BBC Payments to “Talent” – Applying Procurement Principles

In part 1 here of this series we looked at the BBC publication of stars’ earnings from the corporation, and considered matters from a procurement and economic perspective. We suggested that market value, value to the BBC and most importantly, substitutability were the key factors to consider.

Substitutability we define as the level of risk or damage to the BBC if it had to find someone else to step in if a “star” left. So it is the equivalent really of the BATNA in negotiation (best alternative to a negotiated agreement) – in other words, what will you do if you can’t reach agreement with your negotiation opponent?

So how could the BBC increase the substitutability of their stars in order to strengthen their negotiation potion and to have credible alternative contingency plans if agreement can’t be reached? Again, thinking about this as a procurement issue throws up some parallel suggestions and ideas that could be applied here.

  1. One procurement tactic is to lock in suppliers while the buyer has power in the relationship. So if you know you are getting a good deal from a fairly new supplier, perhaps because they don’t have many customers yet, we would aim to lock in that advantageous pricing for some time to come – perhaps several years. So, applying that to “talent”, when someone is first offered an attractive acting or presenting role, the BBC could look for a long-term contract. An option to extend (so there is not a firm commitment) would be even better. The idea is that the initial agreed fee will look like a bargain for the Corporation once the star has made their name. there are risks and even negatives with this approach, but it can be a useful strategy.
  1. Ironically, another strategy is all about avoiding “lock-in”! But here we mean the BBC being locked in to certain presenters so that it is in a weak position when it comes to negotiations. So, for example, using multiple presenters on shows (which often happens naturally) helps avoid a programme being associated solely with one artist. Ensuring that where possible a presenter has a stand-in who gets some regular exposure is another route (obviously you can’t do this with an acting role)!
  1. The logical follow-on to that point is the need in procurement terms for the BBC to continuously look for new and innovative “suppliers” – a goal that should be on every CPO and procurement manager’s agenda. That provides supply alternatives as well as promoting innovation. In this context, it means looking for lesser known actors, presenters, journalists. We could see a strategy where the BBC positions itself as a great discoverer of talent and nursery – but recognises that some of those people will move on for greater rewards at a certain point in their career. We don’t think this would bad thing, and it might not even be bad for ratings. Plenty of people moved and discovered that they were easily replaced by the BBC – and indeed often didn’t do so well on other channels (Adrian Chiles is a great example).
  1. As well as having a decent BATNA, the good negotiator sells the benefits of their offer to the other party. So the BBC should continually stress the non-financial benefits that the talent gets from working with the Corporation. The exposure, the cachet, the global reputation of the organisation, the ability to go and do lucrative personal appearances or write books … it’s not all about whether you might get another £100K a year from Sky!

Anyway, if the BBC’s procurement team starts getting more involved in commissioning programmes and talent, then we look forward to seeing how they can bring their conventional procurement skills and techniques to bear in this fatiguing “spend category”.

 

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