From private company towards public service corporation, 1923 to 1926

The financial arrangements soon proved inadequate. Set sales were disappointing as amateurs made their own receivers and listeners bought rival unlicensed sets.[27] By mid-1923, discussions between the GPO and the BBC had become deadlocked and the Postmaster-General commissioned a review of broadcasting by the Sykes Committee. The Committee recommended a short term reorganisation of licence fees with improved enforcement in order to address the BBC's immediate financial distress, and an increased share of the licence revenue split between it and the GPO. This was to be followed by a simple 10 shillings licence fee with no royalty once the wireless manufacturers' protection expired. The BBC's broadcasting monopoly was made explicit for the duration of its current broadcast licence, as was the prohibition on advertising. The BBC was also banned from presenting news bulletins before 19:00 and was required to source all news from external wire services.

Mid-1925 found the future of broadcasting under further consideration, this time by the Crawford committee. By now, the BBC, under Reith's leadership, had forged a consensus favouring a continuation of the unified (monopoly) broadcasting service, but more money was still required to finance rapid expansion. Wireless manufacturers were anxious to exit the loss making consortium with Reith keen that the BBC be seen as a public service rather than a commercial enterprise. The recommendations of the Crawford Committee were published in March the following year and were still under consideration by the GPO when the 1926 general strike broke out in May. The strike temporarily interrupted newspaper production, and with restrictions on news bulletins waived, the BBC suddenly became the primary source of news for the duration of the crisis.[28]

The crisis placed the BBC in a delicate position. On one hand Reith was acutely aware that the government might exercise its right to commandeer the BBC at any time as a mouthpiece of the government if the BBC were to step out of line, but on the other he was anxious to maintain public trust by appearing to be acting independently. The government was divided on how to handle the BBC but ended up trusting Reith, whose opposition to the strike mirrored the PM's own. Although Winston Churchill in particular wanted to commander the BBC to use it "to the best possible advantage", Reith wrote that Stanley Baldwin's government wanted to be able to say "that they did not commandeer [the BBC], but they know that they can trust us not to be really impartial".[29] Thus the BBC was granted sufficient leeway to pursue the government's objectives largely in a manner of its own choosing. The resulting coverage of both striker and government viewpoints impressed millions of listeners who were unaware that the PM had broadcast to the nation from Reith's home, using one of Reith's sound bites inserted at the last moment, or that the BBC had banned broadcasts from the Labour Party and delayed a peace appeal by the Archbishop of Canterbury. Supporters of the strike nicknamed the BBC the BFC for British Falsehood Company. Reith personally announced the end of the strike which he marked by reciting from Blake's "Jerusalem" signifying that England had been saved.[30]

While the BBC tends to characterise its coverage of the general strike by emphasising the positive impression created by its balanced coverage of the views of government and strikers, Jean Seaton, Professor of Media History and the Official BBC Historian, has characterised the episode as the invention of "modern propaganda in its British form".[28] Reith argued that trust gained by 'authentic impartial news' could then be used. Impartial news was not necessarily an end in itself.[31]

The BBC did well out of the crisis, which cemented a national audience for its broadcasting, and it was followed by the Government's acceptance of the recommendation made by the Crawford Committee (1925–26) that the British Broadcasting Company be replaced by a non-commercial, Crown-chartered organisation: the British Broadcasting Corporation.