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1 Tony Elliott points on BBC Worldwide for Edinburgh TV Festival

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1 Tony Elliott points on BBC Worldwide for Edinburgh TV Festival Powered By Docstoc
					Tony Elliott points on BBC Worldwide for Edinburgh TV Festival – Sunday 24 August 2008. I have to confess that I had always seen the BBC – and in particular the BBC’s worldwide website – as the perfect long-term partner for Time Out. We would be able to provide a stream of fantastic date-tied events listings, as well as the insider city guide visitor information that Time Out has a great reputation for. Our well done factual content is entirely complementary to the BBC’s website of news and current affairs. This was our business – something the BBC did not do - and something the BBC should not spend any new resources on. I mentioned the idea to Mark Thompson a couple of years back and his reaction was that “the BBC’s audience should be one click away from what they wanted”. And around the same time a senior BBC executive emailed and said: “I've long thought that the BBC and Time Out would make a fantastic partnership and I'm writing with a view to the potential to develop a relationship on the public side of the BBC. I have discussed this with Mark, who I know has always believed there is potential for the BBC and your organization to work together in some way.” We met but it eventually became clear that the BBC in the UK as a broadcaster would have a problem working too closely with a private commercial business. And anything outside the UK everything was the prerogative of BBC Worldwide, who made their own minds up about things. Over the last 5 years or so there have a number of occasions when I have tried to investigate a long-term partnership with BBC Worldwide. But every time I have tried to have this conversation they have always said

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they did not do minority investments and they would want to own Time Out. And I have never had any intention of selling Time Out to anyone. So you can imagine how pissed off I was when I heard that they had acquired Lonely Planet! And this following the recent selling off of their book publishing operations as being unviable only a few months earlier. I have never sought a long-term working relationship with the BBC that would have to exclude other travel and information brands. I saw a network of travel and cultural information being linked into the BBC’s website – supplied by any number of people – fulfilling Mark Thomson’s idea that the BBC’s audience would be “one click away from what they wanted”. All this is important because clearly the BBC’s plan now is to build up the Lonely Planet brand to the exclusion of any other information source. Even though there are many other sources who could provide much of that same information cheaper or at no cost, more flexibly, and generally to a higher standard and to multiple audiences and tastes. I am a total supporter of all that the BBC stands for. As a UK broadcaster. And I would always want the core BBC service of TV and Radio and now its fantastic website, which I use a lot for news and sport, to remain fully funded by the license fee or some other similar source of public money. But I have a real issue with BBC Worldwide, which I genuinely think is out of control – a kind of rogue BBC operating worldwide and not properly controlled by the BBC Trust - developing activities way beyond it’s original remit of generating spin-off income from exploitation of content and formats from the UK broadcaster’s activity. People’s jaws usually drop and they burst out laughing when I tell this: Did you know that the BBC publish a licensed edition of the UK title ‘Hello’ in India for the Indian market! 2

What connection on earth does that have with anything the BBC exists to do? They will say of course – it makes money, which goes back to the BBC to invest in programmers. But all that energy, time and distraction, all that risk, all that potential damage to the BBC brand and its reputation – is that what they should be spending time and taking risks on? You have to wonder if the BBC Trust is really paying attention and being rigorous enough in exercising control and supervision on these overseas BBC activities? The potential damage to the BBC brand is immense. A senior broadcasting regulator recently expressed the view that there were members of the BBC Trust who were highly concerned about the activities of BBC Worldwide. They felt that the best way to defend the BBC – and the license fee – was to make the best possible programmes and concentrate on that – not all these daft worldwide ventures. No doubt many people would agree with the merit of this approach? The BBC Trust is a very curious body. I recently contacted the civil servant responsible for the BBC at DCMS. He explained that the Trust was created as a totally independent entity to be 100% responsible for everything the BBC does. That way no-one could ever accuse the Government of interfering with the BBC. There was nothing else he could do about the acquisition of Lonely Planet and said we would have to take it up with the Trust. But he did confirm that the Trust had responsibility for the BBC’s activities anywhere the world. I think the problem with the BBC Trust is that they only look at things at a relatively simple high level. And the BBC Executive has no incentive to engage the Trust in any very close (time wasting) scrutiny.

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When the Lonely Planet acquisition was announced in October 2007, Penguin – as the owners of Rough Guides and Eye Witness – wrote to the BBC under the Information Act requesting details of all the legislated measures the Trust was obliged to do in something as significant as that. It took six months to get anything back! And that only came about after they were forced to invoke the help of the Information Commissioner. And what was received was so carefully edited to be totally useless, uninformative and unreassuring. So we still don’t have the full details of exactly what the BBC Trust really did review and approve. The Trust’s obligations – and they say their key principle – is to be open and transparent: 1. Fit with the BBC’s Public Purpose activities. 2. Exhibit commercial efficiency. 3. Not jeopardize the good reputation of the BBC or the value of the BBC brand. 4. Comply with BBC fair trading guidelines and in particular avoid distorting the market. Involved in this would be ‘transfer pricing’ ie. what the licenced funded BBC UK broadcasting side charge the non-UK world facing BBC Worldwide for the commerial use and exploitation of their assets and this is extremely important. There ought to be an open public record of these transactions. There are none available to the outside world, as far as I am aware. And anyway the mere suggestion would be brushed away as being ‘commercially sensitive’. So we have no idea what subsidized and paid for materials the new BBC funded Lonely Planet operation has been granted and on what terms. But we have a clear declaration of intent from the BBC’s Director General, Mark Thompson: “Content that would have been sitting in the archives gathering dust, we now believe can get commercial value around

