On funding the BBC

It looks like we're going to see another debate on the future of the BBC in the not too distant future. I happen to believe that the BBC plays two important roles in UK television, so I'm not in favour of anything that guts it; I do, however believe that those two roles could be improved by a change to the BBC's funding.

So, firstly, what do I think the BBC does that's important?

1. It takes risks. The BBC can do a programme like Sherlock, which could easily have been a complete disaster, because it doesn't have to worry about making a profit on every slot.
2. It produces programming for minority interests. The BBC can broadcast the Paralympic Games knowing that the majority of people would prefer to watch football or mainstream athletics, because its funding method means that it can do the right thing anyway.

Further, having broadcast risky or minority programmes, the BBC sometimes ends up demonstrating to commercial broadcasters that their intuitions on what's potentially profitable are wrong; thus, it also stops the commercial channels descending into wall-to-wall dross, because they know that their viewers can always switch to the BBC.

Given these priorities, the BBC's funding mechanism needs to give them incentives to take risks rather than play it safe, and to worry about providing something for everyone rather than something for the few. As always when I present a problem, I have an idea to solve it.

To understand my suggestion, you first need to understand the audience measurement concepts of reach and audience size.

Audience size is really simple - just count everyone who watches a programme, or a channel, or a group of channels. There are some slight complexities here, such as deciding when someone counts as having watched a programme, but it's otherwise not hard.

Reach is a much more complex measurement; you have to count the number of unique viewers. The important thing about reach is that you can't just appeal to the same viewers again and again to increase your reach - you have to bring in new people each time.

A very simple example; imagine two TV stations, 1 and 2, and 6 people, A to F, and the following audience figures:

Time of day	Station 1 viewers	Station 2 viewers
6pm to 7pm	A, B, C	D
7pm to 8pm	B, C, D	E, F
8pm to 9pm	C, D	A, B
9pm to 10pm	A, B, D	C, F

By audience size (the most commonly quoted rating), station 1 consistently equals or beats station 2; with the exception of the 8pm to 9pm timeslot, it has more viewers in every timeslot. However, on a reach rating, station 2 beats station 1 - it reaches 100% of the audience over that evening, whereas station 1 keeps attracting the same viewers again and again to get a 67% reach.

With my terms explained (albeit badly), I can explain my proposal. I intend to reuse the BARB reach measurement for TV, and the RAJAR reach measurement for radio, as they're already taken anyway for the benefit of commercial broadcasters. I'm ignoring the BBC's online services completely, for these purposes; I believe that there's enough competition online, and it's easy enough to find, that the BBC is not needed as an aid to competition.

The BBC would have to face two measurements in my world. First, it would be measured on the reach of its television services alone; it must reach 99% of households with a TV licence. This allows for a small number of law-abiding households that don't watch the BBC on philosophical grounds, but still forces the BBC to provide something for everyone. If the BBC fails to achieve this, it has to "buy" ratings from the commercial and state broadcasters until it has the 99% figure; note that because it's buying historic ratings, it has to buy programming that helps it achieve its reach goal, thus giving commercial broadcasters an incentive to find a minority interest that the BBC does not service.

The second measurement includes both TV and radio services, and controls the BBC's future funding. For each of the two figures, you end up with three outcomes:

1. Reach increased compared to last year.
2. Reach the same as last year (within error bounds).
3. Reach decreased compared to last year.

If either reach figure decreases, the BBC is limited to an inflation-only rise in income; if both decrease, the BBC's revenue is not increased at all. This gives the BBC a strong incentive to avoid losing reach - lose reach in one medium, and you're limited to an inflation-only rise in income. Lose reach in both media, and you're making cuts.

If one figure rises, and the other stays the same, the BBC is permitted a small increase over and above inflation - say the lower of 5% or the inflation rate. If the BBC can make both reach figures rise, it's permitted a larger increase - say the lower of 10% or four times the inflation rate. In both cases, the tie to inflation ensures that the BBC never grows rapidly; but by tying increases to reach, the BBC is prevented from growing at all unless it can appeal to more of the population than before.

Obviously, this is just an outline, and thus rather incomplete - but hopefully my thinking is clear.