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BBC Reveals Plan to Cut $228 Million from Costs

The U.K. publicly-funded broadcaster BBC has set out details of how it plans to cut £150 million ($228 million) from its costs to plug a hole in its finances.

The shortfall has arisen because fewer people are buying the U.K. television license, which is the main source of funding for the broadcaster. This is because more people are watching BBC on its streaming service, the iPlayer, on computers, tablets or mobile devices, and so the proportion of U.K. households owning a television set is falling. If they don’t have a television set, they are not obliged in law to buy a license.

The U.K. government has said it will close this legal loophole, and oblige every household to buy a license, but in the meantime the BBC has to cut its costs.

About £50 million ($76.1 million) will be saved by cutting the number of corporate divisions and senior management positions. Also, there will be fewer layers between the top and bottom of the organization. About 1,000 posts will be lost as a consequence. Some £25 million ($38 million) will come from reducing back office and support services; £10 million ($15.2 million) will be cut by reducing management layers in content areas; and the remainder will come from the merger of technology and digital divisions, and changes to expenses, payroll management and other areas.

Some £35 million ($53.3 million) will be saved from the BBC’s TV sports rights budget. The BBC anticipates this will lead to the loss of some existing rights and events. A further £12 million ($18.3 million) will come from the BBC’s TV budget. Drama will be protected, but a range of other genres will face cuts. This will mean reductions to factual, comedy and entertainment programming. Around £5 million ($7.6 million) will be cut from the news division budget.

About £12 million ($18.3 million) will be cut from BBC’s online services.

Lower levels of inflation will result in £20 million ($30.4 million) in savings from long-term contracts and other costs.

The final £16 million ($24.3 million) will come from a variety of areas, including savings in distribution costs and the ending of the “Red Button” service, which provides additional channels for special events like soccer tournaments and music festivals.

The BBC director-general Tony Hall said: “The BBC has and is doing everything possible to make sure the impact on the public is minimized. Wherever possible we’re targeting savings by creating a simpler, leaner BBC.

“But cuts to budgets for programs and services are unavoidable. No director-general wants to announce reduced spending on services that the public love. This is very tough, but the BBC’s financial position means there is no alternative.”

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