Britbox is not a step to end the licence fee, says BBC
THE BBC has warned its agreement with ITV to launch a subscription streaming rival to Netflix later this year must not be a step towards the end of the compulsory licence fee.
Tony Hall, the director-general, said politicians would alter the BBC’S guaranteed system of funding “at your peril” as he and Carolyn Mccall, the ITV chief executive, unveiled the final terms of their Britbox joint venture.
“The licence fee method of funding the BBC means that everyone gets something of equal value,” Lord Hall said. “It is a fundamental principle in the mentality of the BBC. Change that at your peril.”
The current BBC Charter runs to the end of 2027, by which time television is due to be transformed. Audiences for traditional broadcast television, particularly among younger viewers, are being eroded by subscription streaming services such as Britbox.
Lord Hall argued the £5.99 a month service, which is due to launch before Christmas and will mean the gradual removal of hit BBC and ITV programming from Netflix and Amazon Prime Video, will replace income from withering DVD sales and benefit viewers keen to retain access to archives.
Financial returns from licensing programmes to Britbox, as well as any potential dividends, will be reinvested in production, creating a “virtuous cycle” for licence fee payers, Lord Hall said.
The BBC will own only a tenth of Britbox, however, and provide no cash for the development of new technology, and tens of millions of pounds of new, exclusive programming designed to encourage viewers to sign up.
ITV, which will control the remaining 90pc of the venture and provide all the initial funding, agreed not to oppose Lord Hall’s plans to expand iplayer to secure the BBC’S involvement. BBC programmes will remain on the free streaming service for a year before moving to Britbox, potentially limiting the appetite among viewers to pay for continued access. Previously, iplayer was limited to a 30-day window and its expansion is expected to mean tougher competition for audiences for ITV’S main advertising-supported business.
However, ITV has been forced to concede that it would not be able to make Britbox a success without access to the BBC’S vast programme archive.
Lord Hall said: “We’re putting our brand into this and our programming into this, and for that we get our equity.
“I don’t see this as somebody winning and somebody else losing or anything like that at all. This is a really good joined-up strategy for the future.”
Dame Carolyn said she did not expect ITV to make a return on its investment for up to five years. The broadcaster is pumping £25m into the venture this year as it sets up the necessary systems, rising to £40m next year.
“Unlike some of the other things we have embarked on this will not be a fast return,” Dame Carolyn said. “We have looked at this and think it is very doable to get to break even, but it will be over three to five years.”
Britbox is now at the centre of ITV’S effort to reduce its reliance on volatile advertising sales. Investor fears over cuts to investment by brands, and much tougher competition for viewers, have driven its shares close to their lowest level since 2012.
Although Britbox will not produce direct returns for some years, it could play a role in Dame Carolyn’s other attempts to secure new income. ITV will control distribution of the service by pay-tv providers, allowing it to make access to Britbox dependent on fees for its existing channels.
The broadcaster is in talks about such arrangements with Sky, Britain’s dominant pay-tv operator. ITV executives are demanding a boost to channel fees, as they obtained from Virgin Media last year. Sky meanwhile argues that the shift in viewing towards bigbudget drama and boxsets means ITV’S bundle of channels has fallen in value.
Control of Britbox, with the BBC archive on side, could be a valuable chip in negotiations for Dame Carolyn.
She said that talks with Channel 4 and Viacom, the US owner of Channel 5, about joining Britbox were ongoing.
The Telegraph revealed last month that BT has also held talks about investing.