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BBC to cut content to plug $375m funding gap amid licence fee freeze, superinflation

The BBC’s offices in Manchester

UK pubcaster the BBC will cut content as it scrabbles for ways to plug a funding gap created by the licence fee freeze and superinflation, including rising talent costs, in the media industry.

The Line of Duty broadcaster’s annual report said culture secretary Nadine Dorries’ controversial move to freeze the annual licence fee at £159 for the next two years would cost it £285m (US$375m) by 2027/28, adding that the freeze was “challenging, particularly at a time of high inflation and media super-inflation.”

Expanding on the effects of rising living costs in the UK and inflation within the media sector, the report said: “Rising inflation rates across the UK economy put pressure on the BBC’s budget and the cost of talent and content has continued to rise faster than inflation (‘superinflation’) as the global demand for high-quality programming remains fierce.”

Additional costs due to pandemic-related production disruptions and delays have also put a strain on the BBC’s revenues, the report added.

While the pubcaster said it would publish a comprehensive savings strategy in May to find the extra £285m, which includes £55m alone in 2022/23, the annual report said the gap “will mean a reduction in the BBC’s audience offer.”

“It also reduces the real-term investment we can make in the wider UK creative sector compared to a settlement that kept pace with inflation,” the report added. It means the pubcaster will have less funds than in previous years to commission hit titles like drama Normal People, adapted from Sally Rooney’s novel of the same name, and Michaela Coel’s I May Destroy You.

Tim Davie

One a more positive note, the report said “careful financial management” means the BBC can mitigate the effects of the licence fee freeze and inflation by continuing its current savings plans of £1bn a year and maintaining a spend of only 5% of income on overheads, with the remaining 95% going on content. It also added that commercial arm BBC Studios has “delivered strong commercial performance in 2021/22,” which is anticipated again in 2022/23.

Elsewhere in the report, the BBC affirmed its commitment to boosting diversity by introducing a new target of 25% of staff to come from low socioeconomic backgrounds by 2027 “to ensure our workforce is more representative of the audience we serve.”

The nations and regions also got a boost as the broadcaster reasserted its aim to spend at least 60% of its television network production spend outside of London, which includes moving unscripted title Design Masters to Brighton and transferring motoring series Top Gear to Bristol.

A documentary commissioner based in the North and a Bristol-based commissioner covering specialist and popular factual will be hired in the coming months to expand the BBC’s commissioning footprint, the report added.

Finally, the BBC said it was on the hunt for more British animation. It will commission three pilots from its Ignite initiative, designed to find and develop the country’s next animation hit, which received more than 1,000 submissions.

Drama is another “key strategic priority” for the BBC, which will launch a new series called Phoenix Rise, set in a fictional West Midlands secondary school and filmed on location in the region.

Richard Sharp, BBC chairman, said: “This annual plan shows that truthful, independent news and uniquely British content is needed more than ever. Our plan highlights the challenges and opportunities in the media market. We will continue driving changes to our public service and commercial operations to fulfil our duty.”

BBC director general Tim Davie added: “The BBC is performing an indispensable role delivering impartial news around the world, with 456 million people using our services globally every week and growing. This annual plan shows significant progress has been made to reform the BBC, but we will continue to transform the organisation to provide value for all audiences in the digital age.”


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