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the world, which will lead to more profits from Worldwide that can be invested back into the public service arm”. Time Out decided to wait and see what Penguin would get back. Finally in frustration we contacted the Office of Fair Trading on 13 May 2008. We also sent a copy of our letter to every member of the BBC Trust and the BBC Executive. And we have to date not received a single BBC response. We then sent copies of this letter to over 100 MPs. And particularly all the members of the Culture, Media & Sport Select Committee who had a hearing on the BBC’s 2007-8 Report on 8 July 2008. Many MPS and Committee members expressed concern and interest in the Lonely Planet transaction. That Committee announced on 18 July 2008 an inquiry into the activities of BBC Worldwide. Written submissions are invited from interested parties by Friday 10 October 2008. This is clearly a major event and I urge everyone to do something! Full details from http://www.parliament.uk/parliamentary_committees/culture__media_an d_sport/cms080718pn052.cfm On 11 July the OFT replied to us saying that in the view of fact that there is a structure to make complaints about the BBC via the BBC Trust, and given the limited resources of the OFT, they declined to investigate our complaint. But back to the Lonely Planet purchase. It’s a private Australian publishing company. Good brand. Variable quality books. Poor website. And a spotty track record profit and loss wise. The BBC paid £80m for a business with a turnover of just over

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£10m a year, making minimal profits, and with assets of just over £30m – half of which is stock of printed unsold books. This makes it only just twice the size of Time Out’s Guides company, which also has a similar spotty track record profit and loss wise – but a very good website and, of course, really great books! By the BBC’s own admission in the 2007-8 Report they paid some £73m for Goodwill. God knows what that really is for? It’s certainly not the traditional publishing side, which would be worth a fraction of that. So it has to be for brand potential – and that can only really mean one thing: Online. And don’t get kidded that this is all just something Worldwide is responsible for. It’s very revealing to find on p.85 of the 2007-8 Annual Report in the Financial Overview provided by Zarin Patel, the Group Finance Director, that it’s ultimately the BBC itself (not really Worldwide as an isolated self-contained entity) who increased it’s borrowing by £107m to buy Lonely Planet. The BBC - conveniently wearing it’s public broadcasting hat - has invested amounts of money into the development of their website and associated things like iPlayer that would keep a small country going for a decade or two. Interestingly the two best websites in the UK come from non-commercial, protected, not-for-profit entities: the BBC and the Guardian, which is controlled by the non-profit Scott Trust. Both have spent sums beyond the resources of most commercially operated businesses. How on earth can serious businesses like Time Out seriously compete in the digital area with animals like these? And now to cap it all the BBC buys one of our main rivals – Time Out, Lonely Planet and Rough Guides form a distinct sector in the worldwide travel guide market.

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(We have already experienced one highly revealing collateral incident when discussions over Time Out providing content from our ‘Flight Free Europe’ guide to a BBC website were terminated with the comment that “we are now in competition”.) Clearly the future for the Lonely Planet brand is online and it is reasonably safe to assume that the BBC will hand over all its technological and other associated benefits to it’s new Lonely Planet subsidiary to make this a success. If they do not do that they are remarkably stupid and irresponsible and in a commercial environment they would be sacked. On page 83 of the Annual report they say “The acquisition supports the BBC’s strategy for overseas and digital growth”. To top it all the BBC has now announced a Lonely Planet magazine. One of the areas of publishing Time Out – and the BBC through titles like the Top Gear magazine, a legitimate spin off of a broadcasting asset – have been very successful in is the licensing of local international editions. Time Out has some 24 local editions round the world published by other local media companies. The BBC will be able to roll out the Lonely Planet magazine through its licensing network so within 3-4 years expect to see a Chinese, Indian, Brazilian, Australian edition. All powering the LP brand and its published and digital forms. And furthermore fully endorsed by one of the most credible brands in the world – the BBC’s. The UK Editor of Conde Nast Traveller is as exercised by the implication of this as we are at Time Out. I really don’t see how it is tenable to claim that in the increasingly important and dominant online world that (a) in the UK public broadcasting rules apply and we will always act as a regulated responsible publicly-owned entity and (b) outside the UK we are

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unregulated and can act in an entirely different manner like a redblooded commercial beast (taking advertising for God’ sake). It’s an untenable approach long-term and needs reviewing with a truly worldwide policy imposed that’s fair and correct for a dominant national public entity totally funded by public funded state aid. I believe that online is something totally different to dabbling in things like monthly magazines or selling programmes and formats. Online is a 24 hours 7 days a week thing. It’s permanent and structural if successful. It becomes part of many people’s everyday lives. It’s the future. And it’s here now. There are two clear possible solutions to this: Either the BBC divests themselves of the LP acquisition – or allows all other guide publishers equal access to the BBC’s worldwide digital platforms, which have been created using public money. Our (public) money. And people should have choice of content. Footnote: The Wheelers in selling 75% of LP to the BBC retained 25% of the equity. They have a put option to sell this to the BBC after 25 month (there’s some 17 months left). As a result there is a liability of £28.8 in the BBC’s 2007-8 accounts with a note that this will need to be reviewed annually as their 25% will decrease or increase in value. This has to be the greatest publicly subsidized debt to private individuals in history! I am amazed that the BBC Trust allowed it.

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