Study reveals how cutting BBC licence fee would reduce choice and value for money

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Cutting the BBC licence fee would reduce consumer choice and value for money, as well as greatly damaging UK programme producers, says an Oxford University study. The 100-page report, launched today by the University’s Reuters Institute for the Study of Journalism, explores what the current UK television market would be like if there were no BBC Television.

If concludes that, without the BBC, total UK television industry revenue would most likely be reduced, although there is a wide range of uncertainty. Total investment in programmes would be 5-25% lower with investment in new UK programmes likely to be 25-50% lower, which would be a ‘severe blow’ to UK production companies as well as to viewers.

The report says that these projections are conservative, if anything, since they assume that the BBC ‘crowds out’ some of the investment in programming that would otherwise be made by commercial broadcasters. On balance, the evidence suggests that, on the contrary, the BBC probably forces commercial channels to spend more on programmes in order to attract viewers. If this is correct, losing BBC Television would be even more damaging to viewers and programme producers than the report projects.

None of the BBC’s critics argue for the BBC to be abolished overnight but, the report says, many want it scaled back without providing any evidence that a smaller BBC would be better for the public. Its analysis suggests the opposite: although scaling back the BBC would not be as bad as abolishing it, it would still have a detrimental effect on UK viewers and producers.

The authors argue that a future without BBC Television is not just a hypothetical scenario dreamed up by academics. They see it as the logical conclusion of the government’s current ‘salami-slicing’ policy of freezing the licence fee and diverting more and more of it to fund activities outside the BBC’s UK services - while the rest of the market keeps growing. They project that if this policy continues - or even accelerates, as some are advocating - within a generation the BBC will be reduced to a minor sideshow, the UK equivalent of PBS (the Public Broadcasting Service) in the United States.

The scope of the report is limited in two ways. First, it focuses solely on television. The licence fee also funds other services and activities such as BBC Radio, BBC Online, the World Service, S4C, and broadband delivery. The authors argue that, if there were no BBC Television and no licence fee, these other activities would also need to be cut or another way of funding them would have to be found.

Secondly, the report is only about the BBC’s impact on the public as ‘consumers’ rather than as ‘citizens’. This means that its contributions to national culture, society, the economy, child development, technology adoption and many other ‘citizenship’ benefits are excluded.

The report authors are Patrick Barwise, Visiting Fellow, and Professor Robert Picard, Director of Research, at Oxford’s Reuters Institute for the Study of Journalism.

Professor Barwise said: ‘Critics of the BBC and many economists argue that, funded by a compulsory licence fee, it distorts the market, making it hard for commercial competitors to prosper and meet consumers’ needs. They conclude that viewers would be better served if the BBC were smaller – allowing commercial broadcasters to expand – and showed only public service programmes that the market will not provide. We think our analysis demolishes that argument. A smaller BBC would be bad for the public even in pure consumer terms - choice and value for money.’

Professor Picard said:  ‘Our calculations suggest that without BBC Television almost all UK households would be worse off. They would either have to pay slightly more for slightly less choice or pay slightly less for much less choice. It would also be likely to mean less money being spent on programmes overall, with far fewer new programmes being made, so viewers could expect TV schedules with many more repeats and imports. These projections are conservative, if anything, as they assume that the BBC crowds out some investment in content by commercial broadcasters. On balance, it probably doesn’t.’

The analysis is based on comparing the UK television market in 2012 with projections of what the market might have been like if there had been no BBC TV and no licence fee. The net impact of BBC TV is the difference between the two. The researchers have developed two different scenarios: one highly optimistic (from the viewpoint of the industry) and the other highly pessimistic. The estimates allow for uncertainties in what effect no BBC would have on commercial broadcasters’ revenue, and uncertainties in the percentage of that revenue they would invest in content in a market without the BBC.

For more information, contact the University of Oxford News and Information Office on +44(0)1865 280 534 or email news.office@admin.ox.ac.uk

Notes for Editors:

  • The report will be launched at the Oxford Media Convention on Wednesday 26 Feb at the Said Business School at the University of Oxford.
  • The full text of the report will be available on Wednesday morning on the Reuters Institute website: http://reutersinstitute.politics.ox.ac.uk/publications/risj.html
  • Patrick Barwise is a Visiting Fellow at the Reuters Institute and Emeritus Professor of Management and Marketing at London Business School. He is also Chairman of Which?, the UK’s leading consumer organisation, but his involvement in this study is as a Reuters Institute researcher, independent of his role at Which?.
  • Professor Robert G Picard is a world-leading specialist in media economics and government media policies.  He was formerly based in the Media Management and Transformation Center at Jönköping International Business School in Sweden where he was Director of the Center and Hamrin Professor of Media Economics.
  • The Reuters Institute for the Study of Journalism (RISJ) is University of Oxford’s centre for research into news media. The Thomson Reuters Foundation is the core funder of the RISJ, based in the Department of Politics and International Relations. The Institute was launched in November 2006 and developed from the Reuters Fellowship Programme, established at Oxford 31 years ago. The Institute, an international research centre in the comparative study of journalism, aims to be global in its perspective and provides a leading forum for scholars from a wide range of disciplines to engage with journalists from around the world http://reutersinstitute.politics.ox.ac.uk/ 

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