Incorporated: 1922 as British Broadcasting Corporation Limited
NAIC: 513120 Television Broadcasting; 513112 Radio Stations
The British Broadcasting Corporation Ltd. (BBC) is the largest public sector media company in the world. Affectionately known as "Auntie" or simply "the Beeb," the BBC has served the British public for more than 85 years. The BBC's operations are grouped into two major divisions, the first supported by the annual license fee paid by all British citizens; and the second operating as a commercial business, grouped under subsidiary BBC Worldwide. Since 2000, the BBC has rapidly expanded its broadcasting content beyond the venerable BBC1 and BBC2 channels. In 2007, the company operated ten channels, through analog and digital broadcast and satellite networks, including BBC3, BBC4, CBBC, Cbeebies, and BBC News 24. The BBC also operates a range of local and regional television channels in England, Scotland, Wales, and Ireland. BBC is also the largest operator of radio stations in the United Kingdom, with more than 35 stations, including Radio 1, 1Xtra, Radio 2, Radio 3, Radio 4, and Five Live. The BBC's license-fee supported services also includes the BBC World Service radio service, which broadcasts in 33 languages around the world. On the commercial side, BBC Worldwide has emerged as a major force in the global television programming market. This company oversees the sales of BBC programming worldwide, as well as ancillary sales such as CDs and DVDs. BBC Worldwide also operates a range of commercial television stations, including BBC America, BBC Canada, BBC Food, BBC Kids, BBC Prime, BBC World, and Animal Planet, among others. The company also operates the beeb.com Internet portal, and iMP online player. The BBC is led by Managing Director Mark Thompson. In 2006, the government-owned company posted total turnover of £4.63 billion ($8.8 billion).
Founding in 1922
The history of this august institution parallels the history of broadcasting itself. The British Broadcasting Company Limited, as it was originally known, came into being on October 18, 1922. It represented a collaboration between leading radio manufacturers, such as the Marconi Company and the General Post Office (GPO), that wanted to introduce a national service in Britain while preventing any individual manufacturer from gaining monopoly power. The new company had a share capital of £100,000, shares being allotted only to "genuine British manufacturers employing genuine British labor," and generated income in two ways. It was entitled to half of the Post Office license fee of ten shillings (75 cents) and would receive royalties on the sale of radio transceivers made by member companies. The license was introduced on November 1, 1922. By December 31 of the same year, 35,744 licenses had been issued.
On the evening of November 14, 1922, Arthur Burrows, the company's first director of programs, read two news bulletins from Marconi House in London. These were the first daily transmissions at the BBC. The following day, radio stations opened in Manchester and Birmingham, and by the end of the month, British radio enthusiasts could tune into five hours of broadcasting daily. Despite the fact that the original broadcasters had little experience in the field, or perhaps because of it, the standards they established in both news service and children's programming set the tone for decades to come. Their success was partially due to the influence of John C. Reith who, at the age of 33, became the company's first general manager. Reith was a Scottish war veteran with a background in engineering and a clear vision of what public broadcasting could achieve if run by an idealistic team. He determined company policy and dictated the program mix. In Reith's first year at the helm, programming expanded to include outside broadcasts of opera and theater, daily weather forecasts, and live commentaries of sporting events. To keep track of this range of programs, the BBC published a guide called the Radio Times, that included scheduling information, commentaries, and articles on the development of the new medium. By the end of 1923, an experimental broadcast had reached America, and a Radiola Paris transmission had been relayed to listeners in the south of England. Meanwhile, the number of U.K. stations operated by the BBC had increased to ten while the number of employees had risen from four in December 1922 to 177 in December of the following year.
