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U.K.’s Continued Support of BBC Leaves Rivals Disappointed

The BBC may have breathed a sigh of relief as the U.K. government’s blueprint for the pubcaster, released last week, left it largely unscathed. But rivals are likely dismayed that the network is maintaining what they see as an unfair advantage with a funding plan set to last at least a decade.

The government’s white paper protects the BBC’s domestic public service and global commercial activities, guaranteeing the broadcaster’s £3.7 billion ($5.3 billion) license fee funding for another 11 years from 2017.

The annual fee, paid by all U.K. homes owning a TV set, has been frozen at £145.50 ($209) since 2010; increases starting next year will be pegged to inflation, provided the BBC passes a “health check” after five years. Also, those who watch TV online will now be required to pay the fee.

BBC director general Tony Hall said in a statement that he is happy with the terms. “The white paper reaffirms our mission to inform, educate, and entertain all audiences on television, on radio, and online.”

But others are unsatisfied. Many observers believed the white paper would mandate that the BBC sell the lucrative UKTV network, owned jointly with U.S. media firm Scripps Networks Interactive. “This will be a disappointment for the commercial sector, that the BBC has not been reduced in scope or size,” says Michael Grade, the former BBC chairman and ex-ITV executive chairman.

Fox-controlled broadcaster Sky is likely among those disappointed. Chairman James Murdoch “will think the U.K. government missed an opportunity,” says media consultant Phil Harding. “Everybody knows that James Murdoch would like the BBC’s presence in online news curbed. It’s not that long ago that he said the scope of the BBC’s activities and ambitions is chilling.”

11 More Years of Funding
$209 Annual household licensing fee for owning a TV set in the U.K.
$5.4b Total annual funding BBC collects from licensing fees

ITV, the U.K.’s biggest commercial free-to-air broadcaster, had lobbied for the BBC to be less competitive. The white paper suggests moves in that direction, stating that the Beeb should avoid “bidding wars” for third-party content like “The Voice” and schedule shows less aggressively. “I think there will be a cooling of the BBC’s fiercely competitive instinct,” says Harding. “They will think twice about scheduling ‘Strictly Come Dancing’ against ‘The X Factor.’”

But Steve Hewlett, a media commentator, argues that, in certain aspects, a more commercial Beeb is in the cards. “While the white paper is generally good news for the BBC, last July it was forced to accept budget cuts of up to £800 million a year, phased in from 2017. Consequently the BBC will now be desperate to earn every penny it can to supplement the license fee.”

The white paper opens the door for BBC subscription plans, at home and potentially overseas, stipulating that the broadcaster launch trial pay services over the next five years. “We’ll see an SVOD BBC offering based on the BBC Store before too long,” Hewlett predicts, referring to a domestic iTunes-style service launched last year based on the BBC’s 60-plus-year archive. The Beeb, which has traditionally opposed subscription plans due to fears they would erode license-fee funding, could form an SVOD partnership with ITV and possibly NBCUniversal, according to reports.

The most contentious issue to emerge from the white paper is a proposal that, for the first time in the BBC’s 93-year history, government appointees will sit on a new “unitary board.” The body, which would replace the discredited BBC Trust and board of governors, would be responsible for determining the network’s editorial direction. Some claim that, if implemented, it risks compromising the pubcaster’s global reputation for journalistic integrity and impartiality.

“The BBC is one of the world’s most trusted brands,” says Peter Kosminsky, director of the award-winning “Wolf Hall.” “That reputation would be lost if the BBC was seen as getting too close to government.”

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