Sunday, 2 April 2017

Assessing Whether the BBC were Overcharging the Australian Broadcaster ABC for Television Programmes from 1958-1973

Despite the ABC being the most prolific purchaser of BBC programmes throughout the sixties they received no concessions in the prices that were offered to them. In fact, they paid some of the highest prices in the Commonwealth for access to BBC material (BBC Handbook, 1960-9). This would eventually lead to an air of resentment towards the BBC from within the ABC. This is exemplified by the words of the ABC’s Charles Moses (General Manager [1935-65]) after a visit to the BBC and Moses declaring that the BBC was staffed by “rapacious incompetents” (Potter, 2012). Moses’ comments did not go unnoticed by the ABC Chairman. Who went to seek assurances from the BBC’s Australian representative, Doug Fleming (Potter, 2012). Kenneth Adam (Controller of BBC Television Service [1957-61]) was concerned about what he regarded as neo-colonialism by the TV producers, believing that this partly due to the UK government’s unwillingness to subsidise TV exports (Potter, 2012).         
The primary focus of this paper is to assess through empirical evidence whether the ABC were paying prices higher than they should have been. The secondary focus is to ascertain if the ABC was unfairly subsidising BBC sales to broadcasters in other nations. As the BBC was a business, any profit would be expected to cover operating costs so this issue may be hard to clearly discern. The BBC defines the term overseas as meaning outside of Europe, and therefore, implies that the term foreign would denote sales within Europe (BBC Handbook, 1960 p.90). Consequently, these are the definitions used for this essay. 

The ABC:
First, though, we need to assess the number of sales by the BBC to the ABC in order to judge the value of the ABC as a customer, i.e. now crucial were they to the BBC’s overseas sales. The following figures were extracted from the BBC Handbooks for the sixties and represent the number of programmes purchased by all broadcasters in Australia:

                                                     Year   No of Programmes
1964               693
1965             1000
1967             1100
1968             1225
1969             1342
1970               786
1971               937
Table 1: BBC Programmes Sales to Australia 1964-1971 (minus 1966)

The sales figures for Australia above are for all broadcasters but the BBC offered programs on a first refusal basis to national broadcasters (Potter, 2012). This could only be to the ABC’s advantage and allow them to assert a monopoly over British imports while potentially blocking the BBC getting more lucrative deals from commercial broadcasters who were assisted by advertising money.                                   
The benefits to the ABC deploying a strategy like this were two-fold. The first being that the cost of making programs to the quality offered by the BBC was much than the ABC could reasonably afford, despite the ABC paying more compared broadcasters in other nations. Otherwise, why would the ABC continue to pay prices that by their reckoning were grossly inflated? The idea that the ABC were being overcharged seems to have come from Charles Moses. Yet when we consider the following quote the actions don’t seem to match the attitude displayed by ABC’s General Manger, (TV Policy Promotions File 1961-64, WAC, T16/599/4), under the heading sales prospects: 

The majority of Australian Sales are to the ABC – who have bought approx. 85% of programmes offered. The remaining 15% were either too expensive or rejected. These we hope in future to place with the commercial operators, who are desperate for programmes.”                                                                                 
If the commercial broadcasters were only being left with over-priced scraps and programmes which were rejected or demand heavy cuts from the censors then the only reason that Charles Moses could have thought that the programs were overpriced would either be that he was simply trying to negotiate a more advantageous deal or they saw that poorer nations who bought material near the end of the screening rights allowed by Equity were paying much less.                                                
For example, Ethiopia’s ETV had a yearly income of £80,000 a year, local programming cost them £350 per half hour to make, whereas, an episode of Bonanza cost them £20 to buy with superior production values that anything that could be managed locally (Green, 1972). At the time ETV was the only broadcaster in Ethiopia which was one of the poorest countries in the world, and as such, could not be expected to pay the prices that the ABC were.                                          
It should also be noted that the ABC had not given due care to how much foreign imports would cost. This would lead the commission to go hand in cap to the Australian treasury for additional funding (Potter, 2012). Also, the overspend wasn’t solely on BBC material but foreign programmes in general.                                                                                   
As a public broadcaster, the ABC had a quota for locally produced material that had to be met and because of the shared culture and history between the two nations British programmes were deemed acceptable for that purpose. As well as proving popular with the audience (Potter, 2012). The prevailing attitude at the broadcasters seems to have changed from 1964 when Charles Moses retired to be replaced by his successor, Talbot Duckmanton. It can be seen from the sales figures at the top of the paragraph that once Duckmanton took over the purchases by the ABC from the BBC jumped from around 700 per annum to well over a thousand, indicating that the perceived lack of value was very much the view of Charles Moses.

The BBC:
From the BBC’s perspective, they were suffering problems with potential deals being scuppered by high royalty fees to the Actors’ Guild of Britain, Equity. In the sixties fear of actors being made redundant through cheap and plentiful repeats led to deals that were unsympathetic to repeats and potential foreign sales. Equity received 30% of the original fee from each new transmission (The Guardian, 191 P.3).                                                                 
In a memo from (WAC, T16/599/4) the Manager of Television Enterprises (as BBCWW was then known), it is stated that: 

“For material of what might be called a ‘commercial’ nature i.e. entertainment capable of attracting wide audience, we charge the current market price in that area no matter whether the purchaser is public service or commercial. In this way, we maintain the BBC’s right to be paid, for this type of material, no less than the purchaser would pay to e.g. an American supplier.” 