The number of stations grew over the next few years, as did the power of broadcasting. During the general strike of May 1926, publication of most newspapers was suspended for a week. Also at this time, the BBC increased its daily news broadcasts to five, becoming the sole medium of mass communication in many parts of the country. Although government pressure prevented the BBC from interviewing striking miners on the air, Reith campaigned successfully to maintain the company's editorial independence with respect to reporting on strike developments. The BBC's position was strengthened on January 1, 1927, when the British Broadcasting Company became the British Broadcasting Corporation, established under a new royal charter guaranteeing that it was not "a creature of Parliament and connected with political activity." The motto of the new company was "And nation shall speak peace unto nation." Sir John Reith was appointed director-general, a post he maintained until 1938. The postmaster general (the chief executive of the Post Office) continued to collect license fees from the public and place restrictions on permitted broadcasting hours, but policy-making responsibility was transferred to a five-person board of governors. During the depression years of 1930-31, 1,000 licenses per day were issued, and by 1935 an estimated 95 percent of the population were able to receive at least one BBC program in their homes. Complete reception coverage was a guiding principle of the BBC, and indeed it was perhaps among the poorest classes and in the most remote regions of the country that the service was most appreciated. It was also during this period that the first foreign-language broadcasts were made from Bush House in London. An Arabic service was inaugurated in January 1938, to be followed two months later by service in Portuguese and Spanish.
Inauguration of Television
Television service had a more difficult birth. The BBC had been experimenting with television broadcasts since 1932 and, in November 1936, was able to launch the world's first high-definition black-and-white service under the leadership of Director of Television Gerald Cock. During the first three years, the prohibitive cost of television sets limited the number of viewers to 20,000, but the range of programming was impressive and foreshadowed the tremendous influence that television would exert in the postwar years. Among the events covered by fledgling BBC Television was the coronation of King George VI and Queen Elizabeth and a performance of Macbeth with Laurence Olivier in the title role. On September 1, 1939, however, television broadcasts ceased. The television transmitter at Alexandra Palace in London was a perfect aircraft direction finder, and, for national security reasons, the service remained off the air for the duration of World War II. The BBC reopened in June 1946, when 100,000 viewers in the greater London area watched a broadcast of the victory parade celebrating the end of the war, and reached a high point on June 2, 1953, with the historic televising of Elizabeth II's coronation inside Westminster Abbey.
BBC radio had a tremendous impact with its informative broadcasts during the war years. Its influence was felt far beyond the borders of the United Kingdom; it was in foreign-language broadcasts to the occupied territories that the Overseas Service came into its own. The BBC approach to news reporting was captured succinctly by R. T. Clark, director of foreign news, who told his augmented news staff: "It's war now ... tell the truth ... that's our job ... thanks very much and good luck." Meanwhile, on the domestic front, home broadcasting stations were restricted to a single wavelength named the Home Service, which introduced innovative if still rather high-brow programming in a supreme effort to boost the country's morale through the early war years. In January 1940, a second program was introduced with the aim of lifting the morale of British troops stationed overseas. Attractions such as popular American variety stars quickly helped the Forces Program secure a huge civilian audience in Britain. At the end of the war the Forces Program was renamed the Light Program, becoming the BBC's first formal admission that frivolity had a permanent place in the radio schedule.
Post-World War II Prosperity Bringing End to BBC Monopoly
By 1946 a combined radio and television license was being offered for £2, and the Home and Light Programs had been supplemented with the addition of a third program, designed to meet what was controversially perceived as "the virtually insatiable demand for serious literature and drama, for good music and intelligent discussion." Classical music fans in particular benefited from the change. In 1947 the BBC was granted a third royal charter and, in spite of fuel shortages which led to the temporary suspension of all television service and some radio service, continued to expand the geographical scope and variety of its operations.
