UK: BRAVO FOR THE BEAN COUNTER.

UK: BRAVO FOR THE BEAN COUNTER. - The knee-jerk of hostility to any mention of John Birt's name overlooks his success in raising audience figures while cutting costs and repositioning his David in a world of media Goliaths.

by Robert Heller.
Last Updated: 31 Aug 2010

The knee-jerk of hostility to any mention of John Birt's name overlooks his success in raising audience figures while cutting costs and repositioning his David in a world of media Goliaths.

With most organisations, shock and horror are usually reserved for managerial ineptitude - or worse. With the British Broadcasting Corporation, however, the inverse is true: praise for John Birt's BBC (programmes apart) rings like rank heresy to a host of enemies. Yet the truth is that the BBC is well-managed. The corporation is simply undergoing a necessary transformation similar to BT's - one which, in its context, is just as successful.

That is the reality. But the director-general's regime is beset by myths, strongly believed internally and externally, and partly explained by paradoxes inherent in its strategy. Strangely, Birt and his most vehement detractors stand on common ground. They attack him for betraying what he has successfully defended, namely, the status of the BBC as the world's largest public service broadcaster, to many the best. The conundrum is that to preserve public sector excellence, the BBC must become as effective commercially as any private sector rival.

For the BBC, once a radio monopoly, is now dominated by television, battling with rampant competitors in an industry whose technologies, outlets and channels are rapidly changing and expanding. Yet the old aura remains potent. Typically, the only real uproar over Birt's latest reorganisation (as outlined in the document, A Structure for the Digital Age) centred around merging the long-treasured World Service - a fraction of the whole, funded by a government which has squeezed its money - with other radio.

Though the move may have been justified, it was, notably, tactless of Birt to announce the World Service change unilaterally only to vanish on holiday, leaving his new chairman, Sir Christopher Bland, and his deputy to face outraged parliamentarians and miffed ministers. That's characteristic of the mishaps that contribute to Birt's image problems. He has become the man the chattering classes love to hate.

What is the difference between John Birt and Stalin?, asks a lampoon circulating among the disloyal opposition. Among answers like 'John Birt does not have a moustache', real concerns emerge: 'Stalin ruthlessly disposed of all those who disagreed with him whereas John Birt ... er ... actually, this isn't a good example'.

So knee-jerk is the hostility that a forum on 'Why I left the BBC' at the Edinburgh Festival inspired the unsurprising Guardian headline, 'Fear and groaning at the BBC'. But surprisingly, as the transcript shows, BBC and ex-BBC employees mostly heard thoughtful, constructive and affectionate accounts. Ex-drama head Nick Elliott spoke of 'improved performance of the BBC in all areas', and supported the separation of broadcasting and programme making, the heart of Birt's latest reforms. A few horror stories included two camera crews sent to Russia by separate operations, burning up £15,000: no doubt, there are plenty of others. Any large organisation has such lapses. The general trend of costs and efficiency is the acid test.

In three years (Birt was made director-general in late 1992), the average reduction in the unit price of programmes has totalled a genuine, subject-to-audit 19%. In 1995/96, the BBC produced 19,334 hours of TV for £1.13 billion: in 1993/94, 18,165 hours for £1.07 billion. Rising prices (as a major instance, an 800% rise for sporting rights) have been absorbed.

These figures don't indicate any wonders of management, but do conceal more effective use of resources. The latest annual report claims that, 'A further £100 million was saved ... by more efficient working practices ... most of these savings have been invested in additional or improved programmes and services'.

Birt is now seeking a further 15% reduction in costs over five years.

That seems modest, given the economies that the move to digital technology should bring, and given that the basic processes have yet to be re-engineered - including the creative ones.

The key restraint on leanness and meanness, however, is the vaunted creative excellence - on which ultimately the BBC depends. The three-year cut in TV and radio unit programme prices has been accompanied by a robust creative performance, marked by improved audience statistics. The Birt regime, which treats the licence payers as both customers and shareholders, must provide value for money in both respects.

The fact is that for all the 'Birt-speak' effusions about managerial efficiency and culture change, in reality the BBC is still dominated by the very programme makers who often disparage Birt and his allies. This is hardly surprising, given Birt's provenance. His entire ITV career, either as producer, controller or director, was built on programmes.

And his top colleagues are broadcasting and mostly BBC veterans. They outnumber two to one a quartet of outsiders with experience of the professional corporate management which the BBC used to lack: their CVs take in BA, Forte, Burton Group, the Midland Bank and BT.

Birt's inner circle, and his clarity about the BBC's paramount cultural aims, make it hard to understand his demonisation as the management-mad dictator, a Dalek stultifying creativity and commonsense with jargon-riddled nostrums. Management is informed, intelligent and sensible. The overhead exercise that underpinned the market-testing Producer Choice, introduced in April 1993, is an example, and a very sophisticated one.

