Commercial rivals attack BBC funding plans

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The Independent Online

The Government published a White Paper on the BBC, before renewal of the corporation's charter, but it did not spell out the level of its annual licence fee. That will be decided in the summer. The BBC has asked for a licence fee that would rise by 2.3 per cent above the rate of inflation for the next 10 years.

A spokesman for BSkyB, the pay-television market leader, said: "The BBC White Paper represents a missed opportunity to reassure licence fee-payers that they are getting genuine value for money. That can only be done if people have confidence that the BBC is as efficient as possible and is not wasting public money on launching services that the private sector is already providing. Leaving the BBC to be a law unto itself is in no one's interests."

Under the Government's proposals, the regulator of the commercial media sector Ofcom will, for the first time, be given a role in assessing the "market impact" of new services planned by the BBC. But the final decision on new services will be taken by a new BBC board of "trustees" who replace the corporation's governors but remain part of the BBC.

Charles Allen, the chief executive of ITV, the BBC's biggest terrestrial rival, said: "The real issue now is not governance but funding. The BBC's funding must be proportionate to its needs and should not be able to stifle competition and innovation. Their bid for an extra £6bn poses a serious threat to the ability of commercial players to invest in high-quality, popular content and develop new digital services for viewers."

According to ITV, back in 1998, total BBC licence fee income exceeded ITV1's revenues by about £250m. By 2004, that gap had mushroomed to £1.25bn.

The Commercial Radio Companies Association pointed out that the revenues of the entire private radio sector last year amounted to £610m, while it estimated that the BBC spent £540m on its radio services. Paul Brown, chief executive of the CRCA, said that BBC Radio 1 and Radio 2 were positioned in the "heartland" of the audience sought by commercial operators. The BBC White Paper does not attempt to rein in the corporation's existing services, he said.

Tom Moloney, the chief executive of Emap, one of the biggest players in the radio industry, said the BBC's new digital radio services simply replicated what was already offered by the commercial sector.

"There is no need for the BBC to have 55 per cent of the [radio] audience. That totally distorts the market, with no benefit to anyone," Mr Moloney said.