Recommendations for Government

5.1 Ensure that policy uses evidence and analysis to maximise net public value. Policy can never be a purely analytical exercise because it always involves both value judgements and uncertainties about the likely consequences of alternative actions. But it can and should be conducted within an explicit conceptual framework (as I have tried to do in this review – see Section 1.5) and with a clear focus on net public value. Both the BBC and Ofcom are seeking to do this, using analysis and evidence to support their proposals, but many of those seeking to influence policy do not

(I single out Financial Times editorials on broadcasting policy, because the quality of analysis in the FT is usually so good). There is a need to “raise the bar” so that proposals based only on slogans, metaphors, adjectives and dogma are discounted. In the current debate, most such proposals come from people seeking to weaken or marginalise the BBC, while providing no argument or evidence as to why the public would benefit, but the same criteria should be applied to the BBC’s supporters too.

5.2 Ensure that the BBC continues to drive digital takeup. The Government is aiming for analogue switch-off during the next BBC charter period, probably in 2012. Pay-TV is a maturing market, so most of the homes which have not yet gone digital will have to be either forced to do so,

“bribed” through subsidy, or persuaded to switch voluntarily in order to get free-to-air digital TV

(and radio) channels. Some of them may then upgrade to a (probably low-tier) pay package and some will use the interactive features. Over time, DTV may also develop a clear advantage in sound and picture quality. But the evidence is that the main drivers will be the perceived quality of the extra free-to-air channels, the simplicity of buying and using DTV, and the fact that adoption involves a one-off payment and no monthly fees. These have been behind the success of Freeview and will also drive “Freesat”. They apply equally to the replacement or conversion of analogue sets in homes which already have a digital TV. The BBC is only one of the suppliers of free-to-air digital channels, but it is an extremely important one, and could be more so if it follows the recommendations listed above, especially those listed under (1) and (2) relating to BBC3 and 4. The Government should seek to ensure that this happens.

5.3 Ensure that the BBC has sufficient resources to maximise public value and drive digital takeup. This is controversial, but in my view, recommendations 5.1 and 5.2 imply the need for a strong, well-funded BBC, which means either continuing to increase the licence fee faster than inflation (but more slowly than both GDP and commercial TV revenue) or finding other ways to ensure sufficient resources. It also implies a gradual increase in the proportion of BBC revenue going into digital broadcasting, although this is a matter for the management and governors. The need for the BBC to help drive digital takeup (and encourage BSkyB to invest in a strong free-to-air package to drive “Freesat”) is only one consideration. Others include the need to continue investing in PSB content, UK and regional production, training, etc. The BBC is not the only public service broadcaster, but it is obviously a key part of the broadcasting ecology.

5.4 Ask Ofcom to work towards an expert consensus on market impact. As discussed in Part 3, market impact is a complex and still controversial topic. Ofcom has proposed that, over the next few months, there should be an attempt to agree a consensus about it especially between Ofcom itself and the BBC governors. This would need to cover the issues of definition and scope (see Sections 3.1 to 3.3) and methods for estimating the scale of market impact (see Sections 3.4 to 3.6). I agree.

Two specific areas which in my view require further analysis are (a) the market impact of CBBC and advertising and (b) access to the BBC archive:

(a) The market impact of CBBC. My judgement is that CBeebies produces huge net public benefit but CBBC is a more marginal case, because children’s viewing is significantly segmented and the BBC is overall a big player in this market (with a 37.5% share on weekend breakfast-times mornings, according to an analysis sent to me by GMTV). The public value of CBBC is still substantially more than its market impact but the issue may merit further work looking at the market impact of children’s BBC as a whole.

(b) Access to the archive. My judgement is that forcing the BBC to provide access to its archive to commercial broadcasters paying “market prices” (however determined) would not increase net public value, but this is a fairly close call and also merits further work.

Concluding Comment

To avoid misunderstanding, I stress that I see these recommendations as evolutionary not revolutionary.

For instance, although I recommend releasing BBC3 from the perceived need to target 25-34s, I expect it to build on its early successes in edgy comedy and, more generally, innovative entertainment, in a way which will in practice tend to appeal more to younger viewers. I also expect it to continue with factual programmes on topics especially relevant to these viewers, although with less of a “yoof ” look and feel.

At the same time, increasing the share and reach of BBC3 and 4 in order to get them into more

viewers’ repertoires, and to drive digital takeup, does not mean either making BBC-TV as a whole more populist or increasing its market impact. On the contrary, the portfolio as a whole – BBC1, 2,3, and 4 – would almost certainly be less populist than today (depending on the policies for BBC1 and 2), with a slightly lower combined viewing share and market impact. The recommendations for BBC3 and 4 should be seen in that context.