If the accountants who worked on creating such systems count as bureaucrats, then the charge of bureaucracy so often levelled at Birt is easy to understand.

These bureaucrats were essential: £200 million-plus operations were bereft of accountants, and systems needed (and got) huge improvement. The advent of the bean counters, typically, was resented by many creatives: but creative leaders like the new head of production, Alan Yentob, are fully behind the sea change: 'There was hardly such a thing as budgeting'.

Producer Choice was fundamental. It freed the producers to seek the cheapest services, and involved charging for facilities from the archive to concert halls. There are downsides, of course. The archive is really a fixed cost, so apportionment gains little. And, if the concert hall fee busts an orchestra's budget, forcing it to rent outside, the asset stands unused. Despite such examples, overall the BBC has gained. The prices paid for programmes are 'at or below' market rates, Birt asserts, resources 'are traded at market prices', and support services are outsourced.

The novel idea of choice has generated lower costs, but so has old-fashioned pressure on expenditure. That also helps explain the hostility Birt has aroused. It's important to recognise, too, that media people are naturally 'agin the management'. As Margaret Salmon, personnel director, points out, 'some programme makers would die if you used "manager" in their title,' even if they're managing £200 million budgets and 160 people.

Making 8,500 people redundant (from a total headcount of around 33,000), did not help, either. But, Birt adds, 'you've got to get on with it and do your best to explain ...' There is, however, a huge difference, he says, between introducing structural and strategic change. 'I completely reject the idea that I'm autocratic about strategy.' He claims that the strategy in Extending Choice in the Digital Age, the document which set out the BBC's new direction was 'consensually produced', with 'barely a murmur of dissent'. While consensus didn't create the latest restructuring, Birt asserts that his predecessors acted in 'exactly the same way'. They decided on a new structure, he says, persuaded the governors to agree - and then imposed the plan. 'Strategy must be consensual, but structure is a different matter,' Birt argues.

True, when individuals and their positions are at stake, consensus tends to fly out of the window: 'The chief executive has to make the decision.

Yes, I was decisive. I don't believe that many chief executives in those circumstances are not decisive.' In any case, he says, the centrepiece of the latest restructuring - separating commissioning from programme making - had been discussed in depth and is widely supported within both the creative and the managerial community.

And, says Salmon, for all the perceived grumbling, 'there is no serious problem with morale: absolutely not'. Surveys, audits and recruitment, like absenteeism and turnover, support the assertion. In general, Salmon says, while management still has 'a huge way to go, we're half-way there'.

She points to what Yentob has achieved at BBC1 and BBC2 despite eccentricities such as leaving his own meetings and forgetting to return: given the splendid outcomes, 'I don't care if he forgets'.

Drama is another case. The department is a known difficulty; Yentob says 'how it is managed is problematic', but 'you wouldn't know it from the on-screen success'. Even Private Eye, a spite-fully witty Birt watcher, concedes that, 'Of all the extraordinary developments in television in the past few years, the one no one predicted was the renaissance of the BBC drama department'.

For all the positive achievements, Birt, who is affable and approachable in person, maintains his extraordinary knack for feeding his negative image. What is the explanation?

Without doubt, the collision between his hard-nosed attitudes and the entrenched, softer culture of the BBC created a body of animus. Some veterans with brilliant records have neither forgotten nor forgiven the way they (and their records) were swept aside when he came in. Certainly Birt is not one to suffer fools gladly, nor slow to make judgments about what he believes to be folly.

The lampoon mentioned earlier accuses him of 'brutally converting a world-leader into a third-rate bankrupt economy', purging most of his key programming staff, being an 'autocratic, aloof despot, incapable of listening to advice and totally out of touch with reality' and 'instituting a regime of fear'.

The accusations are manifestly false. But something about his persona has fed the hatred. The lampoon refers to 'an insufferable, irritating, smug grin'; what you hate, you see. Certainly he could have done more to create a happier image. As the World Service row showed, he does not specialise in tact; and he refuses to be swayed by criticism.

Birt argues that 'people in all organisations are nervous about change and worry about it. In a creative organisation, they have creatively and imaginatively worried about change.' Inadvertently, but definitely, he has fed the worries. Thus the sudden way the latest reforms were announced convinced outsiders that other top people had been wilfully and wrongly excluded. The structure was Birt's own work, for which Salmon 'acted as his sounding board'. It didn't bear the mark of McKinsey, for it's another myth that the corporation is managed by The Firm. Clearly, consultants (and not only McKinsey) are earning substantial fees, but always working to 'very clear project specifications; they would be project managed, and led by a BBC person', says Salmon. For instance, the Programme Strategy Review, led by Yentob and the then head of radio, Liz Forgan, had 'never been done before'. McKinsey supported the BBC teams with external investigations.

