BBC Trust enlists auditor to prove itself in PSB war

The debate over how to safeguard the future of broadcast journalism intensified this week, with the BBC renewing its campaign to keep full control of the licence fee while shaking off a fresh attack from the commercial radio industry.

The BBC Trust has published a lengthy report highlighting the corporation’s contribution to the British economy. Carried out by independent auditor PricewaterhouseCoopers, the report estimates that the broadcaster adds around £6.5bn a year to the UK economy – around twice the figure it receives from licence fees.

Launching the report in a speech to the EU conference in Strasbourg, BBC Trust chairman Sir Michael Lyons said: ‘The Trust is trying to bring about a BBC that is a good corporate neighbour to other players in the UK media sector.”

‘Of course I wouldn’t want to suggest that everything the BBC does is positive. The BBC is a deliberate intervention in the market, but if we can minimise any negative effects, the economic value it creates can be increased still further.”

Treading on toes

What the BBC does with the £3.4bn-a-year levy has incensed some of its rivals. Its latest project – to launch 65 local online video services across the UK – has prompted a campaign from RadioCentre, the commercial radio trade body, which claims the move will jeopardise its already fragile business model.

‘The market impact of this proposal could be devastating,’said Andrew Harrison, RadioCentre chief executive. ‘We just see this massively threatening and distorting the balance at a time when the industry is delicate.”

Although the commercial radio industry has not publicly made a claim on a share of the licence fee, RadioCentre has published a document outlining the industry’s public service contributions – such as news and community initiatives – and has said that the document will be used for a wide range of ‘lobbying and campaigning’purposes.

As the sparring between the BBC and the commercial media continued, regulator Ofcom added further fuel to the debate by giving its strongest hint yet that the BBC could be forced to give up a share of the licence fee to help prop up rival commercial news providers.

Commercial reality

In a speech to the London Business School, Ofcom chairman David Currie accused the BBC of ‘misunderstanding’the pressures faced by its commercial rivals, such as ITV.

‘The BBC’s optimistic view of the commercial PSBs’ prospects appears to be based on a misunderstanding,’he said. ‘We would be delighted if the numbers looked different. But they don’t. The current downturn will accentuate the pressures [on ITV to fund journalism].”

ITV argues that the benefits it derives from having public service broadcaster status will be greatly outweighed by the costs of providing the required output by the time digital switchover is completed in 2012.

Cash available

At the same time, the £800m sum that the BBC receives over six years to promote digital switchover will become surplus to requirements by 2012 – prompting suggestions that it should be used to help fund rival public service broadcasting providers.

Ofcom is currently consulting on the future of PSB, and has received responses from a broad range of groups from unions and campaign groups to broadcasters and regional newspaper publishers.

The BBC’s local video plans are currently the subject of a separate investigation by the BBC Trust, which is carrying out a full public value test.

Correction: An earlier version of this article wrongly stated that the amount of funding that the BBC receives to promote digital switchover. It is £800m over six years, not £800m a year.

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