BBC Trust

The BBC’s plans to turn in-house TV production into a commercial venture as BBC Studios would bring potential benefits to audiences but need significant further scrutiny, the BBC Trust says today.

In its advice to the Government on the possible reform of the supply of BBC TV content, the Trust says that based on the evidence currently available, creating BBC Studios and opening up BBC production to more competition would best serve the interests of audiences compared with the alternatives, and the Government could therefore support BBC Studios in the forthcoming White Paper on the BBC’s Charter.  

However, the Trust makes clear that it or a future regulator would still need to conduct a rigorous regulatory assessment of more detailed proposals, which would need to be submitted by the Executive, before any final decisions are made. 

Key areas for this assessment to examine include:

• Whether the BBC Studios plan represents a viable business proposition that is likely to sustain itself and generate returns without any form of subsidy from the BBC’s public service side;
• Whether Studios would support the fulfilment of the BBC’s public purposes;
• The potential impact of the wider commercial ambitions of Studios on the BBC’s reputation and brand;
• Ensuring that commercial transactions between Studios and the BBC’s public service are at market rates and that Studios is not given any inappropriate advantage over competitors;
• How the proposals would support production in the nations and regions;
• How Studios would support training and skills development.

BBC Trust Chairman Rona Fairhead said:

"This is one of the biggest proposed changes to BBC TV production in its history.  Our early conclusions are that BBC Studios and the opening up of more programming to competition could deliver real benefits both for audiences and the creative market.  However there needs to be a proper, robust assessment of the full impact of these plans before a final decision can be reached."

The Trust carried out a public consultation in autumn 2015 on options for changes to the BBC’s content supply arrangements and heard from a wide range of industry representatives; independent analysis was also commissioned from Ernst & Young to specifically look at the BBC Studios proposals.

The Trust looked at the BBC Studios proposals against a set of key principles for the future of content supply:

• Securing high-quality and creative content: A mixed model of supply that includes a commercial BBC Studios could deliver the best quality and most creative content for audiences compared to the alternatives;
• Value for money: BBC Studios could generate significantly greater financial returns to the BBC public service than the alternative options, although this is based on limited evidence, further work is needed and it should be treated with caution;
• Range of supply across genres and across the UK: The Studios plan should increase the range and diversity of content supplied to the BBC, although safeguards would need to be put in place to ensure the BBC continues to support production and network supply in the devolved Nations and English regions;
• Sustainable production supply: A commercial BBC Studios would have greater freedom to reward and retain talent in the production sector, and would remove the current constraint of there only being a single buyer for BBC in-house content, but the regulatory assessment would need to analyse the risk that Studios could withdraw some support for the provision of training in the production sector in future. 

The Trust has submitted these views to the Government as part of its public consultation on the BBC’s Charter, which invited views on four options for reform of the BBC’s approach to content production across TV, radio and online, including the BBC’s plans for BBC Studios.  Ofcom has also submitted its advice to the Government on the potential market impact of the four options.  

For radio production, the Trust broadly supports increasing competition in radio. However, it believes raising current quotas would not be in the best interests of audiences as it could lead to commissioning ideas externally simply to meet quotas, and outsourcing major strands that are currently successfully produced in-house. 

The BBC has proposed significantly increasing the proportion of network radio hours available to independent producers, from 20% currently (10% quota and 10% open to competition) to 60% open to full competition over the first six years of the next Charter.  Under the current Charter this would be subject to the Trust’s approval.  The Trust supports in principle increasing competition in network radio, however in its findings today has highlighted potential risks if competition is extended too quickly given the limited scale of the radio market; and concerns about potential costs of the BBC’s plans.  When the Trust receives the BBC’s detailed plans, an assessment will be made of whether they deliver the best outcomes for licence fee payers.  

For online, the Trust supports in principle the BBC’s proposals for reforming current content supply arrangements to increase competition, which include opening almost all non-News and non-Sport content up to competition over the next Charter period.  As with the other proposals, however, further details are needed; The Trust has also advised against alternatives such as simply increasing current quotas as it does not consider such an approach in the best interests of licence fee payers.   

Notes to Editors

1. In its public consultation on the BBC’s Charter, the Government invited views on four options for reform of the BBC’s approach to content production across TV, radio and online:

• Retain the current arrangements with no changes;
• Retain the current arrangements with changes to some or all of the existing quotas;
• For TV, remove quotas to allow non-BBC producers to bid for all commissions (except news, current affairs, childrens and sport programming), and set up a new commercial business, BBC Studios, which would also be free to make programmes for other broadcasters;
• Directly scale back BBC in-house production.

2. Currently 25 per cent of BBC TV production is guaranteed to independent producers, under the 2003 Communications Act; 50 per cent is guaranteed to BBC in-house producers, under the BBC Agreement that sits alongside the Charter; and 25 per cent is available to both in open competition, known as the ‘Window of Creative Competition’, also under the BBC Agreement.  For radio, the Trust requires the BBC to commission at least 10 per cent from independent suppliers, with a further 10 per cent open to competition between the BBC and independent sector.  For online, the Trust requires the BBC to commission 25 per cent of online content from independent suppliers.  Under the BBC Agreement the Trust also expects the BBC to ensure that 50 per cent of network TV production spend is outside London by 2016.

3. Under the BBC’s proposals BBC Studios would become a wholly-owned subsidiary of the BBC Group and operate in the market. It would produce programmes for the BBC and other broadcasters in the UK and internationally, and return all profits to the BBC Group.

4. The Trust analysed the BBC Studios proposals and other options for the future of content supply, against a set of key principles published last year:

• Securing high-quality and creative content across all genres;
• Providing value for money to licence fee payers;
• Using a wide range and diversity of supply with fair access across all genres and from across the UK;
• Securing a sustainable production supply in terms of skills and capacity;
• Maintaining appropriate separation between the BBC’s publicly funded activity and its commercial services.