Michael Grade: My blueprint for the BBC

The anachronistic public service broadcaster should - and can - survive, but only if it is prepared to make a radical break with the past, says its chairman from 2004-2006

Change is good: Michael Grade gives his blueprint for the BBC’s survival (Susannah Ireland)

There are three established UK institutions you would not invent today if you had a blank sheet of paper and were “creating” a new Great Britain: a hereditary monarchy, an unelected second legislature (the House of Lords) and, yes, the British Broadcasting Corporation. The arguments against these “anachronisms” are more powerful and more easily articulated than the arguments in favour of their continued existence. Yet, somehow, their emotional grip on the hearts and minds of the British people seems likely to hold sway for generations to come.

They help to define the curious, often mystical aura of Great Britain – they are what make us “different”, core brand values, if you like jargon. How well I remember the late Baroness Thatcher defending our monarchy with the words: “My mother used to say that without our monarchy we would be just like [pause for contemptuous emphasis] Belgium!”

My remit here, as the last Chairman of the old BBC governors, is the BBC: some anachronism – three-and-a-half billion pounds of public intervention in a dynamic and ever-growing media market. How can the BBC argue its case to survive against such odds? Intellectual logic, both economic and social (how better could we spend £3.5bn?) is against it. On the other hand, political sentiment will usually follow the public mood – and this is where the BBC scores heaviest. The electorate is emotionally attached to “Auntie” in a way that politicians can only envy. The public backlash to the fallout from the Hutton Inquiry, when Blair, Campbell et al brought the Corporation to its knees, I believe, really surprised and scared the Labour government. It demonstrated beyond doubt the overwhelming public support for “its” BBC. I count myself as a firm believer in the idea of the BBC.

In the early days of its existence, ‘Auntie’ created everything (Getty)

Thinking the unthinkable

But can the BBC survive long term? Will my grandchildren still value the kind of public service content that we have valued from the BBC all these years? Can the BBC continue to hold out against the market forces that threaten to make it irrelevant? Can it justify the licence fee, or regressive poll tax, as it is defined by its enemies? Will it be forced into an irrelevant, elitist ghetto of market failure, filling in the tiny niche taste voids left by the private sector?

Not in its present form, is my verdict. The BBC has an assured place in the modern history of Britain, and yet in one very damaging respect it is a slave to its history. When it started out and then developed, there were no studios. It had to design, build, own and operate its own. There were no electronics companies, so it had to design and create its own cameras, TV lighting, and other operating systems. There were no independent programme makers so it made its own. I could go on and on. It is in the DNA of the BBC that “we can and must do everything ourselves”. It still seems to believe in owning real estate, studios, post production and, yes, programme making – it is as if the private sector did not exist. It goes on expanding in areas that require huge resources, yet more management, more HR departments, more spectrum, more channels, more, more, more.

The recent wave of remuneration horrors serves as a red-light warning that in the process of expansion the BBC has forgotten the value of money. Not surprising given the size of the cheque (£3.5bn, remember) that arrives every year. Where there is no bottom line, no profit and loss account, no need to “earn” revenue, territory becomes the yardstick. More licence fee, more services online or over the air.

In the great Hollywood gangster movie Little Caesar, in a quiet moment away from the murder and mayhem, Edward G Robinson, in the title role, is asked by a sidekick what he really wants. Without hesitation he responds simply: “I want more.” He would have made a classic Director-General. This cannot and must not continue if the BBC is to retain public support.

The BBC under its impressive new director-general Tony Hall, and with the board of Trustees, must be radical in the upcoming charter renewal debate. The future of the BBC lies in a root-and-branch reversal of its default territorial agenda. It must think the unthinkable.

Blueprint for survival

Here are my starters for 10: merge channels BBC 2 and 4 – and surrender the spectrum and invest heavily in one, properly-funded channel. Does any viewer understand the difference between 2 and 4 today? I certainly don’t. With one such channel to fund, maybe we will have a channel that can afford challenging UK drama every week of the year.

Outsource all production processes and facilities (studios, post production, film and TV) to a private sector more than capable of absorbing the work (I declare my interest here as chairman of Pinewood and Shepperton studios). This will free up capital expenditure, resource management, headcount, investment capital and much more besides. The BBC must finally accept that it just doesn’t need to own and operate any of these facilities any longer. It seems to have survived when its transmitters were privatised against its wishes.

The independent production sector now provides a huge proportion of BBC TV and radio programming, outside of news. It supports Channel 4’s entire output. What is the justification for the BBC continuing to run BBC in-house production any longer in areas such as drama, documentaries, light entertainment, comedy etc etc? No point at all. Any producer who comes up through the BBC in-house ranks, and makes a name for his or herself, soon leaves to start their own production company or join an existing one.

