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16 November 2012

What is wrong with the BBC?

Tag(s): Leadership & Management

In last week’s blog “Who owns the Customer?” 10th November, 2012 I made a side reference to George Entwistle, the new Director General of the BBC. I said “George Entwistle's position, however, now looks questionable after the Savile and McAlpine scandals.”  Within a few hours of my writing this he was gone and Tim Davie was appointed as Acting Director General. I did not know George Entwistle and cannot comment with any special insight on his suitability for the role although many commentators feel no such inhibition. I have known several of his predecessors. I had dinner with Mark Thompson, lunch with John Birt and hosted Greg Dyke at a Spurs v Manchester United game as we’re both United fans.

I have met Tim Davie as we are both ex-Procter & Gamble and he joined the BBC with a classical career behind him in Marketing to be its Marketing Director. He once hosted a group of P&G Old Boys to show us round Broadcasting House and discuss the issues of the day. I asked him about the Licence fee. I find it odd that the BBC does not only get the advantage of a guaranteed income from its customers enforceable by law but this is usually inflation protected as well. Furthermore they get the benefit of household growth and so I challenged Tim on this point. How was it justifiable? Tim’s answer seemed to show that he had n’t really thought about it before. He said my question had made him think that as Marketing Director he should also be responsible for the whole issue of the License Fee. Well now, at least for the time being, he is.

 So what is wrong with the BBC? I wrote on the general subject in Chapter 11 on Profit in my unpublished book “The 20 P’s of Marketing”. Here are the relevant paragraphs:

“There are many organisations in the public sector that are set up with purposes similar to commercial enterprises but without a Profit requirement. The most famous and perhaps controversial of these is the British Broadcasting Corporation. The BBC was actually set up in 1922 by the leading manufacturers of radio equipment. Prior to that there had been an almost entire ban on radio-telephony broadcasts by the Post Office. The manufacturers successfully lobbied to change this and they became the initial members of the BBC, a company limited by guarantee. They provided the capital to build the radio masts and listeners paid a ten shilling (50p) licence fee to listen on equipment that had to be made by a British manufacturer.  Half the licence fee went to the BBC.

Over time the charter has been changed so that the BBC is now a public body, independent of Government and industry but still financed by a licence fee. It is no longer necessary to buy a licence to listen to the radio but it is a legal requirement if you want to watch a television even if you claim that you never watch the BBC’s own channels. The BBC now gets the entire licence fee as its income, £145.50 per household at the time of writing, and this is annually increased for inflation. Not only does this mean that the BBC effectively receives a poll tax on most households in the country which is perennially increased by an inflation factor but it also increases as households fragment and population grows. No business has both protection against inflation and benefits from household growth but the BBC executives pay themselves as if they were an international business rather than a public servant. Some 39 of them earn more than the Prime Minister's £197,689 salary and 80 are paid more than the £144,000-a-year Culture Secretary whose departmental brief includes the BBC.  With this unfair advantage of guaranteed income enforceable by law the BBC competes directly with commercial enterprises, particularly in the provision of an outstanding website which is free to use while competitors must finance theirs through advertising or subscription.  If the Competition Commission were to investigate it would have to find that this is a monopoly against the public interest. But then there is only one Competition Commission.”

That was about three years ago and I don’t think the numbers have changed very much. It is clear that the BBC is over managed. A bureaucracy will seek to perpetuate itself and while there may be many able individuals in particular roles, whether managers, journalists, engineers or talent, the overall structure has too many people in management positions with less than clear accountabilities and responsibilities. This has grown up despite the fact that much of the programme making is now outsourced.

This week the BBC celebrated the 90th anniversary of its first broadcast. There is no doubt that in many respects it has been a magnificent institution producing programmes of high quality whether their purpose was to inform, to educate or to entertain, in the words of the original mission adopted by its first Director-General, the great John Reith. This week also saw the 50th anniversary of the first broadcast of the documentary on Elgar produced by Ken Russell. I have vivid memories of watching this and being spell-bound by its skill. I had a family connection with Ken Russell as his then wife was a relative of an uncle of mine and so we naturally took a special interest. Russell’s work had the effect of restoring Elgar as the country’s favourite classical composer.

There have been many other similar milestones in the history of this unique broadcaster, surely the finest public service broadcaster in the world. But there have also been many controversies. In the recent past another Director General, the aforesaid Greg Dyke, had to resign after the Gilligan affair seemed to be another excess of journalistic enthusiasm. The resulting scandal included the death of Dr Kelly, Andrew Gilligan’s source, and the Hutton inquiry which whitewashed the government. But I think most people would now believe that the dossier was sexed up; that Saddam Hussein did not have weapons of mass destruction; and that the Iraq war was of dubious justification.

On this occasion it is extraordinary to watch the variation in views as everyone seems to have an opinion. The senior journalists are coming out in force to criticise the management structures at the BBC while trying to ensure that none of their traditional independence is clipped. And here it gets really interesting because the Leveson Enquiry is due to report this month on the scandals of the written press and may well recommend some clipping of their wings.  There is no suggestion that the BBC has been guilty of the crimes of hacking into the phones of the victims of murder and their families as did the News of the World’s journalists, nor of the cover up that followed involving senior figures in the Murdoch press. I stopped reading the Murdoch papers after that. Even when I did read them regularly I would never bother reading anything they wrote about the BBC because of their obvious enmity.

The BBC is often accused of left wing bias. Even the previous DG Mark Thompson admitted this once. I was with a senior cabinet minister last week who had worked at the BBC earlier in his career. He did not think the bias was institutional as such but that the majority of employees were drawn from the metropolitan liberal class who do just think in a certain way. The fact that they don’t have to drive for profit to survive but have a guaranteed income enforced by the criminal law makes it difficult for them to understand the world of business and most of their business coverage is crass.

But the current crisis makes this more dangerous. There will be those who think that the reason Newsnight did not investigate adequately the suggestion that Lord McAlpine was a paedophile was that he had been close to Margaret Thatcher and they could not believe their luck. If a Labour politician had been implicated they would have been much more careful. I do not know if that is true but those who want to do the BBC down need to be careful what they wish for. If we follow that logic then in the Savile case we must not only pursue the BBC but also the NHS and many schools.

Finally it is about trust. Traditionally the BBC has been a particularly trusted institution. Most of us prefer it as a source of news and comment. But once that is gone then there is not much left. Do we really need a publicly funded institution to put on programmes like Strictly Come Dancing (which I confess I watch) and Dr Who (which I confess I stopped watching nearly 50 years ago)? But on the other hand would we want to lose an institution where on last Saturday morning after I had published my blog I heard the irrepressible John Humphrys interview his own Director General as fiercely and bravely as if he was any politician or suspect business man? What other institution in the world would permit such a thing?

Copyright David C Pearson 2012 All rights reserved




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