James Murdoch's (and News Corp.'s) War on the BBC

James Murdoch, much like his father, Rupert, is a champion of market values. As such, he knows his enemy: it's the venerable BBC. And the chief executive of the vast News Corp. in Europe and Asia is in fighting mood. In a speech last month, Murdoch slammed the BBC as an "Orwellian" institution—a provider of "state-sponsored" news with "chilling ambitions" that was using government-guaranteed income to "throttle" competition. At issue was the supply of independent information—and the publicly funded BBC could not be trusted. In Murdoch's concluding words: "The only reliable, durable, and perpetual guarantor of independence is profit."

So much for the opening round in the grand slugging match over the best model for tomorrow's journalism. In one corner: the world's biggest public-service broadcaster, still respected but under threat. In the other: its best-known commercial competitor, struggling to make money in a tricky market. The fight continues with each claiming the moral advantage. In his response last week, BBC director general Mark Thompson accused Murdoch of failing to understand the distinctive British tradition. "Much of our collective cultural and social life exists not in James's bipolar universe of market and state but in a third space: public space."

Indeed, for the BBC, the Murdochs make an easy target. Rupert Murdoch, supreme boss of News Corp., has made plain his intention of charging for access to online news. But he knows that paying readers will be hard to attract as long as the BBC stays determined to open its Web site to all, free of charge. In Thompson's words: "It can't be a complete coincidence that every proposal in [James Murdoch's] speech is aligned with the economic interests of News Corp."

Trouble is, the BBC can't wholly depend on the home crowd. Even before Murdoch's comments, critics were questioning the BBC's use of the $230-a-year license fee—paid by every household with a television—to fund its relentless expansion, from new digital channels to the iPlayer service, which allows viewers to download TV shows. For some, the 87-year-old corporation has strayed too far from its original public-service charge. Two years ago, its commercial arm, BBC Worldwide, caused outrage by splurging a reported $200 million on the purchase of the Lonely Planet guidebook publishers. There are plenty who question the need for the BBC to go head-to-head with commercial pop-music stations.

The unease is shared at the top. Earlier his month the BBC Trust—which oversees all BBC operations—announced a review of the BBC's entire range of activities. In an open letter, chairman Michael Lyons wrote, "We want a BBC that is smarter, more efficient and no bigger than it needs to be." Decoded, the message is clear enough: the BBC may have to shrink. A government-commissioned report this past summer recommended passing along some of its annual $6 billion revenues to help private TV companies finance local news. There's also talk from the Conservative Party of restricting the BBC to "core broadcasting," shutting down channels with small audiences, if it wins the next election.

Behind such attacks, there's a sense that the BBC has grown to resemble its commercial rivals. Take pay, for example: cash-strapped newspapers were quick to highlight this summer's revelation that 47 of the corporation's senior executives earn more than the prime minister's salary of $320,000. Thompson himself pockets almost $1.4 million a year. At the same time, the BBC has spent piles of cash outbidding other TV companies for the services of top hosts, some reportedly receiving more than $9 million year.

On the other hand, old loyalties remain intact. Respect for the BBC is unshaken. A survey earlier this month suggested that 77 percent of citizens still believe the country should take pride in the corporation, and more than 60 percent think the license fee represents good value for money. One poll last year found that the BBC outscored the church, the military, and the National Health Service in terms of the public's trust.

Besides, the public doesn't welcome lectures on journalistic integrity from a Murdoch. Commentators have been quick to point to the questionable record of Murdoch's Fox News on objectivity (to say nothing of media consolidation), and to remind people how News Corp. yielded to pressure from the Chinese government, dropping the BBC's World Service from its Star satellite package in 1993. If Orwell might have fretted over the power of the BBC, he wouldn't have landed any punches for Murdoch.