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Friday, 25 August, 2000, 16:57 GMT 17:57 UK
Greg Dyke's speech in full
"Let me start by saying how pleased I was to be asked to deliver the MacTaggart lecture in this the 25th year of the Edinburgh International Television Festival.
I wasn't here for the first few years but I have been coming on and off for most of the Festival's existence.
Three things have changed fundamentally since those early days. Firstly the size and professionalism of the festival has changed beyond recognition.
Secondly the price of hotels in Edinburgh for this particular weekend have gone through the roof.
Finally, and the biggest change of all, my friend Gus MacDonald has gone from being a radical programme maker with strong far left credentials to become Lord MacDonald of Tradeston.
Actually I'm the first ever Director-General never to have worked for the BBC before taking on the role. I only ever applied for two jobs at the BBC - the first in 1970 as a reporter on Radio Teeside, which I failed to get, and the second nearly 30 years later as Director-General.
I am also flattered to be the first person ever to deliver the MacTaggart lecture twice, although there is one big drawback to that. I used all my best jokes the first time. So forgive me if my lecture here tonight is unremittingly serious and I realise that as a result, some will think that I've gone completely native after less than a year at the BBC.
In 1994, my lecture was about broadcasting and politics. My concern then was that the relationship between Government and broadcasters was in danger of becoming unhealthy; that as the world of broadcasting was changing broadcasters were always wanting something from the Government and, as such, were less likely to be brave in their programming when standing up to the Government of the day.
I still have that concern - in fact the danger has grown. Broadcasters today want more from Government than we could possibly have imagined just six years ago. That is why the Government's decision to give the BBC a seven year licence fee agreement, right through to the end of the current BBC Charter, is important. It gives the BBC the freedom and independence to be brave.
However we all still need to be vigilant in the area of political independence and I am particularly concerned when I read of proposals for a single content regulator across the whole television industry.
I believe we have a far better chance of resisting political pressure if, between us, we have more than one content regulator. Pluralism in regulation is as important as pluralism among broadcasters.
The Council Chamber in Broadcasting House at the BBC is an austere place where the windows are set so high that no one can see in or out. If you believe that is symbolic, beware - our new boardroom has no windows at all.
As you go into the Council Chamber you will find something equally symbolic - the portraits of previous Directors-General hang on the walls around you to serve as a constant reminder of the BBC's heritage.
In the spot above the mantelpiece, pride of place rightly goes to the BBC's founder, John Reith. The second best spot, directly opposite him, is taken by Hugh Carleton Greene. These are seen by many as the two truly great Directors-General.
Now, the myth of the BBC is that there is a single flame, a single idea handed seamlessly from generation to generation. The flame is public service broadcasting and each generation understands its inheritance and fights not to change it but to defend it to the death. Having the previous Directors-General looking down upon you is no doubt intended to remind you that you tamper with it at your peril.
Echoes of the past
The truth, of course, is very different. John Reith - on your right as you walk into the Council Chamber - ended up disliking Greene, on the left, with an intense passion. Reith's view was that Greene had trivialised his great institution; that Greene had - dare I use the words - "dumbed down" the BBC. As Reith put it when talking about Greene, "I lead, he follows the crowd in all the disgusting manifestations of the age¿ Without any reservation he gives the public what it wants; I would not, did not and said I wouldn't. I am very annoyed that I even got on to terms with him".
In fact, many of the changes attributed to Greene had actually been started by his predecessor Sir Ian Jacob. Reith's views of Jacob were similar to his views of Greene. When he heard Jacob's portrait was going to be hung in the Council Chamber, Reith was so angry that he demanded that his own portrait be removed.
What had Jacob and Greene actually done to so upset the BBC's founder? The story is very illuminating.
Under Jacob, Greene had been Director of News and Current Affairs and had set about introducing radical change.
In the mid-fifties the great joke about BBC News was that every newsreel would begin, "The Queen Mother yesterday¿". I do, of course, realise that I am on dangerous ground when talking of the Queen Mother, but I'll take the risk.
Back to the joke. All newsreels started "The Queen Mother yesterday". The Queen Mother because everyone loved the Queen Mother; and yesterday because it took the BBC at least a day to check with the Queen Mother that she had done what she was said to have done, even though they had film of her doing it.
