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Speeches

Greg Dyke

Director-General


Richard Dunn Memorial Lecture


Sunday 24 August 2003
Printable version

Speech given at the MediaGuardian Edinburgh International Television Festival


Press release


Not checked against delivery


It seems every generation has a media revolution. For my mother, it was radio; for me it was television; for my children, it is digital.


Each revolution is different, and we are still learning about how digital can make a real difference to people's lives.


Today I want to look at the future of the BBC in the context of what we already know about how the digital revolution is unfolding.


I believe that the next phase will be about how we, as a society, can harness the new digital technologies to bring benefits to everyone, not only those who can afford to pay.


To bring benefits to communities, families, schools, universities, as well as to individuals.


In short, I agree with what Tessa Jowell said yesterday.


I believe the second phase of the digital revolution will be more about public than private value.


I will come back to this theme, and what it means for the BBC, later.


I also plan to revisit the MacTaggart speech I made here in Edinburgh three years ago.


I'll ask, with the benefit of hindsight, what did I get right and what did I get wrong? As part of that, I'd like to say something about the future of ITV.


And I'm sorry to disappoint you but one thing I am not going to talk about today is the Hutton inquiry.


As long as the inquiry is underway, I don't think it is appropriate for me to talk about its implications for the BBC or for anyone else. There will be plenty of time for that later.


First, though, I want to say a few words about Richard Dunn, who died suddenly five years ago.


Following his death, Pearson Television decided to fund this annual event at the Edinburgh Television Festival and I am very pleased to be this year's Richard Dunn interviewee.


Richard was in many ways the opposite of me. He was tall, suave and very good looking.


I always joked with him that his biggest problem was that, because he looked like Wyatt Earp, people expected him to be Wyatt Earp.


And of course no-one could actually be Wyatt Earp because romantic figures like that didn't really exist - our industry invented them.


In his career Richard had great successes but also one great disappointment - the unfair loss of Thames Television's licence in the farcical ITV auction of 1991.


But importantly Richard came through that experience. With the support of his very close family, Richard moved on and rebuilt his career with flair and dignity.


Most of all Richard was a man of integrity. He was not always right - none of us are - but in my experience of him his motives were always honourable.


He didn't come from a programme making background but he understood that broadcasting was more than just a business, something I am not sure his successors in ITV have ever recognised.


And then came that day in August 1998 when, out of nowhere, he died at the ridiculously young age of 54.


Our industry lost a good man, many of us lost a good friend but of course the greatest loss was his family's.


Now to my MacTaggart speech of three years ago.


On that day, I outlined what we planned for the BBC in the first phase of the digital revolution.


When I read it again in preparation for today, I realised that we have delivered on most of these plans. For instance:


• We did move the news on BBC ONE from nine to ten o'clock and we did it earlier than predicted


• We have launched four new television channels - BBC THREE, BBC FOUR and our two children's channels


• We have reduced the cost of overheads in the BBC from 24% of total expenditure in 1999 to 13% this year which is 2% better than I predicted


• We have increased our real spending on programming by more than 30%, as I promised we would


• We have increased our spend out of London and in particular we have increased the budgets for regional and national programming by £70 million - £20 million more than the £50 million I said we would


• And we have increased BBC ONE's budget by £165 million a year - with nearly half of that money being spent on original drama, just as I promised we would.


The irony, of course, of doing what we said we were going to do is that, three years ago, people were still talking about the BBC being in terminal decline.


Today, the accusation is that the BBC is too successful, too powerful and too competitive.


As I have said on many occasions, this is one of the few jobs in the world when you get crap for losing and crap for doing well.


Of course, the biggest change since I gave that lecture has been the relative collapse of ITV.


Now, I can't pretend that I predicted this would happen as quickly or as dramatically it did.


However, I did say and I quote - "Channel fragmentation will gradually erode the current revenue base of Britain's commercial channels. If in the commercial world you lose share year after year, in the end you either change your cost base or fall off the cliff."


So I did predict the economic impact, over time, of share loss for ITV in a multi-channel world.


What I didn't foresee was the meltdown of the advertising market at the same time.


Nor did I predict the failure of ITV's management to deal with that situation effectively.


The combined effect of these three factors has been devastating for ITV.


In three years, ITV1's audience share has fallen from 30% to 24%, and their revenues from £2 billion a year to £1.7 billion.


It could well turn out that we won't see a single year this decade in which ITV's revenue will, in real terms, reach the figure they achieved in the year 2000.


Of course some senior people in ITV have blamed the BBC for their plight.


My answer to that is they should look much closer to home for many of the reasons for ITV's recent failures.


Take a few examples of decisions by ITV's management over the past five years:


- They chose to invest £1.2 billion in ITV Digital only to let it go bust


- They changed the name of On Digital at a critical time and as a result seriously damaged the brand name of ITV


- They set up the doomed ITV Sports channel and spent more than £100 million a year for sports rights which weren't conceivably worth more than £30 million


- They decided to spend some 10% of ITV's total network budget on Premier League highlights, and got back nowhere near that in revenue for the slot


- They moved the News at Ten from its traditional slot, which turned it into News at When and as a result permanently damaged ITV's reputation as a serious source of news


- They allowed Channel Five to buy Home and Away and as a result seriously damaged ITV's early evening schedule while boosting Channel Five's


- They took millions of pounds of dot.com advertising money, which created enormous cost inflation and in the process upset ITV's traditional advertisers, who went on to take their revenge when the dot.com money went away.


