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³ÉÈËÂÛ̳ Director-General

Speech to Royal Television Society Cambridge Convention

Check against delivery

I want to start with a few words in defence of that highly respected, but also I'm afraid much maligned and misunderstood public institution, the Murdoch family.

In many ways, if your name's Murdoch you can't win. Every time you open your mouth, people start looking for a hidden agenda. Institutional self-interest. A secret plan to influence current or future political leaders. A lust for world domination.

Almost no one takes what you say at face value. As Director-General of the ³ÉÈËÂÛ̳, I can't imagine what that must be like.

Well, in my view James Murdoch meant every word of his MacTaggart lecture. Admittedly, it can't be a complete coincidence that every proposal in it is fully aligned with the economic interests of News Corporation. Nonetheless I'm quite certain that he said what he said not because of that, but because he genuinely – indeed passionately – believes that his ideas, if adopted, would lead not just to a better media sector but a better world.

So let's spend a few minutes exploring them seriously.

Public space

At the heart of James's speech is a simple proposition: that only an unregulated free market can guarantee editorial independence, choice and quality, and that there is no space between this market and the state. Media properties are either commercial and therefore truly free, or they are state-sponsored, state-controlled and therefore not just paternalistic, but authoritarian. You have to choose – and in James's view, in so many ways with ³ÉÈËÂÛ̳, Channel 4, Ofcom, the rest of PSB, Britain has made the wrong choice.

What I want to say is that in this country we have a different tradition – not just the ³ÉÈËÂÛ̳ and the other PSBs, but our universities, our museums and galleries, many of our orchestras, the RSC, the National Theatre, our great national parks. In fact, so much of our collective cultural and social life exists not in James's bi-polar universe of market and state, but in a third space. Public space.

Public space is not-for-profit space, not by accident but by design. It exists not to make money but to serve the public. Ben Bradshaw was right last night to compare the way the public think of this kind of service with the way they think of the NHS.

Wherever it can be – and certainly in the case of the ³ÉÈËÂÛ̳ – public space is free at the point of use. And the more people who use it the better.

Consider the contrast between the availability of music and arts on Sky Arts and on ³ÉÈËÂÛ̳ Television. Sky Arts is one of the most positive developments in multi-channel television. It has some brilliant programming. It extends the choice and range of music and arts available on TV. In a typical seven days, it reaches perhaps half a million people.

But arts on the ³ÉÈËÂÛ̳ is simply of a different order. To quote just one statistic, this summer more than 12 million people in this country sampled the Proms on ³ÉÈËÂÛ̳ Television before the Last Night. I'm not claiming any special credit for that, by the way – the ³ÉÈËÂÛ̳ exists in part to make the arts universally available, Sky does not. Private space focuses on the minority who already have a taste for the arts, public space reaches out across the population.

In the case of the ³ÉÈËÂÛ̳, there's another important characteristic. There's no demand curve and no exclusion. You can't buy a better service from the ³ÉÈËÂÛ̳ no matter how wealthy you are. And you can't stop people who are less well-off than you enjoying just as good a service as you do.

Public space is shared space.

That's why we will never erect a pay zone around our news.

That's why we will fight tooth and nail to preserve our broad public remit – from Strictly to the Poetry Season.

And public space is independent space.

How can that be, James Murdoch asks, when you're state-sponsored and state-controlled? In James's universe, the Hutton crisis could never have happened – no scandal, no crisis, no inquiry, no resignations. Indeed, in public you'd never be able to slip a cigarette paper between the ³ÉÈËÂÛ̳ and the Secretary of State. Yeah, right.

The public believe in the editorial independence of the ³ÉÈËÂÛ̳ and they trust us. James called his speech The Absence Of Trust, the argument being that we have a system that doesn't trust the public to make free choices as consumers and which therefore is a system which the public themselves cannot have any trust in.

