How to privatise the BBC

There can be very few people above the age of 40 who do not acknowledge that BBC programmes helped shape and make us. Whether it was drama; or BBC news reporting from war-zones; or the coverage of Live Aid in 1985; or early Eastenders; or BBC Radio 3; or comedy in the form of Fawlty Towers, Spike Milligan, John Sullivan’s Del Boy, and French and Saunders; the Beeb was the frame in which we painted our national picture. There are many good memories, and quite a few bad ones too.

The world moves on, though. Alongside those good BBC memories I also have fond memories from the 1980s of the Sony Walkman and cassettes, but we would not have advanced very far if a national poll tax had been in place to protect the future of the Walkman produced by private sector Sony. Now, instead of the Walkman for music on the move we have Spotify and other services. Those of us with large CD collections find it annoying that there is no simple way to get the clunky and not remotely compact discs onto our phones, meaning rarer tracks not on Spotify are lost in a digital dead-zone. But that’s a small gripe. We have access to most of the world of music on our phones for under a tenner a month.

The marketplace has transformed the consumption of music, films and drama, via subscription services.

It is this profound change in the media ecology that means the BBC licence fee, £154.50 per year, is doomed. And that  is going to lead, by a logical process, to a realisation that the BBC is going to have to be funded in a different way. That means privatisation in some form or another.

I know the arguments in favour of the state-sanctioned TV licence fee. I’ve backed away smiling and nodding politely at Tory conference events from people ranting against the BBC and demanding it be closed down completely and immediately.

But it is now obvious that the licence fee is not, that “s” word again, sustainable when the decline in the amount of television watched is accelerating. Those aged 16-24 watched an average of 85 minutes of broadcast TV per day in 2018. That is down 15 minutes per day on 2017. Demand for YouTube and video streaming services is surging. The BBC iPlayer is only one stall in a noisy marketplace.

That trend away from conventional TV helps explain why YouTube, owned by Google, the company which has almost destroyed the news business, now generates in the region of $50m a day – a day – from advertising.

In such a climate, of YouTube power and subscription choice, few younger consumers are going to tolerate paying 154 quid and 50p on the threat of punishment, carrying a potential jail sentence, to fund the BBC when they have been raised doing their own thing with numerous alternatives available. Why pay for services you don’t watch?

That reality of demographic change and consumer pressure means the government must look at making the fee non-compulsory. It announced today it will consider this. Yet once it is non-compulsory revenue will fall, human nature being what it is. The £3.7bn that the fee raises now will plummet, requiring further cutbacks in BBC services and public arguments with the government about favourite programmes being axed.

This is all, in my view, secondary to most of the arguments about allegations of bias. The BBC has many good journalists. Although if Netflix wants to lecture me on diversity or which opinions are deemed correct I have the option of cancelling my direct debit. Not with the Beeb.

One way or another commercial change is coming. The question in such a climate is not whether the licence fee has had it or not. The question is: what replaces it and what happens to the BBC?

The argument for the BBC to be funded out of general taxation seems a non-starter. If many people already object to a compulsory tax, the licence fee, they are unlikely to think much of it being abolished and replaced with another tax rolled into their increased general tax bill. They’ll see through that. There may, of course, be some public service element which requires special treatment, such as the World Service. The rest of it will not work funded by taxpayers who are increasingly paying, or not paying if they don’t want to, for other services such as Netflix and Amazon Prime.

This means the BBC needs another funding model. What way is there other than raising capital on the open markets like a business?

Around Westminster in Tory circles the air is abuzz with talk of how it might be done. Papers are being drafted. Think tanks are gearing up. Culture Secretary Baroness Morgan gave a speech today to Policy Exchange on the licence fee. Boris Johnson has received representations and letters with various ideas.

Here, it seems to me, is how it could be done in the spirit of popular capitalism, if the Prime Minister decides that this – a massive fight with the opposition in full cry in defence of Antiques Roadshow – must happen.

1) Make every licence fee payer a shareholder in the BBC. One share each.

2) Guarantee the payment of the licence fee for a fixed period. I have heard three years suggested. Perhaps seven will be needed. Failure to pay the licence fee means voiding your share.

3) At the end of that period, raise capital on the open markets, rationalise BBC property and build new subscription services, retaining a free to air element established by charter and policed by the regulator.

4) In time every individual share – awarded to a licence fee payer – will be tradable on the open market.

Parts of the BBC do at last seem to have worked out the extent of the difficulty they are in post-election, what with YouTube eating TV just as Google ate newspapers. Elsewhere in media land there is spirited but misguided talk of the BBC needing a fighter as Director General to take on the government and protect the licence fee. While the BBC must defend its editorial independence, the last thing it needs is to wage and lose a hopeless war.

As I said, change is coming, via the market and changing consumer habits, and the BBC needs someone who can lead on this and propose a solution. Otherwise it will, I suspect, find a solution imposed.

I know there will be howls of outrage when such ideas emerge. There is much about the BBC to love, but if its best programming is to be maintained and survive then it must find another way – soon.