Greene set about changing the whole journalistic ethos of the BBC, transforming a largely obsequious and deferential institution into a gritty news organisation that could respond swiftly and imaginatively. At the heart of the changes were two extremely controversial views, though: firstly that television not newspapers would prove to be the bedrock of news reporting in the future; and secondly that news and current affairs had to be less isolated from the rest of the BBC.
ITV on the scene
It was out of these twin beliefs that truly ground-breaking genre-defying programmes like Cathy Come Home were later to spring.
After two years running News and Current Affairs, Greene became Director-General in 1960 at a time of real turmoil in the industry. Interestingly on becoming Director-General one of Greene's first actions was to move the nine o'clock news on the old Home Service, now Radio Four, to ten o'clock. You will not be surprised to know that the decision was ferociously attacked at the time.
By 1960 BBC Television was in real trouble. ITV had come into existence in 1954 and after a difficult start was making life very hard for the BBC. BBC Television's share had gone from 100% to 34% in only six years, and remember this was still only a two channel world.
With quiz programmes like Double Your Money, Take Your Pick and a raft of popular American series, ITV was stealing the hearts and minds of British viewers. Meanwhile BBC Television, obsessed with its own importance, was inward looking and hardly seemed to notice what was going on.
Jacob and Greene set about changing this. For the first time British audiences were to be offered a diet of programming that was both challenging and popular, programmes like Play for Today, Z Cars, The Forsyte Saga, That Was the Week That Was, Til Death Us Do Part, Doctor Who, Monty Python's Flying Circus and literally dozens of others.
It wasn't that Greene produced these programmes, of course he didn't. But he did make them possible. He gave BBC producers the ambition to make popular quality programming for the first time - programmes which both appealed to large audiences and made a difference to their lives. In rating terms, the BBC made a great recovery which left ITV with no option but to follow the BBC's lead, effectively making Greene the founder of modern day British television.
And it didn't end with television either. When Radio Caroline and other pirate stations started broadcasting under a Panamanian flag of convenience in 1964 he not only argued that they should be closed down, but along with Frank Gillard, his legendary head of radio, he put in place the now familiar pattern of Radios 1, 2, 3 and 4. Imagine the fuss that caused.
Greene and Gillard's reforms of radio and television brought cries of derision. A Times leader accused the BBC of "abandoning their role as the sponsors and protectors of quality broadcasting".
Even the now seemingly innocuous Z Cars received its fair share of condemnation. The Chief Constable of Lancashire, Colonel Eric St Johnstone, demanded that it be cancelled. His force, to a man, he complained, were full of disgust.
Mary Whitehouse complained about the spate of modern plays on the BBC: "We are told that the dramatists are portraying real life, but why concentrate on the kitchen sink when there are so many pleasant sitting rooms?" No wonder she said of Greene: "If you were to ask me who, above all, was responsible for the moral collapse which characterised the Sixties and Seventies, I would unhesitatingly name Sir Hugh Carleton Greene."
Outrage from journalists, politicians, the great and the good and even some of the BBC's own staff at any mooted change in BBC radio or television is a pattern you can find throughout the history of the BBC.
Just look at the last decade - changes within all of our memories. Remember the fuss and outrage when Matthew Bannister re-shaped and effectively re-invented Radio 1 in the mid Nineties? Yet Radio 1 is now seen as one of the great success stories of the BBC.
Remember the fuss when the BBC created Radio Five Live with the idea of starting a radio station aimed at a younger audience and based around news and sport? Today Five Live is supreme in its field and its audience is still growing rapidly year by year.
Remember when John Birt set up BBC Online? He was widely accused of wasting licence payers' money and yet now it is the most visited content site in Europe and widely loved by some of the very people who accused him of wasting money at the time.
Long before any of these recent examples, a few of you may remember Grace Archer's death in the Archers - which just happened to coincide with the opening night of ITV. It was greeted by Denis Pitts in the Daily Herald with the following denunciation: "The BBC went too far on Thursday when, for the sake of a stunt, they killed off Grace Archer. The stunt was mean, callous and cold-blooded. I accuse the BBC of a shabby trick which has left an unpleasant taste in nine million mouths. I am angry. So is my wife."
