BBC Berated For Huge Cash Claim
An independent study, commissioned by ITV, has hit out at the BBC’s bid to increase the licence fee by 2.3% above RPI.
The study, by Indepen Consulting, said that the BBC, now headed by director general Mark Thompson who famously criticised the Corporation for being “awash in a jacuzzi of cash”, was deliberately underplaying its predicted revenue growth and overplaying the cost of switching to digital.
With the current licence fee settlement of RPI plus 1.5% due to expire at the end of this financial year, the bid for the next seven years is a substantial, and critics say entirely unjustifiable, increase.
Even assuming the BBC achieves only economy-wide growth predictions of 2%, the licence fee could be simply raised in line with RPI. If it mirrors the growth predicted for the communications industry, the licence fee could be set at RPI minus 2%.
Key concerns outlined in the report include the effect on commercial rivals, with the BBC cash cow managing to attract the best in staff and talent, and crowding out innovation in the commercial sector.
Also, with a colour licence currently costing £131.50, the poorer sections of the population would be hit hard by a licence-fee hike that far outstrips government forecasts of income growth.
Commenting on the report, ITV chief executive Charles Allen said: “This report represents a thorough economic analysis of the impact of the BBC’s proposed licence fee increase and it is damning in its conclusions. The BBC’s back-of-a fag-packet figures should come with their own health warning. They systematically underplay their estimates for savings and efficiencies and overplay their funding requirements. The government should reject the BBC’s bid and send them back to the drawing board.”
The report strengthens previous criticism of the BBC’s bid in a study commissioned by the Department of Culture, Media and Sport published a month ago. That report, by UK accountants and business advisers PKF, concluded: “We consider that our detailed report contains specific information for the government to progress discussions with the BBC which would point to a lower settlement than currently sought.”
Today, Geoff Russell, director for media affairs at the IPA, endorsed the findings by the ITV study, saying that it “underpins all our concerns, and those of the commercial sector as a whole. Everyone knows that the BBC licence bid is excessive and unnecessary; for the health of UK media as a whole, it is now down to the government to trim it back severely.”
Indepen Consulting: www.indepen.co.uk ITV: 020 7843 8000 www.itv.com