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Measuring the Value of the BBC A report by the BBC and Human Capital

October 2004

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Contents

Management Summary.........................................................................................3

Background...........................................................................................................5

Methodology .......................................................................................................10

Results................................................................................................................17

Conclusions ........................................................................................................27

Appendix 1..........................................................................................................36

Appendix 2..........................................................................................................37

Appendix 3..........................................................................................................38

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Management Summary

In May 2004 Human Capital and GfK Martin Hamblin carried out a study with the BBC to measure the value it creates. The research set out to investigate how much people think the BBC is worth and how that value is divided between its different services. In addition, it looked at how the introduction of a subscription system might affect the value generated by the BBC.

A key aim of the research was to understand how the BBC is perceived as a public service broadcaster, offering value to people not only as consumers or individuals but also as citizens. To this end it investigated not only how much people would be willing to pay if the BBC was a subscription service but, most importantly, how much it is worth to the country as a whole.

The research involved interviews with 2,257 people across the UK. It was preceded by a series of detailed pilots, which were used to refine the methodology and a qualitative study which enabled us to probe people’s responses in some depth.

The study revealed that there is overwhelming support for the BBC across the UK. 81% of the population agree that the BBC is worth the £121 per year which the licence fee currently costs. On average, people actually value the BBC at around twice the rate of the licence fee, that is £20 a month or £240 a year. Young men with multichannel television value the BBC the most highly and some are prepared to pay as much as £50 per month.

All of the BBC’s constituent services, from the terrestrial channels through to radio and BBCi, are perceived to deliver considerably more value than they cost. The digital services, however, stand out in particular for generating a remarkable amount of value from a relatively low cost base. This is made possible, to a great extent, by the large reach and promotional power of the BBC’s terrestrial channels and the ability to window content between the different platforms. In addition, they benefit from the values of trust and quality which are associated with the BBC’s terrestrial brands. Digital households tend to value the BBC’s digital services the most highly as they are already in the habit of paying relatively expensive multichannel subscriptions.

High quality programming is considered to be the most vital component in creating value. Of the many genres broadcast on television, news, regional news and soaps are considered to be the most important. Home-produced programmes are also valued highly, especially British comedy, drama and film.

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Even blockbuster movies are seen as important for the country as a whole, proving that public service television need not be confined to the traditionally “worthy” genres.

Finally this research investigated the possible outcome of introducing a subscription system in place of the licence fee. It revealed that the BBC would maximise its revenue by charging £13 a month (a 30% increase). At this price 14.8m households would subscribe but 9.7m would not. Consumers would be worse off by £300m a year and the BBC would lose a further £523m a year in revenue. As a result those who chose to subscribe would end up paying more than the current licence fee for a lower standard of service. Also, of course, a non-universal BBC would not be able to carry out its citizenship roles, including support for democracy, education, culture and social cohesion.

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Background

The BBC is funded by a licence fee, which is compulsory for every TV-owning house in the UK. In return it is expected to deliver the best possible value for money to the UK population. Over recent years the value generated by the BBC for individuals and for society as a whole has come under increasing scrutiny. Two trends, in particular, mean the BBC needs to have a better understanding of the value it creates:

• Regulation of commercial broadcasting increasingly involves quantifying the value of both public and commercial channels in order to assess the value created by new services such as BBC News 24 or platforms like Freeview.

• In the past, when spectrum was limited, consumer welfare was addressed mainly through content regulation. As spectrum becomes more plentiful and the number of commercial broadcasters increases, there will be more emphasis on competition regulation.

More recently the importance of valuing the BBC has been brought to the fore by the OFCOM review of public service broadcasting and the impending 2006 BBC Charter review.

This is not the first study of its kind. The valuation of public services is an area of growing interest and importance. Recently major studies have been carried out on the British Library, the Danish National Theatre and the Irish broadcaster RTÉ1.

The first large-scale valuation of the BBC took place in 1987. Commissioned by the Home Office, it explored the viability of introducing a subscription system for BBC One and BBC Two. The report concluded in favour of the licence fee. It acknowledged that the introduction of subscription might lead to a more consumer-focused, efficiently-run BBC but argued that the losses, both of revenue and audience numbers, would simply be too great to justify such a system.

In 1990, Andrew Ehrenberg and Pam Mills at the London Business School conducted a seminal piece of research on the value of the BBC. They investigated whether viewers would pay a voluntary subscription for BBC television and how much they would be willing to pay. This took place fourteen

1 See Appendix 1 for details of relevant studies into valuing cultural public services

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years ago, when there were four channels to choose from and the annual licence fee was £71.

Ehrenberg and Mills showed that, at that time, 90% of respondents were willing to pay a voluntary subscription of £72 for both BBC One and BBC Two. Their final report recommended against subscription, due to the high operating costs it would entail. Instead, it recommended that the BBC should “retain the licence fee but raise it to be closer to a free-market price, enabling the BBC to show more good programmes”.

The most recent valuation of the BBC was carried out in 2000 for the Radiocommunications Agency. This project used conjoint analysis to determine people’s willingness to pay for viewing television. It investigated potential subscription prices for the five terrestrial channels as a whole and for a package of satellite channels. It did not, however, seek to value each of the BBC’s individual services.

Ehrenberg and Mills looked purely at consumer willingness to pay. They were interested in how much people would pay for a subscription to the BBC. Our research re-values the BBC for the digital age and investigates whether the consumer value alone is an adequate measure of the entire perceived value of the BBC. With this in mind we set out to answer four key questions:

• What is the perceived consumer value of the BBC?

• What is the perceived total value of the BBC?

• Is there a difference between the total value and the consumer value?

• If so, to what extent can the difference between the two correctly be identified as citizen value?

In this way our research explored the different terms of the equation in Figure 1.

Total Value of the BBC Consumer Value Citizen Value= +Total Value of the BBC Consumer Value Citizen Value= +

Figure 1 There are generally held to be two possible approaches to measuring value. The first is to calculate revealed preference, or what people actually consume, using BARB and RAJAR data. This, however, is problematic:

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• Reach and share are difficult to put a value on when there is no industry standard. The best method would probably be to compare the price per viewer, per hour. In this calculation the BBC comes out at 4.7p, whereas Sky, for example, would be 38.5p2.

• Consumption tells us nothing about the quality of experience people have.

• Measuring consumption takes no consideration of externalities such as educational, democratic, social and cultural benefits.

The second approach is to look at stated preference, or what people say they value. This involves measuring which genres people value or their perception of the quality of the BBC’s output. Neither stated preference nor revealed preference, however, give any indication of how much people believe the BBC is actually worth.

Measuring the value of the BBC does not easily lend itself to a traditional cost-benefit analysis. In deciding, for example, whether to build a road, it would be possible to think first about the cost of building it and then about the benefits it would offer – the impact it would have on journey times and the amount of economic growth it would create. If, in the final analysis, the benefits outweighed the costs, the project would be given the go-ahead, subject to any other (eg. environmental) factors. The BBC does not fit as easily into this type of analytical framework. Whilst its costs can be calculated relatively easily, there is far less clarity surrounding the benefits. This is because so many of them are not economic. The social conscience encouraged by Crimewatch, the political stimulation provided by Question Time, the goodwill spread by Children in Need; these represent just a few examples. Indeed, the BBC generates a whole raft of democratic, cultural, educational and social benefits, which must be factored into its overall valuation.

