Some of the UK’s biggest broadcasters have voiced their concern over competition for advertising should the BBC’s funding model change.
A House of Lords committee heard there is a “finite pool of TV advertising revenues”.
The Lords Communications and Digital Committee is looking into how the BBC should be funded in future.
Culture Secretary Nadine Dorries has said she wants to find a new funding model for the broadcaster after the current deal expires in five years.
The licence fee is due to remain frozen at its current price of £159 for two years and will then rise in line with inflation for the following four years.
BBC bosses have warned the licence fee freeze will leave them with an annual £285 million shortfall by 2027-28.
Some £3.6 billion of the BBC’s £5 billion income is generated from the licence fee, the committee has said.
Khalid Hayat, director of strategy and consumer insight at Channel 4, said he does not believe cutting BBC funding is a good idea and that it would affect public service broadcasters (PSBs).
Giving evidence to the Lords committee on Tuesday afternoon, he said: “Any changes to the BBC funding model should not have an adverse impact on its suppliers or on other PSBs and, above all, what we mean by that is introducing an element of advertising into the BBC funding model would damage the PSB ecology.”
Explaining that there is a “finite pool of TV advertising revenues”, he added: “Were the BBC to enter into that advertising market and make its services ad-funded, yes, it’s possible to envisage that the overall market size of TV advertising could increase a bit but actually I suspect what we would find is that, were that change to take place it wouldn’t be in the interests of the BBC, it wouldn’t be in the interests of commercial PSBs and it wouldn’t be in the interests of viewers.”
Mr Hayat said there would likely be a shortfall in BBC funding relative to the licence fee funding that currently exists.
He said: “Much of that money, if not all of it, would come from a transfer from commercially-funded players into the BBC. That therefore leaves players around this table with less money to spend on UK-originated content.
“All of that therefore means there is a reduction in PSB provision which is not in the interests of viewers.”
Mitchell Simmons, vice-president of public policy and government affairs with EMEA, Paramount Global, which includes Channel 5, said it would be “very, very concerned” should the BBC move to an advertising-funded model.
He said: “The knock-on effects on to the wider ecology would affect all other broadcasters who have advertising as their primary source of revenue, so it would hit the entire market.”
He added: “We would be very, very concerned if the BBC were to move to some form of advertising-funded model that would undermine our ability to invest in content.
“Consequently of course we are the smallest PSB, as noted before, so we would feel particularly vulnerable if that were to happen.”
Asked directly whether it would be fair to say their biggest concern is the share of advertising spend, Magnus Brooke, director of policy and regulatory affairs at ITV, said: “In terms of the future funding of the BBC? Yes.”
All three agreed, with Mr Hayat adding: “Yes, and what that means for the PSB ecology writ large.”