The Strategist

Why Slash BBC's Budget?

07/28/2015 - 16:32

In 2016 the document on the budget of the famous BBC is expires. The UK authorities have seriously thought about whether the company has the right to receive 3.7 billion pounds annually.
BBC operates on the principle of public service broadcasting, and its monetization model was formed in 1922. Then it was decided to introduce an annual fee from each household using the radio. The company itself was not to achieve profitability and not to pick the state budget, spending money set aside for other needs. Thus, a separate tax was decided to be established for the BBC.

Ever since the system has not been changed, which, however, does not make BBC a unique player. In many other European countries (for example, in Scandinavian countries) and even in Japan, public service broadcasters use the same model of financing. It is believed that the contributions provides independence from the authorities, because they have no right to interfere in the editorial policy or to take part in the collection of the tax from the state budget. But there is something that politicians still can do.

The state has the right at some point to revise the fees from British households and therefore change BBC’s budget. December 2016 is the deadline for Royal Charter, providing corporate financing. At this point, rates are subject to change. Recently, more and more British politicians have been in favor of BBC’s budget cuts and the creation of new game rules on the market.

How much does BBC get? Other British media, which has long been jealous of a comfortable existence of the public broadcaster, uncovered all the financial details with joy. If in 1922 the collection per household was 10 shillings, then today it reaches 145 pounds. In other words, each year a Briton spends on BBC as much as quite a decent TV costs. By the way, if the TV is black-and-white, the fee shall be reduced to 49 pounds. In the case of non-payment, the household pays a fine of one thousand pounds.

All of this ensures a steady flow of BBC funds regardless of what the company does. Decided to save money on new programs? A fight with a team of Top Gear? Or, conversely, have created something new and very expensive? In any case, you can expect that you will get 3.7 billion pounds! It is not surprising that such a system seems unfair to many BBC’s competitors.

The Corporation earns far less on advertising than its competitors relying on private funding. Limiting the amount of advertising is one of the foundation principles of public service broadcasting. However, BBC still earned 1.3 billion pounds on advertising and other paid content last year. This means that the total budget of the corporation reached 5 billion pounds.

The most expensive is BBC One. It costs about 1.4 billion pounds. In comparison, 16 stations cost 653 million pounds per year. All these figures with great joy were laid out by Telegraph for everyone to see. The journalists did not forget to talk about the fact that 33 million pounds are spent on orchestras and musical groups acting in the framework of BBC broadcasting.

The new Minister for Culture, Media and Sport John Whittingdale, appointed to this post May 11, 2015, criticizes such a practice. The politicians from the conservative wing of the political system of the United Kingdom admits BBC’s merits. He argues that the corporation sets international quality standards and attract the widest audience, bringing together the citizens of the country during the Olympics or broadcasting new episodes of "Sherlock". Nevertheless, at the same time Whittingdale says: "We must ask ourselves whether BBC must be everything to everyone."

We are talking about a huge number of radio and television stations, funded from the BBC’s budget. Many of them has rather limited popularity. Traditionally, the company tried to provide an exhaustive amount of program content to the UK population. BBC broadcasts for each age group and for all people, including, for example, Welsh, for whom the content is created in Welsh language.

Nowadays, there is a wad of players who prefer to maximize monetization, focusing not on all at once, but in a narrow audience. Thus, BBC would remain a powerful force in the field of information, but, for example, give up part of the entertainment assets, not competing with the Internet. This view is gaining more and more support both from members of competing media and political environment.

In an attempt to protect itself, BBC published a special appeal to the authorities and citizens of the UK, signed by the key cultural figures and stars. However, this approach has caused a storm of criticism. For example, Financial Times believes that the word of a commoner, "smelling of cheese and fried onions" will be a more significant issue, because BBC does not pay him the money.

We should also talk about the fate of the BBC in the event of budget cuts. Of course, the company will not collapse overnight. However, it can be assumed that brand recognition in the UK and abroad will gradually decrease. New competitors will emerge in the local market, which will take over many niches through aggressive advertising and cheaper but well-selling content. In this situation, the proportion of BBC may shrink to such a size that financing on the principle of public broadcasting service will lose any meaning. Against this background, the famous companies will either have to follow the general trend, promoting infotainment and scoring broadcast advertising or leave without saying goodbye.