The BBC was told it could no longer hesitate to implement the worst of its £ 1billion ($ 1.4bn) savings plan as it faces a perfect storm of pressure including declining revenues, declining audiences and intense pressure from pocketed rivals.
A grim report from Britain’s public spending watchdog, the National Audit Office (NAO), said the BBC had “delayed achieving what it saw as the most difficult aspect of its savings” in recent years , including job cuts and content reduction.
As the NAO noted that the BBC had made ‘strides in achieving savings’, achieving £ 618million of its overall target, the watchdog warned that the worst is yet to come. He pointed out that the BBC was delaying layoffs in its news and national and regional units, while at the same time the total workforce had grown by 7% in the past four years.
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The NAO said the BBC must make the cuts amid “significant” financial and policy pressures. The BBC’s £ 3.5bn funding is down (it fell 8% last year), while future negotiations with the government over its funding and streaming growth will put additional pressure on his finances.
The NAO added that the revenues of the commercial branches of the BBC, including the BBC studios, are “not yet at a level to make a significant contribution to its overall income.” In addition, there is market inflation fueled by streamers, such as Netflix, which not only eat into the BBC audience, but increase the cost of content. Drama costs have risen by two-thirds over the past five years, according to the BBC.
The NAO said the BBC must develop an urgent cost reduction plan. “As decisions about licensing fees are made, the BBC needs to develop a clear financial plan for the future that shows where it will invest and how it will continue to save,” said Gareth Davies, director of NAO. “Without such a plan, it will be difficult for the BBC to effectively implement its new strategic priorities.”
A BBC spokesperson said: “As the NAO reported, we have achieved significant savings and increased efficiency, while maintaining our spend on content and continuing to be the most used media organization UK. We have laid out plans for urgent reforms to deliver great value to all audiences and will provide more details in the coming months.
One plan under consideration at the BBC is to cut 20% of its content and redirect that resource to areas of programming that offer better value to audiences. Managing Director Tim Davie first raised this idea last year and it was noted in the NAO report, suggesting that it has become an important part of the BBC’s planning.