Sir Michael Lyons, BBC Chairman

Date: 22.02.2011     Last updated: 18.03.2014 at 18.07

Public value and the BBC's international role. Speech by Sir Michael Lyons, Chairman of the BBC Trust, to Sweden's Public Service Day
22 February 2011

I would like to begin by thanking you warmly for inviting me here to Stockholm to play a part in your discussions.

I see my visit here very much as the latest link in a long chain binding the broadcasting systems in our two nations together.

Both of these systems were built to service the public's desire to be educated, informed and entertained throughhigh quality broadcast output, creating public value for the nations they serve.

Owned directly by those who pay for them, public service broadcasters like ours do inevitably attract healthy debate about quality, impartiality, value for money and market impact. All issues which I see reflected in today's agenda.

As I near the end of my term as Chairman, these are subjects on which I have strong views. So I want to use this opportunity to do two things.

First, to consider the BBC's role overseas. I'd like to explore with you the evolving public value of the BBC's international activities, specifically its news output but also its commercial activities.

I would like to set out publicly for the first time the principles of a new global mission for the BBC, recently agreed by the Trust.

Second, I want to address the issues of independence and accountability.

The Trust itself is now four years old and we have sufficient experience to start to draw out some of the lessons we've learned during that time and I'd like to use some of these observations to form a judgement on the value of the BBC Trust model itself as a way of governing Britain's major national broadcaster.

In doing so, I hope to contribute to the lively debate you are having here in Sweden, which we can, of course, explore further in questions.

But before I start, I'd like to set the stage by briefly touching on recent events in the UK, which form the backdrop to what I would like to cover today.

Like many other countries around the world, the UK is facing a significant deficit in its public spending as a result of the financial crisis. In dealing with this, the British Government looked last year for ways to reduce its expenditure.

The BBC was not part of the so-called Comprehensive Spending Review – which sets spending for Government departments for a three year period. But we were approached in October last year and asked to take a share of the national burden by assuming extra funding responsibilities.

The Trust had itself already proposed a freeze to the level of the licence fee through to 2013 because of the difficult economic circumstances facing UK households. So we knew that accepting new responsibilities, including the World Service and Welsh language channel S4C, together with a licence fee frozen until 2017, would undoubtedly have an impact on the BBC's existing services.

As a result, our agreement to take on these new responsibilities, as well as a continued freeze on the licence fee, was conditional upon bringing forward the new licence fee settlement, thus giving the BBC in exchange security of funding for another six years.

In real terms, it will mean cut of at least 16 per cent in expenditure on the BBC's core services. It is a tough settlement. But, I believe it is the best that was achievable in the circumstances. It will mean some very tough decisions in the future, and the effects will be felt across the organisation.

So the BBC is facing some tough challenges at home. And we are not alone in that.

Let me move onto the BBC's international role.

The BBC has always had an international dimension. From the moment it was invented, the BBC saw itself as a voice speaking not just to Britain, but to the world.

In the early days of the BBC, the first Director General, John Reith, was looking for a motto for the new BBC coat of arms. Various suggestions were made, but the one Reith accepted was this: "Nation shall speak peace unto nation."

What underlies that resonant motto - nation speaking to nation - is the idea that the BBC exists not just for Britain, but carries British voices to the rest of the world, sharing British culture and contributing to a global conversation.

The question is: does this idea still have currency today?

After all, the world we live in is very different from the world John Reith inhabited 80 years ago.

As is Britain, and its relationship to the rest of the world. Let's not forget that when Reith launched the first BBC overseas service, he didn't call it the World Service. He called it the Empire Service. Things have indeed changed since then!

The latest BBC Royal Charter, agreed in 2006, restates that concern for an international dimension to the BBC's work.

It identifies six “public purposes” which together constitute its current day mission, and guide its delivery of public value. They include such things as: sustaining citizenship, promoting education, stimulating creativity.

But also charge the BBC with:

bringing the UK to the world and the world to the UK

It's a bold aspiration. It calls on the BBC to open wide a window, so that the world can see more of Britain – but also that Britain can see more of the world.