The memo also goes on to say that art programmes, documentaries, current affairs; etc, are sold at non-commercial rates regardless of who was purchasing the programmes.                                                              
The national broadcaster of New Zealand (the NZBC) received lower prices because there was no competition for the American companies to sell to (Potter, 2012). This meant that the market rates were naturally lower than Australia’s.                                                           
We can see that there hefty royalties and programmes were offered on a first refusal basis to public broadcasters who could rely on financial aid from their governments while the BBC claimed to be asking no more than market prices. America dominated the global market for television programmes accounting for 73% of the world’s output compared to a measly 3% for the whole of the UK ( Consequently, as the same program could be sold multiple times the American producers were in a far better position to make a profit at the prices the BBC claims to have been pretty much breaking even at. So why was the BBC operating in a way that seemed to be averse to fully capitalising the potential of its products and brand name? It’s important to remember that the BBC was also a public broadcaster and not a commercial one.
Commons and Lords Hansard, the Official Report of debates in Parliament for 26 March 1963 [vol 248 cc75] (, states that the BBC sold 3000 television programs overseas with subsidies to Commonwealth countries organised through the Central Office of Information with the BBC receiving £50,000 that year for the teaching of English. The wording is not clear as to whether the distribution of English language program was the reason for the payment of £50,000, but according to ( television teaching programs for the English language began on 28th December 1963.                                                                         
The parliamentary debate suggests that the British government was keen on promoting the English language, especially to “under-developed countries” in the commonwealth and provided some financial aid to the BBC to enable this.                             
The ABC had to fulfil a quota for locally produced television material and the BBC, like all commonwealth countries at the time, had a quote for what percentage of its sales could be made to other Commonwealth countries ( This meant that if the BBC sold a program to one Major Commonwealth country - ie Australia, Canada and others – in order to sell to two Minor countries such as developing third world sub-Saharan nations or Asian countries. This was the result of a Commonwealth Broadcasting conference, as was the right of national broadcasters to first refusal (Potter, 2012).                                                                        
In order to evaluate the BBC’s position, it is necessary to take into consideration a potentially enormous amount of red-tape. Equity had very favourable terms which held back sales. Whereas the ABC had the benefit of first refusal and despite a subsidiary from the British government the BBC were tied to selling to Major commonwealth countries while trying to match US television producers’ prices. The only real perceivable benefit of selling so cheaply to other countries is to avoid a cultural invasion from a flood of cheap American imports or trying to counter the rise of communism in emerging Commonwealth states with positive propaganda.

The ABC was the biggest customer of the BBC during the sixties and may have expected more sympathetic prices as a result. On the other hand, they were offered first refusal and as this was taken up more often than not leading to a monopoly on British programmes. British, and in particular BBC, programs were a highly sought after commodity for their quality and affordability. Britain and Australia also had shared history and cultural values which the USA perhaps lacked. Additionally, the ABC took full advantage of near-exclusivity to push other local broadcasters from the operating table which suggests the deals on offer must have offered good value to them because they were at one point buying 85% of the BBCs output. The ABC’s overspend on foreign programming also seems to indicate a poor grasp of financial affairs from within the organisation. The view that the BBC were overcharging seems to have come mainly from Charles Moses. This could be down to two reasons. He simply wanted a better deal or he saw smaller countries paying cheaper prices.                                                                                                                                                  
The BBC, however, had to meet certain the requirements of certain regulations. They had to hand over a large percentage of their turnover to Equity. They Also had to meet the stipulations of the Commonwealth Broadcasting Conference and couldn’t sell to poorer countries till they a major Commonwealth member made a purchase, putting Australia to the front of the queue. The BBC also had to compete with the US Networks and ITV companies. The BBC may have dominated the domestic market but ITV controlled 75% of Britain’s television exports (

Neither organisation broadcast adverts, leaving them both at a financial disadvantage to competitors. A fairer solution would have been if the BBC had bought some programmes of the BBC. This would have put both parties on level ground, at least. Unfortunately, the Australian-made programs were often of poor quality in terms of production and recording so sales in the other direction were non-existent. 
On balance, the BBC seemed to lack the business acumen to compete with their competition and may possibly have been of a charitable disposition. There is no doubt, the money from Australia was vital for the BBC to be able to sell to other countries, but the BBC only sold to those countries at what they could afford while trying to work within the limits of the Commonwealth quota system. The actions of the ABC do not match up with their words, though. That is what ultimately suggests that the ABC, actually, got a very good deal and the most of it.                                                                        
Therefore, the BBC did sell at reasonable prices whilst having to pay larger fees to Equity. Also, smaller prices offered to broadcasters in other nations were due to local economic factors such as the number of competitors with those markets and relevant Commonwealth agreements. The same agreements which meant that the ABC were classed in a Major Commonwealth country and had to accept higher prices also allowed them first refusal which was a major boost for their acquisition of television material and gave them a significant advantage over other local broadcasters. Presumably, as a member of the Commonwealth Australia would have had to agree to these terms. 
This shows that Charles Moses comments were merely an interpretation of the events and circumstances surrounding the ABC, but not accurate. The ABC were not being asked to pay more than the market prices but could be interpreted as subsidising sales to more impoverished broadcasters.  

Potter, Simon. Broadcasting Empire. Oxford: Oxford Press, 2012
British Broadcasting Corporation. BBC Handbook. London: Microform Academic Publishers, 1960-9
Green, Tim. Universal Eye. London: The Bodley Head Ltd, 1972
BBC Written Archives Caversham. TV Policy Promotions File 1961-64, T16/599/4
Reporter, Our Own. “Keeping the World’s Screens Filled” The Guardian. London: 20, March, 1961, P.3