UNIT 8 – Task 01

For this unit we have been asked to research the finance schemes for the BBC and ITV and to then conclude why and how they differ from one another.

BBC:

The BBC is the world’s leading public service broadcaster, which has a mission on enriching peoples lives with programmes that are educating, entertaining and informative.

The BBC Media Action, which is the BBC’s international development charity, received £40 million in the year to 31st March 2013. The main source of funding was grants receivable from international bilateral donors and this money then made it possible for the BBC to work on 81 projects worldwide. The pie chart I have used shows the number of different companies which support (fund) the BBC Media Action, as well showing you how much that specific company has donated to them. On occasion, specific project funding is also received from a number of different charitable foundations, most importantly The Bill and Melinda Gates Foundation still continue to show increasing support for the BBC in 2012/2013 to help fund their work in India.(http://www.bbc.co.uk/mediaaction/about/finance - accessed: 17th October 2014 – Authored by: BBC)

Another source of income, which was used by the BBC, was the annual license fee. Between 1 April 2013 and 31 March 2014 the licence fee cost was £145.50, which was equal to £12.13 per month or just under 40p per day. The BBC used this income to pay for its TV, Radio and online services, as well as other costs. All of these factors were paid for per household, every month at a small price: TV cost £8.00 per month; per household, which meant that £2,276m (66%) was spent. Radio, didn’t cost as much at £2.30 per month, per household which gave the BBC a total spending rate of £650m (19%) for the radio funding. Again, online services cost even less than radio

at £0.61p per month, per household which therefore gave the BBC £174m (5%) to spend solely on the online service funds. And then finally, the other costs asked for were slightly more expensive than the online services at £1.82 per month, per household, which gave the BBC a total of £357m (10%) to spend on the other funds, which became present. (http://www.bbc.co.uk/aboutthebbc/insidethebbc/whoweare/licencefee - accessed: 17th October 2014 – authored by: BBC)

They use the income from the licence fee to provide multiple services including: 10 national TV channels, plus regional programming, 10 national radio stations, 40 local radio stations and an extensive website.

The BBC also have something called ‘BBC World Service’ which broadcasts to the world via radio, TV and online, providing news and information in 27 languages as well as, the world service English language. They also have a ‘commercial arm, which involves BBC worldwide, as well as a larger amount of other commercial ventures. Money made from these activities is given back to the BBC for funding in new programming and services. (http://www.bbc.co.uk/aboutthebbc/insidethebbc/whoweare/ataglance - accessed: 17th October 2014 – authored by: BBC)

ITV:

ITV is a commercial broadcaster, which means that their funding, mainly, comes from advertisements. Which basically means that different companies and campaigns book airtime for their advertisement to be shown, the price can range from as little as £2000 up to and in excess of £1m. The price generally depends on how big the task is and how much noise the campaigns need to make. Also, certain clients book single airtime costing only a few hundred pounds. But then there’s others who run through to the large multi-national companies that run advertisements 12 months of the years, costing them millions of pounds, therefore giving the BBC millions.

(http://www.itvmedia.co.uk/tools/rates - accessed: 17th October - authored by: ITV) The table above shows how much it would cost a company to advertise themselves in different regions as well as what time in the day they would like their advertisement to be shown. As you can see, figures are higher for an advertisement between ‘Coronation Street’ and ‘Movie and Drama’, this is because most of the country watch daily soups and movies when they’re shown and so the advertisement will therefore be viewed by a larger amount of people, which gives the campaign/company a larger scale of recognition. This is what makes commercial broadcasting, ITV’s main source of funding.

The other funding source for ITV is shareholders. A shareholder is basically someone who invests into a company, like ITV.

The table above shows a list of major shareholders for ITV, including the amount of funding given and percentage of funds for each specific shareholder.

This table above then shows a list of the major institutions that are involved in the shareholding system. (http://investors.morningstar.com/ownership/shareholders-concentrated.html?t=ITV&region=gbr&culture=en-US&ownerCountry=USA - accessed: 17th October 2014 – authored by: ITV PLC)

Shareholders have a specific amount of money to give to ITV before a specific time, they are given a payment date and amount which both ITV and the shareholder themselves have decided upon. Although there are many shareholders involved in the funding of ITV (e.g. Richard Branson), they aren’t they key source of funding for ITV, advertisements are still the things that bring them, as well as many other TV channels, their main money.

Comparison:

BBC compared to ITV is completely different, both having different funding schemes and different structures. The general public and the license fee fund BBC, whereas campaigns and companies who want their businesses or projects to be known by the nation fund ITV. It is also clear by the information I have and the images I have chosen to

include in this piece of research, that ITV earn (are funded) more money than the BBC are. This is possibly because ITV offer companies a chance to make their businesses well known in the nation, which would obviously cost quite a bit of money, as well as the fact that there are approximately 4 breaks in-between each TV show that is shown on ITV and then there’s approximately 8 breaks within the time that a movie is shown which gives more companies a chance to hire a slot during that specific show or movie. Compared to the BBC which has the license fee as their main source of income and it states that, for colour license, it costs a household £145.50 which has seemed to increase over the years from £135.50 but the government decided to keep this price stable and unchangeable over the past 4 years, this price will stay the same for just over another 2 years, until 31st March 2017. If this price drops after 2017 then the BBC will loose some of their income and therefore, will have to look for another source of funding which could be troublesome for the company and possibly even the public if the BBC decide to become commercial broadcasters like ITV as certain people like BBC strictly because there are no breaks in-between shows or movies. (http://www.bbc.co.uk/aboutthebbc/insidethebbc/whoweare/licencefee/ - accessed: 17th October 2014 – authored by: BBC)

BIBLIOGRAPHY:

BBC Finance (http://www.bbc.co.uk/mediaaction/about/finance - accessed: 17th October 2014 – Authored by: BBC)

BBC Licence Fee (http://www.bbc.co.uk/aboutthebbc/insidethebbc/whoweare/licencefee - accessed: 17th October 2014 – authored by: BBC)

BBC Worldwide Service (http://www.bbc.co.uk/aboutthebbc/insidethebbc/whoweare/ataglance - accessed: 17th October 2014 – authored by: BBC)

ITV Advert Rates (http://www.itvmedia.co.uk/tools/rates - accessed: 17th October - authored by: ITV)

ITV Shareholders Stats (http://investors.morningstar.com/ownership/shareholders-concentrated.html?t=ITV&region=gbr&culture=en-US&ownerCountry=USA - accessed: 17th October 2014 – authored by: ITV PLC)

BBC Licence Fee (http://www.bbc.co.uk/aboutthebbc/insidethebbc/whoweare/licencefee/ - accessed: 17th October 2014 – authored by: BBC)