The second obstacle is that it is hard to know exactly what a world without the BBC would look like. The ramifications on media, cultural, political and social life would be so profound that it is very difficult to predict what they might be. It is not too dissimilar, for example, from envisaging a country without a national electricity grid. This lack of any obvious counterfactual makes it far more complex to think of the benefits derived from the existence of the BBC than the benefits of a road or a bridge.

To allow for the BBC’s role as a public service provider we asked respondents not only about their “willingness to pay” like Ehrenberg and Mills, but also about the value they attach to the BBC and its services. “Willingness to pay” is an 2 BBC Annual Report 2003-04

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appropriate method for testing the price of Sky and many other commercial products and services, where the respondent is asked to think as a consumer about the likelihood of buying a product. It is less relevant, though, when applied to the BBC, whose purposes extend beyond those of the market. It is helpful to illustrate this with an example. Take two children, A and B. A comes from a rich family and spends every holiday abroad. B comes from a less wealthy family and has never been abroad. If offered a trip to France, child B might be willing to pay less than child A but would probably value it more. If a profit-maximising pay broadcaster was offering the trip then it would take child A. If the BBC was offering the trip then it would take child B. Our research aimed to find a value for this stimulation, inspiration and mind-opening experience which the BBC offers. Expressed in more technical terms, the BBC is funded by a regressive tax which places a blanket charge on the UK population, regardless of wealth. For this reason, the metric used for gauging its value should not be progressive. It is simply not appropriate to incentivise the BBC to focus on delivering value to the better-off.

For this reason our research looks at both the consumer value of the BBC as well as its total value by asking respondents to think either as consumers or as citizens. The distinction between the two appears in the 2004 Communications Bill where it states that,

“It shall be the principal duty of Ofcom, in carrying out their functions-

a) to further the interests of citizens in relation to communications matters; and

b) to further the interests of consumers in relevant markets, where appropriate by promoting competition”3.

Ofcom tends to merge the two definitions, referring to audiences, more commonly, as “citizen-consumers”. We have isolated the concept of consumer and citizen in order to explore their relationship further.

The key terms in our paper can be summarised as follows:

• Value generated by individuals pursuing their own preferences. This considers people as rational, economic agents, acquiring goods that maximise their own personal utility. This is a different concept to that of a consumer because here the goods can be acquired through a non-market mechanism.

3 Communications Act 2003, chapter 21

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• Externalities. These correspond to the value that is created or destroyed over and above individuals satisfying their own personal preferences. Externalities can be defined as anything external to the model.

• Consumers. This is about considering people as individuals making decisions about acquiring resources, which are for sale in a market. They will decide to buy those goods if they believe that the value to them exceeds their cost.

• Total Value of the BBC. This is the value of the BBC, which is obtained when respondents are asked to think as citizens, in terms of the country as a whole. It incorporates both consumer value and citizen value.

• Citizens. This is about thinking of people as belonging to a state to which they pay taxes and, in return, are allocated resources through non-market mechanisms such as civic institutions and the democratic process. This research explored whether the citizen value of the BBC could be calculated by subtracting its consumer value from its total value.

Between December 2003 and May 2004 nineteen pilots were conducted to refine the methodology for the final study. They were helpfully informed by regular consultations with Ofcom’s Robin Foster, Helen Normoyle, Alison Preston and other members of their research and strategy departments. Patrick Barwise from the London Business School also made a significant contribution. GfK Martin Hamblin carried out the fieldwork for the entire project.

We carried out an unusually large number of pilots because the Hutton Enquiry was receiving high-profile coverage during this period. The publication of the Hutton Report caused a sudden peak in perceptions of the BBC’s value and we wanted to ensure that the high levels of publicity surrounding the BBC were not influencing the results.

The next section of this document examines the learnings from the pilots in some detail. It will be of interest if you are a research professional or an empirical economist. If not you may prefer to turn to the results section.

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Methodology

Overview

There are many possible ways of measuring value, each with its own pros and cons. Qualitative research tends to be the most appropriate method for gaining an in-depth understanding of why and how people arrive at a value for a product. The interaction between moderator and respondents can also help to ensure that respondents understand complex concepts. This was the method chosen by Ofcom in their general investigation of public service broadcasting, where they conducted an in-depth exploration of attitudes to a range of potential funding scenarios4.

Our study used qualitative research slightly differently. Firstly it helped us to understand the motivations behind people’s valuations of the BBC and secondly it enabled us to refine the wording of the final questionnaire for a major quantitative study. The quantitative approach had a number of advantages. Most importantly it gave us access to a nationally representative sample which was also large enough to be statistically significant. This enabled us to arrive at a numerical value for the BBC which can be taken to be reflective of the entire UK population.

The quantitative research consisted of both a “top-down” and a “bottom-up” valuation of the BBC. The “top-down” approach simply asks respondents to rate the value and quality of the BBC as a whole. It provokes an instinctive reaction, simulating the kind of response, which might be sought in a government poll. The “bottom-up” questions actively prompt respondents to rate the value and quality of the constituent services, channels and broadcast genres that make up the whole of the BBC. Figure 2 lays out the overall shape of the research.

4Ofcom Public Service Broadcasting Review: Phase 2 Meeting the Digital Challenge (2004)

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AdditionalAnalysis

Consumer value or total value

Method What does it measure? What does it investigate?

Consumer value or total value (depending on question wording)

Service Valuation Question

Consumer value

Total value


National Voting

BBC Approval

Gabor GrangerTOP DOWN

Looking at thevalue of the BBC as a whole

BOTTOM UP

Looking at the value ofindividual services


Genre Ranking


BBC Service Approval

Cluster Analysis

Figure 2

Different groups and how they value BBC services

The aggregate value of the BBC services (attributed to either citizens or consumers) by

placing a value on each of the individuals services

How much people would pay for the BBC if it were a subscription

service

The overall value of the BBC to society as a whole

The overall approval of the BBC as a whole on a scale of 1 to 10

(10 being the highest)

The relative value of different TV and radio genres

The approval of individual BBC services on a scale of 1 to 10

(10 being the highest)

The prompted “bottom-up” method is arguably a more accurate way of understanding the value of the BBC. Where the “top-down” method simply seeks a first impression, the “bottom-up” questions create a dialogue with the respondent, recalling each of the BBC’s constituent parts and probing the respondent’s attitude to each.

The research fieldwork was carried out on a nationally representative sample of 2,257, with the Northern Irish sample slightly up-weighted. 1,136 of those respondents were asked to think about the total value created by the BBC. The remaining 1,121 respondents were asked to consider the value of the BBC to consumers only. The research was conducted face to face so that card-sorting exercises could be incorporated into the methodology.

