BBC, Ofcom and James Murdoch

The Edinburgh TV Festival is all very depressing isn’t it. The stories coming out, during a recession that’s probably hit TV today to a greater extent than ever before, all seem to be about shutting things down, and leaving well alone.
James Murdoch has come out swinging with his McTaggart lecture and it’s depressing stuff. Poor little Sky is being set upon from every side. This is the same Sky, by the way, that recently announced record numbers of subscribers including many who’ve been shifted over to HD (for which there’s an additional monthly cost).
I think that Richard Sambrook (yes – of the BBC) really hits the nail on the head in his blog entry.
Allied with a good piece from David Chance in the FT the other day, it really shows where an embattled Murdoch is really coming from.
The printed media is embattled to put it politely. Rupert Murdoch’s answer is to make everything paid-for. If he can just make this happen, then everything will be OK. But that won’t work if everybody else doesn’t go along with him. As even Murdoch will acknowledge, in a market like London, consumers seem to prefer the “news-lite” Metro to bargain-price 20p copy of The Sun. While clever things with subscription models and access to the web probably could make a difference, micro-payments (also beloved of many others in the TV industry who believe that we’ll somehow go through the rigmarole of paying 10p to watch Susan Boyle or whoever sing on our laptops) have yet to really emerge, and quite possibly never will. (Robert Peston talks about an adjunct of this in his very long, but well-worth-reading blog.)
Meanwhile he feels the pressure from two sides in the TV business. None of the Murdochs have ever liked Freeview – ironic as they’re a stakeholder in the consortium and continue to supply three free-to-air channels. Ofcom turned down their proposal to switch them over to a sports/movies subscription option, and so the stake sits there as Sky fumes, plots and schemes its next move. In the meantime, the forthcoming Freeview HD is likely to cost Sky subscribers in churn.
Ofcom really became unpopular with Sky the moment it announced proposals to force the broadcaster to wholesale some of its premium programming – sport and films – to other broadcasters. Yes, you can buy those channels on Virgin Media, but other platforms such as Top-Up TV and BT Vision don’t have access. BT, for example, would love to sell Sky Sports to consumers in a way that doesn’t force them to buy dozens of other channels to access the sports package as Sky effectively forces consumers to do.
Ofcom also talks about rights that Sky is unable to use, yet holds the rights to such as subscription films on demand. You pay a monthly fee for recent releases (a la Sky Movies) and watch them as you want. The main issue is that Sky does not have the bandwidth to offer this kind of service. Indeed, the return path is still largely reliant on phonelines. Cable companies and internet operators can clearly offer these kinds of services.
To say that Sky is furious at Ofcom’s intervention here would be putting it lightly. It’s livid. It could change the fundamentals of their entire business model.
Is it surprising, then that suddenly David Cameron has talked about limiting Ofcom in the future. Anyone would think that one or more of the Murdoch clan has a word with Mr Cameron…
Historically British broadcasting has been world class, and that includes commercial as well as public sector broadcasting. Yet, as Sambrook says:

What’s missing so far is discussion of the public good. Because many commercial operations are struggling, the answer for some is to close or pull down the BBC’s activities. A lowest common-denominator approach. Surely part of the justification for public funding and public media is to provide during conditions of market failure?

The argument is always to take down the BBC. But will we be left with programming that is as good? Will we have the information and resource available to all?
We’re living in a wonderful age. The internet allows the licence payer to watch, listen and read so much of what we’ve already paid for. The BBC is just about the only news organisation in the world with a significant number of foreign bureaux beyond the agencies like Reuters, AFP and AP. We laugh when we see what we think are, say, ill-informed Americans not understanding the world view on issues, yet it’s only because we get that world view ourselves via news organisations that employ staff in these locations.
James Murdoch talks about “unaccountable institutions” like the BBC Trust, Channel 4 and Ofcom. Yet he works for a very unaccountable company himself. Yes, I can buy shares in the business, but what I say or believe counts for nothing. I can at least have a say so in the next government with my views counting equal to those of the very rich. Sky and News International pretty much do as they wish (and they reportedly don’t pay a great deal of tax either).
I find it amusing that Murdoch attacks the EU’s attempts to force competition into football rights by forcing them to be sold to at least two companies should be attacked. Of course he’s right that prices went up rather than down as consumers had to take out a second subscription, but is that really the EU’s fault or Sky’s? It still has the dominant share of matches including every single “glamour” tie. Setanta didn’t play along and despite trying just about everything, went out of business (they made plenty of mistake to be sure). ESPN is not making those mistakes and has quickly climbed into bed with Sky who now handle everything from subscriptions to production on ESPN’s behalf. It’s clear that you get along or you die.
Has the BBC gotten too big? Sometimes, yes. I think that the provision of free video to various newspapers hasn’t been the smartest thing. I can quite see why commercial providers like ITN, Reuters and PA would be furious. They’re having a market removed from them.
Similarly, the Lonely Planet purchase really wasn’t smart. Although I think that BBC Worldwide existing as a commercial operator who’s job is to plough profits back to the BBC is clearly exactly what the BBC needs.
Murdoch’s MacTaggart speech was based around a “creationism” theme which didn’t really work I felt. But calling the UK “authoritarian” is misguided at the very least, and obnoxious in the extreme.
Somehow, I found his closing sentence to be fearful rather than fill me with support with his viewpoints. Wall Street’s Gordon Gekko sprang to mind:
The only reliable, durable, perpetual guarantor of independence is profit.


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