Again we need a reality check. As the Guardian's ICM poll suggested the other week, public pride and trust in the ³ÉÈËÂÛ̳ has grown, not diminished, over the past five years. The ³ÉÈËÂÛ̳ is more trusted in Sky homes than Sky is. Value for Money scores are up not down.

So much of the current discourse is based on the assumption that support for the ³ÉÈËÂÛ̳, the licence fee and for other forms of public service broadcasting, is in decline.

It isn't. Public support is strong and getting stronger.

More than that. The assumption that, as choice expanded, the market failure argument for PSB intervention would progressively diminish has turned out to be false. Indeed, market failure is popping up in unexpected places and, as Steve Morrison said last night, the ³ÉÈËÂÛ̳ has a more important role than ever as the investor of last resort in high-quality content.

Instead, many commercial media business models are in crisis – though not all, we heard about Sky's counter-cyclical performance this morning. People argue that a powerful ³ÉÈËÂÛ̳ is making this problem worse. There's no evidence that that's the case. If anything, the traditional media industry is facing even more daunting economic challenges in the States where there is no large-scale public intervention in broadcasting.

With all its faults and failings – and, of course, there are plenty of them – and at a time when the future of so much of the rest of media is so uncertain, the idea of the ³ÉÈËÂÛ̳ still works. It works in terms of investment in production, in training, in talent. It works in innovation. But, above all, it works for the public.

The ³ÉÈËÂÛ̳ beyond 2012

The ³ÉÈËÂÛ̳ works precisely because it has never stood still. Yes we enjoy growing public support but it would be fatal for us to sit on our laurels. Nor should we turn our back on the rest of the media sector. The public will be best served not by a strong ³ÉÈËÂÛ̳ sitting in isolation but by a strong, varied media sector which includes a strong ³ÉÈËÂÛ̳. We get it.

It's only three years since we launched Creative Future. But, in those years, the world has changed almost beyond recognition.

Digital take-up and the public's use of digital services has exceeded almost everyone's expectations. But the effect of that – and of the downturn – on many incumbent media businesses has been devastating.

Inevitably, that has meant a steady increase in the number of those who worry about the ³ÉÈËÂÛ̳'s scope and market impact. Convergence has become an everyday reality and the businesses who once regarded themselves as being in a quite different market from the ³ÉÈËÂÛ̳ – newspapers, for instance – now believe themselves to be direct competitors.

Now you've heard me argue that James Murdoch's diagnosis of the ills of British media misses the point.

That does not mean that every question about how the ³ÉÈËÂÛ̳ fits alongside the rest of British media is illegitimate or a partisan attack on public service broadcasting.

The world has changed and so the ³ÉÈËÂÛ̳ must consider how it changes, too. Five years ago, we said that "the ³ÉÈËÂÛ̳ should be as small as its mission allows" and in absolute terms it is smaller. Thousands of jobs have gone and whole former divisions – Technology, Play Out, OBs – have been sold. The high-water mark of new linear service launches and of content investment was passed some years ago. New initiatives like the iPlayer offer convenient new ways of giving the public access to existing content, rather than representing expansions into fresh content areas.

But we have to accept that to many in commercial media we seem relatively bigger and stronger than ever. Therefore, it is inevitable that questions about the ³ÉÈËÂÛ̳ and our services come to the fore.

That's one of the reasons why, back in June, the ³ÉÈËÂÛ̳ Trust and I decided that this autumn was the right time to look ahead to the post-switchover world of 2012 and beyond and to develop a clear strategy for what kind of ³ÉÈËÂÛ̳ could best serve the public, and best support the media sector.

The review will be both radical and open-minded. Ben Bradshaw wondered aloud last night whether the ³ÉÈËÂÛ̳ might have reached the limits of expansion. Don't assume that we'll dismiss that notion out of hand or erect defensive barriers against it. Defining the public space the ³ÉÈËÂÛ̳ should occupy and being explicit about where space must be left for others will be the thread through the whole review.

