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24 September 2014
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Greg Dyke

Director-General


Speech given at the Manchester Evening News Business of the Year Awards


8 November 2001
Printable version

Good evening and thank you for inviting me to speak here tonight. When my office phoned and asked what subject you wanted me to speak about the reply came back that I could talk about "anything I liked but could I try to be both funny and profound".


I thought that's like the old joke about Max Boyce - who tries to be funny and Welsh. You can be funny or you can be Welsh but you can't be both.


This is the first time I've used that joke since the whole Welsh nation went into apoplexy when Anne Robinson decided to condemn the Welsh to Room 101 so I use it with some anxiety. At the time of Room 101 there were some in the Welsh parliament who wanted to summon me, as Director-General of the BBC, to appear before them to explain what I was doing allowing Anne to be so rude about the Welsh. They didn't seem to understand it was a joke.


So if there is anyone Welsh here tonight could I make it very clear that my opening remarks were a joke and were not intended to be offensive - well not very.


Now I'm very happy to take questions tonight and my experience at events like this is that the question and answer session is usually better than the speech so we'll come to that soon. And of course some things are worth waiting for.


It is exactly two years since I joined the BBC - two years in which the BBC has hardly been out of the headlines including our former Chairman's account of life at the BBC a decade ago found in the Sunday Times in recent weeks. I notice that Duke Hussey is now saying he wishes he had sacked my predecessor John Birt. As he did sack the two Director-Generals before John, you have to begin to wonder whether it was the Director-Generals who were the problem or was it possibly the Chairman? Either way the latest BBC chairman Gavyn Davies and I have already agreed a pact - I'll be nice about him in my autobiography if he's nice about me in his.


Since I joined the BBC I have taken out a lot of central costs. When I got there there were consultants all over the place and I've never really got on well with consultants. In fact I've always liked the definition of a consultant as "a bloke who knows a thousand ways of making love but doesn't know any women". It's a bit like the definition of an economist as "someone who is good with figures but doesn't have the personality to be an accountant".


Right, so having offended the Welsh, consultants, economists and accountants in the first ten minutes of my speech, perhaps I should move on.


One of the things I was determined to do when I joined the BBC was to improve its reporting of business. When I was running profit and loss companies I always thought that, unlike newspapers, television and radio reported business as if they were still in the culture of the sixties and seventies and that profits were somehow seen as the enemy. Anyone who made profits was interviewed as if they were stealing from the consumer.


As part of my campaign to change that approach to business - and I think we have made great strides over the past 12 months - we employed the Editor of Sunday Business, Jeff Randall, as the BBC's first ever Business Editor. He brought with him a new approach, which has been very successful, but like many people who join television and radio from newspapers he thought it would be a breeze. Instead he found it harder than he expected as he described in an article in last Sunday's Telegraph. I'll read some of it.


"The greatest difference between broadcasting and newspapers is the drunks. In newspapers the drunks are inside the newsroom. In television they're standing on the street heckling you.


"I was doing a two-way outside the Bank of England. The voice in my earpiece said ‘coming to you in ten seconds Jeff, tell them why interest rates are going down'. As I stood there, shaking with nerves, a car pulled up with four Essex girls in it and they shouted ‘oi tosser get your trousers off.' It's hard to look at camera and think of Eddie George after that."


In another part of the article Jeff describes waiting to talk about the decline of Marks and Spencer, a subject he knew well as a business reporter. The presenter of the Six O'Clock News turned to Jeff and said "Jeff what does it all mean for shoppers?"


"Shoppers" thought Randall, "I had never thought of shoppers and I could hear a little voice saying ‘well I'm buggered if I know' and that's what I wanted to say on the Six O'Clock News ‘I'm buggered if I know. Instead my mouth went up and down and nothing came out. It was ghastly."


On another occasion Jeff was asked by the presenter of the Ten O'Clock News what he thought of the management of Marconi. "I just wanted to say ‘they're a bunch of prats'" wrote Randall "but of course I can't say that on the BBC. I had to find a way of saying exactly the very same thing but making it acceptable to the nation."


Jeff is without doubt my best signing since I joined the BBC - if only for the jokes.


I am pleased to be here in Manchester because, although I was born and bred in London, part of me is Mancunian. My partner for the past twenty years is a Manchester girl - she was born in Walley Range and went to school at Loretto - but that's not really why Manchester has a special place in my life - my heart is here because of Manchester United.


I'm one of the thousands of southerners who has supported United since they were kids. My love affair with United began in the mid fifties when I refused to join my elder brothers in supporting Tottenham, where my grandmother had a pub just down the road from the ground, and instead I supported the Busby babes. So I cried at Munich, was depressed in the bad years in the seventies and eighties and have been celebrating virtually ever since.


Given my lifelong commitment to United you can imagine how excited I was back in 96 when I was asked to join the Board of Manchester United - a job, sadly, I had to pack up when I became Director-General of the BBC on the basis that it was seen as a conflict of interest to both buy and sell football rights. My kids have never forgiven me for joining the BBC because of that.


To give up four seats in the directors box at Old Trafford in exchange for a job where you end up the Daily Mail whipping boy is hardly a fair swop in their eyes. In fact I'm not sure it's a fair swop in my eyes but at least I took the decision.


Of course I was on the Board of Manchester United when BskyB tried to buy the company. I think it is well known that I was very much against the deal in principle and personally I was delighted when the Monopolies Commission came out against the takeover.


