UK Ad Bodies in Joint Assault on BBC Funding Proposals

09 March 2006

British advertisers and agencies are concerned at the likely impact on the ad industry of over-funding the nation's publicly-owned broadcasting behemoth, the BBC.

In particular the Incorporated Society of British Advertisers and the Institute of Practitioners in Advertising fear the proposed annual increase formula of RPI (Retail Price Index) + 2.3% could enable the BBC to out-gun its commercial competitors, both on broadcast and new media platforms.

The trade bodies argue that the level of BBC funding is an important issue for advertisers and their agencies, given the impact of the Corporation's activities on (a) the commercial sector, (b) the UK market for TV airtime and (c) advertiser access to audiences.

In a submission to the government's Department for Culture, Media and Sport, ISBA and the IPA acknowledge: "The BBC's strong contribution to British society and to its world-leading broadcasting industry. To continue to deliver this, we believe it needs to be properly resourced and funded."

But then the inevitable "However ..." Followed by an eight-plank submission:

  1. An "over-funded" BBC, which is capable of outspending all its competitors on broadcast and on new media platforms - and, in consequence, of "unfairly" stealing their audiences - could seriously damage the commercial media sector on which we depend to deliver the advertising messages so important to the continued health (and growth) of British business.

  2. There is clear evidence that the existing 2000 settlement has already had the effect of over-funding the Corporation - and all indications are that the proposed future formula could worsen this situation still further.

  3. IPA and ISBA consider that the figures put forward to justify its bid by the BBC are excessive - and that insufficient attention has been paid to using cost savings to meet the objectives laid down in the Green Paper on Charter Renewal.

  4. Against this background, we believe the BBC's proposed settlement formula of RPI + 2.3% is excessive. We believe that an overall settlement of RPI minus is a more appropriate target, and would certainly urge for the setting of a ceiling of no more than RPI.

  5. Elsewhere the Corporation should be encouraged as vigorously as possible to fund future activities via continued cost savings.

  6. The BBC remit should be greatly clarified to ensure the BBC is brought back to serving its core public service role and competing less directly with the commercial sector.

  7. BBC Governance should be reviewed. The previous system, whereby BBC Governors were both 'cheerleaders' and 'regulators' was unsatisfactory.

  8. The BBC Charter [currently ten years] should be subject to a mid-tern review. Given the pace of change in the media, this is necessary to ensure the Charter is proving itself appropriate to the rapidly evolving media environment
The two trade bodies also acknowledged that government is seeking the BBC's support for Digital Switchover, which will have attendant costs. But, they argue, these do not span the whole Charter period, nor should they be 'rolled in' to any general settlement. Rather, they should be identified, separated and ring-fenced from any general settlement.

Data sourced from Institute of Practitioners in Advertising; additional content by WARC staff