BBC given green light to create Netflix subscription rival

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The BBC has been given the “right to fail” with innovative new programmes and services under a new Royal Charter which will require the corporation to test subscription services for the first time.

Karen Bradley, Culture Secretary, presented to Parliament a draft of a new 11-year Charter which guarantees the BBC’s independence from Government but requires greater transparency over spending and star salaries from the corporation.

Written into the Charter for the first time is an obligation for the BBC to make programmes which are “distinctive” and “substantially different” to commercial rivals.

The BBC is expected to increase its level of level of “risk-taking, innovation, challenge and creative ambition” even if some new ventures disappoint licence-fee payers.

“Its services should be distinctive from those provided elsewhere and should take creative risks, even if not all succeed, in order to develop fresh approaches and innovative content,” the Charter states.

The BBC is now allowed to “develop, test and pilot” a subscription service, with the approval of Ministers.

The clause allows the BBC to participate in the creation of a British rival to Netflix, charging viewers to watch high-quality drama and documentaries outside of the free 30-day iPlayer window.

Wire ITV and NBCUniversal are possible content partners in the new service. However the BBC would not charge licence-fee payers a “top-up” for content they already receive.

The BBC won a major battle with ministers over the make-up of a new unitary BBC Board which will replace the BBC Trust.

The Government will appoint five members of the new 14-strong board but the corporation will choose the majority of members.

The BBC will be subject to greater transparency – all stars who earn more than £150,000 will have their salary details published.

The National Audit Office will become the BBC’s financial auditor and fully scrutinise the corporation’s value for money record.

Ofcom, which will have oversight of the corporation, will publish a series of investigations into the BBC’s performance as part of a mid-Charter review.

But the “health check” will not threaten the BBC’s licence-fee funding.

Ms Bradley said: “We have resolved a number of important areas with the BBC, which go further in the key areas of transparency, fairness and securing the BBC’s independence. Licence fee payers have a right to know where their money goes.”

The minister said an obligation for the BBC to support “social cohesion” between all parts of the United Kingdom did not rule out the the creation of a separate BBC Scottish Six O’Clock News.

A flexible licence-fee payment plan could be introduced for those on lower incomes.

Tony Hall, BBC director-general, said discussions with ministers had produced the “right outcome” for the BBC.

But he criticised the decision to force the BBC to publish talent salaries above £150,000. “The BBC is already incredibly transparent and we publish what we spend on talent pay – a bill which has fallen in recent years,” Mr Hall said.

“The BBC operates in a competitive market and this will not make it easier for the BBC to retain the talent the public love. Ultimately, the BBC should be judged on the quality of its programmes.”

Rona Fairhead, the BBC Trust chair, who will be replaced by a new chair when the Executive Board is established in 2017, said: “It is good that, for the first time, there will be a more transparent process for setting the licence fee.

“The Government should go further and we will continue to urge them to publish future funding proposals for external scrutiny before making a final decision.”

The new Charter will come into force on January 1, 2017 following debates in Parliament and the devolved assemblies.

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