Cutting the BBC licence fee would reduce consumer choice and value for money, as well as possibly halving investment in new UK programmes, says an Oxford University study.
The 100-page report, launched today by the Reuters Institute for the Study of Journalism, explores what the current UK television market would be like if there were no BBC Television.
It concludes that without the BBC, total UK television industry revenue would probably be reduced. Total investment in programmes would be 5-25% lower, with investment in making new UK programmes possibly halved (25-50% lower), affecting viewers and UK production companies which would suffer a 'severe blow'.
The report says that these projections are conservative, if anything, since they assume that the BBC 'crowds out' some of the investment in programming that would otherwise be made by commercial broadcasters. The evidence suggests that if, on the contrary, the BBC forces commercial channels to spend more on programmes in order to attract viewers, losing BBC Television would be even more damaging to viewers and programme producers than the report projects.
None of the BBC's critics argue for the BBC to be abolished overnight but, the report argues, many want it scaled back without providing any evidence that a smaller BBC would be better for the public. This study suggests that although scaling back the BBC would not be as bad as abolishing it, there would still be a detrimental effect on UK viewers and producers.
The authors argue that a future without BBC Television is not just a hypothetical scenario dreamed up by academics. They see it as the logical conclusion of the government's current 'salami slicing' policy of freezing the licence fee and diverting more of it to fund activities outside the BBC's UK services, while the rest of the market keeps growing. They project that if this policy continues – or accelerates, as some are advocating – within a generation the BBC will be reduced to a minor sideshow, becoming the UK equivalent of PBS (the Public Broadcasting Service) in the United States.
The scope of the report is limited in two ways: first, it focuses solely on television. Yet the licence fee also funds other services and activities such as BBC Radio, BBC Online, the World Service, S4C, and broadband delivery. The authors argue that if there were no BBC Television and no licence fee, these other activities would also be cut or another way of funding them would have to be found.
Secondly, the report is only about the BBC's impact on the public as 'consumers' rather than as 'citizens'. It remarks that the BBC's other contributions to national culture, society, the economy, child development, technology adoption and many other 'citizenship' benefits are excluded.
The report authors are Patrick Barwise, Visiting Fellow, and Professor Robert Picard, Director of Research, at Oxford's Reuters Institute for the Study of Journalism.
Professor Barwise said: 'Critics of the BBC and many economists argue that, funded by a compulsory licence fee, it distorts the market, making it hard for commercial competitors to prosper and meet consumers' needs. They conclude that viewers would be better served if the BBC were smaller – allowing commercial broadcasters to expand – and showed only public service programmes that the market will not provide. We believe this analysis demolishes that argument. A smaller BBC would be bad for the public even in pure consumer terms, when you look at choice and value for money.'
Professor Picard said: 'Our calculations suggest that without BBC Television almost all UK households would be worse off. They would either have to pay slightly more for slightly less choice or pay slightly less for much less choice. It would also be likely to mean less money being spent on programmes overall, with far fewer new programmes being made, so viewers could expect TV schedules with many more repeats and imports. These projections are conservative, if anything, as they assume that the BBC crowds out some investment in content by commercial broadcasters. On balance, it probably doesn't.'
The analysis is based on comparing the UK television market in 2012 with projections of what the market might have been like if there had been no BBC Television and no licence fee. The net impact of BBC Television is the difference between the two. The researchers have developed two different scenarios: one highly optimistic (from the viewpoint of the industry) and the other highly pessimistic.