File photo dated 23/3/2015 of BBC Broadcasting House in Portland Place, London. The BBC has agreed to fully fund free TV lice
File photo dated 23/3/2015 of BBC Broadcasting House in Portland Place, London. The BBC has agreed to fully fund free TV licences for over-75s from 2020/21, the Culture Secretary has said.

For most Americans, The BBC is the broadcasters that produces stuff like Downton Abbey (except that is ITV), and other Masterpiece Theater shows that they occasionally watch on PBS - maybe.

But in Britain, The BBC is under fire.

Unlike virtually every other broadcaster in the world, The BBC is funded by a license fee that everyone in the UK who owns a TV set is required to pay. This may have made sense in the 1950s, when TV sets were relatively new and television networks few - or, with the exception of The BBC in the UK, non-existant.

Unlike America's PBS, which gets no funding at all, but has to find it, the BBC, since its inception in 1920, has been very well funded. This has allowed it to create some of the world's best programs (and world's best journalism) without the pressure of having to sell ads. This has worked very well, until now - and there is some discussion in Britain as to whether The BBC should continue at all. Why should taxpayers (or license fee payers, to be precise) continue to underwrite a State Broadcaster in a world in which there are literally hundreds of channels? Everyone is grappling for an answer to the question: what future for The BBC.

Last week, I published my own idea in The Daily Telegraph, a British newspaper:

"Ratings are the lifeblood of commercial television. Ratings translate into advertising revenue and advertising revenue is what keeps a network on the air. The higher the ratings, the more people are watching, the more the network can charge for ad spots. That's the backbone of the business.
The BBC doesn't need to sell advertising to create revenue. It gets its revenue from the licence fee. Last year the BBC received £3.7bn in licence fees. It beats selling ads.

As the BBC is free from the need to sell advertising, it is also free from having to chase ratings.
Thus, the BBC can take risks that commercial broadcasters simply can't. When I was a producer at CBS, we used to call the place "cubicles of fear". If you produced a show that did not rate, you were finished. "Television," my mentor in the industry instructed me in my early days, "is not creative; it is imitative."

This is true to this day. Once someone finds a hit formula, whether it is The X Factor or property shows, everyone piles in and repeats the model. Commercial television is notoriously risk-averse. It has to be. There is too much at stake.

The BBC, on the other hand, can afford to take risks. It does not depend on maximising the audience to maximise revenue. Its revenue is guaranteed.

This makes the BBC unique. Even PBS in the US, perhaps the closest comparison, has no budget. To produce a show you have to beg, borrow or steal whatever corporate funding you can cobble together. This alone kills most ideas before they get started.

The problem with the BBC is that it still thinks of itself as a conventional broadcaster. This is understandable. Since its inception, the BBC has been a broadcaster. It was, in fact, the first broadcaster in the UK and it has remained the paramount broadcaster ever since. Thus, it sees itself in competition with commercial broadcasters for a share of the audience. This is a mistake.
The technology has radically changed since 1920. There are now lots of broadcasters around the world. We don't need more broadcasters; we need something entirely different. And the BBC could fulfil that role.

Freed of the need to chase ratings, the BBC should become a hot house for new and creative ideas - a giant intellectual and creative laboratory. It could be akin to what Bell Labs was to ATT in the US, the place that gave birth to transistors, cellular phone technology and helped prove the Big Bang Theory. Things that changed the world.

Similarly, the BBC should experiment with new and innovative programmes - the kind of programmes that commercial broadcasters could never risk trying to make.

Danny Cohen, the director of BBC Television, recently said that the public doesn't want "a market failure corporation that is only permitted to make niche programmes to fill the gaps left by rival broadcasters". He is right.

Instead, the BBC should become the extremely profitable research and development engine for the television industry, not just in the UK, but worldwide.
How would this work? Producers at the BBC should be encouraged to make the most innovative and creative programmes in the world - to really push the envelope and their own imaginations, freed from the constraints of the commercial world. Some of these shows will work, others will not - which is fine.

The BBC would then air them. For those shows that do work, the BBC should be limited to airing the series for two years - enough time to prove that the concept garners an audience. After that, if the show has gained a viewership and a following, the show should be auctioned off to commercial broadcasters.

The Holy Grail of any commercial broadcaster is ratings. Everyone is constantly looking for a hit show. Now, the BBC would have them for sale. They have done the hard work - the research and development phase. The bidding for the shows with a proven track record and a loyal audience would be quite extraordinary. Ad agencies will be lining up to buy ad spots. Success is virtually guaranteed.

The BBC would receive a yearly licence fee from the purchaser, based on continued ratings and commercial income from the series. To give a sense of how much these properties are worth, American Idol last year brought in $6.6m (£4.3m) in ad revenue, per half hour. This does not even begin to touch on merchandising or global format franchise rights. A hit show is a money-printing machine.

But we would not stop there. In order to attract the best creative talent in the world, the BBC would also give those who created the new shows an equity stake in the programmes that they created. Thus, in addition to their BBC salaries, they would receive a share of the vast revenues created by their work, no matter where they aired. This would cost the licence fee payers nothing.
The world of television has changed immeasurably since the BBC was founded in the 1920s. Today, there are literally thousands of broadcast networks around the world in search of good content. And, with the advent of broadband networks such as Amazon and Netflix, the market for quality television has never been greater. Content is indeed king.

Properly constructed, the BBC would become the world's greatest creative television engine - with a world anxious to bid on successful BBC productions and pay millions for the right to air them.
Instead of being seen as a competitor, the BBC would become a respected partner for commercial broadcasters such as ITV and Sky.

As the body of hit shows in play around the world began to grow, so too would the BBC's revenues. Enough at first to underwrite BBC News, (which is both very high quality and very expensive). But over time, accrued revenue from BBC developed programming would allow the licence fees to be reduced.

It is not inconceivable that at some point in the future the BBC might be able to pay a dividend to those who have invested in it for so many years - the licence fee payers."

Post script: Would this work? I think so. The day after this was published, Amazon.com announced that they would start airing a new version of a once very popular BBC program called Top Gear. The BBC halted production on Top Gear after an altercation with their popular host, Jeremy Clarkson. Amazon said it was paying Clarkson an astonishing £800,000 per episode ($1.2m). Of this, and the rest of the fees - and the considerable revenue this will produce, The BBC, who developed and nurtured the show for many years, will get nothing.

The BBC produces programs that have enormous value in the open market. Instead of airing them, they should develop and sell them. The BBC could become the world's most profitable broadcaster, as well as the world's best, if they would only pay attention to the value of their work.