Mark Thompson: Public space: so scorned yet so vital

I am often asked for my thoughts on that highly respected but much maligned and misunderstood public institution, the Murdoch family.

In many ways, if your name's Murdoch, you can't win. Every time you open your mouth, people start looking for a hidden agenda: institutional self-interest, a secret plan to influence current or future political leaders, or a lust for world domination. As Director-General of the BBC, I can't imagine what that would be like.

James Murdoch declared earlier this month that "the only guarantor of independence is profit". Here is where he and I differ. And also where I believe his view differs from that of the British public. James Murdoch sees an entirely black and white world. Media properties are either commercial and therefore truly free, or they are state sponsored, state controlled and therefore not just paternalistic, but authoritarian. The reality in Britain is more nuanced – and, I think, more precious. I'm quite certain that James Murdoch genuinely, passionately believes that unregulated profit-seeking would lead to a better media sector. By happy coincidence it would also be in the interests of News Corporation, but it is a respectable, principled position. However, it is not such a policy that has given Britain its place as the global leader in creative and cultural industries.

In this country we have a different tradition. Not just the BBC, but also our universities, our museums and galleries, many of our orchestras, the RSC, the National Theatre, our great national parks, in fact so much of our collective cultural and social life exists not in either the market or the state, but in a third space – public space. They exist not to make money but to serve the public. And the more people we serve, the better. To quote just one statistic, this summer more than 12 million people in this country sampled the Proms on BBC television, even before the Last Night.

Public space is also independent space. How can that be, James Murdoch asks, when you're state sponsored and state controlled? In his straw-man world, the Hutton crisis could never have happened – no scandal, no inquiry, no resignations. Indeed, you'd never be able to slip a cigarette paper between the BBC and and any Government minister. Really?

The BBC is an organisation subject to intense public scrutiny – and rightly so. But while many would have you believe that trust in the BBC is diminishing, the opposite is actually the case. Public pride and trust in the BBC has grown significantly over the past five years. Public support is strong and getting stronger. With all its faults and failings – and, of course, there are plenty of them – and at a time when the future of so much of the rest of the media is so uncertain, the idea of the BBC still works. It works in investment in production, in training, and in talent. It works in innovation and in supporting creativity around the whole of the UK. But, above all, it works for the public.

But while we enjoy growing public support, it would be fatal for us to sit on our laurels. And the BBC must not turn its back on the rest of the media sector. The public will be best served not by a strong BBC sitting in isolation but by a strong, varied media industry.

The effect of new media, and of the downturn, on many incumbent media businesses has been devastating. Convergence has meant that businesses which once considered themselves in quite different markets from the BBC – newspapers, for instance – now believe themselves to be competitors. I am told that the problems of commercial broadcasters are the fault of the BBC, but there is no evidence that that is the case.

If anything, the traditional media industry is facing even more daunting financial challenges in America, where there is no large-scale publicly funded broadcaster at all. But understandably, there has been a steady increase in the number of those who worry about the BBC's scope and market impact. Just because James Murdoch has a dualist view that doesn't fit with the reality of British broadcasting or, indeed, public life doesn't mean that every question about how the BBC fits alongside the rest of British media is illegitimate, or a partisan attack on public service broadcasting. The world has changed and so the BBC must consider how it changes too.

Earlier this year, we decided it was the right time to look ahead and develop a strategy for what kind of BBC could best serve the public, and best support the whole media sector in the digital world. This review will be both radical and open minded. The Culture Secretary, Ben Bradshaw, asked this week whether the BBC had reached the limits of expansion. Don't assume that we'll dismiss that notion out of hand or erect defensive barriers against it. Defining the public space that the BBC should rightfully occupy, while being explicit about where space must be left for others, will be the thread through the whole review.

The British public wants a strong, confident BBC which delivers real value to every household. But in a period where not just the licence fee but the wider public finances and the revenues available to commercial media are constrained, and after years of squeezing efficiencies out of the system, that means choices.

The millions of people who will switch on Strictly Come Dancing or The X Factor tonight don't much care about the finer points of the BBC's structure or about the governance of public service broadcasting. But they do care deeply about the quality and range of what they watch and listen to.

Over the coming months we will be scrutinising every aspect of what we do to help us to make those choices. We will seek to help to rebuild the media sector, to secure the future of great British content for audiences here and around the world, and to sustain that precious idea of public space.

Mark Thompson is Director-General of the BBC