Cut in budget may follow in 2012

LONDON — The BBC license fee is to be frozen for the next year — with a cut to the fee a real possibility in 2012.

The move is the latest twist in what is becoming a tense political game of cat and mouse between the corp.’s troubled leaders and the new U.K. coalition government.

It emerged Thursday that the BBC Trust, whose chairman Michael Lyons announced Sept. 14 that he is to stand down next May, proposed that the fee — payable by all British homes that watch TV — be frozen for the remaining two years of the corp.’s current financing agreement with the government.

But media minister Jeremy Hunt said while he “welcomed” the proposal and accepted a one-year freeze — pegging the fee at £145.50 ($227) — he would keep his options open for how much the fee should cost from 2012.

“A decision about 2012/13 will be taken as part of the next funding settlement,” said Hunt.

He added: “I have made it clear that the BBC needs to take proper account of the current economic climate and this move, which comes with the Trust’s assurances that it will not significantly impact on the quality of services provided to license fee payers, will be welcomed by the public.”

Hunt’s decision immediately led to speculation that the U.K. government, soon to announce massive public spending cuts as part of an austerity drive, is preparing to cut the fee, which generates £3.6 billion ($5.6 billion) a year for the corp.’s coffers.

The Trust said that a two-year freeze would have taken £144 million ($224 million) out of planned BBC budgets.

Hunt had already warned that the corp. “must live on the same planet as everybody else.”

With most U.K. broadcasters’ content budgets under pressure, there is growing concern about the declining amount of coin being invested in British shows.

The move by the Trust and the swift response by the government will only increase those fears.

John McVay, head of producers‘ lobby group PACT, said: “PACT recognizes that during these difficult economic times that it is broadly right for the BBC Trust to make the decision not to increase the BBC license fee for the next two years.

“However, we are alarmed at what impact this may have on the TV program budget and the consequences that any further reduction will have on individual program budgets, which are already under considerable strain as a result of the BBC’s 5% year-on-year efficiency targets.”

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