BBC braces for funding cuts

UK taxes set to be diverted from broadcaster

LONDON Is the behemoth that is the BBC — omnipresent on TV, radio, online and expanding internationally — about to be cut down to size?

Judging by pubcaster chairman Michael Lyons’ reaction to the government’s Digital Britain report, published June 16, the answer is a resounding yes.

The BBC fears that measures in the report will end its 87-year monopoly on the fee paid by all U.K. homes that have a TV, which brings it some $5.9 billion a year.

“The license fund must not become a slush fund to be dipped into at will,” thunders Lyons.

At the heart of Digital Britain is a plan to make sure all homes are able to receive high-speed broadband by 2012.

To pay for this, the government plans a levy of around $10 a year on all homes that have fixed-line phones and, crucially, will also raid the BBC’s coffers to the tune of some $326 million.

The money will come from a fund given to the pubcaster to help the disadvantaged make the switch to digital TV by 2012 and which is surplus to requirements.

Some of this will be tapped to help finance three experimental local news services in England, Scotland and Wales. These will air on rival web ITV, which recently announced a $4.4 billion loss and says it can’t afford to pay for local news.

To ensure competition for the BBC in local news coverage, the government backs public intervention.

Significantly, Digital Britain also recommends that beginning in 2013, when the current agreement on the license fee ends, around 3.5% of the fee — about $214 million a year — be set aside for rivals to use.

The plan is to use the money to help competitors pay for news and, ideally, homegrown children’s TV where non-BBC- funded content is in a state of chronic crisis.

Lyons believes that once the principle of what industryites here call “top slicing” the fee is established, pressure will mount from competitors until more and more money is drained from the Beeb’s ever-diminishing purse.

Communications minister Stephen Carter, promoter of the Digital Britain report, has pledged that the 3.5% limit should be enshrined in the BBC’s constitution.

But Lyons is unconvinced. “History tells us these guarantees are not worth very much,” he says.

Veteran media commentator Raymond Snoddy believes the BBC is fighting a losing battle against top slicing.

“The simplest way of maintaining public service broadcasting in the U.K is to fund it through an already established mechanism i.e. the license fee,” says Snoddy, who presents the BBC’s “NewsWatch” and has covered the media for Channel 4 and a slew of newspapers.

“But given the political and economic context, where rival media organizations are being damaged by structural and cyclical changes, that is becoming increasingly difficult.

“In the long run I don’t see how the BBC can win this one. The political and economic forces are strongly positioned against the Corp.”