The TV licence fee: the true cost of television
We take the BBC for granted and fail to see what an asset it is, warts, errors and all. And also what value for money it is too.
I did some research on this for Parliament in 2007, so the figures relate to then, but doubtless the ratios and principles remain the same. Searching around on the Ofcom website, I found that that total commercial TV advertising revenue is running at about £4 billion a year. Total retail spending in the UK runs at about £264 billion a year. (Retail Consortium, thisismoney.co.uk).
So of that £264 billion, £4 billion goes to pay for commercial television. That's about 1.5%. So 1.5% of every shopping basket on average is what you pay for commercial television. To match the current licence fee for the BBC at that level, you would have to spend £8,766.66 a year. Or another way, if you spend less than £8,766.66 then the BBC is costing you more than commercial television, if you spend more than £8766.66 a year, and most people do, commercial television is costing you more than the BBC, especially if on top of retail spending, you are paying again through subscription fees.
But that is not the end of the story.
Commercial TV however costs most people far more than the licence fee, and is hidden and unaccountable.
Commercial TV is financed by the sale of advertising, which ultimately comes from the consumer. The total advertising income of commercial TV in the UK is about £4 billion a year. The £4 billion is only what the TV companies charge, not what it costs other companies to hire an advertising agency to run a campaign and make TV adverts.
Let's take not just any advert, but an M&S advert. They hire an agency to create a series for broadcast. Suppose the TV companies charge £100K to screen it. But on top of that £100K, M&S have had to pay the agency their fees, the production costs etc. amounting to several times the £100K. So rapidly the 1.5% of the shopping basket reaches more like 5%.
5% of most people's annual spending comes to far more than the licence fee, and then many people are also conned to paying again to watch it through subscription and Pay TV! No wonder commercial TV was described as a licence to print money! A BECTU study has even put the cost as high as 13% of consumer spending. But there is no outcry because this most inflationary and hidden 'tax' is unnoticed.