You have to wonder what his wife would have thought about EastEnders.
In the sixties the opponents of change and in particular Greene's style of populism were everywhere. We now see Steptoe and Son as the great turning point in British situation comedy, a seminal series which helped pave the way for Dad's Army, 'Til Death Us Do Part, Fawlty Towers, Only Fools and Horses and many others. But it wasn't always perceived as that.
Wilfrid Brambell - the Shakespearean actor who played Steptoe senior said at the time: "I suppose every actor has to get into dustbin drama sooner or later".
One wonders if anyone today would ever have heard of Brambell if he hadn't got into "dustbin drama" - I rather doubt it.
None of this is new. As the BBC's Chief Archivist described it to me, "The BBC has been accused of dumbing down from the day Reith invented it." Propose any significant change and the BBC is accused of betraying its heritage.
The point is that the real genius of the BBC is that it has adapted and changed over the years. Successive generations of leaders have not simply taken the flame of public service broadcasting as a whole and passed it on unchanged. At crucial times in the BBC's history they have recognised that change was essential and have taken the bold decision to introduce it despite loud protests from all around them.
By and large history has rewarded their courage and their detractors have been forgotten. No Director-General was more criticised than Greene and yet today his memory is revered - without Greene there would not be the BBC as we know it. Reith invented the BBC for one age. Greene re-invented it for another.
Of course it's pretty obvious why there are so many howls when anyone wants to change even comparatively small parts of the BBC.
It was Machiavelli, when writing The Prince, who summed it up when he wrote: "There is nothing more difficult to plan, more doubtful of success, nor more dangerous to manage than the creation of a new system.
"For the initiator has the enmity of all who would profit by the preservation of the old institutions and merely lukewarm defenders in those who would gain by the new."
Oddly when I looked up that quote in my files written on the same sheet was one which is less philosophical but equally applicable. It was from the former French President General De Gaulle who said, "Never stand between the dog and the lamp post."
So given this history, why try to change the BBC?
Look at the venom directed at John Birt - the man who had the courage to start the modernisation process at the BBC.
Why be radical in an age when attacks from sections of the press are more vicious and more personal than ever before; when the BBC's commercial competitors are more ruthless than they have ever been; and when some politicians and commentators seem more interested in quick headlines than in trying to understand the real issues?
The answer, of course, is we have no option. I believe the stark choice facing the BBC today is that we either change or we simply manage decline gracefully and none of us joined the BBC to do that.
The changes happening in technology; in the wider society; and in our competitive environment are what make this one of those times in history when change at the BBC is essential.
Let's take technology first. Digital television, and with it as many as 160 channels in digital satellite homes, has arrived at a pace faster than any could have imagined, certainly faster than I anticipated when I gave this lecture six years ago.
But we are only just beginning to see what digital television can really bring. Electronic programme guides are already changing viewing habits in digital homes dramatically, but the real revolution will come with the arrival of the TiVo box and similar in-home, hard disc recording technologies which will give the consumer complete freedom to watch what they want, when they want it.
I still believe there will be a role for conventional channels by the end of this decade - at times people will still want informed selection - but the channels are likely to be more focused, and aimed either at particular audience groups or based on particular programme genres.
Secondly society is changing. Huge gulfs have opened up in the attitudes and values of different generations in a way not seen before.
In recent research people from different age groups were asked if they agreed or disagreed with the following statement, "There is too much sex, bad language and violence on TV and in cinema today." Amongst the over 45's 72% said they agreed. Amongst the 25 to 34 year olds 79% disagreed.
This dramatic polarisation of views creates real challenges for programme makers, broadcasters and regulators alike, particularly in the areas of taste and decency.
The people brought up in the Thatcher age are the biggest challenge of all whether you're a politician, the Chief Executive of Marks and Spencer or a television executive.
For these are the children of the multichannel age, they are used to choice and love it - whether it's shopping, music or television and they are certainly not deferential to Britain's traditional institutions like the BBC.