The review will throw up difficult choices. Over the past 20 years, we've been able to use productivity gains – enhanced during some of the period by a licence fee which grew in real terms – to opt for what you could call a 'both-and' strategy: both maintaining, indeed sometimes being able to increase investment in existing linear services, and launching new digital ones.

The British public tell us that they continue to want a strong, confident ³ÉÈËÂÛ̳ which delivers real value to every household in the country. But in a period where not just the licence fee, but the wider public finances and the revenues available to commercial media, are constrained, and after years of squeezing efficiencies out of the system, 'both-and' must and will give way to 'either-or'. And that means choices.

Digital Britain

The Government also faces choices as it considers how to take forward its Digital Britain agenda.

There was much in what Ben said last night that I could agree wholeheartedly with. His pride in the public service journalism he'd been involved in himself – and which he knows audiences here and around the world still trust and depend on. His scepticism about whether market solutions alone can deliver the quality, range and plurality that the British public deserve. His determination to build a strong and balanced creative sector for the UK.

But there was plenty that was frankly puzzling as well. He set out a long list of the current ³ÉÈËÂÛ̳ public services. By the way, I don't know many broadcasters who haven't launched multiple services over the past decade. But, with one or two exceptions, these new ³ÉÈËÂÛ̳ services weren't approved by the ³ÉÈËÂÛ̳ Trust. They were approved by the Government of which Ben is a member. Indeed, the Government asked the ³ÉÈËÂÛ̳ to launch a range of new services to help with their policy of encouraging the public to move to digital television and radio. Ben's surprise at these services is itself surprising.

Ben was very critical of the idea of the ³ÉÈËÂÛ̳ Trust. How can one body be both governing body – which I think is roughly what he means by "cheerleader" – and regulator, he asked. That's a familiar debate. But the people Ben should ask this question of is those colleagues of his in the present Cabinet who invented the ³ÉÈËÂÛ̳ Trust, approved it and enshrined it in a Charter which still has well over seven more years to run. They believed – as I believe – that the present settlement, with most formal regulation discharged by Ofcom and other regulatory authorities, but with the Trust safeguarding the interests of the public, the proper use of the licence fee and the editorial and political independence of the ³ÉÈËÂÛ̳ is a foundation on which real public confidence can be built.

The Charter which this Government devised tells the ³ÉÈËÂÛ̳ Trust to be independent, to consult the public, to be guardians of the licence fee. It's difficult not to suspect that the real offence the Trust have caused is that they have done exactly what they' ve been told to do in the Charter. The trouble with independent governing bodies is that they can be, well, independent. To threaten them with imminent or creeping abolition when they take a different view from you is not in keeping with the tradition of political independence on which the whole of British public service broadcasting is based.

The issues which broadcasting in this country faces are real and imminent and directly affect the services that the British public receive. The millions of people who will switch on Strictly or X Factor this Saturday don't terribly care about the finer points of governance, let alone different flavours of NAO access to the ³ÉÈËÂÛ̳. They do care about the quality and range of the programmes and content they watch and listen to.

Digital Britain, while bold and interesting on broadband, is too light on what Lord Carter himself described as 'the poetry'.

It was encouraging to hear Ben say that the Government still has an open mind on top-slicing. If you weren't aware already, and for the avoidance of doubt, the Executive and the Trust are united in opposition to top-slicing – it's bad for independence and accountability; and all international experience shows that it's the start of a slippery slope.

I hear that work is being conducted on spectrum tax, which I believe is a credible and deliverable alternative. But I would also suggest that the Government thinks more imaginatively about what kind of local and regional alternative it wants to support. Is a replication of the current ITV provision – close to a mirror-image of the ³ÉÈËÂÛ̳ service – really what this country needs in a post-switchover world?

Like Ben, I believe we need a better, broader, more positive debate. We need policies and actions which will rebuild this sector, secure the future of great British content for audiences here and around the world and sustain that precious idea of public space. The ³ÉÈËÂÛ̳ will be, and should be, only one voice in that debate. But both within and beyond our strategy review it's a debate we will enter with real enthusiasm.

Thank you.

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