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The qualitative pilot

The piloting process was informed by a detailed piece of qualitative research which took place in December 2003. This enabled us to understand which parts of the questionnaire respondents found the most difficult or confusing (if any) and how respondents were thinking while answering the questions. In particular, it was designed to answer three key questions:

• Do respondents understand the concept of thinking on behalf of the country as a whole about the total value created by the BBC?

• Do results differ depending on whether respondents are asked to think about the BBC’s consumer value or about its total value? If so, is it possible to calculate the “citizen value” of the BBC as the difference between the value to the country as a whole and the consumer value?

• Do people interpret the concept of the BBC’s value to the country as a whole and its value to consumers in uniform ways? Is one person’s idea of what is best for the country the same as the next person’s?

The main findings from the qualitative phase were as follows:

• Respondents found it quite simple to think about the BBC’s total value and consider the interests of the country as a whole. This could involve two different perspectives. Some respondents took a paternalistic approach, and said that what is best for the country is to give people what is good for them. This group claimed, for example, that news was important but that soaps were not. Other respondents took a more libertarian approach and said that what is best for the country is to give people what they want. This group, naturally, considered soaps to be of greater importance.

• When thinking about consumer value, respondents tended to answer some questions as individuals and others on behalf of the whole household. This underlined the importance, of asking all “consumer value” respondents to answer all questions on behalf of themselves and their household.

• Respondents became confused if they were asked to answer questions about the BBC’s total value and its consumer value. From this we realised the importance of using two separate samples. When the research was structured in this way, the “total value” respondents gave higher values for the BBC than those addressed as consumers. This implied that the BBC does create some extra (citizen) value, which is not accounted for in the measurement of consumer value.

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• When asked to think about the consumer value of the BBC, most people also thought about the other worthwhile things that it offers to the country as a whole. They tended, for example, to think not only about what they usually watch and enjoy but also about what they ought to watch because they know it is good for them. Whilst we established that the difference between the total value and the consumer value could be identified as citizen value, it is not clear that this figure adequately represents the sum total of all the citizen value created by the BBC. It appears that some of the citizen value is buried within people’s perceptions of the consumer value.

Piloting the top-down method

We conducted six different pilots of the top-down method.

At first we tried using the monadic version of the Gabor-Granger. This offers only one price point for the BBC, which respondents are then asked to accept or reject. We found, in our pilots, that it was producing non-monotonic curves. That is a curve for which, at certain points, demand rises as price increases. Therefore we chose to use the sequential Gabor Granger method. This offers a number of randomised price points and asks the respondent to answer yes or no to each. We used eight monthly price points (£5, £10, £15, £20, £30, £40, £50 and £60). The monadic Gabor Granger is probably a slightly superior method because it does not involve prompting. This was the method used by Ehrenberg and Mills. However, the cost of the fieldwork for a much increased sample size (which should have solved the problem) was simply too great.

The Gabor-Granger method worked very well to convey the consumer value of the BBC, or how much people would be prepared to pay for the BBC on a subscription basis. However, it did not tell the full story. “Willingness to pay” is certainly helpful in understanding how the BBC would work as a subscription service but it does not take account of the externalities and therefore does not

Gabor-Granger Method • Asks respondents to say whether or not they would buy a product at a

particular price-point. • Reveals levels of demand at different prices, the price elasticity and

therefore the optimum price point. • Good for researching what people would be willing to pay for a consumer

product. Less appropriate for researching what people think a public service is worth.

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reflect the value created for either individuals or society. Since the BBC is not a commercial product like Sky, we wanted to understand not only what people are willing to pay, but also what they believe the BBC is worth. We still needed to quantify the extra (citizen) value, which had been revealed in the qualitative research.

As a result we designed a question, which would relate to respondents as citizens or democratic agents. After all, the BBC is funded through the democratic political process and any changes to its current structure would be decided by an elected and accountable government.

National Voting Question

• Addresses respondents as voters in a national referendum.

• Asks them to vote between the total closure of the BBC or its continuation at a particular price point. (Respondents were asked to react to a number of different price points.)

In this way we decided on the Gabor-Granger question for measuring the top-down consumer value and the “national voting” question for measuring the top-down total value. These methods were chosen because they placed respondents in two realistic scenarios – the former asked them to imagine paying for all their BBC services through a subscription method and the latter asked them to imagine voting in a national referendum. This overcame a problem we had experienced in the early pilots when we had told consumers that all access to the BBC’s services would be taken away from them and asked how much they would be willing to pay to buy it back. Respondents had found this idea rather confusing and found it difficult to imagine having the BBC taken away entirely. This problem had also occurred in the 1990 Ehrenberg and Mills study.

Piloting the bottom-up method

The second quantitative method we tested was conjoint analysis. This was intended to inform the bottom-up pricing research and involved five different pilots.

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Conjoint Analysis

• Used to examine the trade-offs that consumers make in purchasing decisions.

• Respondents are asked to place values on different product packages. Eg. They might be asked to choose between a red Toyota with a sun-roof and three doors for £10,000 and a green Ford with five doors and air-conditioning for £15,000. The responses can then be analysed to arrive at a value for each of the car’s attributes.

• Works well when respondents are used to choosing between packages when buying the product in question.

Whilst conjoint analysis has been used very successfully by commercial channels to price channel packages and was used by the BBC to research the pricing of Freeview boxes, here it seemed less appropriate. Respondents found it difficult to choose between the different bundles of BBC services as they were not used to making this type of trade-off in real life. What is more, once again, they did not believe that the BBC would really be taken away.

Consequently, the results seemed unlikely. For example, Figure 3 shows how respondents in one of our pilots gave an extremely high value to digital television – even higher than BBC Two. Local radio was given a higher value than national radio and digital radio was valued more than both of these. This was particularly highlighted when the data was analysed in more detail for 14-19 year olds and they were found to value local radio just as much as BBC One.

Relative Importance of BBC Services in Conjoint Pilots

0.00 0.50 1.00 1.50 2.00 2.50 3.00

BBC ONE

BBC Digital TV

BBC TWO

BBC Digital Radio

BBC Local Radio

BBC National Radio

BBC Online ServicesBBCi Interactive Digital

Services

Relative Utility

Figure 3

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As a result we decided that conjoint analysis was not the most appropriate method. We replaced it with the “service valuation question” which involved a non-normalised chip-allocation method.

Non-Normalised Chip Allocation Method

• Commonly used for valuing the constituent parts of a product.

• Respondents are given chips which add up to the product’s total value and are then asked to allocate them among its component parts to show how much they think each part is worth.

• In our survey respondents were asked to give values to different BBC services but the values they allocated did not have to add up to the full price of the product. For this reason our method is described as “non-normalised”.

The advantage of this method was that answers would not be affected so much by affluence because it asked respondents what they thought the BBC is worth rather than how much they would be prepared to pay for it. This method produced a more intuitive set of results than the conjoint analysis and could be tailored to address both the “total value” respondents and the “consumer value” respondents.

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Results

Overview

The research found that the BBC was valued, on average, at between £18 and £24 per month. That is around double the current licence fee (see Figure 4).