This generation doesn't complain if they don't like our schedules they simply turn over. "Disgusted of Tunbridge Wells" is disappearing and being replaced by "Not bothered of Newcastle".
And as the retiring speaker of the House of Commons reminded us recently this is also a generation with very little interest in conventional politics.
However what we know is that they are passionate about many of the important issues of our times, they just don't think Westminster politics can provide the answers.
I believe this will become an increasingly serious problem for broadcasters and programme-makers steeped in a tradition of reporting conventional politics.
If the BBC is to stay relevant over this decade we have to understand this generation and meet their needs, not only because they matter, but because we are all being influenced by them. In the old days kids wanted to be like their parents. These days parents, terrified of growing old, want to be more like their kids.
As Bob Dylan wrote "I was so much older then I'm younger than that now."
The third reason the BBC has to change is that the BBC's competitive environment has changed and will be transformed beyond recognition in the next decade. Consolidation and merger are the order of the day amongst media companies.
Our competitors today are bigger, richer and more ruthless than at any time in the BBC's history. They are increasingly part of a global media industry which has access to vast capital funds. This is competition on a scale the BBC has never seen before.
It's this combination of factors which mean that this is one of those periods when the BBC, and BBC Television in particular, has to go through fundamental change. In the words of Margaret Thatcher, "there is no alternative".
Inside the BBC we have been discussing the changes we need to make to our television channels since I first took over, as no doubt many of you have read in Broadcast and elsewhere.
One thing I have discovered in that time is that there is no such thing as a confidential debate in the BBC, but if a few headlines are the price you pay for an open and questioning environment it is a price worth paying.
At the BBC we all recognise that changing anything is difficult to achieve without controversy. But no-one feels this more keenly than our new Director of Television Mark Thompson who went to make the keynote speech at the Banff festival in Canada a couple of months ago.
Mark took the opportunity to outline some ideas about the future of our television services in an intelligent and thought provoking speech. He opened the debate.
Within days the forces of darkness came down upon him. He was accused of being a philistine with plans to turn BBC One into an all entertainment channel, which he didn't say and is not true, and relegating all serious programming to the fringes, again which he didn't say and is not true.
It was all familiar stuff. Predictably the retired old men of the BBC came out in force to defend yesterday as they always have done and always will. Had they read the speech? I doubt it. Did they understand the arguments? Unlikely. They just want television the way it was in their day. But that simply isn't an option.
So what are the changes we plan to make?
Well one of the dangers of making this speech here today is, as our Head of Press said to me, I'm bound to disappoint. He told me "people are expecting you to be Moses coming down from the mountain with tablets of stone".
Of course Moses had it easy - he only had to carry the stone, someone else had already worked out the messages.
Let me make it clear, I haven't come here today with all the answers, there are no new Ten Commandments.
What we do have are some exciting ideas for the future of BBC Television in the first decade of a new century which also happens to be the first decade of the digital age. Like all ideas some will succeed and others won't but that doesn't matter, this is only the start of a journey, the process of change is ongoing.
Let me explain our plans in three parts.
First of all I want to talk about money and what the BBC can and cannot afford to do.
Secondly I'd like to talk about our proposals for a portfolio of BBC public service channels, which will eventually be available in every home in Britain.
And finally I want to talk about the purpose of the BBC and public service broadcasting in the digital age.
Starting with the money then. One thing I have learned in my years in the television industry is that money matters when you're trying to make outstanding programmes. It's not enough on its own - at some time or other most of us have spent a lot of money producing a very average programme - but trying to make fantastic programmes without the right budget is incredibly difficult.
In fact I believe one of the problems of BBC Television today is that too many of our services have been under funded.
BBC One certainly needs more money, particularly for drama and quality entertainment and two of our digital services, BBC Choice and BBC Knowledge, were started without enough money to commission truly original and inspiring programmes, programming of the quality people expect from the BBC.
If we want to spend more money on our traditional services, and we do need to, there are certain consequences. Firstly we have to find the money and secondly we have to limit our plans for new services to what we can afford.
This year's licence fee settlement, which gave us an increase of inflation plus 1.5% every year for seven years was a fair, even generous, award. By 2007 this will produce a real increase of £250m in that year compared to last year.
