Magazine article Marketing

The Two Faces of the BBC

Magazine article Marketing

The Two Faces of the BBC

Article excerpt

As the BBC grows commercially, it gets harder to justify the licence fee.

If the BBC were a patient on the psychiatrist's couch, the diagnosis might be an acute case of schizophrenia. On one hand it constantly stresses its role as a licence-fee funded public service, built on traditions of impartiality, public service and quality.

On the other, it is now a major media player, embroiled in deals it would not have thought about ten years ago, and frequently jumping into bed with partners from the world of commercial television.

Its commercial ambitions not only raise questions about the BBC's brand values, but about the lifeblood of its revenue: the licence fee.

The BBC currently receives 95% of its income from licence fees, which in 1996 came to just over [pounds]1.8bn. It is the world's largest public sector broadcaster and arguably the biggest global media brand. It is still regarded by friends and foes alike as the benchmark for quality broadcasting.

Despite the growth of cable and satellite television, and intense competition from ITV and Channel 4, it has managed to increase its overall share of TV viewing to 44% in 1996, compared with 35 % for ITV, its closest rival. In radio it continues to dominate with a 49.6% share.

But with the launch of digital television and radio, it is inevitable that the BBC brand must change to survive. The catch-22 for the BBC is that it feels it is imperative to move into new media markets, yet every expansion of its brand raises questions about whether it should still be funded by the licence fee.

The BBC director-general John Birt's emphasis on marketing the BBC as a competitive commercial force has been evident. His drive for cost effectiveness and audience has raised the hackles of commercial rivals, who accuse him of providing a mirror image of ITV, rather than an alternative service.

Marcus Plantin, director of the ITV Network Centre, notes: "John Birt is a commercial animal. He, quite rightly, wanted to get his house in order, and it is now a much harder act."

Commercial activities are not new to the BBC, and date back to the launch of the Radio Times in 1923. However, they are now no longer just a sideline but have become a major business. BBC Worldwide, the most obvious of its commercial activities, encompasses magazines, consumer publishing, multimedia, overseas channels, as well as joint TV ventures.

Its turnover last year was [pounds]350m, with [pounds]77m reinvested in the BBC, and the remainder covering Worldwide's costs and developing new business. By 2005, Bob Phillis, the BBC's deputy director-general has plans to treble Worldwide's contribution to the BBC. A conservative estimate, given the anticipated revenue it will generate from its digital television deals.

Worldwide's recent joint venture with Flextech Television threatens to further blur the line between the BBC's public service face and its commercial activities.

With the intention to launch eight channels in the UK as part era subscription service later this year, viewers will see the BBC for the first time charging for some of its broadcast services in the UK. Aware that this might create confusion among its licence-fee payers, the BBC will run advertising to explain its involvement in the venture. Dick Emery, chief operating officer for BBC Worldwide, says: "We have to explain the rationale this spring. We will be upfront about being involved in commercial activities, but differentiate them from the public service. Once people understand the rationale they will be comfortable with it."

A risky business

While the BBC knows there are risks involved in such ventures, the biggest danger would be to stay out of them, says Emery. By 2006, the BBC has predicted that UK pay-TV revenue will be worth over [pounds]3bn. Although its initial deal with Flextech does nor cover pay-per-view television events, it is not excluded from the BBC's future activities. …

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