£20.70

Total Value of the BBC

National Voting method

Service valuation (“total value”-

wording)

£23.50VS. £18.35

Consumer Value of the BBC

Gabor Granger method

Service valuation (“consumer

value”-wording)

£18.70VS.

Figure 4

Top-down (valuing the BBC as a whole)

In order to find the total value of the BBC we used the “national voting” question5. This asked people to vote on whether the BBC should be closed down all together, or whether it should continue as it is, funded by a licence fee, at a cost chosen by the respondent. It asked people to think on behalf of the country as a whole and to consider the BBC as an all or nothing option, which would disappear altogether if an individual chose not to pay. In this respect, it addressed people in their capacity as voters or democratic agents.

The research found that these “total value” respondents were overwhelmingly in favour of the licence fee. When asked the “national voting” question, 81% said they were willing to pay the £10 a month at which the licence fee is currently fixed, in order to secure the future of the BBC (see Figure 5).

5 All question wording can be found in Appendix 2 at the end of this document.

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“Total Value” Respondents: proportion willing to pay

9281

60

42

199 6 4

5 10 15 20 30 40 50 60Monthly price (£)

% w

illing

to p

ay

Proportion willing topay £10:81.0%

“Total Value” Respondents:demand curve for the aggregate

value of the BBC

Equivalent monthly fee:

“Total Value” Respondents: Current Licence Fee:

£20.70£10.00

Mon

thly

pric

e (£

)

0

10

20

30

40

50

60

70

0

10

20

30

40

50

60

70

0 5m 10m 15m 20m 25mNumber of UK households

Current LicenceFee: £10 per month

Figure 5 Figure 6

Not only would 81% of “total value” respondents pay the existing licence fee to keep the BBC, they would actually pay considerably more (see Figure 6). When asked what they would be prepared to pay to stop the whole BBC from closing down, on average, “total value” respondents said it was worth paying £20.70 per month to keep it in operation. This is more than double the existing £10 monthly licence fee.

In order to find the consumer value of the BBC we used the Gabor-Granger method. Respondents were asked to what extent they would be prepared to pay different (named) prices on a monthly subscription basis for the BBC if there were no licence fee.

When asked about consumer value, 76% of respondents were prepared to pay a £10 per month subscription for the BBC’s services (see Figure 7). On average the “consumer value” respondents said they would be willing to pay £18.35, almost twice the current £10 licence fee, but slightly less than “total value” respondents were prepared to pay (see Figure 8).

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Proportion willing to pay

9281

60

42

199 6 4

92

76

53

32

166 3 2

5 10 15 20 30 40 50 60Monthly price (£)

% w

illing

to p

ay“Total value” respondents“Consumer value” respondents

Proportion willing topay £10:

“Total value” respondents:“Consumer value”respondents:

81.0%

76.0%

Demand curve for the aggregatevalue of the BBC

Equivalent monthly fee:“Total value” respondents:“Consumer value”respondents:Current Licence Fee:

£20.70

£18.35£10.00M

onth

ly p

rice

(£)

0

10

20

30

40

50

60

70

0

10

20

30

40

50

60

70

0 5m 10m 15m 20m 25mNumber of UK households

Current LicenceFee: £10 per month

Figure 7 Figure 8

“Total value” respondents“Consumer value” respondents

Despite the high top-down values given by the research, 19% of “total value” respondents and 24% of “consumer value” respondents value the BBC at less than its current £10 monthly charge (see Figures 9 and 10). Moreover, within each of these groups, 8% of respondents do not even value the BBC at £5 per month.

“Total value” respondents NOT willing to pay:

“Consumer value” respondents NOT willing to pay:

Figure 9 Figure 10

0%

5%

10%

15%

20%

25%

£5 £10

8% not WTP £5

19% NOT WTP £10

11% WTP £5 but NOT £10

0%

5%

10%

15%

20%

25%

five ten

8% not WTP £5


24% NOT WTP £10

Net surplus

It is possible to calculate the net “citizen” surplus by taking the value of the BBC attributed by the “total value” respondents and subtracting the amount currently collected by the licence fee (see Figure 11). The net “citizen” surplus represents the value generated by the BBC to the whole country, over and above the £10 per month they expect in return for the existing licence fee.

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Net citizen surplus(Based on total value of BBC)

£m

illion

s

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

£2,798m

Current collected

Licence Fee

Net Citizen Surplus = £3,288m

Total Citizen Value = £6,085m

Figure 11

According to this study, the BBC generates a net “citizen” surplus of £3.3bn. The consumer surplus can be calculated similarly, using the value of the BBC to “consumer value” respondents (see Figure 12). Since the “total value” respondents value the BBC higher than the “consumer value” respondents” the consumer net surplus is slightly lower at £2.6bn.

Net consumer surplus(Based on consumer value of BBC)

Figure 12

0

1,000

2,000

3,000

4,000

5,000

6,000

£2,798m

Current collected

Licence Fee

£m

illion

s

Net Consumer Surplus = £2,597m

Total Consumer Value

= £5,394m

Bottom-up (valuing the constituent parts of the BBC)

The non-normalised chip allocation method was used to value the constituent parts of the BBC. The “total value” respondents were asked to imagine that the licence fee no longer existed and to think about what the BBC’s services are worth to the country as a whole. They were then asked what each of the BBC’s services is worth per month, to the average person. The results are shown below in Figure 13.

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Value of BBC services for “total value” respondents

BBCi (online and interactive)BBC Local RadioBBC Digital Radio

BBC National Analogue Radio

BBC Digital TV Channels

BBC Two

BBC One

0

5

10

15

20

25

“Total value” respondents

5.70

4.00

3.90

3.60

1.802.70

1.80Total = £23.50

Current Licence

Fee: £10 per

month

£ permonth

Figure 13

If the value of the BBC is calculated as an aggregate of the answers given by “total value” respondents to the service valuation question, the monthly value comes out slightly higher than the “national voting” question, at £23.50.

The “consumer value” respondents were asked to consider how much the licence fee is worth to them personally. They were then asked to say how much they think each of the BBC services is worth per month to the average person. The results are shown below in Figure 14.

Value of BBC services for “total value” and “consumer value” respondents£ per month

BBCi (online and interactive)BBC Local RadioBBC Digital RadioBBC National Analogue Radio


BBC Two

BBC One5.70 5.40

4.00 3.50

3.90 3.20

3.602.70

1.80

1.202.70

1.70

1.80

1.00

0

5

10

15

20

25

“Total value” “Consumer value”

Total = £23.50

Total = £18.70

Current Licence

Fee: £10 per

month

Figure 14

respondents respondents

Looking at the relative values given to each of the services, BBC One is awarded the highest value by both groups of respondents, at between £5 and £6 per month, or around half the existing monthly licence fee. As one might expect, this is followed by BBC Two. In fact, the sum of the perceived value of these two services alone almost totals the current £10 monthly licence fee. The BBC digital channels are valued relatively highly at between £3 and £4, which is more than

22

analogue radio. Similarly, BBC digital radio is valued higher than BBC local radio. Finally, BBCi is given the lowest value at between £1 and £2 per month. Every one of the BBC’s services is valued more by the respondents who were asked to think about the total value of the BBC, than by the respondents who were simply thinking as consumers.

