TELEVISION / The world, not at one: Poor old BBC. No sooner has it seen off its critics at home, than another battle looms: the fight with the media barons for control of a fast-shrinking globe. Peter Koenig reports

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The Independent Culture
IN APRIL 1990 the Great Wall Industry corporation launched a satellite from China. A Hong Kong billionaire, Li Ka Shing, leased the transponders of this satellite and set up Star television, beaming a celestial pot-pourri of movies, old telly and sport to a potential audience of two of the world's five billion inhabitants. For the news strand of Star, Mr Li turned to the BBC.

The deal BBC World Service Television did with Mr Li favoured Mr Li. The Hong Kong billionaire had the leverage. He had access to the Chinese Communist Party officials managing the Great Wall Industry Corporation. Under the terms of the deal the BBC gets its money from Star only after Star's costs are met.

'We turned down the deal,' says Peter Vesey, vice-president of CNN International. 'We decided to compete against Star from a different satellite.' A second American TV executive explains: 'You want your own satellite. You want to handle as much of satellite broadcasting yourself as you can. That way you control destiny, and you come out ahead on cash flow.'

The Star deal, nevertheless, served the BBC's purpose. It was part of a larger plan. It was the BBC's debut in the world of 500-channel television. It would lead to the BBC moving up from being a sub-contractor to the 'gatekeepers' of the global 'electronic highway' to become a 'gatekeeper' itself. It was a marker against the future: the day when the BBC would have enough political support at home to develop its grand strategy for the New Media Age.

Now, it appears, the BBC has won its political battle at home. The Government has guaranteed it an index-linked licence fee for three years. The all-party National Heritage Committee of MPs has recommended that the status quo continues when the BBC's royal charter expires in 1996.

Instead of celebrating, however, the man fashioning the BBC's global strategy is chewing his nails. He is Bob Phillis, John Birt's deputy director- general. The political battle, it turns out, merely cleared the way for the real battle: the tussle in the global marketplace with Rupert Murdoch and the other New Age media barons.

Last August Murdoch's News Corporation bought 63 per cent of Star TV for dollars 525m ( pounds 362m). Soon after, Murdoch threatened to turf the BBC off Star and replace it with Sky News, of which he is half-owner. At the time Murdoch bought Star, the BBC was negotiating with a Rome-based consortium of Saudi Arabians to start an Arab-language satellite news service in the Middle East. Murdoch claimed the Middle Eastern news service would compete against Star, and that this would violate his contract with the BBC. The dispute has ended up in the Chancery Division of the High Court. It is due to come to trial in April.

Whatever its outcome, says a Sky source, 'the BBC's position is very fragile'. The fine print of the BBC-Star contract, the source says, contains a let-out clause giving Murdoch the right to sack the BBC as Star's news supplier in about 18 months, no questions asked.

The BBC has won the right to continue as a cultural force in Britain. But to exercise it, it must now compete against American, German and Japanese media conglomerates who know little about the arguments for and against Thatcherism and Birtism, and care less.

'The BBC must make its assets work harder,' says Phillis. 'Its assets are its programmes. Making programmes work harder means selling them more aggressively abroad.'

Translation: 'Excuse me, chaps, we all know the rococo rules of political engagement in Britain. But if the BBC is to remain a standard-bearer of public-service broadcasting in an age of cheap, violent, sensationalist television, we must play by a different set of rules altogether. Taking on the world on our terms, not Murdoch's, is going to be rough. But it is the only fight worth fighting.'

AT THIS stage the New Media Age resembles the Age of Oil when robber baron John D Rockefeller seized control of it. Before Rockefeller energy came in myriad forms and was delivered in myriad fashions. After, energy increasingly came in the form of oil and was delivered by Rockefeller. In the same way people around the world today increasingly watch the same television programmes, produced and broadcast by the same companies.

The New Media Age also resembles the City of London before Big Bang. In the 1980s scores of international banks poured into the City prepared to lose millions on the assumption they would be among the handful of survivors when the dust cleared. Today the same goes for media conglomerates prepared to spend millions on satellites, cable, exchanging equity with telephone and computer companies, opening offices in Rio de Janeiro and Jakarta and wooing foreign customers to become A-to-Z suppliers of news and entertainment for a global audience.

Sizing up this contemporary frontier of capitalism, many on the right urge the BBC to privatise. In November, Ian Hargreaves - once a BBC manager, now deputy editor of the Financial Times - published a monograph arguing that the only way the BBC could adapt to the New Age was to subject itself to the discipline of the market.

The left has a less coherent programme. It seems disposed to hold back the BBC from the marketisation of broadcasting. They seem inclined to noble failure - letting the BBC go down with all hands on board, head held high.

Of those pronouncing on the BBC's future, only the BBC itself articulates a middle course. The management rejects privatisation on the grounds that it would turn the BBC into a clone of American-style competitors better equipped to compete for high audiences.

Equally, management rejects the go-gentle- into-that-good-night strategy on the grounds that the BBC's decline would be rapid and complete, and that its emasculation would result in the emasculation of British culture overall.

Management aims, instead, to make the BBC a player in the New Media Age despite the awkwardness of its public ownership. Phillis says the BBC can do this by trading its trump card, its high reputation, for everything else it needs: capital, partners, access to markets, advanced technology.

