John Redwood: The BBC needs capital to conquer the world, and private finance could provide it

Sir John Redwood is a former MP for Wokingham and a former Secretary of State for Wales.

As the Conservative party embarks on a policy review, it is time to lift horizons and come up with new ideas that could boost growth and make life in the UK better.

The Government is so negative, always talking of spending cuts and tax rises. It is mired in the current model of government which is working so badly. It often takes a Whitehall battle or even a U-turn before more money is tipped into so many things, often to little avail.

What we need in many areas is not just new money but new ideas and changes of management. The loss-making, employee-mugging Post Office, and the cash sink delayed and truncated railway line that is HS2, show us the failures of the nationalised model. There needs to be new public-private partnership, more harnessing of private capital, more ambition for Britain’s undoubted talent and inventiveness.

The UK prides itself on its creative industries. It is true we have produced some great entertainments, from Robin Hood to James Bond, from Paddington Bear to Harry Potter, from the Beatles to the Last Night of the Proms, we have global brands that have captured big audiences. It is also true we have been winning some new investments in studios and media production in recent years.

This relative success compared to the continent has, however, served to conceal the bigger picture: American media giants are taking over our home market and dominate the world. One of the main reasons this is so is we have in the BBC a nationalised leading player that has too little entrepreneurial energy to project well beyond our shores or even to regain lost domestic market share.

The BBC could make a much bigger contribution to the British economy and employment if only it was more ambitious overseas. Instead, it is badly constraining the development of the domestic media industry, especially in the exciting and fast growing world of downloaded and streamed media, video, and film, as it has too little capital to expand.

The Corporation did set up a commercial arm to stride the world media markets and to export BBC products to earn revenue for itself and our country. This is a ring-fenced business that is meant to make a profit, detached from the licence fee and public interest broadcasting requirements.

However, BBC Commercial last year reached a turnover a little shy of $2.4bn – and made a loss. Meanwhile, it watched as the US giants just got bigger. They were there exploiting the new demand for downloads, video on demand, films and entertainment more generally. Disney, Netflix, Warner, and Paramount all had turnovers in excess of $30bn worldwide, all of them more than ten times larger than BBC Commercial.

Netflix has now taken much market share away from the BBC in British homes. Disney makes good money out of adapting old British stories and books as well as other franchises; Amazon Prime has gone from newcomer to being a big presence in video and music. Comcast, the US giant turns over $120bn, showing just how big this world market is.

Meanwhile the BBC’s national audiences for the two channels of fixed programming are losing out to flexible downloads. where people have so much more choice of what they watch and when they watch it. The market for downloaded entertainment is fast growing and insatiable. It needs many more producers of drama, incisive reporting, informative documentaries and riveting entertainment from song and dance to comedy.

What BBC Commercial needs is more capital to expand its production and broadcasting capabilities much more rapidly. It needs management to be far more ambitious, with world-beating technology to deliver the service.

To deliver this, the BBC should offer a new issue of shares in BBC Commercial to people and companies willing to put up money to expand the brand and engage more people in the world with its offerings. On the back of the new share capital, BBC Commercial could borrow to finance new productions and to finance new technical capacity.

The new shareholders should own more than half the enlarged share capital, to give them sway over management and decisions. This would also guarantee substantial capital was raised. There could be a restriction on anyone buying the whole business through a golden share or other blocking device.

BBC Commercial would need carefully negotiated contracts with the domestic, public Corporation over access to and use of British BBC material. It would work best if there was some privileged two-way access to each other’s commissioned products. It should of course pay BBC national for the use of its products. None of this would change the domestic BBC and its licence fee.

The government says it wants growth. There has been some growth in new studios and new entertainments in the UK, but the US dwarfs our efforts so far. The BBC has a bigger brand that needs proper support and marketing worldwide. It is time to release it to grow, and to harness private capital to help it sell to the world.

This Government may not, however, be sensible enough to do something so obvious to unblock the media arteries and project British talent. If so, it could be a good idea for the Conservative Opposition to champion.