Not simply a voice telling the world about Britain, showcasing British culture and British ideas, but also as listening ear and a seeing eye, capturing key events and ideas from around the globe and bringing them back to the UK to nourish and enrich Britain's own public debates and cultural life.

And it forms the underpinning for the three elements of the BBC's global mission, announced today.

One, bringing the world to the UK by enabling licence fee payers to enjoy the best ideas, talent and debate from around the world.

Two, bringing the UK to the world, by serving specific international audience needs and spreading values that the UK treasures and promotes.

And three, generating new financial value from BBC intellectual property, an objective which is primarily fulfilled through BBC Worldwide, the BBC's commercial arm.

I'll say more on each of these later, but first, why is this important?

I certainly sense a hunger among the British public - particularly among the young – for the BBC to do even more to bring the world to the UK. I hear this at the public meetings I attend around the UK, and our research supports this, with three-quarters of those aged between 15 and 24 placing importance on the BBC's role in helping them appreciate what is going on in the wider world (2009/10 Purpose Remit study).

Younger British people in particular are now astonishingly well-connected to the rest of the world. An increasing number have direct family links to worldwide diaspora. Cheap and accessible travel, together with the power of the internet and social networking, further shrink the world.

This all creates a greater thirst for information about other nations and cultures. This is not just about news and current events but a wider cultural perspective, and they look to the BBC to fill this need.

Part of the BBC commitment to bring its audiences the highest quality content includes searching out great programmes not just from the UK but also from around the world.

And since I'm here in Stockholm, I'm very happy to say that Swedish culture is part of that rich mix UK audiences expect the BBC to deliver.

As I'm sure many of you know, over the last few years the UK has enjoyed new exposure to Swedish crime fiction. And the BBC has played its part in developing and feeding this appetite.

The BBC mounted its own very successful adaption of Henning Mankell's Wallander novels starring Kenneth Branagh. He won a BAFTA "best actor" award last year for his work on the series.

But, equally importantly, the BBC also ran the Swedish television version starring Krister Henriksson - all 26 episodes, with English subtitles - and they, too, attracted an enormously appreciative audience.

BBC viewers really liked the opportunity to see both versions, to compare and contrast scripts and styles and performances and approaches. Some, it has to be said, even preferred the Swedish version, perhaps feeling that it was inevitably more authentic.

And I am now enjoying the Danish-made police thriller, Forbrydelsen, which is currently being shown under the name The Killing in the UK. So please nobody tell me the end of the story!

But I suppose it will always be on the subjects of news and journalism that audiences outside Britain will think of when they think about the BBC.

Many of you will be familiar with the BBC's home for international-facing news, the World Service, which broadcasts across radio, television, online and mobile phones in English and 31 other languages.

At present funded by the UK government by grant-in-aid, the aim of the BBC World Service is "to be the world's best known and most respected voice in international news, thereby bringing benefit to the UK, to the BBC and to audiences round the world".

Britain's voice in the big international debates about climate, poverty, world trade and human rights is strengthened by the contribution of the World Service, which achieves credibility by its editorial independence from Government.

It is a good example of that ‘soft power' which US foreign policy expert Joseph Nye argues a modern nation should seek to develop.

I am in no doubt that the global reputation of Britain is enhanced by the quality of the BBC World Service.

And this is no empty boast.

A recent piece of independent audience research showed that four out of five BBC users in Egypt, Pakistan, Turkey and Kenya felt the World Service made them feel positive about the UK. In total, the audience figures for BBC World Service on radio, television and online, reached 180 million people last year.

This is despite operating in an increasingly challenging environment.

You may have seen last month reports of the World Service closing some services and reducing staff numbers.

As part of the new settlement, licence fee payers will fund the World Service from 2014. But the World Service's grant-in-aid up until that point has been cut by some 16% as part of the Government's Spending Review.

This has forced us to take some tough decisions, made all the tougher by the need for the changes to be made quickly.

It will mean the closure of five full language services, the end of radio programmes in seven languages, a phased reduction from most short wave and medium wave distribution of remaining radio services and the expected loss of 650 jobs from an overall total of 2400.

And the challenges are much bigger than simply financial.

