BBC’s content cuts fuel $511m ‘third-party funding’ surge

Good Omens S2

Content cuts at the BBC are set to make up more than 40% of its annual £1bn ($1.3bn) savings target in 2021, despite a surge in third-party investment in programming from the likes of Netflix and Amazon.

The findings from the UK’s National Audit Office (NAO) suggest that the BBC is largely on track to achieve its current annual savings target – struck as part of the 2015 licence fee settlement – but that the impact of cuts are now being felt on screen.

The BBC has previously attempted to reduce back-office costs and staff to achieve the savings, but the NAO said that 41% of the broadcaster’s annual savings were now coming from cuts to content and the scope of services.

A further 11% of the savings are derived from “changes to the scheduling mix,” the NAO said.

Third-party spending soars

The UK audit office said the BBC had “sought to enhance its spending on content” by seeking third-party funding for productions, with shows such as Good Omens coproduced with Amazon. Netflix, meanwhile, has coproduced on BBC dramas such as The Serpent and Bodyguard.

The BBC has previously said it expects £116m (or 12%) of its £971m annual savings would come from income generation, an increase on the £14m (2%) delivered under the previous savings programme prompted by the 2010 licence fee settlement.

This increase has, the NAO said, been “mainly been driven by a rise of 84% since 2016-17 in the amount of third-party funding of BBC-commissioned productions to £385m ($511m) in 2019-20.”

The BBC has also reduced the amount of broadcast television it offers licence fee payers, partly as a result of Covid but also to address changing viewing habits and to reflect the increased uptake of its iPlayer streaming service.

The NAO said there had been a 22% increase in the proportion of repeat programming on BBC One.

However, “considerable further savings” will be required in the coming years, the NAO predicted, as the BBC attempts to meet “the challenges of a fall in its audience share and in the number of people buying a licence.”

‘Small commercial returns’

While BBC chief Tim Davie has repeatedly talked up the “big opportunities” for BBC Studios (BBCS) – including ambitions for more global streamers – the NAO said the impact of its commercial arm on overall savings would be slight.

The BBC expects that increased commercial returns will make a relatively small contribution to its future savings, with plans to make £50m a year in extra income from BBCS.

Overall, the NAO said the BBC is forecast to exceed its original savings target of £800m a year by 2021-22 and is “largely on track” to meet its increased target of £1bn a year.

The organisation is currently negotiating with the UK government on the level of the licence fee from 2022-23, which will then prompt another five-year savings programme.

“Over the past decade the BBC has consistently made savings and is largely on course to achieve its £1bn annual savings target by 2021-22,” said Gareth David, head of the NAO.

“However, over the coming years it will need to make significant further savings at the same time as addressing a range of other challenges, not least its declining audience share. The BBC must ensure its savings plans do not further erode its position with audiences.”