Economy: Broadcast Media

Lord Sugar Excerpts

Thursday 28th November 2013 Lords Chamber

[Lord Sugar (Lab)]

My Lords, I, too, am grateful to the noble Baroness, Lady Bonham-Carter, for securing this debate, and I join my noble friend Lord Bragg in saying that she has already covered some of the things that I wish to go over. I am sure that most of your Lordships are aware that I host a programme for the BBC. I do not understand why, but I had best declare an interest before continuing, as part of my speech will focus on the concerns that I have about the BBC.

In order to talk about the future of broadcasting, I wish to visit what has occurred in the past 30 years. In May 1987 I took a phone call from Rupert Murdoch. That phone call resulted in one of the biggest shake-ups in the history of British TV broadcasting. In February 1988, between my then company and News Corporation, the Sky satellite television service was launched. Prior to that, my company was invited to join a satellite consortium known as BSB. I decided against it because I felt that its technical solution of the “squarial” was doomed. After millions were injected into BSB by shareholders, it had to concede defeat. Reluctantly, it amalgamated with Sky, winning one concession only: the new company going forward would be named BSkyB.

From then on, decisions by Murdoch continued to upset the industry applecart by not conforming to established business models. Matters appeared quite alien to the then cosy status of the three main broadcasters. Not the least of these matters was the purchase of the Premier League rights in 1992. Again, it is on the historical record that I played a significant role in BSkyB getting those rights. Since those days we have witnessed the transition of terrestrial broadcasting to digital. We have also seen the failure of ONdigital, an initiative of ITV. We have seen the introduction of digital video reorders that allow consumers effectively to make up their own TV channels and view programmes when they want to.

I apologise if my speech is starting to sound like a potted history of my past involvement, but knowing the background will help noble Lords understand why in 2010 the then director-general of the BBC contacted me to draw down on my experience to salvage the renamed Project Canvas—YouView—a system to deliver live TV via the internet. This company is made up of seven shareholders: the BBC, ITV, Channel 4, Channel 5, BT, TalkTalk and Arqiva. To make a long story short, this important and futuristic venture was a rudderless ship, technically and commercially. After banging a few heads together and managing the expectations of high-profile shareholders, YouView was finally launched in May 2012. Had commercial rationale and realistic technical thought not been applied to YouView, it would have joined the scrap heap of BSB, ONdigital and other failed initiatives.

The BBC, of course, has the technical capability to keep up with technology, but I fear it is unable to compete with the ruthlessness of the commercial market and its competitors, particularly those in the general pay-TV market. It seems hamstrung by external critics constantly referring to the £3.65 billion of licence fee payers’ funds being spent correctly so that consumers get fair value for money. Some of the management and the BBC Trust are fixated on cost cutting to try to appease the critics. In adopting this posture, they will fall behind by taking their eye off the ball and forgetting what their remit is: to provide high-quality, innovative content and entertainment for the British public. The BBC needs to be there at the forefront, competing for content instead of being complacent in accepting that its hands are financially tied.

BT, a newcomer to the TV market, recently demonstrated what consumers need by outbidding ITV and BSkyB for Champions League football. The BBC did not even bother. It just stood there like an envious kid in a sweet-shop, watching the big boys buy the sweets. We are all currently paying approximately £12 per month for our TV licence: 40 pence a day. It will be news to the Deputy Prime Minister that I do pay for my TV licence. By comparison, one can pay up to £55 per month for a BSkyB or Virgin subscription, £25 a month for a mobile-phone subscription, or £20 a month for an internet service. We should look at what we get: 10 brilliant channels of TV, quality news coverage all over the country, a brilliant iPlayer service that delivers three billion downloads per year, a magnificent array of radio stations, and what I consider is the best-in-class informative website. This is exceptional value for money. Incidentally, for every £1 of licence fee income the BBC receives, it generates £2 for the wider economy.

Interestingly, Mr Murdoch once complained during his wooing of the coalition Government that the BBC website was, if you can believe it, “too good” and that it was unfairly affecting his business by using public funds. In other words, the BBC was doing a much better job than his organisation. This resulted in the right honourable Jeremy Hunt, who was then the Secretary of State for Culture, Media and Sport, foolishly making noises that the BBC should consider making its website less informative and not spend too much licence fee payers’ money on it. This is one example of the oppression coming from outside influences that has created an organisation whose managers are constantly looking over their shoulders and defending themselves against in some cases ridiculous criticism. For example, the Daily Mail complained that the licence fee payers paid towards a bottle of champagne or a cake to celebrate Sir Bruce Forsyth’s 80th birthday.

Having worked with the BBC for 10 years in my capacity as host of one of its shows, I have seen another side of it, apart from the aforementioned technical side. It is without doubt the best broadcaster in the world. It is very well respected in reaching out to more than 406 million households in its global footprint. It annually generates approximately £700 million of overseas revenue and has created great indirect economic return by enhancing the UK’s reputation overseas, which can stimulate trade and inward investment. We should all be very proud of it, but—I say this very respectfully—it is heavily overstaffed and there are too many jobsworths. The noble Baroness, Lady Bonham-Carter, has already mentioned those who used to reside on the sixth floor. I think they are now in the new glass palace in Portman Place. The organisation is not run in a manner in which a commercial organisation should be run.

The BBC Trust is a complete and utter waste of time and should be disbanded, and there is a need for a more commercial approach with an experienced board of directors who are ready to stand up and be counted—and, of course, some independent non-executive directors. Senior management should get bonuses if they perform, and should be fired if they do not. More importantly, government must not be allowed to interfere or to try to influence management. Layers of jobsworths need removing, and the money saved must be thrown into R&D, programming and the ability to bid in a competitive market for other entertainment content and talent. It should not be used to reduce the annual licence fee because, as I have already stated, that is great value for money. All viewing devices in homes are now digital. It is now possible for the BBC to encrypt pay-per-view programmes so that consumers can choose to buy, for example, football or the latest movies. Consider the basic cost of £12. Lots of consumers would be prepared to pay for extra stuff, as demonstrated by the commercial broadcasters.

Noble Lords will hear how passionate—or, perhaps, frustrated—I am about this great institution of ours. I have stated all the positive things that the BBC has achieved. Can you imagine if it ever got commercial? It has a lot to offer the culture of this country, as well as our economy. It must strive to ensure that it remains the main game-changer for the next big thing in television. My dream mission in life would be to commercialise the BBC. One thing I would promise is that there would not be an army of personnel whose sole purpose in life was to appease the BBC Trust, the Daily Mail or government.