BBC expects $390m shortfall from licence fee deal

Line Of Duty

Tim Davie, the director general of UK pubcaster the BBC, has said that the corporation will suffer a £285m ($390m) shortfall in 2027/28 following yesterday’s licence fee settlement.

The UK government said on Monday that the licence fee would be frozen at £159 until 2024, a move that had been mooted late last year. It will then rise slightly each year through to 2027, when it will be fully abandoned.

As a result, the BBC will need to save around £1.5bn on top of pre-existing savings targets of around £1bn, for a total of £2.5bn over the next five years. The licence fee currently brings in around £3.5bn of funding per year for the British public broadcaster.

Disappointment & excitement

Speaking on the BBC Radio 4 Today programme this morning, Davie said that the settlement was “disappointing”, adding: “Inevitably, if you don’t have £285m you will get less services and programmes” and stated his preference was for an annual inflationary rise.

Tim Davie

He said that the Line Of Duty broadcaster “needs to reshape for a digital age” and added that he was “excited about re-engineering the BBC”, doing nothing to dispel the possibility of linear channel closures.

In a statement released yesterday, following the government’s announcement, Davie and BBC chairman Richard Sharp said: “A freeze in the first two years of this settlement means the BBC will now have to absorb inflation. That is disappointing – not just for licence dee payers, but also for the cultural industries that rely on the BBC for the important work they do across the UK.

“The BBC’s income for UK services is already 30 percent lower in real terms than it was 10 years ago. We will set out the implications of the settlement later, before the end of the financial year, but it will necessitate tougher choices which will impact licence fee payers.”

Meanwhile, in a separate memo to BBC staff yesterday, Davie and Sharp said that they will “continue to make a strong case to the Government for investing in the BBC”.

They wrote: “There are very good reasons for investing in what the BBC can do for the British public, the UK creative industries, and the place of the UK in the world. This is the case that we’ll continue to make to the Government right until the last moment.”