The BBC had nothing to do with any of these decisions, yet, between them, they explain a good part of ITV's recent problems.


Having said all that, a weak ITV is not in the BBC's interest; it is not in the interests of the British broadcasting industry as a whole; and, above all, it is not in the interests of the people who matter most, the viewers.


A healthy broadcasting market in the UK needs a third gorilla alongside the BBC and Sky - and that third gorilla should be an advertiser funded, free to air television group with ITV at its heart.


That way, you get a proper balance of influence; that way, no one player can call too many of the shots; that way, no one player is too powerful.


Now, if we want to turn ITV into this third gorilla, some things will have to change.


If they don't, I believe the outlook for ITV is bleak.


If my analysis of ITV is right, then it must be in the interests of both our broadcasting system and its audiences for the merger of Carlton and Granada to be allowed to go ahead on reasonable terms and for further consolidation within advertiser funded broadcasting to be allowed.


It also means that, when the ITV licences start to come up for renewal in 2004, both Ofcom and the Treasury should recognise that ITV is no longer a cash cow.


For ITV to be paying more than £300 million a year for its licences is not sustainable in even the short term.


In the past, regulatory changes like these could easily have happened. Today they might well not.


The British television system was founded on the belief that the cultural imperative was more important than the economic.


Cultural policy was more important than competition policy.


But now, for the first time, competition policy dominates.


But if these vital changes don't happen, there are two likely results.


First, in the short term, ITV will have no option but to reduce its spending on local and network programming.


We all know that, inside ITV, work is already underway to model the effects of taking £100, £200 and £300 million out of the network budget.


The second and perhaps more profound outcome is, I suspect, that sometime later this decade the owners of ITV will decide that it is no longer worth their while keeping ITV as a public service commercial broadcaster.


I think the magic number is around 80%.


When 80% of the population can receive digital television - and today that number is 44% and growing fast thanks to Freeview - ITV could simply rent digital capacity from satellite, cable and Freeview operators, and give up its analogue spectrum and most if not all its public service obligations.


It would only keep the ones which made commercial sense.


The cuts could include much of ITV's regional output, children's programming, religious programming, education, current affairs and the arts, to name just a few.


As we speak, I suspect there are people inside ITV doing this long term financial calculation.


I also suspect that some of the large US media companies, who sadly are now allowed to own ITV, are doing exactly the same thing.


Of course, the question is - does it matter?


Well, it would to a lot of viewers.


Under this scenario, 20% of the population would not, on day one, be able to receive some of their favourite programmes like Coronation Street or Emmerdale, but that might only be for a few years.


If and when analogue switch off happens, everyone would be able to receive "new" ITV, an ITV not financially encumbered by public service requirements.


The more lasting effect of this fundamental change in ITV would be on the type and volume of programmes being made in the UK.


There would be an inevitable drop in the total investment in the production sector with far fewer public service programmes being commissioned.


In business terms this could work well for ITV.


The savings in programme costs could easily outweigh the initial loss of audiences.


This is because the lost viewers would almost certainly be the least attractive to advertisers - older, poorer and more rural.


And there is plenty of evidence from Europe that commercial broadcasters can be very successful with much less investment in original production than ITV currently spends.


So the business case for a non public service ITV may well stack up.


But there would be cultural costs to Britain which could be high.


ITV's traditional commitment to public service broadcasting, alongside that of the BBC and Channel Four, is one of the reasons why Britain's television output reflects our culture, our tastes and our values.


If ITV chose to shed its public service commitments, this could all change.


Crucially, what we all have to realise is that the government of the day would not be in a position to stop ITV from doing this.


The rules of the game are changing, and the balance of power between the regulator and the regulated is changing with them.


Under the old rules, the Government owned the spectrum and the commercial television companies needed it.


This gave the politicians the power to impose public service broadcasting.


Under the new rules, spectrum is plentiful and allocated largely by the market place.


What is valuable in this new world are strong and popular programme brands which, week after week, can reach millions of people. ITV, and Granada in particular, have a lot of these.


All this means that, under the new rules, politicians will have less power and broadcasters with successful programme brands will have more.


So if governments and regulators want to preserve some of the best features of commercial broadcasting in this country they will have to change their approach.


They will have to make it commercially attractive for ITV to remain a public service broadcaster.


The days of doing it by decree are rapidly coming to an end, and the days of charging ITV hundreds of millions of pounds for the privilege of being a broadcaster are certainly numbered.


Back to my MacTaggart lecture of three years ago.


So far I've talked about what I got right, but I also got some things pretty far wrong.


I said then I thought personal video recorders like Tivo and Sky Plus would revolutionise our viewing.


