Flagship web excels as execs walk and pols threaten cuts

In a single day last week, the BBC lost Michael Lyons, chairman of the BBC Trust, and one of its key creative toppers, Jay Hunt, head of flagship web BBC1.

That was only the beginning of the pubcaster’s woes.

Reacting to the new Conservative-led coalition government’s pledge to address the U.K.’s record national debt by cutting public services, the Beeb volunteered to freeze its license fee — paid by all homes that own a TV — for two years.

That altruism backfired when the government accepted a one-year freeze and then indicated it would reconsider the 2012 fees, paving the way for an actual cut in funding.

Pols added insult to injury by announcing the BBC’s budget would come under increased public scrutiny by the National Audit Office.

Yet, in the face of it all, BBC ratings are flourishing, particularly BBC1′s, thanks to shows like “Doctor Who” and newcomer “Sherlock.”

Still, events are being interpreted as a clear signal that the government, after less than five months in power, will be much harder on the BBC than its Labour predecessor.

“The BBC has to live on the same planet as everyone else,” warned media minister Jeremy Hunt last month at the Edinburgh Television Festival.

Hunt wants the BBC to share the economic pain that other publicly funded bodies will soon experience, and which commercial media firms have been living with since the financial crisis struck.

“There is no doubt the government has got the BBC on the defensive because it is threatening that a smaller license fee is possible,” says veteran media commentator Raymond Snoddy.

Much to the envy of rivals like News Corp. paybox BSkyB, the BBC is funded to the tune of £3.5 billion ($5.5 billion) annually by the license fee paid by all U.K. households with TVs. So having to cut $113 million a year because of a fee freeze is hardly big bucks.

But what is alarming some in the creative community is that the freeze comes on top of five years of 5% cuts in program budgets, as the BBC invested in non-content-related projects such as new studios in the north of England, redeveloping its London HQ and the switch from analog to digital transmission.

“If the BBC gets less money than it had planned for, it should make cuts in areas other than the budget for original commissions, otherwise it is the license fee payer who will be getting less for paying the same,” says John McVay, CEO of producers‘ lobby group Pact.

The BBC Trust, which was set up to act in the interests of the public, volunteered to keep the per-household license fee at its current level of $228 in the hope of winning favor with the pols at a time of belt-tightening.

Now it seems the amount of money available to the Beeb for 2012-13 will be part of the negotiations that set the level of the fee until the end of 2016.

In other words, a cut is possible starting in 2012.

Few topics divide British TV folk as bitterly as the BBC and how it is funded.

Some free-market devotees, including the former head of Channel 5, David Elstein, want to see the mandatory license fee scrapped and replaced by a voluntary subscription.

Recently Michael Grade, ex-BBC chairman and the former head of commercial giant ITV and Channel 4, said the fee should be shared between the BBC and Channel 4, which has pubic service broadcasting responsibilities, but is funded by advertising.

“The BBC has to contract,” Grade said recently. “It’s almost

unmanageable now; it’s too big.”

Key to the BBC’s future is the person Hunt appoints as Lyons’ successor.

Publicly Lyons, a former Labour council leader, said he had decided to quit and not seek another four-year team because the workload had become too onerous.

But the truth is more complicated.

“Lyons is going because he knew he would not be reappointed by the Conservative-led coalition,” Snoddy says.

With BBC finances coming under greater scrutiny by public spending watchdog, the National Audit Office, what unites those who want the licence fee scrapped and diehard BBC supporters who want it to survive is a desire that the majority of the coin is spent on content — and not bureaucracy and other non-core activities.

“If we want a BBC, it is important that management ensures that most of the money goes (into) making programs,” insists McVay. “The BBC has committed to spend (90%) on the making and distribution of content, which we welcome.”

Ironically, despite the changes in senior management, the BBC has rarely looked healthier in terms of its creative performance. That’s why Hunt’s departure will not cause consternation inside Television Center.

BBC director-general Mark Thompson and head of vision, Jana Bennett, to whom the head of BBC1 reports, are on the lookout for Hunt’s replacement — and they may not have to look far. BBC3 head Danny Cohen, a rising star at 36, is already regarded as a near-certainty to lead BBC1 and a good bet to one day run either the BBC or one of its rivals.

And in the unlikely event that Cohen doesn’t land the gig, Thompson and Bennett know that of the five terrestrials webs, BBC1 is in excellent health, thanks to fare like “Doctor Who,” “Strictly Come Dancing” and new shows like summer drama hit “Sherlock.”

It’s the only terrestrial web that has maintained its audience share in the past year.

If the U.K. production community has a say, such success is something the politicians and policymakers who will determine the BBC’s future should not forget.

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