From one perspective this strategy is more cunning than it appears. The BBC's global ambitions are modest. In its struggle to make the BBC seem good value at home, management calculates that it only needs to treble annual overseas turnover to pounds 180m by the year 2000.

A blueprint for realising this goal is almost complete, Phillis says. In 1994, he hints, the BBC will get involved with more satellite stations like UK Gold. UK Gold beams EastEnders and other BBC library material into Britain in competition against Murdoch's Sky. Phillis says he is close to signing partnerships for major new co-ventures in Europe and North Africa. 'I shall be announcing these before March,' he declares.

From another perspective, however, the BBC's global game-plan is nothing if not bold. Management aims to transform the BBC into a mini- Japan Inc. circa the 1950s. It wants the BBC to reach out from its protected source of financing at home into media markets overseas.

This strategy thumbs its nose at the conventional wisdom which says a ferocious free-for-all in global markets is no place for a high-minded public-service broadcaster known as Auntie. It comes close, indeed, to defying business gravity. The question is whether it can be pulled off.

PHILLIS is reluctant to explain in detail why he thinks the BBC can execute its strategy. He has yet to get final approval for his game-plan. The glimpse he offers of the internal politicking is one of byzantine intricacy. And there are big commercial problems facing the Corporation. First is capital. Murdoch can tap the private capital markets to pay for his global expansion. The BBC must go to Whitehall. But Whitehall has decreed the BBC may not spend a penny of the licence fee abroad.

Whitehall has domestic political reasons for stopping BBC investment overseas. To American television executives who admire the BBC - who think of it as a broadcaster that might thrive in a better age - Whitehall's policy is incomprehensible. 'Shortsighted and rather silly', is what MTV Europe chief William Roedy calls it.

Second, there is the problem of the late start. Ted Turner launched CNN in 1979. Rupert Murdoch went to Hollywood in 1985, buying 20th Century Fox and developing the Fox Television Network. The BBC made vague international noises in the 1980s. It set up Lionheart in New York to sell programmes into America, do co-ventures there, and look into launching a US cable channel. But a decade later there is still no BBC cable channel in the US. The BBC pays actors in any of its dramas rebroadcast in the US high flat fees, rather than royalties. 'Please]' says Nelsa Gidney, a New York media agent. 'The BBC's residuals are a disaster] They're too high for what the market can generate. This not only makes overseas sales of programmes uncommercial, but screws up co-ventures.'

Third is the problem of size. The BBC is both too big and too small. Too big at home: its infrastructure is too expensive to do what ITN wants to do - specialise in selling programmes to foreign media companies operating globally. And too small internationally: it doesn't even rank among the top 20 media companies. Its resources are too small, some private-sector television executives say, to stand the losses it will have to absorb before global television becomes profitable. 'How do you make money in the international news business?' asks Sam Chisholm, chief executive of British Sky Broadcasting and the Murdoch henchman responsible for all News Corp's television outside the US. 'With great difficulty.' His advice to the BBC is to stay away from where the big boys are playing, and just sell drama and selected other entertainment to the 'gatekeepers' who will rule world television.

SUCH advice should be taken with a pinch of salt. The New Media Age is in a laval state. No one knows what it will look like once conditions cool. It is logical that a state-owned company with a worldwide reputation and a protected source of financing should succeed. The challenge facing the BBC is cultural rather than commercial.

To compete globally, the BBC must transform its culture. It must find a way to fuse its high- minded public-service ethos with a hard-bitten, low-road commercial outlook. Last year the director-general, John Birt, sought to foster such a fusion by introducing Producer Choice, a new accounting system. Producer Choice established an internal market in the BBC similar to that in the NHS. It put a price on each internal transaction. It made staff more responsible for their budgets.

Many staff objected to Producer Choice. They found it a Mickey Mouse way of getting them up to speed to compete against Murdoch, Ted Turner and Time-Warner. They found its imposition coercive. A poll of BBC staff, conducted last year, detected high levels of fear.

The BBC, nevertheless, had no choice but to proceed with cultural transformation. Bob Phillis promises that when the BBC makes its next big move - goes global - all stops will be pulled out to explain and listen to criticism. 'I give an absolute pledge,' he says. 'The BBC is and will be opening itself up to light and scrutiny.'

As the BBC struggles to transform itself, meanwhile, those in Britain with an interest in the outcome of that struggle must decide what they think. Do the ITV companies competing against the BBC at home want the BBC marginalised? Asked that question, ITN chief executive David Gordon lapses into silence for two minutes in a vain effort to reconcile his complex point of view, then says, 'I can't answer that.'

What does the Government want? Almost a decade has passed since Mrs Thatcher unleashed her harsh critique of the BBC. The BBC has responded to this critique. What now? Will the Government provide the BBC with the ammunition to compete in the New Media Age or not?

The odds are that the interwoven constituencies in British culture with influence over the BBC - government, the owners of ITV television, BBC management and staff - will continue to push their own agendas and cover their tracks.

Wouldn't it be wonderful - wouldn't the public like it - if instead these constituencies pulled together and created a public-service broadcaster for the New Media Age capable of beating the pants off Murdoch and his clever, urbane, charming, cynical, confused purveyors of television as a commodity?

(Photograph omitted)

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