I left the following comment (that I have expanded slightly) on Natalie’s earlier post, in response to reader Alisa’s surprise at my observation in passing that other British television stations are owned by the government, besides the BBC. I have written about the weird history of British television before, but it is so weird that it deserves a small repeat
Roughly: The BBC had some experimental pre-war broadcasts but launched its permanent service in 1946. This was and is government owned and supported by the licence fee.
In 1955, a second, advertising funded television network came into being called ITV. This was supposedly not owned by the government but had a highly complex ownership structure. Britain was divided into a large number of regions, and the local television station was franchised to a different private owner in each place. (In larger cities, different companies had the right to broadcast on different days of the week and later different times of day). Much programming was national, but a government body was set up to decide which programming was allowed to be broadcast on a national basis. Private companies’ licenses were for seven years only, after which the government held a review and could and sometimes did take their licenses away if they did not satisfy a government defined “quality” threshold. In essence, the private companies controlled the sale of advertising but did not control their own programming.
This arrangement of two channels led to a peculiar piece of British English, in which people will talk about “switching to the other side” when they mean change the channel. TV was perceived as akin to an LP record, with the BBC on one side and ITV on another.
In 1964, the BBC gained a second channel, which was funded by the licence fee just like the first.
In 1982, Channel 4 (and the Welsh version S4C) were created. This channel was and is owned by the government, but is funded by advertising. The channel had an ambit not to cater to the largest audiences but to cater to audiences that were not adequately served (as defined by the government) by existing services. In order to not upset the existing ITV companies, the ITV companies got to sell the advertising for Channel 4, and if Channel 4′s advertising revenues exceeded a certain point as defined by (you guessed it) the government, the ITV companies and not Channel 4 kept the money.
Thus Britain managed to find two largely different models by which advertising funded television networks could be created that did not compete with the BBC and which were controlled by the government.
Rupert Murdoch launched Sky in 1989 (and almost sent himself bankrupt doing it), but it only really became successful in about 1994-5 when it got going with television rights to the English Premier League soccer. This was the first genuine competition that the BBC had ever faced. This, ultimately, is why the establishment in Britain hate Rupert Murdoch so much. He had the audacity to compete with the BBC and to succeed. They will never forgive him this.
As a brief summary of British television since. A fifth analogue terrestrial channel (Channel 5) launched in 1995, after the relevant government bureaucracy expressed great reluctance to issue the licence (refusing to do so the first time it was theoretically put out to tender). This was the first genuinely national and privately owned terrestrial television network in the UK. The various mid 1990s ITV companies were gradually allowed more control over their own businesses and to merge with each other (and the finite life of franchises eventually went away too), a process that finished with the merger of Carlton and Granada in 2004. So as of 2004, Britain had two, privately owned, national television networks, but (for various reasons) neither of them had any money. In a normal market, you would have large, well funded commercial terrestrial television networks that could compete with other companies, but the companies in Britain were so emaciated (deliberately) by the history of regulation that the only real competitor to the BBC was Sky.
A digital terrestrial platform (OnDigital, subsequently ITV digital) was launched in 1998. This featured various channels from ITV, Sky, and other commercial providers, but it went bust in 2002, due to a combination of restrictive regulation – Sky had initially been a co-owner of the consortium, but was forced out from it on supposed competition grounds after the consortium won the licence but before it started broadcasting, and was subsequently required to provide certain programming for it without being able to profit from it in a serious way – and (to be fair) terrible management. This was subsequently replaced by Freeview, which is run and controlled by the BBC, who were refused the licence to run digital terrestrial in 1998, but were allowed to do so in 2003 due to the failure of the previous private option, which was largely caused by BBC friendly regulators.
So non-BBC television is either owned by Rupert Murdoch, owned by the government, or doesn’t have any capital. such as ITV, Channel 5, and various other organisations who broadcast on Freeview.
On top of that, one must observe that S4C is a very weird beast, even in a world of weird beasts. It was set up as the “Welsh” television channel at the time that Channel 4 was introduced in the rest of the UK, and is funded by a mixture of advertising revenue, Welsh specific cultural subsidy, and indirectly via the BBC licence fee. (The BBC has an ambit to produce some Welsh language programming, which it does and then provides to S4C without charge). For many years Wales received this channel instead of the Britain wide Channel 4, whether the Welsh liked it or not. In these days of digital, all of Wales received both channels.
And as for Murdoch, he became powerful because it took as ferocious a competitor as he to find a place within the ferociously anti-competition regulatory framework of the UK. He bet everything to do this and almost lost the bet – in the early 1990s his banks were at one point in the weeks away from calling in receivers. Having won a place inside that regulatory framework, he benefits from the way in which it repels further competitors. One can only console oneself with the thought that the BBC media establishment has the competitor that it deserves. One can also note that Sky’s customers pay a significantly larger sum in total subscription fees than do the BBCs licence fee holders.
Also Sky’s subscribers pay their subscription fees voluntarily, whereas the BBC’s have the money extracted from them by force. (Plus of course, one must pay the BBC’s fee as well before one is allowed to buy Sky’s channels). I won’t comment on which of these things may be more moral.