Press Office

Thursday 10 Jul 2014

Speeches – 2009

Jana Bennett

Jana Bennett

Director, BBC Vision

Traditional media: coping strategies vs winning strategies

Speech given at the FT Digital Media and Broadcast Conference 2009

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Good morning and thank you for inviting me to speak here today. It's clear to us all that the broadcast industry is in the midst of a seismic change, there's uncertainty as a result of structural and cyclical forces as well as the recession. And things are moving at a great pace – only last week CH5 and ITV announced job cuts and further cuts to their budgets. And behaviour is changing fast too. If the first stage of multi-channel was a move from scarcity to choice the next will be from choice to control for the audience.

All together this means we face huge challenges and stark choices. How can the industry restructure to deal with these? We are not embracing new approaches and technology simply because we can or because it's the right thing to do, but because it is an absolute necessity in terms of survival. Most important is guaranteeing quality of original content – whether that's Comic Relief does dancing or Red Riding on Channel 4 or Margaret Thatcher in terms of drama or Coronation Street, creative content really matters in this country.

Of course, the BBC is in a privileged position with a guaranteed licence fee income that allows us to plan for the future. We know that we have to make every pound of public money work as hard as possible. But it's important to be clear that we are not immune to economic circumstances and the tectonic shifts our industry is going through. Already in the BBC Vision part of the BBC, the part of the BBC I run, which is the six television channels, we've made savings of 5% year on year since 2004, that's a total of about £355 million in savings with another £1billion planned over the next five years. Across the whole of the BBC we have reduced our staffing levels by around 17% or nearly 5,000 people in less than five years. In terms of talent as well, their fees are not excluded from the economic pressures faced across the organisation and these will be affected in our ongoing negotiations as well, as we look at reducing our cost base.

Covering the news about CH5 and ITV, commentators have moved quickly to debate about whether the BBC was too big and powerful and therefore part of the problem. I recognise that it's extremely difficult for the industry to plan for the future when short term solutions can seem like the only option. But short term survival strategies have to be coupled with future proofing and innovation. My belief is that the BBC can be part of a winning strategy for the whole of UK media PLC. An independent Price Waterhouse Cooper report published last year estimated that the economic impact of the BBC is approximately £5bn in the creative sector alone, rising to around £6.5bn in overall economic impact. It said that the stable funding of the licence fee is a vital source of stability for the entire UK broadcasting industry. So, in a tough economic climate the BBC really can help sustain the creative industries as opposed to having a negative effect.

Our Creative Future strategy, established four years ago, is about re-prioritising both editorially and technologically. Coupled with the efficiencies that I've mentioned, savings in content that included reducing the actual amount and volume of our content being produced to concentrate on the Fewer, Bigger, Better and also business modernisation - these are different strands that enables us to invest in the new technologies that are essential to our survival as a 21st century broadcaster: this means Digital Switchover, BBC iPlayer, Freeview, BBC Mobile, BBC HD and the Digital Media Initiative which again looks at both our cost base and releasing creativity through going tapeless. Add to this our regional strategy - to boost out of London network spend to 50% by 2016 and the move to BBC North, to Salford, and our partnership proposals. These are all ways of helping not just other PSBs but other players within the industry.

Before I speak in more detail about a number of these partnership proposals I think it's important to say that partnership is now very much a fact of life across many industries. A series of forces are acting on these industries - globalisation, new technology, the fragmentation of consumer bases and revenues and the global recession, all of them together. Rivals have a common interest in working together, allowing them to overcome common challenges but at the same time deliver the benefits of creative competition. There are many examples that I could point to. Take Formula 1 racing, something with competition absolutely at its heart. They are working together to develop a standard, low-cost engine which could be used by approximately half the teams with other engines' performances pegged to that of the standard engine. The aim? To keep teams secure and competitive in the industry who might otherwise have had to exit for financial reasons. Would we have seen something like this 10 years ago? Perhaps not.

We've suggested a range of proposals for broadcasters for how the BBC could play a role in securing plurality and choice in public service broadcasting. We used Deloitte to model how much value our proposals might create for other PSBs. That analysis showed that our partnership proposals could deliver at least £120m a year of new value to commercially funded public service broadcasters by 2014. Cumulatively over the period of the current licence fee settlement – up to 2012 – these proposals could create value to PSBs of five times their cost. This is what we mean by value creation - investment the BBC makes can, if done in the right way, have a powerful positive effect on our partners as well as helping the BBC to deliver its purposes more effectively.

These proposals, subject to BBC Trust approval, include opening the BBC iPlayer to other PSBs, developing a common industry standard to deliver on demand content over broadband to the TV screen, pooling regional news resources and sharing technology to produce and edit digital content. We are also proposing a newspaper syndication partnership to share BBC content. In addition, Lord Carter's Digital Britain report looks to the BBC to play a broader role around media literacy, the promotion of broadband and open standards, and digital radio.

The issue we are discussing here today is how traditional media providers can adapt to the digital future, and sometimes this is far from straightforward. In contrast to Hulu in the US, Project Kangaroo as I mentioned earlier, that's BBC Worldwide's proposed joint venture with ITV and Channel Four, was blocked by the Competition Commission. Now, although we believed that Kangaroo was good for audiences and good for public service broadcasting, the Competition Commission felt that, particularly with VoD at a very early stage of development, there was too much uncertainty to permit the pooling of retail and wholesale VoD rights as envisaged by Kangaroo.