While I was on the board I also faced one of those dilemmas which parents shouldn't have to face. My eldest son was at university here in Manchester during the years I was on the board at Manchester United. Incidentally when I couldn't get to the game he used to use all four tickets in the directors box - something which did no end for his popularity amongst his fellow students.


Anyway my dilemma came when Manchester United got to the final of the European Champions League which was to be played in Barcelona on the night before one of his finals exams. He asked me for my advice, should he go or not? I thought for all of two seconds and said "Matthew by the time you are 31 no-one will give a toss what degree you got; but if you don't go and Manchester United beat Bayern Munich to win the European Cup you'll regret it forever."


He came, we won, and he got terrible marks for his exam. But he was there, it will always be one of the great nights of his life and he hadn't done enough work to get a first anyway.


My younger son was also in Barcelona that night and he was with me again earlier this year when England beat Germany five-one in Munich. I said to him that night that there he was just 14 and he'd sat through two of the greatest football occasions of my lifetime. He didn't seem at all impressed. Such is youth.


So back in Manchester I thought I'd use the opportunity to say a few serious things about sport and particularly sports rights and the BBC.


As you know until a decade or so ago the BBC had most television sports rights in this country although it is worth remembering it never had much live football. In fact I think there will be more live football on the BBC this coming year than in any year in its history.


The BBC's dominance of sport changed firstly with the arrival of pay television followed by the boom in television advertising over the last decade. The result has been that the BBC has lost some of the sports rights it traditionally held to commercial rivals. We couldn't afford - or chose not to afford - to pay the prices they were paying.


During that decade the cost of sports rights grew at a ridiculous rate. We've now reached the stage when Sky are paying £6 million a match for their 66 Premiership games - imagine paying £6 million for the rights to watch Derby versus Southampton - when ITV Digital are paying £100 million a year for their Football League contract where some games get ratings so low it would be cheaper to send out videos; and ITV's highlights show The Premiership costs some 8% of ITV's total programme budget - and it is about to be moved out of peak time.


It might surprise you but I don't criticise ITV for trying the Premiership in peak time on a Saturday night, in fact I quite admire them for making the decision. It was a risk but risks have to be taken in all areas of business and the very nature of risk means some fail.


Where I did criticise ITV when they won the Premier League rights - and remember the BBC won back the FA Cup and English internationals the same week - was the price they paid for them. At the time it was seen as sour grapes on my part, and it probably was because £60 million was a ridiculous figure, but ITV are now going to play The Premiership in exactly the same slots as we used to play Match of the Day last year - the only difference being that they are paying £60 million a year for the rights and we used to pay £20 million.


Ladies and Gentlemen, I think this is all about to change. I believe that the costs of sports rights have hit their peak and that the massive escalation seen in the past decade is coming to an end. In fact I believe some contracts - the Football League for instance - are so over priced that there is no chance anyone paying anywhere near such large figures again.


Let me explain why I believe this is likely to happen.


The massive inflation in sports rights was fuelled firstly by the arrival of BSkyB, the cable companies and ITV Digital - in other words the pay television platforms. More than 20 million people now live in pay television homes in this country and yet all three platforms are in financial difficulties. None are making money although Sky may be cash positive next year. The other two - cable and ITV Digital - have deep financial problems which weren't around when the last football rights were sold 18 months ago. They are all losing money because of the cost of sports rights. Next time the pay rights are up for grabs there could well be only one bidder - and if that is the case you can be certain Sky will pay the Premier League a much lower price next time.


The second factor in sports rights inflation came with the boom in advertising revenue over the past decade. This gave ITV the money to treble the amount paid for the recorded Premier League highlights. But suddenly advertising revenue has collapsed as some of you know only too well. ITV's revenue this year is down 15% on last year and next year's is expected to be a further 10%. It is the biggest collapse ever in television ad revenues and will certainly restrict ITV's ability to bid for sports rights in the future. I doubt whether ITV will offer £60 million for the Match of the Day rights next time around - and one thing is certain, we certainly won't.


Sports rights holders are beginning to discover that the world is changing. A year ago ITV and the BBC bid £55 million for the rights to next year's World Cup finals. The German company, which owns the European television rights, asked for £170 million. Last week they settled for £60 million. In fact we bought the rights to the 2002 and 2006 World Cups for less than they were asking for 2002. And remember 2006 is much more valuable because it is being held in Europe.


So what does all this mean? Well if I was still on the board of Manchester United I would be warning my fellow directors to be very careful. Don't go signing five-year contracts with players at inflated salaries on the assumption that the next time the television rights are coming up there will be another big jump in the price as there has been in the past. I believe the opposite could happen and there could well be a big fall in the amounts paid.


The boom in television revenues have funded an amazing escalation in players' wages in recent years. Now that boom is coming to an end I think increases in players' wages will also have to come to a stop. The only trouble is I don't think they will stop and as a result some clubs will end up in dire financial problems and over the next three or four years and some could actually go bust.


Of course that won't happen to Manchester United - that's always assuming Barthez stops giving goals away - but along with all other Premier League Clubs who are public companies they will have to cut back if they are to give their shareholders a decent return. Of course there is an argument that Football Clubs aren't suited to be public companies at all but that's one for another day.


Ladies and Gentlemen, everyone I know who runs a television operation in this country - pay or free-to-air - knows that they are paying too much for sports rights, particularly for football, and they are determined they won't pay that much again. They can't afford it and some sports aren't delivering enough value. The gravy train for football in particular is coming to an end.


If I am right it will have serious consequences for everyone in football unless they can find new sources of income.


Even the club closest to my own heart, Manchester United, should be worried - although not as worried as they should be about their defence.


Thank you.



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