Great British Bake-Off Leaves the BBC – Negotiation Strategies and Lessons

We have more fascinating procurement and negotiation lessons from the wider world, as the BBC lose the rights to show the Great British Bake-Off (GBBO) TV show, snapped up by Channel 4.

The show is made by an independent production company, Love Productions. Their negotiations with the BBC broke down after the BBC increased their offer to £15 million a year, more than double the current fee, but Channel 4 then offered £25 million a year for the three year-contract. But two of the four key presents, Mel Giedroyc and Sue Perkins, then announced they were not going to work under the new arrangement.

Some commentators have criticised the BBC, others accuse Love Productions of being greedy, and some suggest that Channel 4 have overpaid. Without key presenters, and with adverts, will the programme lose millions of viewers? But it strikes us that this may be an example where every participant in the negotiation has acted logically, and (in a sense) has achieved a decent outcome. So a win:win:win maybe? Now this is all open to disagreement, but here is our analysis.

The BBC

As a minor positive outcome, the BBC has highlighted to the public that it is under real cost pressure driven by the government funding levels, and that economies must be made. More importantly, the organisation has let programme makers know that they are not afraid to walk away from shows. That confidence comes from the view that the BBC is quite capable of creating or commissioning new programmes that can be successes too. Indeed, many would argue that discovering new writers, performers, presenters should be right at the heart of the BBC mission, rather than continuing with a show that is already six years old. And of course these new shows will also be better value for money in most cases than well established equivalents.

For instance, if you have seen the programmes recently where Nadiya Hussain, last year's winner from GBBO, travels back to Bangladesh (a travel / cookery show), you will know that she is just an absolutely natural and first-class broadcaster. In her first presenting role, she already looks like she could well be up at the Attenborough / Palin / Clarkson level in time. And of course her fee for this series is no doubt a lot less than an established presenter might charge - so a great bit of procurement too! That's why we argue against the fees paid to people like Gary Lineker - it is not that he isn't very good (he is), but we suspect there are many others who could be just as good with a bit of encouragement and nurturing. Get some competitive tension going! Anyway, we can see why the BBC has stuck to their guns in the case of GBBO.

Channel 4

The publicity for the channel has significant value in itself, and even if GBBO loses half its viewers, it would still be the most-watched programme on the channel. No doubt executives have worked out the potential for advertising revenues, the potential spin-offs, co-branding and other commercial opportunities that maybe the BBC was less willing or able to pursue.

And whilst replacing Mel and Sue (and perhaps Berry and Hollywood too) won't be easy, then there are alternatives - plenty of good TV chefs around for instance - and what about Nadiya herself maybe? OK, who knows whether the show will still be as successful at the end of the three-year contract - but we suspect this will pay-off well for Channel 4. Now we might argue that paying £25 million a year when the BBC was offering only £15 million was a waste of money – might Channel 4 have won at £17 million? But we suspect £25m was the amount needed to stop Love Productions touting the show to Amazon, Netflix, Sky ... so Channel 4 made a pre-emptive strike to avoid a real auction that might have driven the price up further.

Love Productions

We cannot see how the firm can be criticised in any way. The show was their idea, they produce it, and their goal must be to maximise shareholder returns. They might be "grateful" to the BBC but if we accept that this is a commercial world, then the owners of valuable IP must be able to exploit that. And this is also perishable IP. Who knows what might happen over the next three years, in terms of presenters or other factors (perhaps nutritionists decide cakes are REALLY bad for us)?

So we'd suggest maximising returns over a relatively short time-frame is an appropriate strategy. But they avoided a long-drawn out auction process which might have been hard to manage and could even have led to reputational damage.

Well done therefore to everyone - the final outcome of the negotiation process is a totally understandable option all round, with all participants probably feeling pretty good about the outcome.

(Late news - we are now picking up some hints there may have been "relationship issues" that affected the negotiations between the BBC and Love Productions. That may be true - but the cynic in me says that sometimes people use that as justification when really, they have simply been behaving in a manner that is totally understandable from a hard economic logic perspective)!

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