Monday, October 4, 2010

BBC, Kate Becker

BBC License Fee, Outdated?

The British Broadcasting Company is the world’s oldest and largest broadcasting company, and its subsidiary, BBC Worldwide, which was launched in 1991, has the largest audience of any BBC channel and of any news channel in the world. Although the BBC and BBC Worldwide are both based out of the UK, they are funded differently because of their dissimilar clientele.

The BBC has the largest budget of any UK broadcaster with an operating expenditure of £4.3 billion in 2007, and BBC Worldwide allocates any additional revenue that it makes to be invested in the BBC. The BBC is a national company and predominantly funded by a licensing fee that is obligatory for all UK citizens that receive television programming. This form of funding for the BBC has been highly criticized as more broadcasters have entered the market and diminished the BBC’s monopoly. Although both sides to the licensing fee argument are valid, compromises should be made to alter the BBC’s funding rather than destroy the nature and reputation of the company.

BBC caters to an array of audiences, with BBC1 and BBC2 being its main TV channels, BBC3 for a youth audience, and BBC4 as the arts channel. Although the BBC is renowned for covering many different interests and topics, it also is part of the reason why UK citizens are scrutinizing the licensing fee. They believe that they should not be forced to pay for programs they do not watch, and that there should at least be an option to only subscribe to the programs of their choice. Mr. Le Juene, a former head of public affairs at Sky, said, “The multichannel era and the internet now offer the ability to provide ‘highly segmented public service-style programming’ to meet the needs of smaller audiences,” and "With so many channels out there now the BBC is duplicating a lot of the sort of programmes viewers can watch elsewhere.” Critics of the fee argue that with the present availability of multi stream and multiple channels an obligation to pay the fee is no longer appropriate. Alternatives to the license fee would be Pay Per View, subscription, advertising, funding from government or politicians, or privatizing the BBC.

The other side of the argument, however, claims that breaking up the BBC and changing its source of revenue would defy the unique nature of it and would, “Be ruinous to the UK’s broadcasting ecology,” and, “Trigger head-to head competition for audience share with ITV and Sky” ( Programming favored by the minority would no longer be produced, since competition for funding and advertisers would only allow for the most popular programs to exist. The BBC upholds and seeks to maintain a reputation for delivering a diverse collection of shows and untainted news.

The license fee enables the BBC to report events without an angle that satisfies its funders. This eliminates any bias from political actors and government officials. BBC’s funding is guaranteed by the Royal Charter and fixed at regular, infrequent intervals, which last for a limited period of ten years, and it is due for renewal in 2012 ( The Charter grants the BBC freedom to broadcast controversial material, because it is not threatened by the Government reducing its funding or the withdrawal of advertising. Many fear that changing the BBC’s funding would undermine the ideology of the company, making it competent of only broadcasting with the same caliber as Sky or ITV.

The license fee also provides a sense of unity for the UK that would be eliminated with funding through subscription. Some UK residents, however, still do not value this unity and politically unbiased reports of the BBC for its steep expense. According to the BBC's 2008–2009 Annual Report, £3,493.8 million in license fees were collected from households, which would be £145.50 per household (Tracey, Michael). BBC Commercial Businesses, government grants, and other income, such as supplying content to oversea broadcasters and concert ticket sales supplied the remaining fees (Tracey, Michael).

Households are mandated by the government to pay the subscription fee, but Downing Street has successfully pressured the BBC to freeze the £145.50 annual fee for the next two years ( Citizens are further deterred from paying the fee when reports are publicized about the BBC not allocating its funds properly. For instance in 2008, when the BBC overspent nearly 50% of its original £74.2million budget ( The company, however, has made initiatives to reduce its costs in the past years such as by reducing employees and it has also suffered cuts in government grants.

Although the BBC’s subsidiary, BBC Worldwide, possesses a different funding system it is also extremely lucrative and it is quickly expanding. BBC Worldwide, however, has fewer competitors on its scale of broadcasting, with CNN International being its main competitor. It would also be impossible to mandate a license fee for all the BBC Worldwide’s consumers, since it reaches numerous countries and governments.

BBC Worldwide is funded by grant-in-aid through the Foreign and Commonwealth Office by the British Government. For 2009 and 2010 it had a budget of approximately £272m, and this kind of funding is usually used when the government and parliament have decided that the recipient should be publicly funded but operate with reasonable independence from the sovereign state ( Although the company is supported by the UK and based there, it still generates much of its revenue from its sales of television programs.

BBC Worldwide sells many more television programs than BBC, and part of BBC’s revenue actually comes from the BBC Worldwide’s profits. BBC Worldwide has 22 channels and 19 global offices in diversified areas. From the programming it sold last year it made a profit of £145, which was a 36.5% increase from the previous year ( BBC Worldwide also licenses and directly sells DVD and audio recordings of popular programmes to the public, most notably Doctor Who and archive classical music recordings, initially as BBC Radio Classics and then BBC Legends ( These additional profits are then reallocated to help fund its parent company, the BBC. The purpose of this transfer is to reduce the license fee, which many citizens criticize since they feel the fee is not altered accordingly.

It seems that it is hard to monitor exactly how efficiently the BBC is allocating its funding, but also understandable that UK citizens do not want to be mandated to pay for a product. With so many other broadcasting companies today it seems that people should be entitled to their choice, or at least only pay for their choice of programs. The BBC, however, is renowned for its unbiased and not politically influenced news reports, that it would be a shame for it to be ripped of its whole concept. Despite there being legitimate criticisms of the license fee, the BBC is now a part of the UK culture and is one of the most respected broadcasting companies in the world. Rather than demolish the company’s values and reputation, compensations should be made such as making the

BBC Worldwide and UK government contributions effectively reduce the household fee, as well as being more cautious with the budget.

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