Once, the Corporation had lived comfortably within its income. In recent years, with the rapid inflation of broadcasting costs, it had got in the habit of going to Parliament for an increase in the licence fee. This was a dangerous position to be in. The BBC had long been unpopular with politicians of both parties. And now, with Margaret Thatcher in Number Ten, a new, almost hysterical, hostility to the BBC was in fashion.
At Lady Thatcher's side was Lord Tebbit, who believed the BBC was the home of an 'insufferable, smug, sanctimonious, naive, guilt-ridden, wet, pink orthodoxy', and once told the head of BBC drama, 'I know you're lying because you work for the BBC'.
Thatcher's views were not very different. She was close to Rupert Murdoch, who disapproved of the 'upmarket costume soap operas which the British system produces, in which strangulated English accents dominate dramas which are played out in rigid, class-structured settings' - in other words, Middlemarch. Most of the Tory Establishment agreed with Paul Johnson, who wrote that the BBC 'lies for the left' and 'rapes for the revolution'.
With all the power and finance in the hands of the politicians, it would not have been surprising if the BBC had simply been marked down for immediate execution. It might have been less painful if the decision had been taken a decade ago to allow the BBC to be financed by advertising.
Instead, the BBC was handed over to the tender mercies of one of the oddest couples ever to be given authority over so substantial a share of a nation's cultural destiny.
The Chairman was Marmaduke Hussey, an engaging and gentlemanly figure, best known for having shut down the Times in a miscalculated attempt to bluff the unions there. His partner, the Tories' chosen Director- General, was John Birt, who was known for being a lifelong partisan of the Labour Party and for missing no opportunity to express his contempt for people like Hussey.
Chris Horrie and Steve Clarke take the story on from the arrival of this incongruous duo. They are, I think, badly served by their title. It was Michael Checkland, Birt's predecessor, who denounced Hussey and the BBC's governors as the sort of people who thought FM stood for 'fuzzy monsters'. It was not a very good joke even then, and as a title it does not do justice to the seriousness of the subject or to the authors' diligence and insight.
Both are journalists, Horrie best known for a sprightly expose of the Sun newspaper, and Clarke deputy editor of Broadcast magazine. Their book is highly readable, full of the kind of spicy anecdote you will get if you interview several dozen angry hacks, and there are certainly a lot of BBC journalists who are very, very angry. If I were running the BBC, for example, I should be concerned that two such loyal and gifted journalists as Charles Wheeler and Mark Tully were as alienated from management as they appear to be.
I particularly enjoyed the picture of BBC producers being obliged to cut out paper frogs and sell them to one another as part of the ' 'huggy feely' personal therapy' approach to making them think entrepreneurially.
The authors are ultimately baffled by the strange contradictions of Birt's character. The exact nature of Birtism, they say, 'boils down to old-fashioned elitism, tinged with political cowardice, and implies that the BBC will retreat from the mass market'. Others, they say, explain Birtism as 'an endlessly flexible doctrine that amounts to whatever will further the career of John Birt'.
It is true that it is hard to reconcile Birt's elitist thesis about television journalism with the hostility he seems to feel towards those most likely to deliver the quality he claims to want. It is clear, too, that as fast as the BBC sheds journalists, producers and craftsmen, it acquires new managerial employees whose strength is the ability to count beans.
John Birt is a man of redoubtable energy and impressive intellect. He is not perhaps over-endowed with an instinctive understanding of people. His idea of becoming the BBC's Director-General without joining its staff was less than inspired. But even if he were as wise as the serpent and as gentle as the dove, the job he is doing may well be too heavy for him.
Once upon a time we lived in a Britain that was deferential, but where we believed in ourselves and rather liked one another. In such a world, it was possible to preside over a cultural monopoly as important to our society as the BBC was then, and achieve at least a working consensus. Now we are overwhelmed by cultural panic. Half of those who form our opinions actually hate the people who used to run the BBC, and believe that the BBC should be managed like an American corporation to produce American-style TV. The other half are ready to die in the last ditch to stop that happening.
The viewers, however, are increasingly indifferent. It may be that the BBC we used to enjoy - a BBC which tried to set world standards and brave the wrath of politicians - was simply too good for us. Perhaps that is what John Birt understands.
Certainly he seems to be confused about what he is trying to do: save money or to save the BBC? To improve the quality of its journalism or to punish those who have set too high a standard? Or just to keep the monster from running away with him? His slogan was the mission to explain. The irony is that, if he were a little bit better at explaining himself, he might be received with less fear and loathing, and more sympathy.