The BBC has been clouded by one of the toughest funding deals in the public sector, which will force cuts with implications for the broadcaster’s output, staff and ambitions.
Nadine Dorries, culture secretary, said the license fee would be frozen for two years at £159, then rise with inflation until the end of 2027, making it one of the financial packages. least generous to the company in decades.
The BBC has called for the tax rate to at least keep pace with inflation during protracted negotiations with the government. Instead, the terms will usher in an era of tough austerity for the public-service broadcaster as it enters its 100th year and tries to compete with deep-pocketed rivals like Netflix and Disney, companies are increasing their investment and quickly encroaching on their fields.
Licensing fees, which are charged to anyone who watches live content in the country, increase by around £3.7 billion and account for about three-quarters of the company’s budget.
To make up for the fee freeze, the government has announced that it will double the BBC’s commercial arm’s loan limit to £750 million, providing the broadcaster with some financial room to configure. reshape its international services.
Richard Sharp, chairman of the BBC, and Tim Davie, general manager, described the deal as “disappointing” not only for license fee payers but also for the cultural industry in the UK.
BBC leaders said: “BBC earnings for UK services are already 30% lower 10 years ago than they were 10 years ago.”
Sharp later suggested that the company had caught off guard by the final details of the deal, which appeared in tweets from Dorries on Sunday. Sharp told BBC Radio 4 he didn’t “anticipate learning what I learned over the weekend”.
Dorries said in the House of Commons she recognized the BBC as a “great institution” but insisted she was being “realistic” about the “economic situation”. “When it comes to monthly bills, this is one of the few direct leverage we have as a government,” she said.
The culture minister added that the government had long planned to look at the BBC’s funding model, saying she would “be accused of being a dinosaur” if she said she would “just keep going”. continue as it is [with] fees for this license”.
But it’s worth noting that she stopped repeating assertive, made it out on Twitter over the weekend, that paying the license fee would be “the last” for the BBC.
Enders Analysis’s Abi Watson estimates the latest financial settlement will create a shortfall of £871m for the BBC by 2027. That adds to the pressure from two license fee arrangements since 2010 that have squeezed The company’s funding is around 1.1 billion pounds.
The broadcaster will assess the impacts in the coming weeks. Insiders say the tight terms will require decisions about the viability of TV channels like BBC Four, significant staff cuts and a pullback from some types of output.
Some BBC executives see the overall settlement as a dire but manageable outcome, particularly because there have been concerns that a hostile Boris Johnson government will impose the cuts. real term reduction for most of the budget period.
Even so, when compared with the spending plan for parts of Whitehall, where virtually all received real spending increases over the term, the BBC stood out as one of the biggest losers. in the public sector. Lucy Powell, shadow culture secretary, said the deal was part of a longstanding government “against the BBC”.
Lord Michael Grade, former BBC chairman and former executive chairman of ITV, said: “These are difficult times now. “They need to take a long and hard look and see what activities they can really cut back.”
“Do they need all those networks, both radio and television? Do they need their online offering to be extremely comprehensive? [There are] all kinds of questions they need to ask. ”