All being well, profits could be made despite free-to-air competition from the BBC and the independent companies. For most of the 1990s BSkyB lost money. Murdoch had embarked on an ambitious long-term gamble, even if it was one that secured strong backing from the UK's big institutional investors. Ironically, BSkyB's investors became involved in this forward-looking and risky venture just as left-of-centre economists started to criticise the City of London for the alleged "short-termism" of its time horizons and the supposed caution of its decision-taking. At any rate, after 15 years of red ink subscription revenues first ran ahead of expenses in 2003. For the last decade BSkyB has operated in the black, with profits reaching over £1 billion a year for the first time in 2011.

In the last few months the Murdoch media have had a bad press, with the phone-hacking scandal at the News of the World receiving huge coverage. But that has been a distraction from the serious debate on the future structure of British broadcasting which must soon begin. It has been so easy to condemn the practices in one part of the News Corporation empire that commentators have overlooked the astonishing transformation that Murdoch and his backers have wrought. In an article in the Sunday Telegraph accompanying the ICM poll Rob Harris, Conservative MP for Reading West, used the word "dominance" to characterise the BBC's position in news and current affairs broadcasting. Many analysts continue to see the BBC as "dominant" with an entrenched, almost unassailable position on the UK media scene.

A changing landscape: Subscriptions have become the largest revenue stream for British television 

The actual position is far more even-handed and complex. As the growing unpopularity of the licence fee has constrained the BBC's revenues, TV advertising spend is now about the same size as the total money collected by the licence fee and well above the portion of this money devoted to television. (See graph, above. Remember that the licence fee has also to meet the costs of radio.) But the truly spectacular development of the last few years is that both total advertising spend and the licence fee money have been surpassed by BSkyB's subscription revenue. As BSkyB also picks up advertising revenue on its channels, its annual income is well above the BBC's. To be more specific, in their last complete years — to March 31, 2013 for the BBC, and to June 30 for BSkyB — the BBC's income was £5.1 billion, of which £3.7 billion came from the licence fee, while BSkyB's income was £7.2 billion, of which about 80 per cent derived from subscriptions. BSkyB has therefore overtaken the BBC in terms of market presence and the BBC has ceased to be dominant even in Britain itself. The BBC does have an international arm, BBC Worldwide Ltd, with an avowedly commercial remit, but  its sales are small compared with CBS, the Hearst Corporation and Murdoch's US-based 21st Century Fox. 

So British broadcasting today is utterly different from its situation in 1946, when the licence fee began and the BBC enjoyed both massive prestige and a monopoly position. On the face of it, three forms of payment are jostling with each other in the UK television market: the semi-tax licence fee money exclusively for the BBC, and advertising spend and subscription revenues for the other two types of participant. No participant is dominant, but in simple money terms BSkyB is first among equals. Just after the Second World War UK broadcasting was the paradigmatic public good; for a long time it was a regulated duopoly. Today it is a confusing oligopoly with a mix of public and private ownership. Even if technology could somehow be stabilised for all time, the original case for the licence fee would have to be reformulated. The private sector businesses, led by BSkyB and ITV (much the largest of the remaining "independent" companies), have carved out strong market positions, but they have done so only after taking great commercial risks and defying the blatant government subsidy given to the original state-owned industry leader, the BBC.