New Vision: Transforming the BBC into a subscriber-owned mutual

IEA Current Controversies 71

  • There is a long history of governments and incumbent vested interests restricting competition in broadcasting for their own ends.

  • Those interests have subtly changed the definition of public service broadcasting in a way that seems to serve producer interests rather than being helpful in informing good public policy debate.

  • The current definition of public service broadcasting used by Ofcom is not coherent.

  • The nature of the broadcast market has changed to such a degree that public service broadcasting (insofar as it can be defined) should no longer be delivered largely by one institution. Indeed, we should go further: there is no need for specific policy in relation to public service broadcasting.

  • Niche providers are often better than the BBC at ensuring the broadcasting of good quality content to meet minority tastes. The BBC is clearly most attractive to higher-income white audiences, despite the impression it tries to convey in its marketing.

  • The fact that the market for broadcasting is now an international industry means that many artistic, educational and cultural programmes, which might not have been economic in the past, may now be economic and not need subsidy.

  • Changes in technology mean that the current approach to financing, owning and regulating the BBC is no longer tenable.

  • The BBC should be financed by subscription and owned by its subscribers. It could then determine different subscription models for different markets (including online and overseas). This model has a number of advantages over alternative models of reform:– The model is simple. All that is required is to allow people to receive TV signals for other services if they have not paid the subscription necessary to receive BBC services. As such, the reform would be permissive – it would be seen as allowing consumers to receive for free, or through existing subscription services not funded by the licence, channels other than the BBC.– A belief in a market economy should not mean that we are opposed to the evolution of a wide variety of different governance models within the market. It is likely that the model of a subscriber-owned mutual would be preferred to fully commercial models by the majority of nominal owners of the BBC (current taxpayers or licence fee payers) and future owners (subscribers).

  • There is nothing to stop the subscriber-owned mutual from having fully commercial or fully charitable arms for different purposes. This is a common approach for mutual and co-operatives and would also allow the exploitation of the overseas market and a wide array of joint ventures.

  • The BBC should lose its legal privileges and be treated in the same way as all other news and media organisations for competition and other purposes.

  • The government may wish to impose some obligations on the sub-scriber-owned mutual in relation to the provision of radio, international broadcasting and also, perhaps, the broadcasting of Parliament. However, this would be best done under a freely-negotiated contract with the new mutual or with an alternative provider.

Below is a revised version of the paper, updated in January 2020. The original paper can be found here.

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Philip Booth is Senior Academic Fellow at the Institute of Economic Affairs. He is also Director of the Vinson Centre and Professor of Economics at the University of Buckingham and Professor of Finance, Public Policy and Ethics at St. Mary’s University, Twickenham. He also holds the position of (interim) Director of Catholic Mission at St. Mary’s having previously been Director of Research and Public Engagement and Dean of the Faculty of Education, Humanities and Social Sciences. From 2002-2016, Philip was Academic and Research Director (previously, Editorial and Programme Director) at the IEA. From 2002-2015 he was Professor of Insurance and Risk Management at Cass Business School. He is a Senior Research Fellow in the Centre for Federal Studies at the University of Kent and Adjunct Professor in the School of Law, University of Notre Dame, Australia. Previously, Philip Booth worked for the Bank of England as an adviser on financial stability issues and he was also Associate Dean of Cass Business School and held various other academic positions at City University. He has written widely, including a number of books, on investment, finance, social insurance and pensions as well as on the relationship between Catholic social teaching and economics. He is Deputy Editor of Economic Affairs. Philip is a Fellow of the Royal Statistical Society, a Fellow of the Institute of Actuaries and an honorary member of the Society of Actuaries of Poland. He has previously worked in the investment department of Axa Equity and Law and was been involved in a number of projects to help develop actuarial professions and actuarial, finance and investment professional teaching programmes in Central and Eastern Europe. Philip has a BA in Economics from the University of Durham and a PhD from City University.