When the value of the BBC to consumers is calculated as the sum of the values that the “consumer value” respondents give to its constituent parts, it comes out at £18.70 per month, slightly higher than the Gabor-Granger result. The prompting involved in the bottom-up method tends to create slightly higher values than the top-down approach.

Figure 15 shows how each of the BBC’s services generates a similar net surplus. (The net surplus is the difference between the value assigned to each service and the actual cost of each service.) Therefore when the value yield is considered, (the total value expressed as a proportion of the cost), it can be seen that the cheaper services like BBC digital television create a higher value yield than the more expensive services like BBC One and BBC Two.

BBC DigitalTV Channels

BBC One

BBC Two

BBC NationalAnalogue Radio

BBC Local Radio

BBCi

2.34

1.40

2.09

2.61

3.00

2.55

Citizens

1.70

4.50

4.43

3.64

4.33

2.76

Citizens

2.50

2.79

2.73

3.56

2.41

1.61

Consumers

0.60

1.09

1.71

2.30

2.05

2.04

Consumers

Value yield:Net surplus:

BBC DigitalTV Channels

BBC One

BBC Two

BBC NationalAnalogue Radio

BBC Local Radio

BBCi

2.34

1.40

2.09

2.61

3.00

2.55

Citizens

2.34

1.40

2.09

2.61

3.00

2.55

Citizens

1.70

4.50

4.43

3.64

4.33

2.76

Citizens

1.70

4.50

4.43

3.64

4.33

2.76

Citizens

2.50

2.79

2.73

3.56

2.41

1.61

Consumers

0.60

1.09

1.71

2.30

2.05

2.04

Consumers

Value yield:Net surplus:

Value of BBC services compared to costs

£ per month

5.70

4.00

3.90

3.60

1.80

2.70

1.80

3.36

3.50

3.20

2.70

1.20

1.70

1.000.00 1.00 2.00 3.00 4.00 5.00 6.00

BBC One

BBC Two


BBC Digital Radio

BBC Local RadioBBCi

1.45

0.90

0.99

0.61

0.40

5.40


5.70

4.00

3.90

3.60

1.80

2.70

1.80

3.36

3.50

3.20

2.70

1.20

1.70

1.000.00 1.00 2.00 3.00 4.00 5.00 6.00

BBC One

BBC Two


BBC Digital Radio

BBC Local RadioBBCi

1.45

0.90

0.99

0.61

0.40

5.40



“Consumer value” respondents


“Consumer value” respondentsCost of delivering service

Figure 15

23

When the values of the BBC’s digital channels are compared to their cost, the children’s channels and BBC News 24 deliver particularly high value (see Figure 16).

BBC digital channels and radio stations individual service values compared to costs

Citizens Consumers Cost of delivering service

£ per month* Combined cost for children’s channels (CBBC and Cbeebies)

Figure 16

0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90

0.63

0.66

0.63

0.45

0.50

0.77

0.80

0.77

0.55

0.61

BBC News 24

Cbeebies

CBBC

BBC Four

BBC Three0.32

0.17

0.11

0.18*

0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90

0.63

0.66

0.63

0.45

0.50

0.77

0.80

0.77

0.55

0.61

BBC News 24

Cbeebies

CBBC

BBC Four

BBC Three0.32

0.17

0.11

0.18*

BBC Three

BBC Four

BBC News 24

0.29

0.66

0.38

Citizens

1.39

1.92

6.98

3.25

Citizens

8.70Children's (CBBC& Cbeebies)

5.73

2.67

1.57

Consumers

7.14

0.28

0.28

0.18

Consumers

1.11

Net surplus: Value yield:

BBC Three

BBC Four

BBC News 24

0.29

0.66

0.38

Citizens

1.39

1.92

6.98

3.25

Citizens

8.70

1.92

6.98

3.25

Citizens

8.70Children's (CBBC& Cbeebies)

5.73

2.67

1.57

Consumers

7.14

0.28

0.28

0.18

Consumers

1.11

Net surplus: Value yield:

Approval

The “total value” respondents gave similar approval scores for the BBC to the “consumer value” respondents (see Figure 17). On average, though, they tended to value it slightly lower, with an average score of 6.78 compared to 6.95. In general the approval scores from the “total value” respondents tend to be slightly less polarised than those of the “consumer value” respondents.

24

Approval Scores

Figure 17

1.3 1.8 2.6

6.0

14.1

12.9

19.6

8.6

6.9

1.4

1.3 2.

9 5.1

11.0

11.1

23.5

10.8

7.5

0

5

10

15

20

25

30

1 2 3 4 5 6 7 8 9 10

“Total value” respondents “Consumer value” respondents

% o

f ind

ivid

uals

Unfavourable rating(1-4)

Neutralrating(5-6)

Favourable rating(7-10)

26.1

25.4

Approval score

Genres

In the genre ranking exercise “total value” respondents were asked about how important different types of television programme are to the country as a whole, while “consumer value” respondents were asked about which types of programme they prefer6. Figures 18 and 19 show the results for both sets of respondents. These graphs show the average score received by each genre, out of 38, where a score of 38 would mean that everyone placed that genre as their most important and a score of 0 would mean that everyone placed it as the least important. News, regional news and soaps are valued highly but the value attached to religion and the arts is less pronounced. Programmes of British origin such as British comedy and British drama also seem to be of considerable importance.

6 For a full list of genres and the programmes used as examples see Appendix 3

25

Figure 18 Figure 19

Art house / independent filmsChildren’s Live Action

Foreign FilmsObservational documentary

ReligionChildren’s Animation

US DramaClassical music

BusinessArts

Reality TV programmesPopular music programmes

US ComedyPolitics

Quiz ShowsFood & Cookery

Period DramaChat showsGardening

Home & DIYUS Films

Investigative programmesBritish Drama

Other local programmesScience

Blockbuster MoviesHistory

SportBritish Films

FootballBritish Comedy

Consumer programmesEducation

SoapsCurrent affairs

WildlifeRegional News

News

0 30Average ranking score

(out of 38)

3.43.63.84.04.14.44.44.64.74.85.26.87.17.87.98.08.18.18.58.59.49.69.710.011.011.111.111.411.512.012.212.713.314.514.515.1

24.728.4

Genre ranking Genre rankingNews

Children’s Live ActionReligion

BusinessArts

Art house / independent filmsChildren’s Animation

Classical musicPolitics

EducationForeign Films

Observational documentaryUS Drama

Reality TV programmesOther local programmes

Popular music programmesInvestigative programmes

ScienceCurrent affairs

Food & CookeryConsumer programmes

Period DramaGardening

US ComedyChat shows

HistoryQuiz ShowsHome & DIY

SportFootball

British DramaBritish Films

US FilmsWildlife

British ComedyBlockbuster Movies

SoapsRegional News

0 30

11.4

2.42.42.93.33.74.04.14.24.74.75.56.37.07.27.78.48.78.98.99.09.59.89.910.010.310.6

11.911.912.713.914.014.414.615.3

17.919.6

22.1

0 30

11.4

2.42.42.93.33.74.04.14.24.74.75.56.37.07.27.78.48.78.98.99.09.59.89.910.010.310.6

11.911.912.713.914.014.414.615.3

17.919.6

22.1

Average ranking score(out of 38)

“Total value” respondents “Consumer value” respondents

When the results of the genre ranking exercise for both sets of respondents are plotted on the same chart, there is a high amount of crossover (see Figure 20). The two groups diverge over areas such as current affairs which are ranked much higher by the “total value” respondents and blockbuster movies which are ranked much higher by the “consumer value” respondents.