In 1950 the number of permanent employees at the BBC topped 12,000, and new television studios were opened at Lime Grove in London. In the same year, the Beveridge Committee on Broadcasting published a lengthy report which upheld the BBC's right to exercise a broadcasting monopoly. In 1951, however, the Labour government of the austere postwar period was replaced by a Conservative government which deplored nationalization and stressed the importance of the free market in raising Britain's depressed standard of living. As unemployment rates continued to fall and demand for consumer goods soared, public debate focused on television as a legitimate medium for advertising the exciting new products. The Television Act of 1954, sponsored by the Conservative government, broke the BBC's television monopoly. As a direct consequence of the Television Act, an Independent Television Authority (ITA) was formed, and on September 22, 1955, the first commercial broadcast went on the air. Although advertising was permitted on independent stations, it remained strictly regulated, and most analyses of the first decade of independent television focus on the many similarities between the ITA and the BBC, rather than on their differences.
Technological Developments
Meanwhile, television technology was also developing apace. In October 1955 the first experimental color television transmissions began from Alexandra Palace in London. By this point, approximately 95 percent of the population could receive television at home. Program hours were increased accordingly, from 38 hours per week in 1954 to 50 hours a week in 1955. A new emphasis was placed on regional broadcasts and regional offices were given greater programming autonomy. Outside broadcasts, too, became more adventurous. In October 1959, for example, the popular astronomy program Sky at Night included photographs taken by a Russian spacecraft on the far side of the moon. These innovations were achieved at a price, and, as concern about the financing of the BBC mounted, the government took the unusual step in 1963 of abolishing the excise duty on the television license and allowing the BBC to keep the full £4 fee.
One result of this improvement in finances was the introduction in April 1964 of the second television channel, BBC2, which was described by Director-General Hugh Greene as a "complement rather than a competitor" to BBC1. Greene was a controversial figure, much criticized by more conservative elements in the press for encouraging irreverent satire and populist drama at a time when the BBC was supposed to provide an alternative to the commercialism of the independent channel. However, BBC2 quickly established itself as a forum for minority and specialized programming in much the same way as the Third Program had done for radio listeners 18 years previously. Initially available in the London region only, transmission capability spread in a few years to all corners of the United Kingdom.
In July 1967, BBC2 followed the American lead, and became the first European television station to offer regular color television service using the PAL (phase alternating line) system. The success of the color venture led to the introduction of a supplementary £5 license fee in 1968, with color service being extended to BBC1 and the independent channel in November 1969. A parallel development was the spread of stereo VHF radio stations throughout the United Kingdom. In keeping with the enhanced broadcast capabilities of the VHF system, the BBC introduced a fourth radio network in 1967 that was devoted to popular music and named it Radio 1. The existing networks became Radios 2, 3, and 4, respectively. A fifth radio network would open in August 1990.
Programming Controversies
By the 1970s many critics felt that in its determination to maintain audience viewing figures, the venerable Beeb was producing lowbrow, rather than substantial, programs. Representatives of the corporation pointed to a long list of award-winning shows in rebuttal of this argument. Of graver concern to BBC executives was the company's long-term financial health. In 1975 expenditure exceeded income for the first time. A series of highly publicized budget cuts at the BBC in the early 1980s highlighted the relative financial strength of the big commercial networks, that were at the time producing such lavish period pieces as Brideshead Revisited, once the BBC's exclusive preserve. Commercial television was also beginning to take the initiative in new kinds of programming. The introduction of breakfast time television on the BBC in January 1983, for example, was a response to a similar venture on the commercial network.
In the summer of 1985, an incident occurred that focused attention on the BBC's accountability to the British government. At the center of the controversy was a BBC documentary about Northern Ireland titled At the Edge of the Union, which featured an interview with the alleged chief of staff of the Provisional IRA. Several days before the program was due to be screened, the board of governors of the BBC bowed to pressure from Leon Brittan, the home secretary, to withdraw the documentary on the grounds that it offered a legitimate platform to terrorism. This decision led to a disagreement with the corporation's director-general, Alasdair Milne, who objected to what he viewed as unacceptable levels of censorship both within and external to the BBC. Journalists at the Home Service and the World Service staged a one-day strike in protest, and, when colleagues at the rival commercial network walked out in sympathy, news coverage in the United Kingdom was effectively suspended for the day. The strike ended when the director-general announced that At the Edge of the Union would be broadcast at a future date with some minor explanatory additions. The offending interview would not be cut.
