Wanted: a DG for the digital age

The corporation's new boss has a conundrum to solve: how to be a public service and a tough media player

The chauffeur-driven Jaguars swept down the drive to Wood Norton Hall, a 19th-century mansion in Worcestershire. The BBC governors, the corporation's most senior executives and the Culture Secretary, Chris Smith, were arriving for the last board meeting before the appointment of the new director-general. Those present at last Tuesday's gathering knew this was a crucial time both to take stock of the changes that have swept through the BBC under the outgoing director, Sir John Birt, and to chart a course for the organisation over the next five years.

As the group sat down for its first session, Sir Christopher Bland, chairman of the governors, paid tribute to Sir John but he acknowledged that the BBC was facing serious problems. The current DG's lack of personal skills had made it difficult for him to carry programme-makers with him, he indicated, and morale among BBC staff was low. The corporation also had to do more to persuade the public that its pounds 2.2bn subsidy from the licence fee was justified. The Culture Secretary agreed. He made it clear that the BBC should concentrate on quality rather than "dumbing down".

There is a commercial and cultural revolution going on at the BBC. The next director-general is not just going to be in charge of a couple of television channels: he or she will be running an international media empire. There are those in the BBC who argue that it will be impossible for any single candidate to combine the necessary skills of Quentin Tarantino and Rupert Murdoch and that the job should be divided into two.

He or she will also need political skills because the growth in the number of channels and in the money that the BBC makes through its commercial activities makes it increasingly difficult to justify the subsidy it receives through the licence fee. The ITC, the regulatory body for the commercial channels, raised concerns last week about the BBC having an unfair advantage over private companies if it uses licence-fee money to subsidise its digital channels.

Gavyn Davies, the economist whose panel is reviewing the funding of the BBC, says the corporation can either maximise profits or improve its public service broadcasting. Its commercial activities are becoming so important that last week it launched new guidelines clarifying when and how the BBC brand name could be used. The turnover of BBC Worldwide, the commercial wing, has increased more than 30 per cent to pounds 409m in the past five years. Its magazines made pounds 130m last year; exports of programmes pounds 126m; and pay channels pounds 26m. The Teletubbies alone have generated more than pounds 50m in revenue over the past two years.

Patricia Hodgson, director of planning and policy, insists that there is no conflict with the public service ethos - there are strict rules about using licence-fee money to subsidise commercial ventures, although the Government's panel is examining whether these are sufficient. Last year the corporation channelled pounds 75m back into programme-making from its commercial wing and it has set a target of increasing this to pounds 200m by 2006, when its charter is next up for renewal. "All of us are committed to the BBC becoming increasingly distinctive," Ms Hodgson says. "The public service comes first but we shouldn't refuse to exploit its secondary value."

Modern marketing techniques are being just as vigorously deployed by commissioning editors, advised by Maureen Duffy, a hot-shot marketing whizz. Although the BBC name has been identified as an invaluable brand, inspiring trust and loyalty, the World Service is being "rebranded" to remove its outdated "bowler hat" image. Meanwhile a new, more touchy- feely philosophy, called the "Hundred Tribes Project", is beginning to have an effect on the schedules. This defines viewers according to their interests, passions and life stage. At one level, it has spawned programmes such as Changing Rooms and Ground Force, both hobby-based shows for the non-specialist viewer; at another, it has enabled the BBC to target key audiences such as young mothers who have felt alienated from programmes in the past. "The aim of the BBC is to provide value for money to every household," says Will Wyatt, chief executive, broadcast.

Critics argue that this is all part of the "dumbing down" of the BBC. But the corporation is determined to boost ratings - last year Anne Sloman, its political adviser, informed the political parties at a private meeting in Oxford that producers would in future be using more interviews with "experts" rather than MPs because research had found that politicians were a turn-off for the public.

More than ever the BBC has to prove that it is still the national broadcaster, if it is to continue receiving public money. Gerald Kaufman, the chairman of the culture select committee, argues that it should no longer have a monopoly on representing the country. His committee will conduct an inquiry on future funding of the BBC in the autumn. "The Government should privatise the BBC and allow it to find its place in the market," Mr Kaufman says. "It believes it has a God-given right to this poll tax - it should get going with its commercial activity and survive on its own."

There are those who argue that the BBC is spreading its business wings to prepare itself for the inevitable loss of the licence fee. "The landscape in which we have to deliver the vision and purpose of the BBC has changed," says Will Wyatt. "One has to think all the time, how do we take those values and that philosophy into the modern world."

THE TALE OF THREE DGs: HOW A BIG JOB GOT MUCH BIGGER OVER NEARLY 80 YEARS OF BROADCASTING

LORD REITH

Appointed general manager in 1922; first director-general in 1927; resigned in 1938.

Licence fee: 10 shillings.

Staff: four when the BBC began in 1922; grew to 177 in a year.

Size: By 1923 consisted of eight radio stations. Schedules consisted of six hours of broadcasts afternoon and evening, plus an hour-long concert in the morning. Regional broadcasting ceased in 1939 to be replaced by the Home Service. Light Programme began in 1945; Third Programme in 1946.

Politics: Reith put under pressure during 1926 general strike to take government line; unsuccessful fight to broadcast Parliament.

HUGH CARLETON GREENE

Director-general 1960-69.

Licence fee: pounds 4 in 1960; pounds 6 in 1969 with pounds 5 extra for colour.

Staff: 17,000; by 1964 20,000.

Size: Radio 1 started in 1967; former networks renamed 2, 3 and 4.

BBC2 launched 1964; local radio begins with Radio Leicester in 1967; BBC publishes TV tie-in books.

Politics: Prime Minister Harold Wilson upset by treatment in satirical programmes such as That Was The Week That Was, especially during 1966 general election campaign.

SIR JOHN BIRT

Director-General designate 1991; director-general 1993-present.

Licence fee: pounds 101

Staff: 21,000; had peaked at 29,000 under Alasdair Milne in 1984.

Size: Five national radio stations; 39 locals, plus Scotland, Wales and Northern Ireland; two TV channels; start of digital channels, including BBC Choice and News 24; BBC Online; commercial activities including books, videos, magazines.

Politics: Panorama's `Sliding Into Slump' pulled, to be shown after general election in 1992; strong links to Labour through former LWT colleagues including Peter Mandelson.