But 2007 is too late. If we want to shine in the new competitive digital age, and we must, we need to spend more money now, which is why I've spent so much time in my first six months as Director-General looking for ways to save money right across the BBC.
I have to say I believe the potential for savings is significant. The BBC currently spends 24% of its income on running the institution of the BBC. Our target is to reduce that figure to 15% over the next three years which will give us an extra £200 million a year to spend on programmes and services if we achieve it. I'm hopeful that over five years we can do better than that. We've made a good start and believe me it's a lot more than just cabs, croissants and consultants.
I also believe we can increase our commercial income from BBC Worldwide and BBC Resources Ltd - and we've established BBC Technology Ltd with the aim of bringing additional revenue into the BBC. We're also looking at whether there are more commercial opportunities in the world of new media than we're presently exploiting but that review is not yet complete.
The second thing we have to do, if we want better funded services, is to limit our ambitions for expansion. A criticism of the BBC over the years has been that it has tried to do everything the commercial sector has done. Those days have to be at an end. We cannot possibly afford to have a tank on every lawn, or compete in every area of the market place.
We need to agree the range of services which people will get for their licence fee and then call a halt. That way we can ensure that those services are properly funded and are services we can all be proud of.
The combination then of the licence fee increases, the major savings we're making inside the organisation and our growing commercial revenues means we can afford a significant increase in our spending.
In this financial year we will be spending £100m more on programmes than last year, and that doesn't take into account the cost of covering the Sydney Olympics, which is extra.
Next year we plan to increase that by a further £250m above inflation and the year after by another £130m. That means in the year 2002/3 we will be spending £480m a year more on our programmes and services than we spent last year - a 30% real increase in programme spend over just three years.
This amounts to the biggest increase in programme expenditure in BBC history.
Considerably more than half of that money will have been saved inside the BBC. This will not be achieved without real pain and a lot of people will have lost their jobs through no fault of their own. However we are spending licence fee payers' money and the obligation on us must be to spend as much as possible on programmes.
So what are we planning to do with the money?
We believe that in the age of digital television it will not be sufficient for the BBC to offer only two mixed genre channels which are somehow supposed to meet the needs of everyone. That is not how audiences will want to receive television in the future. We need a more coherent portfolio of channels.
However, as I've already said, people have an expectation of BBC channels in terms of quality which we have to meet. As we are inevitably constrained by money, this means we must limit the size of this portfolio.
But there is another more important reason for limiting the number of channels we plan and that is the principle of universality. What universality means is making all our publicly funded services available in all homes.
Universality has been one of the core principles of public service broadcasting in the past and should remain so in the digital age. It means that everyone regardless of race, creed or bank balance will have access to the BBC's services.
Like many others I have at times toyed with the idea of a subscription-funded BBC. But now that we can all see the dangers of the digital revolution, as well as the advantages, the principle of universality is more important than ever.
We must avoid the emergence of a digital underclass, a world where some are information rich while others are information poor. The BBC can help to achieve this both with our ambitious plans in the world of education but also by seeking to ensure that all our publicly funded channels are available in every home.
The BBC should be an essential part of the glue which binds this society together in the digital age.
In order to achieve this principle of universality it means we are only going to offer a portfolio of channels now, which, within a reasonable period of time, will be available in every household in the land.
The government's proposals for analogue switch off, possibly in the latter part of this decade, will make this achievable. For then all homes will be digital and all will be multi-channel.
In practice what all this means is that we believe we should offer a portfolio of seven services across five channels. Five, because this is the maximum number we believe we will be able to deliver on our digital terrestrial multiplex, the platform with the least capacity. Of course we could do more on satellite or cable but this would mean abandoning our aim of universality.
Incidentally seven services across five channels is also the number we believe we can afford to fund. Together they will enable the BBC to meet the needs of our increasingly diverse audiences.
So what are these seven services? Well two of them are pretty obvious, BBC One and BBC Two will continue as the mainstays of BBC Television for the foreseeable future and be the only BBC channels available in every home until analogue switch-off.