26

Comparison of ranking scores between “total value” respondents and “consumer value” respondents“T

otal

val

ue”r

espo

nden

t ran

king

sco

re o

f mos

t im

porta

nt

Observational documentaryForeign Films

US Films

British Films

Consumer programmes

Investigative programmes

Art house / independent films

Blockbuster Movies

Chat shows

Children’s Animation

Children’s Live Action

Religion

Classical music

Popular music programmes

Football

Sport

Home & DIY

Food & Cookery

Gardening

US Comedy

British Comedy

Business

Education

Arts

Science

Wildlife

History

Period Drama

US Drama

British Drama

Reality TV programmes

Soaps

Quiz ShowsPolitics

Current affairs

Other local programmes

Regional News

News

0

5

10

15

20

25

30

0 5 10 15 20 25 30

“Consumer value” respondent ranking score of most important

Figure 20

27

Conclusions

Finding 1: There is overwhelming support for the licence fee. 81% of the population think the BBC is worth its current cost and on average people think it is worth twice what they pay.

The greatest value is attached to the BBC by young, well-off, multichannel men living in England. This group is over-represented in the 6% of “total value” respondents who are willing to pay a monthly charge of £50. Their willingness to pay such a high price for the BBC may be a result of them becoming used to the relatively high subscriptions they are paying for Sky, often as much as £40 per month. Indeed, it is probably for this reason that those with multichannel access are more supportive of the BBC throughout this study.

Those in higher socio-demographic groups are also willing to pay significantly larger sums. “Total value” respondents in AB social classes would pay £25.65 (compared to the “total value” average of £20.70), whilst “consumer value” respondents in AB classes would pay £20.68 (compared to the average consumer value of £18.35).

In general, it is the young who support the highest incomes for the BBC. Where the average “total value” respondent would be willing to pay £20.70, 16-29 year old “total value” respondents would pay £22.68. Likewise, where the average “consumer value” respondent would pay £18.35, 16-29 year old “consumer value” respondents would pay £21.42. It is likely that the young are willing to pay more for the BBC because they are living at home and are not responsible for paying the household licence. They are therefore less likely to anchor their answers to the current licence fee. It will be interesting to see whether this generation, as it ages, will adopt the attitudes of its parents.

Furthermore, the young are particularly impressed by the BBC’s digital services. Of all groups they place the highest values on BBC digital TV, digital radio and BBCi. BBC THREE and the children’s channels are also appreciated the most by young people, showing that they are offering value to their intended target.

A significant minority (11%) of the population are willing to pay for the BBC but not at the rate of the current licence fee. Whilst the research results are very positive regarding the amount of citizen value created by the BBC, there is a cause for concern around the people who are unwilling to pay £10 per month. In

28

total they are estimated to represent 19% of “total value” respondents and 24% of “consumer value” respondents.

The Ehrenberg-Mills research, conducted in 1990, had also identified a group of BBC rejectors. Their group, however, was significantly smaller. They found only 10% of the audience was unwilling to pay the licence fee, which at the time was set at £72. It is possible that attitudes to the BBC have changed as a result of the growth of multichannel television.

A significant minority of the population consists of multichannel families who value the BBC at a level just below the current licence fee (see Figures 21 and 22).

“Total value” respondents NOT willing to pay:

19% NOT WTP £10

£10£5


8% not WTP £5

Age: Older(50-64 skew)

Gender: Male

SEG: Less well-off (DE Skew)

Region: Skew to Scotland

MC Access:

Without multichannel

Age: Middle-aged(30-49 skew)

Gender: Male

SEG: Less well-off (C2DE Skew)

Region: Skew to Wales & NI

MC Access:

With multichannel

Figure 21

29

“Consumer value” respondents NOT willing to pay:

24% NOT WTP £10

£10£5


8% not WTP £5

Age: 30-64

Gender: Male

SEG: Less well-off (DE Skew)

Region:Skew to Scotland & NI

MC Access:

Without multichannel

Age: Middle-aged(30-49 skew)

Gender: No gender skew

SEG: Less well-off (C2DE Skew)

Region:Skew to Scotland & NI

MC Access:

With multichannel

Figure 22

This group are willing to pay something between £5 and £10 per month for the BBC. They accept the principle of paying for the BBC’s services, but not at the current cost. They tend to be middle-aged, male, less well-off and to live in Scotland and Northern Ireland. They are also likely to have multichannel television. There are a number of possible explanations for these “multichannel families’” refusal to pay £10 per month for the BBC’s services:

• The qualitative research revealed that some of them believe they are already paying for the BBC through their multichannel subscription.

• They may think their multichannel charges are so high that the extra £10 per month is simply an intolerable extra expense.

• They may have so many channels that the BBC represents only a tiny minority of what they have on offer.

This group represent a strategic challenge that the BBC will need to confront.

A significant minority (8%) of the population are not willing to pay even £5 per month for the BBC (see Figures 23 and 24.) Like the multichannel families these “Refuseniks” tend to be male and come from Scotland and Northern Ireland. However, they tend to be worse off, slightly older and are unlikely to have access to multichannel. This minority equates to the 7% who currently refuse to pay the licence fee.

30

Finding 2: The BBC’s digital services are valued very highly.

The service valuation chart in Figure 14 shows that the BBC’s digital television channels are valued highly. Digital radio is also valued relatively highly, even more than local radio. This high level of regard for the BBC’s digital channels bodes well for digital take up.

The qualitative research undertaken during the pilots explored respondents’ high opinions of the BBC’s digital services. It found that this high value was intrinsically linked to the trust and quality people associate with the BBC brand. This was even the case for respondents who did not personally have multichannel television.

It is interesting to note that those who do not have multichannel and tend to have low awareness of the BBC’s digital channels do still recognise their value. Of all the BBC’s digital services these people place particular importance on BBC News 24. This reflects the importance that the general public place on the BBC’s news services which comes through overwhelmingly in the results of the genre ranking exercise.

