Costs Cuts Loom As BBC Flails to Survive in Present Form

07 July 2004

Fans of Crouching Tiger, Hidden Dragon would recognize the slicing sound now swishing through the cloistered corridors of Britain's publicly-funded broadcaster, the BBC.

But it is not the sinister swoosh of the Wushu kwan that fills the air but the sound of cleaved costs as BBC executives seek to redraw the bottom line by lopping up to one-third from the corporation's annual overheads.

With certain elements in the Blair administration determined to settle old scores with the inconveniently independent broadcaster -- and its ten-year Royal Charter currently up for review -- the BBC is desperately trying to put its house in order, according to Tuesday's Financial Times.

The FT reports that monetarists within the BBC are trying to slash up to one third from the media giant's overheads, reducing them from 18% of income to 12% -- a move that could save £100 million ($183m; €148.7m) annually.

Newly appointed director general Mark Thompson had scarcely warmed the seat of his chair when he announced he was seeking a ten percent cut in overheads during the next charter period which begins (if it is renewed) in 2007.

The BBC's board of executive directors will review the proposed savings this week and discussions are expected to centre for the first time around the efficiency of programme spending. One insider told the FT that staff redundancies are inevitable and could be substantial.

On Monday former BBC chairman and ex-Blair protégé Gavyn Davies bit the hand that shoehorned him into (and out of) the job, accusing the government of a "witch-hunt" against the corporation last year following publication of the pro-administration Iraq war whitewash known as the Hutton Report.

As the one-time chief economist at Goldman Sachs London, Davies is no fiscal innocent and his built-in radar will have detected the nature of the government brief handed both to his successor, Michael Grade, and the new director general.

• At the same time, yet another government-commissioned review of the BBC (more specifically its online activities which have come under heavy fire from commercial rivals -- in particular Time Warner's America Online) has been handed-in by its author Philip Graf, the retired chief executive of Britain's largest newspaper group Trinity Mirror.

It is understood that his report urges that BBC Online's remit and objectives be clearly defined around public purposes. Furthermore, the regulation of its online services should be reinforced by the appointment of two governors, one of whom must have new-media expertise.

Overall, however, Graf's report appears to be both impartial and constructive. He concludes that BBC Online delivers high-quality material, at the same time noting that "there is a lot of public affection for the service".

"There are, however, a number of changes which could improve the experience for users, deliver efficiency and ensure that the site effectively reflects BBC Online's priorities."

The Graf report received a diplomatic welcome from Ashley Highfield, BBC director of new media and technology, who said it would be considered thoroughly.

He called it: "A solid foundation to build on, especially when taken together with the BBC's vision, as outlined in our recent Building Public Value document, to play a key role in the creation of a fully digital Britain.

It is not known if the report's full content will be publicly available.

Data sourced from: BrandRepublic (UK); additional content by WARC staff