[CMA TV] BBC calls for £200 licence fee

[Michelle McGuire]

BBC calls for £200 licence fee
Colin Robertson
11 October 2005 09:43

The BBC is calling for the licence fee to be raised by 2.3% above  
inflation to help pay for the switch to digital.

The corporation proposed the new seven-year licence formula this  
morning which it said should kick off from April 2007, lifting the  
current £126.50 annual fee in stages to £134 plus inflation by the  
start of the 2008 - 2012 switchover window and eventually £150.50  
plus inflation by 2013. The BBC's current licence fee settlement is  
inflation plus 1.5%.

Taking inflation into account - currently running at around 2.5% -  
this effectively means that the licence fee would be £183 by 2012/13,  
the end of the switch. If the formula was continued for the rest of  
the ten-year charter, by 2016 the figure would be £210.50.

The BBC has calculated that in order to meet the requirements set out  
in the BBC Green Paper - which among other things calls for the BBC  
to increase its digital presence - the BBC will need an extra £5.5bn  
over the seven years between next years' Charter renewal and switch off.

The BBC says it will be able to absorb 70% of this extra cost -  
£3.9bn - itself through job cuts and other "self-help measures" but  
argues that the remaining £1.6bn will need to be paid for by  
increasing the licence fee by an annual rise of inflation plus 1.8%.

It added that it will also need to increase that by a further 0.5%  
plus inflation to help pay for other costs specifically relating to  
switchover, such as the marketing of Digital UK, the renamed SwitchCo  
body which is leading the switchover process. It estimates these  
costs to be around £500m. Switch over is set to take place between  
2008 and 2012.

BBC director general Mark Thompson said: "The BBC needs to transform  
itself to ensure we are providing the very best content, accessible  
to and valued by everyone across Britain, and the licence fee will  
help us achieve our vision to be the best creative digital  
broadcaster and content provider for audiences in the world."

Chairman Michael Grade added: "Our document Building Public Value  
outlined the BBC's vision for serving the public in the digital age.
"The government's subsequent Green Paper endorsed and refined that  
vision after consultation with the public. This bid has been  
thoroughly and independently scrutinised by the governors. We commend  
it to government as an efficient business plan designed to meet  
licence payers' expectations at the lowest cost."

Grade and Thompson now face a grilling by MPs at the media select  
committee later this morning.
The BBC this morning issued the following breakdown of costs:

Quality content - £1.6bn
(Learning; Drama, Comedy/Ents, Arts, Music, Journalism, Local services)

Digital services - £1.2bn
(On-demand; Navigation and Search; active engagement)

Digital infrastructure - £0.7bn
(DTT/DAB build out; Free Satellite; Internet distribution; HDTV)

Local relevance - £0.6bn
(Local TV; new radio stations, OpenCentres/ Buses, Out of London)

Base costs increase - £1.4bn
(super-inflation in broadcast costs etc)

= £5.5 billion

Self Help
Efficiencies on overhead and production processes - £2.6bn  
modernising licence fee collection channels - £0.2bn, capturing  
household growth - £0.7bn

Commercial dividends - £0.4bn

= £3.9 billion

Funding Gap = £1.6 billion

Closing the gap = RPI + 1.8%

Switchover costs
Digital UK costs - £200m
Spectrum tax £300m



Source: broadcastnow.co.uk


-- 
Michelle McGuire
Editor, Airflash Magazine
Development Officer

Community Media Association
http://www.commedia.org.uk

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