Rivals set to nab portion of government cash

The U.K. government is preparing to end the BBC’s 87-year monopoly of the license fee paid by all homes with a TV that generates around £3.5 million ($5.7 billion) annually for the pubcaster.

The keenly awaited Digital Britain report, to be published today, is expected to propose that $212 million of the BBC’s coin be diverted to help rivals supply local news and children’s services.

The report is believed to support the use of the so-called “digital switchover surplus,” earmarked until 2012 for helping elderly and poor people make the move from analog to digital TV, to aid the financially stricken commercial broadcast sector.

Some BBC money would go to pay for local news shows on cash-strapped ITV, while other funds could be plowed into original U.K. children’s production, perhaps commissioned by Channel 4.

Although the sums involved will not affect the BBC’s core services, the proposals are likely to infuriate the pubcaster.

Recently, BBC Trust chairman Michael Lyons warned against the “real danger” of whittling away the license fee by taking “a little chip off here, a little slice off there.”

Digital Britain is also expected to recommend that a joint venture between commercial arm, BBC Worldwide and Channel 4, be greenlit.

The report’s other key points are thought to include a government commitment to high-speed broadband for all Brits, and measures to tackle Internet piracy.

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