Gordon Brown, media Baron

BBC: Still feeding fat

What’s the difference between a media executive and a politician? Apparently none, if you want to credit the bizarre argument being raised against the ‘excessive salaries’ of top BBC executives.

Politicians are in a state of moral outrage that some execs are paid more than the Prime Minister. Which makes one wonder what the basis for the comparison is.

It is true that a monkey (or a media exec, which is much the same thing) could probably do the PM’s job. But managing a media business requires special skills politicians generally don’t have (their deep understanding of hair and make-up notwithstanding).

The only determinant of the proper pay for an exec is their opportunity cost: i.e. what they would earn in a similar job elsewhere. That’s the market price for their skills. But since the public is presumably sour on big salaries anywhere, the guardians of public envy must step in to save the day.

The perfect solution of course, is to privatise the Beeb and end the ludicrous license fee tax. But until then, the only correct benchmark is the pay of execs at private media companies.

Berating the Beeb

BBC: Big, Bloated Corporation

There are some things no self-respecting free market democracy should have. One of them is a state-sponsored broadcaster. The second is national industry champions. The BBC is both.

In June, we questioned the policy of forcing anyone who owns a TV to pay a license for it- and then forking the proceeds over to the BBC. James Murdoch strapping scion of the Murdoch media dynasty, appears to agree with us.

The heir to Rupert Murdoch’s empire is calling for an end to the Beebs cossetted monopoly position. Naturally, the BBC Chairman has a different view. The BBC Trust he says, “is here to strengthen the BBC for the benefit of licence fee-payers, not to emasculate it on behalf of commercial interests.”

Well, he would say that. In actual fact, scrapping the TV license and exposing the Beeb to commercial competition is the best way to strengthen it. To lose weight, obese incumbents need to be given a run for their money. Right now, program choices are made by the BBC’s Brahmin elite, immune from any need to bow to consumer demand.

In a truly competitive regime, viewers would vote with their eyes and their wallets. Winning programmes (and channels) would proliferate, and those with no audience appeal would wither and die. And besides, anything that involves one less tax is hard to argue against.

Hollywood's Economic Migrants

Return on Capital Employed

What do Kate Winslet, Hugh Laurie, Sacha Baron Cohen and Dame Hellen Mirren have in common? More to the point, what do they have to do with a business blog?

The answer to the first is, they’re all talented British thespians who had to go to Hollywood to earn global fame and fortune. They’re also economic beings- human capital- who moved to the market where they would earn the highest financial return on their talent.

But why is the UK not the most profitable market for their talent capital? The Times today wrote this article, lamenting the fact that the UK film industry is addicted to government subsidy. Astonishingly, it then concludes with the alarming assertion that the solution to the industry’s woes is for the government to finance a movie production sector.

We would like to gently point out to the Times that there’s no government-financed movie sector in Hollywood. We’d also gently suggest that this is precisely why it nurtures a more succesful and profitable fim industry than the UK.

The European intinct to look to the Great Government Benefactor is again evident. Subsidising the BBC with mandatory TV licences or propping up all manner of theatrical companies that produce material so atrocious no-one would pay to watch it, just prevents the market from uprooting the weeds and nourishing the blossoms.

Any movie that can coax the price of a ticket from a citizen’s wallet will also coax a pound from an investor’s coffers.

Criminalising Choice

Really should cut down on those subsidies, Beeb

It is darkly amusing to see government regulators grapple with problems they create themselves- rather like watching a snake charmer flailing desperately, after being bitten on the nose.

The BBC is a privileged, anachronistic behemoth. Anybody in the UK who owns a TV is required to pay a TV license fee, which is used to fund the Beeb. This fee is ludicrous in too many ways to name. The most obvious is, it assumes, quite optimistically, that anyone with a TV will want to watch the BBC. Not if they have cable, they don’t.

More seriously, the whole idea of public funding for the BBC is as medieval and droll as the very idea of paying a license fee to own a TV. If the BBC produced anything worth watching, it would earn commensurate revenue either from advertising or subscription fees. The corollary to the license fee is, the BBC is prevented from earning revenue within the UK.

The inability of viewers to vote on particular programmes with their wallets means the BBC’s management is free to make whatever unwatchable nonsense it deems fit.

The fact that the BBC’s competitors don’t benefit from this unfair advantage means that, spared the prod of competition and spoiled by the assurance of guaranteed income, it is bloated, complacent and churning out much unwatchable drivel, safe in the knowledge that come what may, taxpayers have no choice but to fund its gargantuan machinery.

This cosseted monopoly position may now be in modest peril. WE say modest because the UK’s socialist government is incapable of anything so market-friendly as completely abolishing the silly TV License fee and letting the BBC sink or swim on the merit of its’ programmes’  earning power. Rather, in its unbreakable passion for subsidy and market interference, it is proposing to siphon some of the BBC’s cream off to other moribund broadcasters that should rightly be allowed to die.

This is why we say they’re struggle to fix problems of their own creation. Fixing market inefficiencies caused by their own market interference obviously gives them something to do in the mornings, and earns them a living. It just isn’t fair to force us, on pain of criminal prosecution, to pay for public broadcasting. That business model went out with bowler hats and British good manners.

Elsewhere, Barack Obama shows that it isn’t only the UK that must put up with politicians telling you what’s good for you. On the assumption that people who choose to smoke are misguided imbeciles, the government imposes even more constraints on the lifestyle choice, making us wonder why they don’t just ban the thing outright and create a new revenue stream for Colombian drug cartels.

Economically, 1 in 10 Britons owns a home of less value than the mortgage on it (which will teach them to buy at the peak of a bubble), and Africans are being condescended to again. The entire African brand is kept synonymous with poverty, aid and desperation, because it makes Western donors feel superior to have someone to give handouts to. There’s nothing like feeding an AIDS orphan to make yourself feel really self-important. Which would all be well and good if the donors would actually pay up as promised.