Getting these channels right for the future is a big challenge. In the early years BBC One and BBC Two will still have to be aimed at people who only have analogue television, the majority of homes until at least 2003. However, over time they will need to evolve to become part of a BBC five channel offering which will eventually be available in every home.
Given that we can't have analogue switch-off tomorrow, we have to face a world of two speed television. This will be a difficult trick for all of us to pull off.
For BBC One in particular this challenge comes at a difficult time when, partly as a result of under-funding, the channel is not doing as well as it should.
As Chris Smith acknowledged in a recent interview in the New Statesman, we had very good autumn and winter schedules last year and we have some great programmes this autumn, including the adaptation of Kingsley Amis' Take a Girl Like You; William Ivory's new drama The Sins and Sir David Attenborough's new series State of the Planet.
We need more of that kind of popular, quality programming. I believe we now live in a competitive world where the average simply isn't good enough. We need more of the very best.
BBC One needs to have a greater impact on people's lives. It needs to be more modern, more in touch, more contemporary. It needs more programming that you simply cannot miss.
While this may mean that some old faithfuls disappear and others move from the fringe of BBC One to peak time on BBC Two, it does not mean we are banishing all current affairs, documentaries, religion and arts to other channels.
Far from it. But programming in these genres, just as in drama and entertainment, needs to be more engaging, more exciting, more gripping if it is to be on BBC One.
We need more factual programmes like Walking with Dinosaurs, Fergal Keane's Britain, Eyes of a Child or the Panorama Special on football hooliganism.
Our aim is to make BBC One the gold standard of mainstream television.
Now all this is going to cost and we plan a major injection of cash. More than half of the extra money to be spent on the BBC overall will go on improving and modernising BBC One and Two, with most going onto BBC One.
Next year alone BBC One's budget will be increased by £95 million and the year after by a further £55 million, with a lot of this additional money to be spent on drama.
'News is the cornerstone'
Let me move onto news. News is the cornerstone of public service broadcasting on the BBC and I think I can say with some confidence that the BBC is now Britain's pre-eminent news supplier. Currently we have a 66% share of all network television news consumed in Britain.
On BBC One we have created a highly successful news hour between six and seven with the BBC's six o'clock national news convincingly beating the six-thirty on ITV.
We now want to turn our attention to the mid-evening slot. After a great deal of thought we have decided that we will move the BBC's nine o'clock news to ten o'clock next year.
Ten is a more secure slot for the BBC's main evening news in the digital world. Currently in digital homes audience share for the nine o'clock news often falls below 10%. In the multi-channel world the nine o'clock slot, the start of the post watershed schedule, is a lot tougher than ten.
The move to ten o'clock also gives us the opportunity to expand in an area which is increasingly under threat on ITV - regional news and regional programming. The BBC's early evening regional news is now beating ITV in all but one region in England, is winning comprehensively in Wales, is neck and neck here in Scotland and is closing the gap in Northern Ireland.
This would have been unthinkable only five years ago but commercial pressures are inevitably taking their toll on the regional nature of ITV.
With ITV's late regional news now relegated to 11.20pm we believe we have a real opportunity to provide a stronger regional news service at a more accessible time.
So with the move of the nine o'clock news to ten we plan to double the length of our late regional news bulletins and improve their quality.
For viewers of news and current affairs this all means that there will be a full hour and a quarter available on BBC Television after ten o'clock, starting with UK and local news on BBC One followed immediately by Newsnight on BBC Two.
Before I move on let me say a bit more about the BBC and the Nations and Regions.
Until recent years the BBC was a very London-centric organisation. This is no longer in keeping with the times. I believe the responsibility for reflecting the UK in all its many forms has gradually shifted from ITV to the BBC over the years. It will be a central plank of the BBC's purpose in the years ahead.
We are giving more power to the Nations and Regions. Next April we're handing back control of production facilities in Scotland, Wales and Northern Ireland to the national Controllers.
We're also planning to increase the budgets in the Nations and English Regions by a total of £50 million a year over the next two years. It will be for the Controllers in those parts of the UK to decide how that money is spent, not for London.
Now it may seem odd to say all this in a month in which we have announced the closure of our two large studios in Birmingham and created a studio joint venture with Granada in Manchester.