In any event, the structure has obviously improved. The 10-strong executive committee is a much less unwieldy body than the 16-strong board of management (which, still exists, with mostly overlapping membership). Half of the 10 are chief executives, running Worldwide, Broadcast, Production, News and Resources. Four run support functions (personnel, finance and IT, policy and planning, corporate affairs). They all report to Birt, while in the key barony, Production, Yentob is free to organise his division as he wants.

Yentob has promised that, 'While people may think this is landing on us ... those who have things to say are going to be heard'. The upheaval is huge, and personally affects Yentob's 4,000 programme makers, whose jobs must change (and may be vulnerable). 'Nearly all the ideas in the final structure,' though, 'will have come from the programme departments, and that should greatly ease the change'. Broadcast, which runs the networks, has the job of commissioning and scheduling the best possible programmes, while Production will 'focus on developing our creative talent'. Yentob says that 'very few voices in the BBC have complained'. Further, 'creative management at the top is more in tune and sync than for a very long time', he claims.

At the straight commercial arm, BBC Worldwide, the issue is one of revenues.

In 1995/96, turnover from TV programme sales and satellite income, magazine and book publishing, and videos, records and tapes was £338.4 million, up by 65% on 1992/93. The net benefit of all this to the BBC is put at £70 million. This fat figure conceals the fact that Worldwide is no profit gusher: deputy finance director John Smith explains that profits are substantially outweighed by other contributions to cash flow, especially direct investment in programme rights and the outside cash stemming from co-productions.

But the potential goldmine embodied in the past, present and future programming seems something of a Cinderella: better suited to the culture of a Time Warner, Disney or News International than to the BBC. Accordingly in August, the BBC announced talks with Flextech, the European cable and satellite programmer, that would allow the latter to distribute some of the richest asset, the enormous archive. The exciting element, though, was less Europe than the US: cable giant TCI has majority ownership of Flextech, and any deal would open up enchanting American vistas. Talks with Discovery, 49%-owned by TCI, that promised a $500 million joint turnover, including revenues from the US, were duly revealed last month.

Even Birt's critics admit that he has read the runes aright. The future lies with multi-channel, digital TV, distributed not only by terrestrial means, but by satellite, cable and telecommunications, and with commercial partnerships that will ease the cost. To compete in this marketplace, the BBC must invest heavily in a wholly new digital system, affecting every aspect of operations, and it must offer many more channels.

Some would be subscription services. But the licence fee (£1.8 billion in 1995/96) plainly won't cover all this expansion. How much is needed?

Currently running 'north of £100 million a year', investment must rise by an 'order of magnitude,' Birt says. But a publicly funded institution with limited powers to borrow money is ill-placed to compete with media giants supported by massive cash-flows and mighty market capitalisations.

The 800% rise in sporting rights mentioned earlier is a painful example.

This wasn't just the result of rising greed among the sports authorities.

The super-rich Rupert Murdoch has led in a pre-emptive bid battle, inspired by the potential of sports for creating and holding mass audiences - and by his awareness of the negative impact on his poorer rivals. The BBC, moreover, can't join Hollywood studios or merge with BT or make any of the other strategic moves that are reshaping the world media map. If only it could, the financial gap might rapidly close.

Projected savings and commercial success won't fill the gap. Birt claims that a 'very sophisticated financial model' shows the plans described in Extending Choice for the Digital Age to be 'very ambitious, but achievable'.

That hinges, however, on major help from Government: first, enabling aid - a new borrowing regime, in other words; second, some real growth in the licence fee.

An alternative scenario is feared by outsiders but firmly negated by insiders. The BBC's transmission facilities are already being sold off, yielding perhaps £100 million for reinvestment. Spinning off BBC Resources (the production facilities and studios arm) has been rumoured - falsely, Birt is quick to assert. But with £650 million turnover, the studios and other facilities represent large capital value.

The BBC has other vast capital opportunities locked in by public ownership.

Could News be spun off as a direct commercial rival to CNN? Wouldn't Worldwide make sense as an independently capitalised commercial business? Similarly, Production, set free, could become a Hollywood-style powerhouse, generating programmes, not just for the BBC, but for a media world whose appetite is gargantuan - and swelling.

But Production, Broadcast and News are the hard core; the essence of the Royal Charter, the justification of the licence fee. As Yentob says, 'The culture has to be that of programmes and programme makers - otherwise it isn't the BBC any more'. Plainly there is a limit to how far Birt can deconstruct the BBC without destroying what he has striven so hard to preserve. His ultimate paradox is that some degree of deconstruction may well be the only means of constructing a BBC that can compete on more equal terms in the media wars of the new century.

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