The effect of this incident on morale within the BBC and on the corporation's reputation worldwide was considerable. The timing of the controversy was also unfortunate, since Leon Brittan had appointed a committee under the chairmanship of professor Alan Peacock to look into financing options for the BBC. The Peacock report was published in July 1986. It firmly rejected the idea of introducing advertising, a stance strongly supported in the press. On the other hand, the criticisms in the report did inspire a new set of guidelines for producers, giving them much greater flexibility in financing their productions.
The following year, the company's commercial activities were expanded with the creation of BBC Subscription Television Limited as a fully owned subsidiary of BBC Enterprises. BBCSTV, a provider of late-night niche subscription services, was a timely response to fundamental changes in the structure of the broadcasting industry. A second BBC initiative was realized in April 1991 with the launch of BBC World Service Television Limited in Europe. Designed as a self-funding cable subscription service, World Service Television offered 18 ten-minute international news bulletins a day, in addition to highlights from the domestic services produced by BBC1 and BBC2. In November 1991 World Service Television was extended to Asia, a market with an estimated 170 million English speakers. This new venture was especially popular in India, where early reports indicated that it was watched by seven times as many people as CNN.
Whither the BBC? Restructuring for the Future
The BBC entered the 1990s engaged in much soul-searching. Sixteen task forces were appointed and spent a year looking at the entire scope of BBC operations from the inside. Titled "Extending Choice--The BBC's Role in the New Broadcasting Age," the resulting 88-page document released in November 1992 highlighted the BBC's arguments for charter renewal. In summarizing the document, Chairman Marmaduke Hussey identified three factors that he believed were crucial to the corporation's future success: efficiency, accountability, and, above all, a "robust spirit of independence from political pressures and commercial interests." Only if all three areas were addressed, he continued, could one of the most highly regarded broadcasting companies in the world continue to fulfill its historic commitment to public service.
That December, Hussey and the board of governors hired John Birt to replace Sir Michael Checkland as director-general. A former executive at ITV, Birt got off to a very bad start at his new employer. To begin with, Birt cut a secret deal with the board to work as a consultant, thereby avoiding some £1,500 in annual taxes and billing some questionable expenses (Armani suits, for example) to the BBC. Though totally legal, the arrangement infuriated the broadcaster's rank-and-file, who succeeded in demanding that he be made a regular staff member. Birt's policies did not go over well with staff, either. In an effort to bring the corporation's notoriously high expenses into line, he inaugurated a cost-cutting strategy dubbed "Producer Choice" in April 1993. This reform reorganized the BBC's many in-house services into "business units" subject to productivity review, then encouraged program producers to use the most financially and creatively appropriate facilities and services they could find, whether in-house or independent. Producer Choice was intended to introduce competition to the production process, but some critics both within and without the BBC charged that an overemphasis on financial accountability was stifling creativity and lowering morale.
At the same time, the BBC struggled to reconcile its traditional role as a publicly funded broadcaster with its nascent commercial activities. Anna Griffiths and Conor Dignam of Britain's Marketing magazine summarized the dilemma succinctly: "The catch-22 for the BBC is that it feels it is imperative to move into new media markets, yet every expansion of its brand raises questions about whether it should still be funded by the license fee." Limiting itself to broadcast television and radio would doom the corporation to marginalization as the proliferation of cable, satellite, and digital channels sliced away at its audience. Yet by putting its venerable moniker on everything from books to pay digital television stations, the BBC invited criticism from license-payers, advertisers, and competitors.
Nonetheless, the company pushed ahead with the restructuring and development of its commercial operations. In 1994, the BBC created a new subsidiary, BBC Worldwide, which then took control of all of the company's commercial businesses. The new company quickly became a major source of revenue for the BBC, and by 1996 generated a turnover of £350 million. The restructuring extended into the BBC's core operations as well, as the company began, in the words of the Economist: "remodelling itself to ape the big American media companies." As part of this process, the BBC centralized much of its journalistic operations, transferring its news operations into a new Television Centre in west London in 1998.