Competition from other players is well-funded and growing rapidly. It comes from international broadcasters both commercial and state, especially organisations like Voice of America and China's CCTV, as well as online aggregators like Google News, and increasingly, from non-traditional media like Wikileaks. And shortwave is in sharp decline as people switch to FM or other multi-platform services.

These challenges do not change the fundamental editorial principles which underpin the BBC's international news services. Nor do different funding streams – whether advertising or the public purse. And overseas we will need both.

As a result, levels of trust among BBC World Service audiences remain very high. And the long tradition of global audiences turning to the BBC for trustworthy news in times of crisis continues strongly.

During the height of the recent Egyptian protests visitors to the BBC Arabic website grew by 200%. The “live stream” of our Arabic TV channel received up to 700,000 video requests per day. The number of people accessing BBC Arabic via their mobile phone doubled.

Now, the Arabic news media are vibrant and easily accessible: hardly a place where information is scarce. The Arabic news audience understands bias and in many ways assumes it in everything, so in a crisis, if people want news they can trust, they turn to the BBC.

Not all governments are pleased that their citizens rely on the BBC for information though. Some governments still do the BBC the great honour of jamming its international news broadcasts.

But their citizens still find ways to watch and listen, and to contribute to BBC coverage.

The BBC's Persian-language television service, for example, was launched in 2009. Almost instantly it was declared illegal by the government of Iran and serious jamming began before the year was out.

The service is still not allowed to station any staff for the service inside Iranian borders. But despite this, the service is well known and highly appreciated inside Iran.

In the aftermath of the disputed 2009 election in Iran the service was receiving half a dozen or more user-generated items every minute from inside Iran. Twitter and Facebook carried hundreds of thousands of references to reports on bbc And black-market DVDs of BBC Persian news were changing hands for hard cash in Tehran.

In the last few weeks, the service has been jammed again. Nevertheless, the Arabic and Persian services joined together for a joint live interactive programme on the Egypt crisis – enabling young Arabs and Iranians to speak to each other.

What audiences appreciate is the manifest impartiality of the World Service's journalism. Neither the reporting nor the commentary nor the agenda is driven by narrow British national interests – it all has the same commitment to impartiality. That is what we have to protect.

Of course some argue that because the World Service is currently funded via a Government grant, it must inevitably be a mouthpiece for British foreign policy. It's not, of course, and the BBC fiercely protects its editorial independence.

But these concerns do shed light on both the difficulty and the importance of impartiality. After all, impartiality is an ongoing balancing act, not something that once attained can be forgotten. And a key part of the Trust's work is to continually test impartiality and accuracy in order to reassure audiences that the BBC is editorially independent from both Government and other commercial organisations.

That's why the new arrangements agreed in the BBC licence fee settlement, while challenging, do have benefits. When the BBC takes on the responsibility for funding the World Service in 2014/15, it will then be even easier to demonstrate that the World Service is completely independent of Government.

We're still working on the details of how the service will be integrated into the rest of the BBC, and finding the funding will inevitably mean some tough decisions, but we know that there will be efficiencies to be had in combining international news resources as well as in sharing the understanding of other cultures.

And our new global strategy sets out a clear direction for our overseas news operations. They must continue to generate international public value and bring credit to the UK by seeking to provide the ‘best journalism in the world', rooted in the BBC's editorial values of integrity, independence and impartiality.

For me, the key here is that the BBC ought not to behave differently abroad from the way it behaves at home.

It must treat its international audiences with the same respect as its national audiences. The fundamental editorial principles applied by the BBC ought to be exactly the same whether the audiences are in Britain or anywhere else.

And this must also apply if the audiences are not just audiences but customers too.

Because the BBC's global mission is not just editorial. It is also commercial.

BBC Worldwide, the commercial arm of the BBC which operates around the globe, is a very important part of the BBC. It takes British creativity, talent and culture to a global audience, returning the profits to the BBC to help pay for more BBC content.

As you know, BBC Worldwide operates on many different platforms and in many different countries. It has built a portfolio of its own channels, plus others through joint ventures, which now include 29 BBC-branded channels, broadcasting in over 100 countries around the world. It also invests in content, licenses formats and rights, sells and distributes programmes, and publishes DVDs and magazines.

