BBC Plans for Content Budget Cuts

Facing “downward pressures” on its income, the BBC is planning to reduce spending on its content and services by £408 million ($556 million).

The BBC has faced a reduction in income of around 30 percent since 2010-11 as a result of increased funding obligations (such as the World Service and S4C) and the freeze in license-fee income for five years from 2010. At the same time, there has been an “unprecedented increase” in competition for audience time with the rise of streaming services, social media and gaming.

In a lengthy report, BBC Value for Audiences, the BBC examined the effectiveness of the response to these changes, and how the BBC has saved, sold and spent “sensibly” to increase efficiencies, grow commercially and reprioritize to make the most of its license-fee funding.

The BBC’s most recent savings program is on course to deliver £951 million of savings by March 31, 2022.

As a “smart saver,” the organization has halved its number of senior managers, reduced the costs of managing the BBC’s property estate by 22 percent, delivered 29 completed major projects since 2012-13 on average 9 percent below budget, and saved 45 percent on major strategic contracts costs, saving £300 million a year. The BBC’s overheads were cut from 7.6 percent to 4.8 percent.

As a “smart seller,” the BBC’s commercial income has grown by 50 percent to a record £1.6 billion. Commercial returns have increased back to the license fee payer by 50 percent to a record £276 million. The on-screen value for every £1 of license fee spent has increased from £1.35 to £1.47 within the last 12 months due to increased third-party investment.

As a “smart spender,” the group has increased the proportion of BBC income spent on content and distribution from 92.7 percent to 95.2 percent. It has also invested in key digital services like BBC iPlayer, BBC Sounds, News and Sport Online, and increased the proportion of TV spending outside of London from 40 percent to 50 percent, and from 13 percent to 20 percent in Scotland, Wales and Northern Ireland. Investment has been upped in key areas of output such as Children’s and across the Nations & Regions, including the BBC Scotland channel.

However, “additional savings through productivity gains are becoming increasingly difficult and scope savings are now the predominant form of savings for the BBC,” the report states. “In order for the BBC to deliver its public service commitments, support the creative industries and continue to invest in high-quality, world-class, distinctive content for U.K. audiences, it will have to do more with less income to spend on programs and services.”

Tim Davie, BBC director-general, said: “The BBC has made big changes to ensure we provide outstanding value. We are smarter spenders and savers and more efficient than ever before, but there is more to do.

“The financial challenges and competition we face continue to evolve and while we have demonstrated we can deliver, I want us to adapt and reform further to safeguard the outstanding programs and services that our audiences love for the future.”