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Jeremy Hunt: Competition makes British TV worth watching

Jeremy Hunt MP, Friday, January 23 2009

It is often said that Britain has the "best television in the world." This is
hard to prove objectively, but in terms of the reach, choice and quality
we do very well by international standards.

However, rather like the British economy, the party is now ending.

This is particularly true for commercial broadcasters, hit by the double

whammy of a declining advertising market and massive technology
changes. Advertising revenue is predicted to decline by 20 per cent in
the next few years.

This week, Ofcom published its review of public service broadcasting.

Much of what it said was sensible, but it is worth spelling out some home truths. The first is that the success
of British broadcasting has been as much thanks to competition as to subsidy.

Through the licence fee the BBC has always had a uniquely privileged position in the market, one it must be
thanking its lucky stars for in the current economic climate.

Generally, it has done a good job, despite serious lapses such as the Jonathan Ross/Russell Brand
incident last autumn. But ask programme editors at the Beeb what drives up quality and they will tell you it is
competition - whether that is Sky News competing with BBC News, Dispatches competing with Panorama
or ITV's Lost in Austen competing with Cranford on the BBC.

Unsurprisingly, that competition has nearly always been introduced by Conservative governments. They
launched ITV to compete with BBC in 1955, set up Channel 4 in 1982 and unleashed the cable and satellite
revolution in the 1990s. The result has been that Britain has uniquely high levels of competition at the quality
as well as the popular end of the market.

Yet, as advertising revenue declines, the BBC's licence fee income is going up by a whopping 15 per cent
in the last licence fee settlement. If they are going to justify this they need to engage seriously in
discussions about how to ensure plurality of provision for public service television.

One possibility is a tie-up between Channel 4 and elements of the BBC's commercial arm, BBC Worldwide.
If this were to happen, there would need to be regulatory safeguards to ensure the new entity did not
undermine the ability of other players to enter and compete in the market. Anyone committed to plurality
and open markets must ensure that monopolies - even well-meaning ones - are properly regulated .

A merger of Channel Four with Five should be considered carefully too. It would need to work economically
and protect Channel 4's public purposes. What both potential mergers underline is the need for Channel 4 to
scale up. With only 12 per cent of UK viewers, it will always remain vulnerable if dependent on advertising
for revenue.

But, much more importantly, Channel 4 also needs to be much bolder about rethinking its business model. It
claims to be a company focused on creative productions and public service goals. But it has made little
attempt to build up a library of intellectual property rights. When it has a hit like Secret Millionaire, it is not
able to exploit it in international markets. The company needs to take a much tougher and more commercial
approach to understanding where the value lies in its business.

Politicians should not try to pick winners or act like a management consultant trying to restructure the
industry. However as both regulator and the only shareholder in Channel 4, the Government has enormous
influence. Stephen Carter, the new broadcasting minister, should not see his responsibility as being to any
individual organisation, state or privately owned, but to viewers. Following the radical Conservative reforms
of earlier governments, they have come to expect both quality and choice. He needs to ensure they

1z2 2009-07-20 23:04

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Promoted by Alan Mabbutt on behalf of the Conservative Party, both at 30 Millbank, London, SW1P 4DP

2z2 2009-07-20 23:04