However, the importance of video on demand for our audiences has not diminished. The BBC iPlayer continues to evolve – for example we will in the next month make the BBC HD channel available on the iPlayer which for some people will be their first experience of High Definition viewing. The importance of VoD is also why we feel that sharing the benefits of iPlayer is the way forward for the industry. This partnership idea is still very much in development, but could involve sharing the technology that underpins the BBC iPlayer to enable other broadcasters to deliver a really high quality and consistent user experience of video on-demand. Our audiences are already telling us that there is something special about the BBC iPlayer – they really love it – as much for its fantastic content as well as its ease of use. We feel an obligation to share what lies at the foundation of that. The intention is not to create another Kangaroo and the sharing of iPlayer will not involve any of the features, notably around the pooling of content rights, which raised the concerns expressed by the Competition Commission. At the heart of the proposal is the ethos of public service. That means ensuring that we maintain all the benefits that plurality and creative competition can provide. It will enable public service organisations to create business models which can work in the digital age and provide their own editorially independent video on-demand services.

If we want to win rather than cope we have to keep asking questions about how the audience will want to consume our content. How do we bring on-demand and the internet into the living room for example? Since 2004 TV ownership has grown by over a million sets and TV sales by 2.6m. This doesn't indicate a future where viewers are only consuming TV on a laptop or mobile. The BBC Trust last week launched a consultation process into Project Canvas, the proposal to deliver and develop partnerships to allow internet protocol television (IPTV) through a broadband connected device such as a set top box. Viewers would be able to watch on-demand services such as the BBC iPlayer or ITV Player via their TV sets. Canvas is envisaged as an open platform. It recognises that we are moving towards a place where the net and TV exist in the same space. If Canvas is approved it would be available to both broadcasters and ISPs – internet service providers – who want to make their content available via the net. This could provide immense benefit to the creative communities, helping to sustain the industry and to maintain the impact of public service broadcasting.

The idea of sharing the iPlayer and creating Project Canvas also offers routes for broadcasters to bring their archives to audiences, unlocking the huge hidden value and creative capital in the process. So we recently appointed Roly Keating as Director of Archive Content to lead on creating a plan of how we can make available to the audience the close to a million hours of TV and radio programming that rest within the BBC's archive. This is crucial as the internet challenges old assumptions about the lifespan of a programme. We are delighted to announce today an agreement with the British Film Institute to create an innovative approach to making rich archive content universally available across the UK. These are vast creative resources and we are determined to maximise the public's access to them, although no decisions have been made about how much of this can be commercial and how much can be free. We want to build on the opportunities presented by the development of the UK's broadband infrastructure, thereby contributing to the building of Digital Britain.

Production techniques also continue to evolve and are very much of importance for the strategy of surviving. The BBC's Digital Media Initiative will enable the BBC to make far better use of the assets it creates – from its rushes to its finished programmes, from its radio archive content to its web products. At first this will benefit our production teams and our audiences including those production teams who are actually making programmes across the industry for all kinds of audiences. But the next stage is to see how we can share the thinking and technology behind DMI with the rest of the industry so that we can all benefit from a fully digital and connected UK media industry. DMI is about investing for the future to realise both efficiency and creative benefits and to facilitate market driven innovation. Over the next few years we are planning to take around 20% out of TV production costs and DMI will be very much a part of that process. We estimate that DMI could enable production efficiencies of some 2.5% in cost per hour, saving the BBC £100m by 2015 and potentially the wider industry an additional £40m per year if our partnerships are successful.

Regarding BBC Worldwide where there are another set of imaginative ideas in development, including partnering with Channel 4. In a report last week the BBC Trust stressed the importance of the BBC's intellectual property and the need for us to exploit this so as to continue to plough profit back into programme making at the BBC. The development of the Worldwide plans all depend on the detail. If you break the link with the BBC's intellectual property you massively undervalue BBC Worldwide and the relationship between the BBC and the licence fee payer. So in my view we should avoid any risk of top-slicing by the back door – it disrupts the value chain, it disrupts the rationale behind value creation per se and would leave our brands exposed. That's not to say we can't come up with very carefully worked partnership between Channel 4 and BBC Worldwide, subject of course to Trust approval, but it is a delicate ecology.

At the heart of all of these plans is – and has to be – the audience. We must be creative both in the terms of the content we create and also the way that we deliver it. The range, quality and distinctiveness of the programmes and content we produce must continue to be the bedrock of everything the BBC does. The licence fee allows us to take creative risks and support emerging talent. We believe our partnership proposals will create added value for audiences by offering them more choice and higher quality PSB content on multiple platforms. Audience expectations of what the licence lee should provide have grown and will continue to grow and we must satisfy these expectations.

So, back to the original question – coping strategies vs winning strategies. The BBC's role is to be part of a UK winning strategy. We can't solve all the problems but we can share and partner to help sustain the sector as a whole. A new kind of BBC is emerging. We and other broadcasters are being driven by a combination of both crisis and opportunity. The BBC must embed our partnership agenda into its DNA if it is to survive – not as an act of political expediency, but of genuine venture capital provision for the benefit of the UK's creative industries as a whole. Thank you.

 

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