When the value perceived to be generated by the digital services is compared to their cost, it is clear that the BBC has succeeded in creating a great deal of value, relatively cheaply (see Figure 15). The digital channels are not only remarkably cost effective, but they benefit greatly from the large reach and promotional power of the BBC’s terrestrial channels. It is for this reason that no other provider would have sufficient presence to run the BBC’s digital channels so efficiently. Whilst the digital channels provide relatively high value in return for their low running costs there is no evidence from this study that money should be taken from BBC One and be invested, for example, in CBeebies. Such a decision would need to be reinforced by a detailed calculation of whether the transfer of funds would lead to any real improvement in production and how that, in turn, would affect audiences and their perception of value. For example, the fact that soaps are very popular is no reason in itself to invest more money in the area. Too many soaps might even cause the disbenefit of people valuing them less than before.

Finding 3: Subscription would have adverse effects on both the BBC and its audience, with an annual net welfare loss of around £300 million, a revenue loss of over £500 million and a loss of its ability to deliver public purposes.

There has been talk by certain media commentators that the BBC should switch to alternative methods of funding. One such argument has been put forward by

31

David Elstein and the Broadcasting Policy Group7. They predict the demise of the BBC as a result of inadequate funding through the licence fee and recommend subscription charging for BBC television services.

Amount of income earned if BBC were a subscription service

0 10 20 30 40 50 60 70Monthly price (£)

Income (£m)

0

500

1,000

1,500

2,000

2,500

3,000Current BBC Income (£2.9 billion)

Amount of income earned if BBC were a subscription service

0 10 20 30 40 50 60 70Monthly price (£)

Income (£m)

0

500

1,000

1,500

2,000

2,500

3,000Current BBC Income (£2.9 billion)

Demand curve for the aggregatevalue of the BBC

Number of UK households

Mon

thly

pric

e (£

)

0

10

20

30

40

50

60

70

0

10

20

30

40

50

60

70

0 5m 10m 15m 20m 25m

Current Licence Fee: £10 per month

Subscription charge: £13 per month

Figure 23

Equivalent monthly fee:

Revenue Maximising Price: Income:Number of Households at £13:Drop in Income at Maximising Price:

£13.00£2.37 billion15.2 million

£522.7 million

Figure 24

Figure 25

The Gabor Granger test in our research reveals that if the BBC were to become a subscription service it would maximise its revenue by charging £13 per month (see Figures 23, 24 and 25). This would cause the BBC’s annual revenue to drop to £2.37bn, incurring a loss of £522.7m. At this price only 15.2m households would subscribe, leading to a net loss of consumer welfare of £25m per month or £300m a year. Figure 26 shows that, currently, with the licence fee set at £10 per month, there is an annual gross consumer deficit of £303.6m. This figure represents the lack of value felt by 5.9m households who believe the BBC to be worth less than they pay for it. If the BBC became a subscription service this gross deficit would disappear as the 5.9m would no longer have to pay (see Figure 27). Unfortunately, £603.6m of gross consumer surplus would also disappear as a consequence of the price rise.

7 Beyond the Charter, The BBC After 2006

32

Figure 26

Consumer surplus

0

10

20

30

40

50

60

70

0 5 10 15 20 25Number of UK households (millions)

Mon

thly

Pric

e (£

)

Current LicenceFee: £10 permonth

A

B

Annual net consumersurplus: £2,597m

Annual consumer deficit:£303.6m

Figure 27 shows the same demand curve as in Figure 26 but with a £13 subscription level. The graph shows how different groups of consumers would react to the increased price. Group B, who value the BBC at less than the cost of the licence fee would no longer be forced to pay under a subscription and would opt-out all together. Therefore their consumer deficit would be wiped out, leading to a welfare gain of £303.6m. The consumers in D, who value the BBC at less than £13 but more than £10, would opt-out of subscribing, losing a service they once valued. Their loss totals £70.8m. Finally, the graph shows group C, who value the BBC at £13 or over. They too lose out, having to pay more money for the BBC’s services. Their loss amounts to £532.8m. Therefore, the total welfare loss, if the BBC were to introduce a £13 monthly subscription would be around £300m.

Figure 27

Net consumer welfare

0

10

20

30

40

50

60

70

0 5 10 15 20 25Number of UK households (millions)

Mon

thly

Pric

e (£

)

Current Licence Fee: £10 per month

Optimal subscription price: £13 per month

BDC

-£532.8m -£70.8m £303.6m

33

Area on the graph (Figure 28)

Monthly value

placed on BBC

Size of group

(households)

How would they be affected by a £13 voluntary monthly subscription

charge? Welfare

gain/loss

B < £10 5.9m

They consider the BBC poor value for money so they are currently unhappy paying £10. At £13 they would be better off as they could choose not to subscribe.

£303.6m

D £10-13 3.8m

They are currently happy paying £10. At £13 they would choose not to subscribe and lose out on what was a good value service.

-£70.8m

C £13 + 14.8m

They currently get excellent value from the BBC. It costs them £10 a month but they think it is worth much more. They would end up paying more money for a reduced service and would lose out by £3 per household.

-£532.8m

Figure: 28

Even at this increased charge, the BBC’s income would drop by £522.7m. It could certainly continue to operate at this level, but there is no guarantee that it would be able to maintain its levels of quality on such a reduced budget. The BBC’s power of universality would be lost, diminishing its political role and providing significantly lower citizen value. Finally, the BBC would have to become a more commercially competitive channel and this would have severe consequences on its scheduling and services.

Figure 29, below, shows how much the BBC would charge for subscription packages for its channels. If these were the only packages on offer 58% of households (14m) would opt out entirely.

Service package Monthly

subscription price

Percentage of consumers who would subscribe

Number of households

Annual revenue

BBC One £7 4% 0.9m £75m

BBC One + BBC Two £9 17% 4.1m £438m

BBC One + BBC Two + BBC digital channels

£11 22% 5.5m £719m

Opt out of all packages N/A 58% 14m N/A

TOTAL N/A 100% 24.5m £1,232m

Figure 29

34

Finding 4: Audiences who attach the highest value to the BBC also tend to award the highest approval ratings.

For both “total value” and “consumer value” respondents there is a noticeable correlation between willingness to pay and approval scores (see Figure 30).

Value of BBC services“total value” respondents (TVR) “consumer value” respondents (CVR)

Aver

age

mon

thly

val

ue (£

)

Overall BBC Approval Score

19.0

17.5

13.8

14.8

14.9

21.9 26

.9

24.9

32.9

18.6

11.1

5.1 7.

4 9.8 13

.7 15.8 19

.7

20.6

21.3

18.9

05

101520253035

1 2 3 4 5 6 7 8 9 10

TVR: £15.43CVR: £8.78

Average monthly value*TVR: £25.90CVR: £20.22

Average monthly value*TVR:= £18.23

CVR:£14.79

Unfavourable rating (1-4) Favourable rating (7-10)Neutral (5-6)

* Monthly average based on service valuation question

Figure 30

The most common reason for giving a high approval rating was that the BBC makes good programmes. 49% of “total value” respondents and 59% of “consumer value” respondents that gave the BBC a high approval rating stated this as the reason why. It seems that programme quality plays an essential role in people’s perceptions of the BBC’s value.

Finding 5: News, soaps, British drama and British comedy are all perceived to be important public service genres.

