On the 18th October 1922, the British Broadcasting Company was established. Originally established as a private consortium of radio manufacturers to secure the first broadcasting license in the UK, the company later became the British Broadcasting Corporation when it transferred to government ownership under the Postmaster General, the ministerial position that was responsible for the postal system and telecommunications.
In the early 1920s, the UK’s radio set producers were keen to expand their market. At the time the government only granted occasional ‘experimental’ radio licenses, which meant that there were large periods when the airwaves were completely silent. This was no use to radio manufacturers themselves who needed broadcasts in order to make their products worthwhile.
As more and more requests were submitted for the ‘experimental’ licenses, the government declared its decision to instead grant a single broadcasting license to a consortium of the UK’s leading radio manufacturers. The six companies held an equal amount of shares in the new venture, which hired John – later to become Lord – Reith as its first Managing Director.
The new broadcasting company was funded through a royalty on the sale of radio sets sold by the member producers, and by a license fee. However, the number of amateur electronics enthusiasts who began building their own sets meant that the income did not produce adequate funds. Consequently the member companies found themselves making a loss, which contributed to their desire to extricate themselves from the arrangement. By the time the BBC had begun its first experimental television broadcasts in 1932, the company had been publicly funded for five years.