The BBC expects to slash more than £400m ($540m) from its programming and services budget this year as it attempts to deal with a financial squeeze caused by streamers and a drop in funding.
The UK broadcaster revealed the cuts in its Value For Audiences report yesterday, in which it said that its ability to reduce back-office spending was now “limited”.
That means it has increasingly “been forced to increase scope cuts – cuts to programmes and services – to deliver its savings plans”, with a figure of around £408m ($556m) expected in 2021/22.
The broadcaster, which has already made a swathe of job cuts in the past year, pointed to the loss of The Great British Bake Off to Channel 4 and the closure of BBC Three as a broadcast channel as examples of savings made to date.
The broadcaster said its most recent savings programme is on course to deliver £951m of savings by 31 March 2022 and added that revenues from commercial entities such as BBC Studios had grown over the past five years, although BBCS’s contribution to its parent broadcaster is expected to be significantly affected this year because of the pandemic.
Overall, the BBC said its income had fallen in real-terms by around 30% since 2010/11, pointing to increased funding obligations such as the World Service and S4C, and the freeze in licence fee income for five years from 2010.
“At the same time, there has been an unprecedented increase in competition for audience time with the rise of streaming services, social media and gaming,” it said.
Services such as Netflix, Amazon, Disney+ and Sky have “inflated demand for talent both on and off screen” the BBC said, adding that the “dramatic rise in competition for quality UK content has led to above-average inflation.”
Drama was cited as a key area, with the BBC saying that over the period 2013/14 to 2017/18 the gross cost-per-hour of BBC commissioned non- continuing drama rose from £1.1m to £1.7m.
“In order for the BBC to deliver its public service commitments, support the creative industries and continue to invest in high-quality, world-class, distinctive content for UK audiences, it will have to do more with less income to spend on programmes and services,” the report added.
More with less
The BBC said it would attempt to do this by expanding co-production activity and striking deals with international broadcasters and streamers, such as the recent deal with Netflix that handed the organisation rights to crime drama The Serpent.
The BBC said it had almost tripled the amount of third-party investment in drama via co-productions with broadcasters and SVODs compared with 2014/15, adding: “In 2019/20, £1.47 of on-screen value was delivered for every £1 of Public Service spend, compared to £1.35 in the previous year.”
The organisation also said that its strategy to attract third-party investment would continue “to secure maximum rights for channels and services for UK audiences, trading off secondary windows and international rights”.
The BBC is also looking to “break new ground in the way it creates and distributes its content to enable further efficiencies”, it said, while also increasing commercial revenues to offset inflation. It also plans to “ramp up investment in new, diverse talent on and off-air to ensure it is well-positioned to develop and access a strong future pipeline.”
Tim Davie, BBC director-general, said: “The BBC has made big changes to ensure we provide outstanding value. We are smarter spenders and savers and more efficient than ever before, but there is more to do.”