This may come as a shock to BBC thinking, but it no longer enjoys a monopoly of creativity. When David Attenborough now plies his genius with independent Atlantic Films, you know the game is up. It is time for the BBC to become a publisher/broadcaster along Channel 4 lines. Some monies freed up should be mandated for industry training. “In-house” production should remain exclusively for news and, maybe, just maybe, for current affairs strands such as Panorama.

The above shopping list would be a start; a signal that the BBC at last understands that less is actually more. Fewer departments, fewer managers with six-figure salaries, fewer demands on cash, and a smaller target for its enemies. In essence, a simpler, much more manageable institution. Perhaps the London School of Economics or some such organisation could model these ideas to see how much lower the licence fee could be set.

Cultural force: the BBC News room at Broadcasting House, in London, one area of democratising excellence the corporation should continue to focus on, according to Grade (BBC)

Preserving the core mission

None of my above contribution to the debate would in any way dilute or risk the BBC’s core mission, which is to transform the public’s money into programmes and services that at one time or another, on one service or another, radio or TV or online, each person can value.

The BBC has an indispensable role to play in journalism, not just internationally through the World Service, but throughout the four nations and the regions. I was and remain a committed supporter of the BBC’s journey out of London. The precarious state of regional printed news throughout the UK will ultimately leave a democratic deficit that only the BBC, with its public funding, is placed to fill. Regional news and news of and for the four nations is a key purpose of the BBC and will benefit greatly from investment, which it can only find with radical solutions – not an ever-greater licence fee, the usual solution.

In addition, encouraging creative talent throughout Britain is another key purpose. In the old federal days of 16 ITV companies, Granada in the North-west, Yorkshire, Central in the Midlands etc, were hotbeds of local talent, places where writers, directors, performers and producers needed only a cheap bus ride to get a chance to express their talent. ITV today, like the BBC then, is pretty much a London consolidation. The opportunity for the BBC to travel in the opposite direction is one it should continue to embrace.

A word about BBC Worldwide in my scenario: it should continue its core role of exploiting the intellectual property funded by the licence fee, through international distribution (exports) and ancillary activities. The terms of trade between the BBC and independent producers in a publisher-broadcaster model should ensure a full commercial return for the BBC in the further exploitation of programmes and formats. Worldwide exists to be a profit centre, based on its international success with BBC programme brands. That should continue. It should avoid speculative commercial expansion, it should avoid acquisitions. It should be run with a culture of ruthless profit maximisation. If it can achieve a commercial return running BBC channels around the world, good luck. Break-even and losses should not be acceptable.

Sharing the licence fee?

Should the BBC fail to rise to the challenge of a radical future, there is one option which would solve a number of problems – competitive funding for the licence fee. Let me explain. Online advertising is now overtaking traditional spend. This threatens all advertising-supported TV channels, from ITV and Channels 4 and 5 to the smallest digital offerings. If, and only if the BBC is still in Little Caesar mode and reluctant to embrace the modern way of doing things, I would take the most important and most threatened public service channel, namely Channel 4, out of the advertising market entirely. It is going to struggle more and more to maintain its special minority remit in the face of increased competition and reducing ad spend.

It should then be funded out of the total licence fee. It should retain its sovereignty – the last things it needs is the suffocating embrace of the institutionalised BBC – but in a series of, say, tri-annual settlements, be put into competition with the BBC for a share of the licence fee, based on quality criteria to be designed by, say, Ofcom. At a stroke, Channel 4’s future would be assured, all of the private-sector channels that are ad-supported would receive a boost, which would ensure sustained investment in original programmes (and improve the advertiser proposition), and, most important, the BBC would learn about the value of money. It would create a culture of transparency that no governance system could replicate, where the licence-fee monopoly is maintained.

Governance (again)

… And so (yawn, yawn) to governance. Oh dear, yet again the debate about the future of the BBC will be dominated by everyone’s pet governance model. I lived through the last debate as chairman of the governors and was in at the birth of the Trust, the creation whose midwife was Tessa Jowell. It certainly isn’t perfect, but it sure is better than what went before.

Let us be clear, there is no such thing as a perfect model of governance – neither in the public nor the private sector. I give you just two examples of FTSE-100 companies that ticked every code-compliant governance box: Marconi and Royal Bank of Scotland. I rest my case. Governance structures are no substitute for individual judgement. That is the lesson of the BBC’s travails over the years and so many private-sector companies, too. Governance structural flaws do not cause disasters. They are caused by poor human judgement.

Let the debate be about the shape and role of the BBC, then we can decide the best governance structure to implement it – and, of course, appoint the right people with sound judgement and wisdom who will overcome the inevitable flaws in whatever governance system is in place.

‘Is the BBC in Crisis?’ (Abramis, £19.95), edited by John Mair, Richard Tait and Richard Lance Keeble, will be published on 1 March. Independent readers can buy it for £15 from richard@arimapublishing.co.uk