The genre ranking exercise indicates that certain genres are seen as important by all respondents, whether they are thinking on behalf of themselves as consumers, or on behalf of the nation as a whole (see Figures 31 and 32). News and regional news, for example, are ranked first and second in importance by all respondents. These results are consistent with the findings in Ofcom’s review of public service television broadcasting8.

8Ofcom Review of Public Service Television Broadcasting: Phase 1 (2004)

35

Figure 31 Figure 32

Genre ranking Genre ranking“Total value” respondents “Consumer value” respondents

0 30

News

Football

British Drama

British Films

US Films

Wildlife

British Comedy

Blockbuster Movies

Soaps

Regional News

11.9

12.7

13.9

14.0

14.4

14.6

15.3

17.9

19.6

22.1


0 30

News

Football

British Drama

British Films

US Films

Wildlife

British Comedy

Blockbuster Movies

Soaps

Regional News

11.9

12.7

13.9

14.0

14.4

14.6

15.3

17.9

19.6

22.1


0 30

News

Football

British Drama

British Films

US Films

Wildlife

British Comedy

Blockbuster Movies

Soaps

Regional News

11.9

12.7

13.9

14.0

14.4

14.6

15.3

17.9

19.6

22.1



(out of 38)

British Films

Football

British Comedy

Consumer programmes

Education

Soaps

Current affairs

Wildlife

Regional News

News

11.5

12.0

12.2

12.7

13.3

14.5

14.5

15.1

24.7

28.4


(out of 38)

British Films

Football

British Comedy

Consumer programmes

Education

Soaps

Current affairs

Wildlife

Regional News

News

11.5

12.0

12.2

12.7

13.3

14.5

14.5

15.1

24.7

28.4

The high level of agreement between both groups of respondents implies that the definition of public service is perceived to extend far beyond the traditionally “worthy” programmes. Football and soaps, for example, both appear in the top ten important genres for “total value” respondents as well as for the “consumer value” respondents. Finally, home-produced programmes are seen as a vital component in creating value, with British drama, comedy and films all ranking highly.

36

Appendix 1

Previous research on “willingness to pay”:

• Home Office Study (1987) • Ehrenberg-Mills (London Business School, 1990) • Radio-communications Agency/ DTI (2000)

Previous research on broadcaster value:

• Australian Bureau of Statistics (2000) • CBC (Canada, 2000) • RTE (Ireland, 2003) • Ofcom Review of Public Service Television Broadcasting: Phase 1 (2004) • Ofcom Public Service Broadcasting Review: Phase 2 Meeting the Digital

Challenge (2004)

Previous research on public value:

• The British Library (2003) • The Danish National Theatre (1997)

37

Appendix 2

Consumer Value:In the context of value to people individually

(respondents addressed as consumers)

Genre Ranking:“Thinking about the types of TV programmes you like to watch I would like you to tell me how much you prefer each as a viewer of television.”

BBC Approval:“On a scale of 1 to 10 where 1 means extremely unfavourable and 10 means extremely favourable, or using any number in between, please tell me your general impression of the BBC.” “Why did you give the BBC a favourable/unfavourable rating?”

Individual Service Approval:“On a scale of 1 to 10 where 1 means extremely unfavourable and 10 means extremely favourable, or using any number in between, please tell me your general impression of each of the following channels/stations.”

“Imagine you no longer had to pay the BBC Licence Fee. We are curious to know what you think BBC Services are worth to you. To help us understand this could you tell us what you think each of these is worth to the average person to the nearest pound per month.”(BBC One, BBC Two, BBC Digital TV channels, BBC National Radio, BBC Digital Radio Stations, BBC Local Radio, The BBC website and interactive TV)

Non-Normalised Chip Allocation Method(“consumer value” wording)

Gabor Granger:

“For each price, could you tell me how likely you would be to pay (each of the prices on a subscription basis per month for the BBC).”

Total Value:In the context of value to society as a whole

(respondents addressed as citizens)

Genre Ranking:“Thinking about the types of TV programmes available I would like you to tell me how important each television programme type is to this country as a whole.”

BBC Approval:“On a scale of 1 to 10 where 1 means extremely unfavourable and 10 means extremely favourable, or using any number in between, please tell me your general impression of the BBC.” “Why did you give the BBC a favourable/unfavourable rating?”

Individual Service Approval:“On a scale of 1 to 10 where 1 means extremely unfavourable and 10 means extremely favourable, or using any number in between, please tell me your general impression of each of the following channels/stations.”

“Imagine everybody no longer had to pay the BBC Licence Fee. We are curious to know what you think BBC Services are worth to the country as a whole. To help us understand this could you tell us what you think each of these is worth to the average person to the nearest pound per month.”(BBC One, BBC Two, BBC Digital TV channels, BBC National Radio, BBC Digital Radio Stations, BBC Local Radio, The BBC website and interactive TV)

Non-Normalised Chip Allocation Method (“total value” wording)

National Voting:“It has been decided to have a national vote on the future of the BBC. Can you tell me whether you would vote for option 1 or option 2.Option 1: Continue with the BBC as it is, but put the Licence Fee to £XX per month.Option 2: Close the BBC, stop all the BBC TV channels, radio services and internet services, and stop charging the Licence Fee.”

Sample 1,136 Sample 1,121

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Appendix 3

Genre list used for genre ranking exercise 1) News (e.g. 6 O’clock News)

2) Regional News (e.g. Your local news at 6.30)

3) Other local programmes

4) Current affairs (e.g. Panorama)

5) Politics (e.g. The Politics Show)

6) Quiz Shows (e.g. Weakest Link)

7) Soaps (e.g. EastEnders)

8) Reality TV programmes (Big Brother)

9) British Drama (e.g. Holby City)

10) US Drama (e.g. 24)

11) Period Drama (e.g. Pride & Prejudice)

12) History (e.g. What the Romans did for Us)

13) Wildlife (e.g. Blue Planet)

14) Science (e.g. The Human Mind)

15) Arts (e.g. Leonardo)

16) Education

17) Business (e.g. Trouble at the Top)

18) British Comedy (e.g. The Office)

19) US Comedy (e.g. The Simpsons)

20) Gardening (e.g. Gardner’s World)

21) Food & Cookery (e.g. Rick Stein)

22) Home & DIY (e.g. Changing Rooms)

23) Sport (not football)

24) Football

25) Popular music programmes (e.g. Top of the Pops)

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26) Classical music (e.g. BBC Proms)

27) Religion (e.g. Son of God)

28) Children’s Live Action (e.g. Grange Hill)

29) Children’s Animation

30) Chat shows (e.g. Parkinson)

31) Blockbuster Movies

32) Art house / independent films

33) Investigative programmes (e.g. Secret Policeman)

34) Consumer programmes (e.g. Watchdog)

35) British Films (e.g. Mrs Brown)

36) US Films (e.g. Pearl Harbour)

37) Foreign Films (e.g. Crouching Tiger, Hidden Dragon)

38) Observational documentary (e.g.Wife Swap)

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