Now, as I say, Worldwide is important to the BBC because its profits help to fund the BBC. That funding is small in comparison to licence fee income, but valuable nonetheless.

This funding is not just cash back to the BBC – Worldwide also plays an important role in co-funding output. Programmes like the award-winning Planet Earth, the internationally popular Top Gear and the RSC/BBC collaboration to produce Shakespeare's Hamlet, which I watched with great pleasure this weekend here on ST2, would not have been made without support from Worldwide, which invests in production for audiences in the UK on the basis that the programme will have a market value overseas.

This forms a virtuous circle, with further profits from the sale of the programme coming back to the public service part of the BBC, increasing the value for licence fee payers and at the same time, fostering new collaborations and allowing the BBC and others to maintain ambitious programming.

I mentioned at the start that the new licence fee settlement will mean a significant fall – at least 16% - in available income for the BBC's core services over the next few years. Let me now touch on what this means for our commercial arm.

Worldwide is very successful. For each of the last two years its sales have been more than £1bn. And its cash contribution to the BBC, including dividend and investment in programming, stood at £170m in 09/10.

This contribution will become increasingly important as we implement the tough new licence fee settlement.

Now, given this pressing financial need, the temptation might be for the Trust to say to Worldwide: just let rip. Don't worry too much about editorial or commercial principles. Invest in whatever will make the most profit and concentrate entirely on squeezing as much cash as you can from international markets so that we can maintain spending on the BBC in Britain. And some do argue just that.

But the Trust believes that would be a very short-sighted decision. It would be an invitation to risk doing long-term damage to the BBC's international reputation and possibly to our national reputation too.

Following our review of the corporation's commercial activities in 2009, we have taken a different direction.

We are clear that our commercial activities are not an end in themselves. They must exist to support our public mission. In addition to the overall responsibility to generate funding for the BBC, the commercial principles which we apply to BBC Worldwide make it clear that:

  • All BBC commercial activities must fit with the public purposes set out in the BBC Charter
  • BBC commercial activity must not be allowed to jeopardise the good reputation of the BBC or the value of the BBC brand
  • And all the BBC's commercial activities must comply with the BBC's fair trading guidelines and avoid distorting the market in which they operate.

Maintaining these high principles while at the same time requiring Worldwide to increase its cash contribution to the BBC would mean some difficult trade-offs.

In this company as in any, there will be debates about the right balance between growth and dividend.

As the representative of the public as shareholders in the BBC, the Trust is very clear on one thing. The BBC cannot afford never-ending growth in its international activities and must never put short-term financial need ahead of the long-term imperative to protect its reputation for honesty and integrity. This could bring unacceptable commercial risks for what is, after all, a public body, as well as dangers for quality, editorial control and, as a result, reputation.

And our new global strategy is very clear about what we expect from Worldwide.

First, that the primary purpose of international commercial activities beyond news must be to generate additional revenues for the BBC, with the core of Worldwide's activity focusing on the exploitation of content commissioned by the UK public service part of the BBC.

As well as programmes, this includes technology. The Trust recently gave the green light for Worldwide to pilot an international version of the iPlayer on the iPad. A good illustration of how the Trust would like to present BBC content to audiences around the world.

And second, nothing must be done which could affect either the BBC's brand and reputation or the markets in which Worldwide operates.

We've worked closely with the Executive to get to this point, and this new strategy is, I believe, a strong example of how the Trust is reshaping the BBC in the interests of licence fee payers, bringing greater clarity, transparency and focus to its operations.

Which brings me to the BBC Trust itself.

At the heart of all national public service broadcasting lies a fundamental tension.

On the one hand there is government, which either directly or indirectly controls the funding - or at least the funding mechanisms - that pay for national broadcasters.

And on the other hand there are the national broadcasters themselves, always seeking to keep themselves independent of the governments that, directly or indirectly, provide their funding so that they can maintain the trust and confidence of their audiences.

In a democratic society, this independence is key to holding the public trust and nowhere is that more important than in the genre of news.

The reason is obvious.

Governments want to communicate their policy objectives in a positive way. But it is not the job of a national broadcaster to do that. It is their role to explore and ensure challenge.

