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TIME FOR CHANGE – why the BBC needs to abolish the BBC Television quotas and guarantees and set BBC Production free.

June 2, 2014

A few weeks ago I was invited onto the Radio 4 Media show to discuss the BBC Trust’s review of Content Supply arrangements. I was in discussion with long time friend and professional foe, John McVay, head of the Independent Producers organisation, PACT. I had planned to talk about an idea I discussed with George Entwistle when he was head of BBC Television, and which he had let me put directly to Mark Thompson during our 2011 annual performance review.

However, straight from the off in the radio discussion John called to scrap the current arrangements because of what he believed were the ‘virtues’ of the free market and the “inefficiencies” of BBC In House Production. As I don’t believe in unfettered free markets, and know that there’s no evidence that BBC In House is less efficient than Indies, I scrapped what I planned to say and reflexively entered into a robust defence of the status quo. 6 minutes later Laura Kuenssberg drew the debate to a close.

So, what follows is what I planned to say when I went on that Media show, a view which has become stronger and more urgent following recent events in the supply ecosystem: Its time to make BBC PRODUCTION (Comedy, Ents, Drama and Factual) a wholly owned subsidiary of BBC Worldwide, and scrap the various guarantees for In House and Indie Producers.

Why and why now?

Well the current TV supply system has been in place since 2007 and guarantees BBC In-House producers 50% of the output (the In House Guarantee, IHG), whilst Qualifying Indies are guaranteed 25% (Indie Guarantee, IG) and the remaining 25% is up for competition between In House and Indies (The Window of Creative Competition, WOCC).

I have been a long time supporter of the current arrangements, not just because I was the head of BBC In House Production (2010-14) but also because I believe a 50% IHG protects the public interest by ensuring that half of the IP paid for by the public remained in public control. I am convinced that without the IHG the BBC would never have been able to build strong Network production bases in Glasgow, Cardiff, Bristol and Salford, or make meaningful commitments to Belfast. Its also clear, when you look at the paucity of the offer of ITVPlayer and 4oD, that the BBCiPlayer would not have been possible in its current form if the BBC couldn’t set the terms to the market through control of a significant IP contribution.

However the rapid pace of consolidation in the production sector is rendering the current system redundant. The IG is for ‘qualifying’ Indies only. As they are increasingly swallowed up by the bigger global players they lose their ‘qualifying’ status and become Non-Qualifying Indies (NQI’s – see footnote). The only place for NQI hours to be accounted for is in the WOCC.  For example, ITV’s purchase of SoTV meant SoTV became an NQI and so all the Graham Norton show hours went from the Indie Guarantee into the WOCC, likewise Discovery’s purchase of All3Media will shift all those hours from Indie guarantee into the WOCC. The truth is the rapid pace of indie consolidation has made the WOCC less about creative competition and more about accounting.

Given the centrality of IP ownership in the new media economic model, any change to the status quo arrangements has to allow the BBC to have the same ability to generate IP as their competitors. So, my blueprint for the future – which I will be sending to the BBC Trust review when it opens – is as follows:

  • Make BBC Production a fully-owned subsidiary of BBC Worldwide.
  • BBC Sport, News and Children’s Production remain unchanged.
  • Transition all current titles over to this new entity, about 43% of current supply, possibly with some limited guarantees (12-24) months to enable a smooth transition.
  • BBC Production free to pitch to all other broadcasters
  • Remove all the quotas and supply guarantees around IHP and the WOCC
  • Keep the Nations guarantees to Scotland, Wales and NI (but review Scotland if referendum votes for independence) and maintain the commitment to 50% of production from outside of the M25.
  • Allow BBC IHP to move out of current BBC corporate buildings to more suitable and cost effective premises if they wish. (ie run it as a business, with clarity of costs and no cross subsidy)
  • Allow BBC WW to invest in Indies.

 I believe this model has many benefits

  • BBC Production’s creativity becomes transparent in the volume of business it wins; removing the unfair inference that working for In House is somehow less creative than working for an Indie.
  • Enable BBC Production to offer market rate pay and conditions for production talent and remove the ridiculous comparison to the Prime Minister’s salary and other canards.
  • Enable BBC Production to get better returns on its development investment, with a wider range of buyers and tastes for every good idea.
  • BBCWW has massive potential to increase its wholly owned IP by producing for other channels, UK and abroad, in turn generating more profit to support the licence fee.
  • Allow commissioners to choose best idea from anyone, and introduce real jeopardy into the Commissioning relationship with BBC Production – there’s currently no meaningful ability for an in-house producer to take an idea elsewhere.
  • The monitoring and administrating of the current supply relationships adds a degree of cost and complexity that can be removed, reducing cost and speeding up process.

It also has some potential downsides:

  • BBC channels may become less distinctive – ITV and Sky would lap up BBC blue chip content like Natural History and Drama which audiences and advertisers love. Whitechapel and Primeval were both developed by the BBC….
  • Small risk of missing the Nations guarantees, but maybe now’s the time for Indies to share that burden instead of letting so much of it fall upon BBC Production.
  • Smaller Indies would lose out in the squeeze – an inevitable consequence of consolidation, but C4 has obligations in this regard.
  • BBC Worldwide could be privatised, potentially giving a third party control of the bulk of BBC supply.
  • Public confusion over what it’s paying its licence fee for – BBC research shows only 8% of viewers watch the credits through to the end card, so most probably assume the BBC is making all their content today. How do you explain that their LF isn’t being used to subsidise productions on commercial broadcasters like ITV or elsewhere? This is probably the biggest hurdle.

And what did Mark Thompson say? Well he accepted that support for the idea was strongly held by Board members of BBC Production at that time, but felt that the first big hit that BBC Production made for another broadcaster would unleash a wave on internal recrimination and accusation, plus the confusion issues over what the LF was for. He told us to try even harder to make the current system work better, which is what we have done ever since.

However I now think the current system is irretrievably broken, and I’m free to say so publicly. I’m not sure how widely held my view is today, but if this review is going to be meaningful it is an issue it will have to address.

NOTE

The current definition of a “qualifying” independent producer excludes those production businesses that share significant common ownership (a 25% or greater shareholding) with broadcasters

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