Seeing the bigger picture at the BBC

UCL Institute for Innovation and Public Purpose

Published in

UCL IIPP Blog

10 min readFeb 23, 2021

By Rowan Conway and Mariana Mazzucato

Alongside the NHS, the BBC is an institution that defines Britain. With iconic storytellers from David Attenborough to Steve McQueen, the BBC narrates the story of us, and few nations can claim such a high profile platform from which their story is told to the world. And yet, perhaps because it is so familiar, we fail to appreciate just how much value it creates.

As we outline today in this Project Syndicate article, understanding the BBC’s contributions to the British economy and society — and the concept of public value more broadly — requires a new conceptual framework. Rather than viewing public institutions’ role as being limited to fixing market failures, institutions like the BBC are actually market shapers.

So how should we value the BBC? This is a more political question than some might admit. The BBC itself recently tried to put a “market price” on its goods in the BBC Value for Audience report which defends the £157.50 license fee, stating that “an equivalent subscription to cover all BBC services would cost £453.45”. While this may be useful price comparison, it actually obscures the wider social, cultural and industrial value the BBC creates.

Confusing value with price

At the UCL Institute for Innovation and Public Purpose (IIPP) we think deeply about value — and particularly about what “public value” really means. It is an imperative for us therefore to bring value theory back to economics, as well as to public debates about economics and economy — and nowhere is this more “material” than in debates about public institutions like the BBC. As Mariana Mazzucato argues in her book The Value of Everything, if we continue to confuse value with price, we will eternally fail to grapple with the deeper questions of what public value really means.

If you follow a traditional economist’s “market fixing” rationale, the role of the BBC would be simply to provide universal access to impartial news, factual programming and the arts — like PBS in the USA. But in practice, the BBC is much more than this — it’s a creative force within the market, not separate from it. And if everything it does is reduced to financial values driven by static notions of efficiency, there could be real and damaging consequences as its “license to innovate” is evermore curtailed.

“the BBC is a creative force within the market, not separate from it.”

The BBC was the first public broadcaster to bring the notion of public value into its governance framework, and while governance arrangements have since changed, the “business case” for the license fee still needs to be prioritised using the five Public Purposes outlined in the BBC Charter as a framework. So understanding its public value should be a primary concern for the incoming BBC chairman Richard Sharp. After 23 years at Goldman Sachs, Sharp will of course be more familiar with the “price = value” logic, and has already used the phrase: “At 43p a day, the BBC represents terrific value”. While it is indeed terrific value for money, public value is more complex than that.

Economics is not “value free” — it is both social and political

Practices of valuation are always social and political, but most economists like to pretend that this is not the case. Market and government practices come with narratives about value creation and while these may seem benign, when they are deployed to justify public spending for innovation or tax exemptions for technology companies, they carry a good deal of political weight. So the story of value matters and now in the case of the BBC’s funding settlement, even the Culture Secretary Oliver Dowden is asking the Corporation to think of new ways to organise its financial, accounting and budgetary information — linking expenditure to its public purposes. If the BBC is to have generative discussions about the next five years’ funding with DCMS — talking about wider value will be key.

So illuminating the many ways that value is created at the BBC may help the Culture Secretary — and the wider public — understand the Corporation’s wider contribution. The next question is — how do you measure this? Understanding how the BBC creates value for individuals, for industry and for society at large is critical. So what does that look like? Well, in the case of industry value, there are those who will point to wider value of the BBC as an investor. For example, Rose Garnett, Director of BBC Films, the feature film-making arm of the BBC (producers of the acclaimed Judy Garland biopic Judy and Palme d’Or winner I, Daniel Blake) has said: “The BBC backs British films with ‘ambition, originality and range’” noting that it is the BBC as a funder who takes the most creative risks — championing new and diverse talent.

“in Britain, public funders are the ones who take the risks that actually make film vital and viable.”

Director Kevin Macdonald also said in a recent interview with the FT: “A financial adviser will ask you, ‘What level of risk are you comfortable with? It’s the same with backing films. And in Britain, public funders are the ones who take the risks that actually make film vital and viable.”

Creating spillover public value

Almost everything that the BBC does leads to spillovers across society — spillovers that are not captured in market impact assessments or cost benefit analyses. So it is important that we learn how to capture these dynamically, not just as static efficiency. For example: the dynamic public value created by the BBC creates industry benefits for suppliers, distributors, and production houses. This investment is not just in highly visible on-screen talent, but also in the less visible regional British production facilities, British small business suppliers and British innovation capability. Ultimately this early investment bears fruit at the commercial end of the innovation chain and by investing in creative programming over the last decade (even with a declining public budget) the BBC has considerably grown its commercial revenues via BBC Studios through global sales, franchising and partnerships, making up nearly a quarter of its overall income (a total of £1.42 billion in 2020).

But this commercial success should not automatically make it a candidate for a spin off subscription model like Netflix. This would be confusing apples with pears — the business models are profoundly different. The security of public funding plays a vital role if the BBC is to continue to invest in diverse kinds of path-breaking content that both showcase British talent and sell well in the commercial market (think Blue Planet, Killing Eve, Small Axe, I May Destroy You). And yet, as screenwriter Russell T. Davies has lamented, there remains a focus on driving down the public cost of the BBC that leads to fears that the BBC is ”heading for extinction right now in front of us”.

