By Darwin Friend, policy analyst at the TaxPayers' Alliance
A former Pepsi exec is about to become one of the most influential people in Britain. That’s because the BBC has opted for marketing exec, Tim Davie, as its new director general.
As many in the media were pointing out when the news was announced, this is a break from the tradition of appointing journalistic or political figures to the role. On paper, this could mean big change. But as explained by the BBC’s own media editor in an excellent piece, the challenges facing him seem almost insurmountable.
As our chief executive John O’Connell noted in the immediate aftermath of the announcement, the director general needs more than just commercial experience to deal with the fundamental issues at the heart of the BBC. He needs “to get real with the reform the broadcaster desperately needs: to axe the TV tax and move firmly into the 21st century.” Make no mistake, as far as taxpayers are concerned, the BBC must change or it will simply die out. So what change is needed?
More transparent
The BBC must be more transparent. Clearly the message of my recent blog on the topic needs repeating: transparency needs to be the first step if the BBC is ever to recover its reputation with the public - whatever future model it takes on.
Mr Davie was appointed with no public oversight from either Parliament or the relevant cabinet minister - Secretary of State for digital, culture, media and sport, Oliver Dowden. Remember, the BBC is an organisation owned by and paid for by taxpayers. Taxpayer representatives must have some ability to hold them to account. New appointees to other public bodies, such as the Financial Conduct Authority and the Bank of England, are subject to appointment hearings held by the Treasury Select Committee. Why is there no equivalent for the BBC, a £4 billion megalith which (as they constantly remind us) is consumed by a significant proportion of the population day in day out? Mr Davie may be the most important man in the entire public sector, but no one knows who he is, where he came from or why he got the job.
What’s more, the BBC lacks transparency at all levels. As anyone who’s ever tried to issue a Freedom of Information request to them will know, they enjoy a specific exemption from revealing certain information which is baked into law. Want to know how much they spent designing a new logo for BBC News? No chance.
If the BBC wants the benefits of licence fee payers’ money, and values its journalistic integrity too, then it cannot remain shrouded in secrecy.
Leaner, more cost effective
Throughout the history of the TaxPayers’ Alliance we have fought against wasteful spending at the BBC. Yet it goes on and on, from £200,000 lost on unused taxis and hotels to £6 million on threatening people with prison for not paying the TV tax. So the new director general will have a big job on his hands trying to reign in an institution so used to cash growing on taxpayer’s money trees.
To be fair, the appointment of a marketing executive might be an improvement on past appointments, given the financial success of BBC Studios during his tenure as the CEO. The closest thing the BBC has to a truly commercial arm, BBC Studios, produced returns of £243 million in 2018-19. Although, before getting too excited by the apparent success, it should be noted that Amazon and Netflix brought in £1.1 billion in revenues from UK subscribers in 2018 - without the massive upper hand of taxpayer-subsidised programme production!
To truly get the best deal for the public he is meant to be working for, Davie will need to transform the Beeb from a taxpayer-subsidised giant of excess into a leaner body, focusing on what the public want and funded entirely from its own efforts, like every one of its competitors. Whatsmore, a reality check is needed when it comes to spending. The bloated news crews and outrageous salaries will need to be reigned in. For the Beeb to maximise their budget, they’ll need to stop splurging.
Axe the tax
From its inception, the BBC has dominated the market (that share now stands at c.33%), initially having a total monopoly on television. As such, there was at least some justification for taxing everyone with a television - they were paying a form of subscription for the service. But over decades this monopoly has been chipped away and since the turn of the millennium totally exploded - video content is effectively unlimited and choice truly is universal. As such, an antiquated funding model which forces most of the UK population to cough up £154.50 each year for something they might not watch has gotten more and more ridiculous. It is equivalent to having to pay Liverpool FC in order to attend a cricket or rugby match!
Unsurprisingly, those paying the TV tax have grown ever more frustrated that as competition has grown, the BBC has become less and less vital, yet the charge has remained and even grown by 2% in 2020. Our landmark polling from last year revealed 68% of working-class voters backed the outright abolition of the licence fee.
Upping the pressures on the licence fee are the immensely popular and fast-growing streaming companies: Amazon Prime, Netflix and Disney+. Netflix alone has seen 20% year-on-year increases in subscriber numbers, with 12.4 million UK households now subscribed. In just the few months since the start of the coronavirus crisis, almost 5 million more people have signed up to streaming services. This growth comes at the same time as a decline in television licences. The most recent data suggests that despite the massive incentives to do so, fewer taxpayers are paying for the licence fee, with 82,000 ditching it in the five months up to March.
This situation can’t continue. Of course, even BBC execs know it. That’s why they’ve latched onto ideas as ridiculous as a broadband levy, which our political director James Roberts identified as essentially paying the BBC protection money to watch Netflix. That won’t wash - but things do have to change.
What must be done
Clearly, there is work for the new boss. If the BBC believes that appointing someone with a commercial connection is a silver bullet to placating criticism and demands for change, they are in for a rude awakening. The new director general will need to realise that the cries of criticism will only abate when the BBC stops being funded by a compulsory tax. Julian Knight, a former BBC journalist and current Chair of the Digital, Culture, Media and Sport Committee, joined the TPA’s calls for a transition to a subscription service. The technology to make it so that the signal is only available to subscribers already exists and is actually already employed by the BBC for its iPlayer services. It would liberate those who resent paying the tax and don’t want to watch the BBC, while for those who do pay some competition will almost certainly improve the end product.
Tim Davie needs to be more than a good salesman and take decisive action to bring the Beeb into the 21st century. At the top of his to-do pile should be the abolition of the licence fee. Not only is it from a bygone era, but taxpayers no longer want it and in the long-term it will only lead to greater resentment toward the BBC. Only time will tell if Mr Pepsi can make a subscriber model BBC the choice of a new generation.