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Wednesday, 4 July, 2001, 19:36 GMT 20:36 UK
Challenge for the corporation
By the BBC's media correspondent Nick Higham

There's little doubt from the BBC's latest Annual Report what the biggest challenge facing the corporation is.

The BBC's governors may have a long list (12, to be precise) of objectives for the coming year, including delivering greater value for money, reducing the proportion of the BBC's income spent on overheads and launching new digital TV and radio services.


Any creative endeavour is inherently risky: there is always the danger of failure

The corporation may also be keen to "reinvigorate the creativity and capabilities of its in-house production teams", and to "make a compelling case for the BBC leading the development of a UK-wide digital curriculum." But what really matters is objective number one: Strengthening BBC One.

In the last year the flagship channel's share of viewing fell significantly, by 1.6 percentage points from 28.3 per cent to 26.8.

Never mind that ITV's share fell almost as much, as the numbers of people switching to multichannel digital television increased.

Licence fee

Never mind that the BBC's Ten O'Clock News comfortably beat its ITV equivalent on four nights out of five in the most recent week for which figures are available, and never mind that audiences for BBC radio and the BBC World Service are growing and that the total number of users of BBC Online rose by 1.1 million to 4.9 million.

If BBC One's audience goes down the pan the Corporation is in real trouble, for only on BBC One does it connect week in, week out with the mass audience which pays the television licence fee.

Rupert Graves and Hugh Bonneville
Take A Girl Like You was a ratings disappointment
The BBC's governors acknowledge that not everything on BBC One last year was as successful as they would have liked.

The Sunday night adaptation of Kingsley Amis's Take A Girl Like You bombed in the ratings.

The channel did not connect with big audiences at Christmas.

And the governors say the decision not to cover the pageant mounted to mark the Queen Mother's 100th birthday was "a mistake".

They also admit it takes time to develop fresh programmes for any network, and that it will be 18 months before viewers see the results of increased spending on the channel - although we are told there is already less "light factual" programming like docusoaps, more drama, comedy, entertainment and "landmark factual" content (like the recent series on Jesus Christ, Son of God).

And, of course, The Weakest Link.

Settlement

Part of the answer to BBC One's flagging fortunes is to spend more money on it.

Thanks to a generous settlement from the government, under which the TV licence fee is increasing at 1.5 per cent above inflation, the BBC can for once afford it.

Son of God
Son of God: 'Landmark' content
The BBC will be spending an extra 67m this year on drama, entertainment and factual programmes for BBC One.

That follows an extra 165m last year, and is part of an additional 265m to be spent on the BBC's television channels in the next two years.

That money is itself part of a 450m investment, much of it on Online and new digital services.

Flagship channel

Will the extra cash have the desired effect? No one can say for certain. Any creative endeavour is inherently risky: there is always the danger of failure. And increasing competition will inevitably lead to a reduced market share.

Annual meeting and annual report alike show there are other significant issues facing the BBC besides the fate of its flagship channel.

It has discovered it's in danger of losing touch with important audiences, including the young and ethnic minorities.

It also needs to do a lot more if it's to meet self-imposed targets for the number of minority ethnic staff it employs - especially among its managers.

Like all public sector organisations it also has to defend the pay - and pay-offs - of its most senior managers. The Daily Mail attacked the payment of a 91,000 bonus to the director-general Greg Dyke (at a time when BBC One was struggling) and of 460,000-worth of "termination payments" to departed senior executives.

The BBC's response is that Dyke's bonus was a reward for achieving 45m-worth of savings last year, and that bonuses are the norm elsewhere in industry (Sir Christopher adds that the Daily Mail pays its top people a great deal more than the BBC).

Greg Dyke
Dyke: Concerned about the cost of net streaming
And then there is the question of the digital future.

This week a senior executive, Ashley Highfield, the BBC's director of new media, floated the idea of charging for some of the BBC's Online services (currently funded by the licence fee and therefore free).

Streaming

At the annual meeting Greg Dyke explained that Highfield was simply thinking aloud about what the BBC would do if millions of viewers chose to watch television programmes streamed over the internet rather than broadcast conventionally.

The costs of streaming, Dyke said, could bankrupt the BBC.

But it was a reminder of just how thorny are many of the questions raised by the rapidly changing broadcasting landscape that surrounds the BBC.

Another is the future of Ondigital (soon to be renamed ITV Digital).

The digital terrestrial television operator is struggling to attract subscribers, yet the government's strategy for persuading viewers to switch from analogue to digital depends crucially on terrestrial digital's success.

The BBC believes digital television will become more attractive once it's allowed to offer the five-channel package of TV services and five new radio channels (several of which are also designed to appeal to those semi-detached young and ethnic audiences) it plans.

It wants government permission to succeed as quickly as possible.

But it was hard not to sympathise with the questioner at the annual meeting who wondered whether many viewers understood the complexities of digital television.

Greg Dyke said he thought they didn't.

He added that he thought many of the BBC's own staff didn't understand them either.

See also:

04 Jul 01 | TV and Radio
Teletubbies boost BBC profit
04 Jul 01 | TV and Radio
Record investment for BBC
04 Jul 01 | TV and Radio
BBC revives classic sitcoms
03 Jul 01 | New Media
BBC internet fee 'a possibility'
05 Apr 00 | UK
Greg gets to grips with BBC
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