The BBC is rightly proud of its reputation for the impartiality of its journalism. And audiences tell us that they value it extremely highly.

But this impartiality can only exist as long as the BBC is independent of government. Impartiality and independence are two sides of the same coin. So, ensuring independence from government and undue commercial influence is absolutely central to any national broadcaster that wants its journalism to be taken seriously.

And this applies not just to the BBC but to every national broadcaster.

In the BBC's case a key factor underpinning its independence, and therefore its ability to report impartially, is its governance arrangements.

The BBC Trust stands between the government and the BBC and speaks for the public as owners of the BBC.

To have a body playing that role is not uncommon in the governance of national broadcasters. There are debates in many countries just now – including Sweden, of course – about the right way to govern PSBs in the modern world. I understand that here you have something similar in your Swedish Broadcasting Commission. But, as we shall see, the BBC Trust is a bit different.

Our job as BBC Trustees breaks down into three key areas.

Firstly we defend the independence of the BBC from undue political or commercial pressures.

Secondly we make sure that the BBC is properly responsive to the wishes of the public who pay for it.

And thirdly – and this is an important part of our work – we make sure that the BBC does not misuse its economic power to distort the wider media market, that it creates, not destroys, public value.

I'd like to say a little more about this third duty, because I realise for some here that it will be treated with caution.

The public service role of the BBC is complex one. It is not just about providing breadth and depth in choice of programming, it is also about the way the corporation behaves.

The BBC explicitly accepts that it is not the only provider in the media market place. The UK public does not only consume BBC services. It relishes the wide choice of media - BBC and non-BBC - now available to UK audiences.

And the BBC must do nothing to reduce this choice or diminish the richness and variety of the British media diet that the British public values so highly, and which can itself promote innovation and public value.

One key change of the new Charter was to give the new BBC Trust responsibility for deciding whether or not the BBC should introduce new services. A decision previously taken by Ministers – a new independence, but one that carries with it a price.

For we must now balance the public value a new service will offer against any negative market impact to ensure that the first outweighs the second and that this is truly a priority for the public's money.

This public value test - or PVT – is applied before we allow the BBC to launch a new service or make a significant change to an existing service.

In the British context, I believe the PVT has served the public well.

We engage in a rigorous evidence-based investigation. We consult widely. We report openly, sharing the evidence we have used as well as our reasoning and conclusions. And at the end of the process sometimes we say yes – but sometimes we say no.

This open, objective, evidence-based process has given the Trust's public value test – or PVT - rulings a quality of robustness and resistance to further challenge, which has much to commend it.

There are inevitable tensions built into the arrangement, of course. Tensions between the Trust and government; tensions between the Trust and some of the BBC's competitors; and sometimes, indeed, tensions between the Trust and the rest of the BBC...

And I realise that what works in the UK may not be right for the different circumstances and structures that apply in other countries.

But on the whole, the PVT, along with the twin pillars of good governance – informed support and challenge – has meant that the Trust model has served the British public, and the wider market, rather well.

It has kept the BBC robustly independent.

It has delivered a BBC that continues to thrive despite huge changes in the economy, in technology, and in the wider competitive context.

And it has established clear boundaries around the BBC's activities that leave space for other players in the market to flourish and prosper for the wider public benefit. And this is the same regardless of the BBC's scale in the market, and whether it is operating abroad or on home turf – the same set of standards for home and for overseas.

I must now move to a conclusion and hope that I leave food for thought and debate.

I have sought to underline the over-riding importance of independence from state and commercial influence for healthy, ambitious public service broadcasting.

I have emphasised that public service broadcasting values of impartiality, accuracy, fairness and commitment to quality are paramount and must be reflected in international behaviours as well as domestic.

I recognise that they must also be combined with an emphasis on openness, value for money and sensitivity to the contribution made by commercial broadcasters.

I draw these two sets of issues together in the conclusion that to survive and to continue to be healthy and strong we need continuing public support.

That rests on strong mechanisms to protect independence but also to challenge existing practice and to promote accountability to those who ultimately pay – the public themselves.

Thank you for listening. I am happy to take questions.