But don't confuse studio capacity with a commitment to regionalism. We all know that changes in production techniques have meant that none of us need as many large studios as we once did. The money saved in Manchester and Birmingham from these changes will all be spent on regional production.
Let me move onto BBC Two.
This is a success story with the channel achieving a higher share of the audience now than it had ten years ago.
But it is also a channel with a split personality. It's the channel of the Open University at the same as being the channel of Gimme Gimme Gimme and The League of Gentlemen.
This eclectic mix has worked brilliantly in the analogue world but in a digital world of 160 channels it may make less sense to viewers. Channel 4 may face the same problem. In the end there is very little audience flow from Robot Wars to Crufts Dog Show.
In the long term we plan that BBC Two will increasingly focus on intelligent specialist factual programmes, our key leisure and lifestyle programmes, thoughtful analysis, creatively ambitious drama and comedy, and specialist sports.
That won't be for some years, maybe not until analogue switch-off. Until then BBC Two will continue to offer a rich and diverse range of programmes. It will still be the test bed for edgy comedy and entertainment aimed primarily at young audiences, some of which will graduate to BBC One.
It will retain, of course, its wide ranging commitment to serious programmes of all kinds. It will also provide a peak-time home for some of the programming which is currently shown late night on BBC One.
Now for the new channels. Imaginatively we've given them the working titles of BBC Three and BBC Four.
Given what I said earlier about the importance of reaching younger audiences it will come as no surprise to learn that we propose to use the evenings on one of our digital channels for programming aimed at this age group.
BBC Three will offer original British comedy, drama and music as well as providing arts, education and social action programming delivered in a way likely to be attractive to a young audience.
We've also been piloting a very different sort of news bulletin that breaks many of the conventions of traditional news services.
I suspect in developing BBC Three we will need to break a lot more rules before we're through.
In preparing for this lecture I read that at the time of the BBC's 50th birthday someone scrawled across the wall in the gents toilets at Television Centre "The BBC has always been 50".
Well on BBC Three we've got to learn to be 20. We know we can do it because we do it on Radio 1.
BBC Three will emerge out of BBC Choice but will have a significantly higher budget.
BBC Four will be very different. It will be unashamedly intellectual, a mixture of Radios 3 and 4 on television.
It will be based around arts, challenging music, ideas and in-depth discussion. It will be serious in intent but unstuffy and contemporary. It will be a style of television which you can't find anywhere else. Is there an appetite for it?
Well more than 800,000 people visited the Monet exhibition at the Royal Academy last summer and on just one Saturday this year more people visited Tate Modern than fill Wembley Stadium for an international football match. And all around Britain festivals like the one here in Edinburgh are flourishing.
We know there's a potential audience, the challenge is to attract it to the channel.
I am also very keen for us to deliver a rolling breakfast time business news on BBC Four. Just as interest in politics has waned in recent years interest in business has grown. I don't think British television has yet caught up with that.
BBC Four will be developed out of BBC Knowledge. But again it will have a significantly higher budget. In all we plan to spend £130 million a year on BBCs Three and Four.
It seems obvious to me that the world's biggest news gatherer, the BBC, needs a 24 hour news service as part of its channel mix.
Increasingly this is how the viewer will watch news and I believe it's the BBC's responsibility to provide news in the way people will want to receive it.
We saw the value of BBC News 24 when reporting the Concorde air crash in Paris. Instead of a news flash on BBC One, we simply switched to the BBC News 24 service. That's the first time that has happened, but it is the pattern for the future.
New children's services
Finally we plan two new children's services to be played in the daytime on the channels occupied by BBC Three and BBC Four in the evenings.
One will be for pre-school children and the second for children aged between six and 13.
These will have separate identities from BBC Three and BBC Four, if only to enable them to be easily found in the children's section of the electronic programme guide.
Nearly half of all children live in multi-channel households where for much of the time they are watching predominantly American-owned channels, largely showing American programmes.
Shouldn't they, and their parents, at least have the option of choosing British childrens' programming on channels free from advertising? We believe they should.