Unpacking public value

So what should we measure? Our new IIPP report Creating and Measuring Dynamic Public Value at the BBC tackles these questions head on. Firstly, the numbers are important. Consumption figures help to show the BBC’s reach, efficiency and commercial success — these are key indicators of public value as without successful and widely viewed programming, the BBC would not have the legitimacy and scale to engage the wider public. But by widening the picture beyond numbers, we can see that the BBC creates broader value for individuals, industry and society. The below diagram shows how a “public value map” can widen out the view of value creation.

In a short exploratory project with the BBC, the IIPP policy team developed a prototype framework for what we call “dynamic public value” — a way to illustrate and understand better the market-shaping capacity of public institutions such as the BBC. We found value for individuals was in their experiences as consumers (for example in the COVID crisis, providing three hours of educational content every day on mainstream channels via BBC Bitesize); value for society could be found in supporting a more inclusive and diverse culture (for example championing female sports presenters, placing women’s football in the primetime schedule, and boosting disability representation on and off screen); and value in industry was shown by the BBC taking the kinds of risks necessary for new markets to emerge (for example, supporting R&D for new digital audio and video standards which ensures markets adopt new technologies around the world).

Value is not just the income generated at the end of the innovation chain–– it is also the creative input at the upstream end, the vital investment in talent, content creation, digital innovation and R&D at the early stages. See the below innovation chain diagram to illustrate the breadth of value created.

The BBC in a changing world

Public value cannot be static in today’s world. It is true that the entire media landscape has changed in the last 10 years and sometimes the BBC has struggled to keep pace. It launched the iPlayer in 2007, and has navigated profound change in consumption patterns as digitalisation has driven a “revolutionary” restructuring of the audiovisual industry that has opened up new avenues for innovation. And yet while today’s “golden age of TV” may be dominated by private sector players like Netflix, Amazon Prime, Apple TV+ and Disney + , the BBC has managed to stay in the game and punch well above its weight, maintaining a high profile alongside its commercial rivals who have ploughed billions into original content to maintain their market leader status.

“Public value cannot be static in today’s world.”

At the same time, as a public service oriented institution, a new hidden value of the BBC has been revealed in an era of misinformation, fake news and conspiracy theories. While big tech platforms like Facebook and Twitter have struggled to maintain trust and define what is in the public interest, as part of last year’s DCMS COVID-19 Inquiry the BBC showed that: “During the COVID-19 pandemic 83% of people trust coverage on BBC TV; and audiences from the UK and around the world have come to BBC News in their millions to stay informed and seek trusted advice on how they can protect themselves and those most at risk.” So even now, in a crowded media ecosystem, the need for a trustworthy national broadcaster to help the public navigate an onslaught of misinformation is perhaps higher than ever.

Defending against “defunding” while demanding accountability

If this seems like an uncritical defence of the BBC, it is important to note that we fully recognise that this is an institution not without flaws. But defending its place in British society is vital. Fundamentally as a public body it is accountable to its citizens and its Charter is there to ensure it works in the public interest. There will always be room for improvement, not least in managing concerns raised about bias and misrepresentation. And beyond the public debate there are undoubtedly internal decisions to be taken on organisational structure, efficiency, process and executive pay.

We are not arguing for secure funding without scrutiny and accountability — indeed what we are hoping for is greater transparency and widening the understanding of the real value created from the investment into the BBC. By building new evaluative tools, the bigger picture can also be grasped by the regulator — expanding Ofcom’s understanding of the public value of the BBC’s services and performance. The paper prototype we built is illustrated in the below diagram — and we hope to build it further over the coming months.

The lessons from this are bigger than for just the BBC. Alternative methods of evaluation are needed for all public investment. At IIPP we recently worked with the Better Regulation Executive at the Department for Business, Energy and Industrial Strategy, to identify alternative policy evaluation frameworks and new tools for the Treasury Green Book. This work analysed a spectrum of alternative policy evaluation and appraisal methodologies looking at ways to capture the value created when dynamic, market shaping innovation oriented policies are implemented.

If we are to build new mission-driven public institutions to tackle the climate crisis and achieve the UN Sustainable Development Goals (SDGs) we must think bigger about public value. We need to ask what governance structures are required in public and private organisations to combat the challenges that face us with climate change and health innovation. While there is much talk about purpose in corporate governance circles, so far we are not seeing change.

Real change will come about when purpose is nested within organisational structures and inter-relationships between public and private — and value goes beyond theory — and into practice.

Further resources:

To find out more about this work, go to the UCL IIPP web site. The research and design team in this project were as follows:

Mariana Mazzucato | Director, UCL Institute of Innovation and Public Purpose
Rowan Conway | Policy Fellow and Head of IIPP’s Mission Oriented Innovation Network. PhD Candidate, UCL Institute for Innovation and Public Purpose.
Eleonora Maria Mazzoli | PhD Researcher, LSE, Department of Media and Communications
Eva Knoll | PhD Researcher
Sarah Albala | Policy Fellow in Public Value and Policy Evaluation, UCL Institute for Innovation and Public Purpose
Adepeju Popoola | Visual designer