Leader: Public service broadcasting deal cuts both ways

by Steve Barrett Media Week 23-Jan-07

The balance of last week's 3% BBC licence fee settlement was probably about right, although none of the main players are likely to admit it in public.

The BBC is a unique organisation, a fact recognised by millions of users overseas who access BBC content online, as well as commercial media operators who have to compete with the Beeb in the UK.

ITV has always taken the view - at least publicly - that a strong BBC is good for the whole broadcast sector. The company's new executive chairman, Michael Grade, could hardly disagree, given he spent two and a half years negotiating with the Government for a large increase in the BBC's licence fee.

BBC director-general Mark Thompson claimed last week's deal would result in "daunting investment challenges" that would "risk diverting money from creating content".

ITN chief executive Mark Wood wants the BBC to focus on core activities rather than "lavishing large budgets" on developing new products and services that distort markets and undermine "innovative UK media businesses".

But the latter argument cuts two ways. Media owners, whatever their organisational structures, cannot ignore the fact that a digital revolution is occurring in the industry. Media operators that don't adapt will wither and die.

The BBC's unique funding structure gives it the opportunity to experiment and develop new products that may subsequently be exploited by commercial media.

But, by leading the development, the BBC can construct products that "lock in" the consumer to the Beeb and shut out commercial operators.

The radio sector, for example, argues that the BBC's forthcoming iPlayer media player should be regulated in the same way as Sky's electronic programme guide, given that whoever controls the programme directory is likely to dictate customer access. The iPlayer will make 30 million hours of BBC programming available for free and is bound to get a head start on its commercial rivals (see page 21).

This will all get really ugly in a few years' time when ITV, Channel 4, Sky, BT Vision and others are fighting the BBC for their share of the video-on-demand future.

- Steve Barrett is editor of Media Week - steve.barrett@haymarket.com.