Interestingly when our childrens' programming is available on BBC One and BBC Two, children in multi-channel homes still choose to watch it ahead of the cable and satellite alternatives even though you cannot easily find it on the electronic programming guide.
We have done preliminary research on our proposals for BBC Three, BBC Four and the childrens' channels and the response has been very positive.
However we cannot go ahead with these without further consulting the public and then seeking the approval of the Secretary of State. We plan to do both this autumn.
Finally we do plan to continue with BBC Parliament on the same basis as now, which means it will be fully available on digital satellite and cable, but digital terrestrial homes will only receive an audio signal.
This, then, is our proposed channel portfolio. Together the channels will deliver the BBC's core aims. All will carry predominantly British original productions. All will make a contribution towards achieving our educational goals which I regard as one of the principal aims of my period as Director-General.
All will include a broad news and current affairs agenda, and all will carry challenging factual programmes. However over time each channel will develop its own personality and will increasingly be aimed at particular target audiences.
So is all this public service broadcasting? I believe it is. The BBC's role in our society will always be complex - we're the guardian of impartiality and political independence, we're arguably the country's most important cultural organisation, we're a major player in the world of education, and increasingly we're Britain's leading global media player.
Our channel strategy is a means of achieving this - a way of commissioning, producing and broadcasting original British programmes of all kinds on a mix of channels which will make sense to audiences in the digital age. Over time the channels will inevitably change - perhaps in ways we can't yet foresee - but the commitment to creating exciting British programmes will not.
Nearly every audience in the world prefers to watch programmes which reflect its own culture, its own lives, interests and passions. And in the UK, with our long history of quality programming for both minority and general audiences, this is particularly the case.
Over the past forty years both the BBC and the commercial sector have contributed to building a vibrant British television production industry across a broad range of programming.
However to repeat what I said earlier, and it bears repeating, the market is changing. I've talked about what this means for the BBC but it could have more dramatic consequences for commercial television.
Sitting here tonight, none of us can be sure that advertiser-funded television will, in a decade's time, be able to continue to play its part in funding and producing the full range of high quality television.
Channel fragmentation alone will gradually erode the current revenue base of Britain's commercial channels. If in the commercial world you lose share year after year, in the end you either change your cost base dramatically or fall off the cliff.
And when you combine channel fragmentation with the introduction of new technology which makes recording programmes and then skipping the ads very easy, the medium-term economics of ITV, Channel 4 and Channel 5 start to look fragile. In fact, according to recent research, two-thirds of all viewing in TiVo homes in the USA is of recorded programming and nearly 90% of TiVo viewers spin through the ads.
If advertiser funded television starts to struggle, the responsibility for the commissioning and production of British programming will fall increasingly to the BBC. This is why I believe the public service role of the BBC could well be far clearer in ten years' time than it is today.
To sum up then. We've started our digital journey. We've changed the structure inside the BBC, we're making considerably more money available for programming and we've got a coherent plan for our channels. But this alone is not enough. Making television is a creative process and if we really aspire to be the engine of a new era of great British production in all genres of programming we have to be able to attract the best talent to work with us, both inside and alongside the BBC. In every area of programming we need people who are passionate about their subject - be it opera, science, comedy or any one of a dozen others.
This means creating inside the BBC an environment in which talented people can flourish. I do understand why people look back to some earlier periods at the BBC as a golden age for programme makers. They were. But the world has changed and changed dramatically and going back is not the answer, even if it was possible. It never is.
Maybe it's time to take down the portraits in the Council Chamber, not as an act of disrespect to the past but as an act of faith in the future. Luckily that's not my decision. Maybe it's time to find a new boardroom with plenty of windows so that we can embrace the outside world, not shut ourselves off from it. It is certainly time for us to take the flame of public service broadcasting and use it to inspire a new generation of talented British programme makers.
So let me end by reminding you of my rather simple definition of the purpose of the BBC in the digital age. It is to make and commission great British programmes. Everything else is secondary.
At times we'll fail - inevitably it's a creative process - but our ambition must never waiver. That is what will make the BBC special in the new media age just as it has been special throughout its history.
I'd like to end by paraphrasing perhaps the most colourful politician of our age.
'It's the programmes stupid."
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