The company, through BBC Worldwide, next looked for new opportunities to leverage its vast portfolio of programs, characters, and brands across other platforms, such as CDs, videocassettes, and DVDs, as well as ancillary products. At the same time, the company launched a new series of commercial television channels, building up a portfolio of five commercial television channels by the end of the decade. It also added five new free channels to its services. Finally, the company partnered with Discovery, the U.S. cable and satellite television broadcaster, to launch BBC America. These moves helped strengthen the BBC ahead of a new era of heightened competition, inaugurated by the launch of British Sky Broadcasting's BskyB digital broadcasting service in 1996.
Embracing Digital for the New Century
Into the late 1990s, the BBC in its turn embraced digital technology, launching its own digital broadcasting services in 1998 and announcing plans to invest £1 billion in developing its digital television, radio, and other services. In this way, BBC emerged as the U.K. leader in digital broadcasting by the end of the decade.
The BBC's digital interests included the launch of BBC Online, a free Internet access service introduced in 1997. The company also launched its own web portal, beeb.com, which quickly became one of the United Kingdom's most-visited web sites.
These efforts had established the BBC as the digital broadcast leader in the United Kingdom. The expansion came at a cost, however. With the rising possibilities of generating its own revenues, particularly with the success of BBC Worldwide, the British government made it clear that it expected the BBC to become more self-sustaining in the near future, setting new turnover goals for the corporation. At the same time, the BBC's shift to digital, including its growing range of commercial operations, but also the limited accessibility of a number of its new channels, brought the future of the license fee up for discussion once again. Increasingly, the BBC's role as a government-held entity mandated to provide free broadcasting to all of the United Kingdom's citizens appeared to be heading toward a digital brick wall in the near future.
As such, the BBC saw only modest increases in its license fee revenues into the early 2000s. On the other hand, the company, under the leadership of Greg Dyke since 2000, received a loan of $550 million from the government in 2002 in order to pursue further expansion of BBC Worldwide. The loan enabled the company to set a goal of boosting BBC Worldwide's revenues from £600 million to £1 billion by 2006. Toward that effort, the company revamped its digital television offering, launching three new digital channels in 2003; a fourth, BBC3, was added the following year.
Nonetheless, the BBC's losses continued, nearing $500 million on total turnover of $5.5 billion in 2003. The losses eventually forced Greg Dyke's resignation in 2004; he was replaced by Mark Thompson. The company then announced its intention to sell BBC Worldwide, in an attempt to silence critics who questioned the compatibility between the corporation's public service commitment and its commercial operations. Soon after, however, BBC changed its mind, announcing its intention to maintain control of the commercial subsidiary. Instead, the corporation launched a massive cost-cutting effort, slashing nearly 3,000 jobs.
While the company's losses continued through 2005, with a net loss of $354 million on revenues that topped $7.2 billion, the company maintained its commitment to develop new revenue streams. In 2005, the company launched trials of its Internet Media Player (iMP), as part of its move into streaming online video and radio content. The full-scale launch of the iMP in 2006 quickly established the BBC as a first-mover in the fast-growing streaming media sector.
Into the beginning of 2007, the BBC spotted a new opportunity to enhance its online presence, while strengthening its brand, and its sales, on a global scale. In January of that year, the corporation announced its intention to develop its own range of social networking web sites, modeled after the planetary success of MySpace.com and similar sites. Then in March 2007, the company reached an agreement with Google, which had acquired the massively successful YouTube video site, to provide BBC content using the iMP via YouTube and Google Video.