I still believe that will happen in the long term but so far only 150,000 homes have PVRs, and it will take far longer than I thought for them to have a real impact.


Three years ago I was also partly persuaded by the idea of more and more channel specialisation, with BBC ONE becoming more entertainment based and BBC TWO more factual.


I no longer think this will or should happen in this decade.


Both should stay as mixed genre channels, at least until analogue switch off and probably beyond that.


Finally, to demonstrate how wrong you can be, back in my earlier MacTaggart lecture which I gave here in 1994, I predicted that multi-channel television was stalling and that penetration could be less than 30% by 2002.


In fact the figure was nearly 50%. I think it must have been wishful thinking.


I'd like to return now to the theme I opened with in this lecture - the changes we are seeing in this, the first decade of the digital age.


The digital revolution has many things in common with the radio and television revolutions of the last century.


As before, it is making new and wonderful things possible.


As before, it is changing the way people use their time.


And, as before, it is changing the structure of our industry in profound ways.


But this latest revolution is also different in one important respect - it has been a private sector revolution, whereas for radio and television, it was the public sector that came first.


The BBC led the launch of radio in 1922 and television in 1936.


The commercial sector followed many years behind.


But by that stage, the sources of public value were well established.


The digital revolution has happened the other way around.


The BBC has not led it - commercial companies have.


The huge advances in digital television have been driven largely by BSkyB.


And the internet phenomenon in Britain was led by American giants like AOL and thousands of small start ups, many of which no longer exist.


The BBC's digital television and online services followed on.


The first phase of this revolution has produced some great things - in television, 200 channels, movies on-tap, imaginative interactivity, and 24-hour sport and news.


In radio, it is bringing many new specialist stations, and, in the world of online, it has brought information and new types of communication to your fingertips.


But, as I said at the beginning of this speech, I believe that we are about to move into a second phase of the digital revolution, a phase which will be more about public than private value; about free, not pay services; and about inclusivity, not exclusion.


In particular, it will be about how public money can be combined with new digital technologies to transform everyone's lives.


As we move forward, the BBC will not, should not and cannot be the only publicly funded player committed to making the most of these opportunities.


They will need the involvement, skills and financial support of government, local government, schools, universities, art galleries, museums, the voluntary sector and many other parts of our society.


There will also be opportunities for commercial companies in partnership with publicly funded organisations.


But there are areas where the BBC can play a vital role, and some where only the BBC can make a real difference.


Take the recent example of the turnaround of DTT and the success of Freeview.


In many ways, Freeview was the starting gun for the second phase of digital because it makes digital television and radio simple, easy and affordable for all.


Freeview wouldn't have happened without the BBC.


Looking ahead, let me give you one example of the kind of thing the BBC will be able to do in the future.


The BBC probably has the best television library in the world.


For many years we have had an obligation to make our archive available to the public, it was even in the terms of the last charter.


But what have we done about it?


Well, you all know the problem.


Up until now, this huge resource has remained locked up, inaccessible to the public because there hasn't been an effective mechanism for distribution.


But the digital revolution and broadband are changing all that.


For the first time, there is an easy and affordable way of making this treasure trove of BBC content available to all.


Let me explain with an easy example.


Just imagine your child comes home from school with homework to make a presentation to the class on lions, or dinosaurs, or Argentina or on the industrial revolution.


He or she goes to the nearest broadband connection - in the library, the school or even at home - and logs onto the BBC library.


They search for real moving pictures which would turn their project into an exciting multi-media presentation.


They download them and, hey presto, they are able to use the BBC material in their presentation for free.


Now that is a dream which we will soon be able to turn into reality.


We intend to allow parts of our programmes, where we own the rights, to be available to anyone in the UK to download so long as they don't use them for commercial purposes.


Under a simple licensing system, we will allow users to adapt BBC content for their own use.


We are calling this the BBC Creative Archive.


When complete, the BBC will have taken a massive step forward in opening our content to all - be they young or old, rich or poor.


But then it's not really our content - the people of Britain have paid for it and our role should be to help them use it.


This is just one example of the kind of public value which I believe will come with the second phase of the digital revolution, but there will be many others.


For example, broadband gives you the opportunity to develop truly local television services for the first time.


Our recent experiment in Hull has shown just how much audiences want these.


The overall aim should be to use public money and the new technologies to enrich our society in ways the commercial market place alone won't.


In some the BBC could lead, in others we could be a partner or a catalyst.


In many, the BBC won't have a part to play at all.


Three years ago on this platform I said that I thought that the BBC's role would be clearer ten years into the digital age than it was then.


Actually, I don't think it is taking that long to define.


What I have outlined today is the kind of idea we're looking at as part of our charter review process.


We'll have more to say about this idea, and others, in a few months time.


But our challenge is to work out how we preserve the best traditions of BBC broadcasting while at the same time taking advantage of what new technologies can offer, at a price everyone can afford, to bring benefit to all.


Thank you.


Notes to Editors


The MacTaggart Lecture given by BBC Director-General Greg Dyke at the Guardian Edinburgh International Television Festival, 25 August 2000



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