Tim Worstall

Efficiency at the BBC

Isn’t it just wonderful how accounting works in the tax funded sector:

The true cost of BBC One is £1.4 billion, the corporation will reveal next week, nearly £600 million more than it was prepared to admit last year.

Oopps! Only lied by 40%. That’s the sort of thing that would have private sector bods in jail.

After the departure of Michael Grade as chairman of the corporation, the BBC Trust has decided to include the costs of news gathering, marketing and other overheads for the first time in the BBC One budget. A year ago the BBC said that its spending on the channel was £840 million. On the revised basis the figure would have been £1.295 billion.

Cheeky don’t you think? We’ll not include overheads?

A precise comparable figure for ITV1 is not available, but it spends about £1.1 billion, about £300 million less than its rival; its expenses include tax payments and the cost of advertising sales staff, neither of which are paid by the BBC.

So the BBC is vastly more expensive than the private sector competition. Well, whadda you know, ain’t that a surprise. Without the bracing effects of the market (and apparently without being able to count) those spoonfed tax money piss it away.

My, we learn something new every day, don’t we children?

In

4 responses

  1. dsquared Avatar
    dsquared

    [That’s the sort of thing that would have private sector bods in jail.]
    Really? When was the last time someone went to jail for a simple overhead allocation? It is not as if the aggregate figures for the BBC were misstated. What Grade’s done is to split out a few central costs to the divisions. Happens all the time.
    That Times article is woefully moronic, by the way, Tim; if it had come out favourable to the BBC I don’t doubt you would have given it one of those “Idiot Awards”.
    [Despite the additional cash BBC One’s share of viewing fell ]
    what additional cash? It is made clear in the third paragraph that this is not extra cash; it’s an overhead allocation. If we decided that some of the time spent on your spam blogs ought to be allocated partly to this one, would that be “additional blogging time”? It can actually be inferred from the figures provided that the BBC1 budget has risen from £1.295bn to £1.4bn, which is a cash increase of £105m, which is really not all that much.
    You’ve also quoted one of the dafter sentences:
    “A precise comparable figure for ITV1 is not available, but it spends about £1.1 billion, about £300 million less than its rival; its expenses include tax payments and the cost of advertising sales staff, neither of which are paid by the BBC”
    which seems to treat its first nine words as purely ornamental; they actually mean that you can’t make precisely the comparable statements that you do make.
    Finally, of course, it is only somebody living outside the UK (and not watching either channel) who could possibly think that out of BBC1 and ITV1, it was BBC1 that was pissing money away pointlessly. ITV1 is a known disgrace, and the “falling revenues and weak advertising” that poor ickle ITV have had to suffer through are a direct result of the falling audience share of their piss-poor programs. The “bracing effect of the market” (by which you mean five years of some of the worst management in the history of the media sector) has damned nearly killed commercial television in the UK.

    Reply
  2. Stephen Avatar
    Stephen

    “[That’s the sort of thing that would have private sector bods in jail.]
    Really? When was the last time someone went to jail for a simple overhead allocation?”
    Actually, Tim said that private sector bods go to jail for mis-stating numbers by 40%, which is more or less what happened with Enron, not so?
    “which seems to treat its first nine words as purely ornamental; they actually mean that you can’t make precisely the comparable statements that you do make.”
    Well, to my no-doubt simple mind, the first nine words say that although a precise comparison is not available, due to ITV paying tax (instead of having its own tax) and paying for advertising staff (instead of having its own compulsory funding), ITV’s spending is X: thus leaving it up to the reader to decide to what extent they are comparable. But maybe I need more edukashun.

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  3. john b Avatar
    john b

    Stephen – it depends entirely on the type of “mis-stating”. If you lie (e.g. including revenues on your accounts that do not and will not actually exist), then you might well go to jail.
    However, if you make a judgement call about an accounting policy to adopt (as in this case, whether overheads can be attributed to the division where they were incurred, or whether it is more appropriate to class them as central costs), and in subsequent years you – with a good justification, and with the assent of your auditors – decide to change the categorisation, that’s absolutely OK.

    Reply
  4. dsquared Avatar
    dsquared

    [But maybe I need more edukashun.]
    basically yes. ITV1 buys in much more of its programming than the BBC does, so the top line and cost line are lower than they would be for a more integrated producer.
    My guess is that the Times person was working off something like this factsheet, which is clearly not remotely comparable as it’s only discussing programme budgets and excludes precisely the head office costs that were the big swing factor in the BBC.
    (Also, surely if we were comparing like with like, the BBC1 cost base ought to be roughly 20% higher than the ITV1 cost base as the BBC has to show programs while ITV is showing adverts).

    Reply

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