk/aboutthebbc/reports/pdf/ futureofthebbc2015.pdf

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208 This figure does not include any 215 Department for Work and 221 House of Lords Select Committee potential voluntary payments. Pensions Spending Review on Communications, BBC Charter Although the BBC is not currently settlement 2015: https://www.gov. Review: Reith not revolution, able to accept voluntary payments, uk/government/news/department- February 2016, pp.3–4: http:// the government will update the for-work-and-pensions-settlement- www.publications.parliament. regulations to allow people to at-the-spending-review; Ministry uk/pa/ld201516/ldselect/ make voluntary payments by of Justice Spending Review ldcomuni/96/96.pdf 2018/19, when the new funding settlement 2015: https://www.gov. 222 Abolish the TV licence arrangements begin. Summer uk/government/news/ministry- (closed petition), January 2016: Budget, July 2016, p.74: https:// of-justices-settlement-at-the- https://petition.parliament.uk/ www.gov.uk/government/uploads/ spending-review-2015 petitions/104367 system/uploads/attachment_data/ 216 The number of iPlayer requests file/443232/50325_Summer_ 223 TV Licence Fee Enforcement has increased from 722 million Budget_15_Web_Accessible.pdf Review, Department for Culture in 2009 to 2.7 billion in 2015: Media & Sport, July 2015, 209 Consumer Price Index. iPlayer performance pack: http:// pp.23–33: https://www.gov.uk/ www.bbc.co.uk/mediacentre/ 210 Based on projected income in line government/uploads/system/ latestnews/2016/iplayer-perf- with Consumer Price Index. uploads/attachment_data/ pack-jan file/445212/166926_Perry_Review_ 211 BBC, British, Bold, Creative, The 217 Broadband Delivery UK Superfast Text-L-PB.pdf BBC’s Programmes and Services programme delivery data as in the next Charter, September 224 TV Licence Fee Enforcement 31 March 2016. 2015: https://downloads.bbc. Review, Department for Culture co.uk/aboutthebbc/reports/pdf/ 218 Letter from the Culture Secretary Media & Sport, July 2015: https:// futureofthebbc2015.pdf to Sir Michael Lyons, 21 October www.gov.uk/government/uploads/ 2010: http://downloads.bbc. system/uploads/attachment_data/ 212 Office of Budget Responsibility, co.uk/bbctrust/assets/files/pdf/ file/445212/166926_Perry_Review_ Economic and Fiscal Outlook, news/2010/sos_letter.pdf Text-L-PB.pdf March 2016, p.12: http://cdn. budgetresponsibility.org.uk/ 219 Ofcom Advisory Group for Wales, 225 TV Licence Fee Enforcement March2016EFO.pdf Response to the DCMS’s Charter Review, Department for Culture Review consultation, “There is a Media & Sport, July 2015, 213 Based on current projections strong justification for protecting pp.43–44: https://www.gov.uk/ for licence fee variables. the funding of S4C from further government/uploads/system/ 214 The Guardian, Guardian News reductions.” uploads/attachment_data/ & Media to cut costs by 20%, file/445212/166926_Perry_Review_ 220 GfK Social Research for DCMS, 25 January 2016: http://www. Text-L-PB.pdf Research to explore public views theguardian.com/media/2016/ about the BBC, May 2016, p.58. 226 GfK Social Research for DCMS, jan/25/guardian-news-media-to- An example of a contribution by Research to explore public views cut-running-costs a participant: “Culturally, they’re about the BBC, May 2016, p.31: [S4C services] of huge value.” 61 per cent of people favour either 18-24, C2DE, Male, : a freeze or a decrease (30 per cent a www.gov.uk/government/ freeze and 31 per cent a reduction): publications/research-to-explore- www.gov.uk/government/ public-views-about-the-bbc publications/research-to-explore- public-views-about-the-bbc

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227 GfK Social Research for DCMS, 231 ICM/Ipsos MORI polling on behalf 234 GlobalWebIndex, Report into Research to explore public views of the BBC from 2004 to 2015, VPN usage, 2015. about the BBC, May 2016, p.41: 2015 findings are from fieldwork 235 The BBC’s assessment is based When asked whether the licence conducted in May 2015, cited on analysis of its server data and fee would be a good or a bad in p.52, BBC’s response to the geolocation services – this can way to fund the BBC, only 4 in 10 Department of Culture, Media & differentiate between IP addresses (42 per cent) of those in the lowest Sport’s Green Paper: BBC Charter that are using “hosting data socio-economic grouping said the Review, Audience Appendix: http:// centres”, which may include VPNs licence fee was good, compared downloads.bbc.co.uk/aboutthebbc/ and proxy servers, and those that to half of those in the highest insidethebbc/reports/pdf/ are not. The BBC is confident that socio-economic grouping. While bbc_charter_review_audiences_ at least 95 per cent of viewing of when asked the same question appendix.pdf TV programmes on BBC iPlayer is about a licence fee model where 232 The BBC also has experience of from within the UK, with the other those on lower income would pay funding content through alternative 5 per cent of usage including that a lower fee, approval by this group funding models outside of the UK. from hosting data centres. Some increased by over 10 per cent It owns and operates (and partners of the VPN usage will also be from (53 per cent): www.gov.uk/ with) pay TV channels abroad as within the UK. 5 per cent of traffic government/publications/research- well as services that carry and equates to 5 per cent of unique to-explore-public-views-about- are funded in whole or in part by browsers, which would imply the-bbc advertising (BBC World and BBC. under 1m users (Source: comScore, 228 Communications (TV Licensing) com online services). Digital Analytix). Regulations 2004: http:// 233 GfK Social Research for www.legislation.gov.uk/ DCMS, Research to explore uksi/2004/692/made public views about the BBC, 229 Letter from Osborne May 2016, p.41: Previous polling and John Whittingdale to Lords evidence has indicated low Hall, 3 July 2015: https://www. support for alternative funding gov.uk/government/uploads/ models, including subscription system/uploads/attachment_data/ (12 representative polling surveys file/443735/Letter_from_George_ showed an average of 19 per cent Osborne_and_John_Whittingdale_ support for a subscription model), to_Tony_Hall_FINAL.PDF polling conducted as part of the Charter Review showed that when 230 DCMS, BBC Charter Review asked if a lower licence fee with a Public consultation, July 2015, ‘top-up’ subscription model would pp.52–54: https://www.gov.uk/ be a good or a bad funding model government/uploads/system/ for the BBC, 34 per cent said this uploads/attachment_data/ would be a good model, while file/445704/BBC_Charter_Review_ 38 per cent said it would be bad. Consultation_WEB.pdf However, focus group participants spontaneously mentioned subscription as an alternative funding mechanism and many were attracted by the idea of additional choice: www.gov.uk/government/ publications/research-to-explore- public-views-about-the-bbc

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Department for Culture, Media & Sport 4th Floor, 100 Parliament Street London SW1A 2BQ www.gov.uk/dcms