BBC seeks smaller fee hike

Thompson requests rise of 1.8% above inflation

In a potentially embarrassing move, the BBC has revised downward its bid for the license fee levied on all TV-owning U.K. homes — from an annual rise of 2.3% above inflation to 1.8% above inflation.

The pubcaster’s director general, Mark Thompson, made the announcement Wednesday during a speech in London.

Decision to ask for a lower increase follows months of debate over the figures the BBC originally tendered to the British government, which sets the fee, last fall.

The two sides were originally set to reach an agreement on the amount of the license fee by summer. But a government-commissioned report by accounting firm PKF questioned the figures on which the pubcaster had based its initial bid, which would have seen the present £131.50 ($237.70) increase to £180 ($324) by 2013.

Commercial rivals also criticized the original bid, claiming the BBC’s ambitions, especially in new media, threaten their businesses.

Negotiations over the license fee have been further complicated by reports of a split between British Media Minister Tessa Jowell and Finance Minister Gordon Brown, who is reported to favor a lower hike than Jowell.

Thompson, who is forcing through a large number of job cutsat the BBC, said there would be some difficult decisions ahead for the pubcaster if the government opts for a low license fee settlement.

A decision on the license fee, which will fund the government’s digital switchover program, is expected by the end of the year.

Thompson said the switchover, due to be completed by 2012, could be held up if the pubcaster is underfunded.

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