Such moves were almost certain to call into question BBC's mandate, and the future of the license fee, when the company's charter came up for its ten-year renewal in 2007. The coming phaseout of analog broadcasts, slated for 2012, led many to call into question the company's capacity to maintain free accessibility for its digital content. Amid these controversies, however, the BBC nonetheless remained committed to its longstanding tradition of developing some of the finest and most innovative programming in the world, with such successes as Robin Hood and Doctor Who in the middle of the first decade of the 2000s. At the same time, the high quality of the group's production effort enabled it to achieve impressive and increasingly international ancillary sales; as an example, the company's Planet Earth series, broadcast in 2006, was sold to 95 countries, while its release on DVD became one of the most successful launches ever, with sales of more than £22 million. While BBC remained "Auntie" for most of the United Kingdom, the corporation seemed to be transforming itself into a "Daddy Warbucks" for the new century.
Principal Subsidiaries
BBC Commercial Holdings Limited; BBC Worldwide Limited; BBC World Limited; BBC Ventures Group Limited; BBC Resources Limited; BBC Free to View Limited; BBC Property Limited; BBC Property Development Limited; BBC Property Investment Limited; Centre House Productions Limited; Digital UK Limited.
Principal Competitors
British Sky Broadcasting Group PLC; Reuters Group P.L.C.; Virgin Media Ltd.; ITV PLC; Channel Four Television Corp.; United Business Media Plc; London Weekend Television Ltd.
Further Reading
Antcliffe, John, "Politics of the Airwaves," History Today, March 1984.
"BBC to Launch Social Networking Websites," Internet Business News, January 11, 2007.
Billen, Andrew, "New Money for New Rope," New Statesman, February 4, 2002, p. 47.
Black, Peter, The Biggest Aspidistra in the World, London: British Broadcasting Corporation, 1972.
Briggs, Asa, The BBC: The First Fifty Years, Oxford: Oxford University Press, 1985.
Butler, Daniel, "Auntie's Bloomers," Accountancy, December 1996, pp. 34-36.
"Changing Channels," Economist, November 28, 1992, pp. 17-18.
Clarke, Steve, "Brits Await Changing of the Guard," Variety, May 12, 1997, pp. 39-40.
Dawley, Heidi, "The BBC As We Know It Is Signing Off," Business Week, August 12, 1996, p. 50.
Dawtrey, Adam, "BBC's Birt Survives the Dirt," Variety, March 22, 1993, pp. 29-31.
"Digital Adventure: The BBC," Economist, March 15, 1997, p. 61.
"The Dirt on Birt," Economist, March 20, 1993, p. 65.
"From a Whisper to a Scream," Economist, November 28, 1992, p. 66.
Gelb, Norman, "Trouble at the BBC; John Birt's Revolution," New Leader, July 12, 1993, pp. 3-4.
"Google Gets BBC Content for YouTube," InformationWeek, March 2, 2007.
Griffiths, Anna, and Conor Dignam, "The Two Faces of the BBC," Marketing, April 10, 1997, pp. 20-21.
Guide to the BBC 1992, London: British Broadcasting Corporation, 1992.
Hargrave, Sean, "The Future of BBC," New Media Age, July 14, 2005, p. 21.
Heller, Robert, "Bravo for the Bean Counter," Management Today, November 1996, pp. 28-32.
"The Last of the Old Guard," Economist, November 2, 2002.
Leapman, Michael, The Last Days of the Beeb, London: Allen & Unwin, 1986.
McDonnell, J., Public Service Broadcasting: A Reader, London: Routledge, 1991.
"The New Look BBC," Economist, August 29, 1998, p. 53.
Reed, Alastair, "Can Auntie Find Success in the World of E-Commerce?" New Media Age, April 12, 2001, p. 36.
This Is the BBC, London: British Broadcasting Corporation, 1992.
Trethowen, Ian, "Turning Point at the BBC," World Press Review, August 1980.
Walker, David, "How Did the Beeb Do It?" Public Finance, July 15, 1994, p. 7.
Wheatcroft, Geoffrey, "Who Needs the BBC?" Atlantic Monthly, March 2001, p. 53.
— Moya Verzhbinsky; Updated by April Dougal Gasbarre, M. L. Cohen
