BBC 'to accept lower licence fee settlement'

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The BBC is reportedly poised to accept a lower than previously demanded licence fee settlement, but will challenge the Government to fund digital broadcasting obligations set out by ministers in a white paper on its future. According to the Financial Times, BBC director general Mark Thompson will reject Treasury calls to keep licence fee increases below inflation, saying that would make it impossible to fulfil the Government's desire that the corporation leads Britain into the era of digital-only broadcasting.

Last October Thompson unveiled a proposed inflation plus 2.3% annual rise, saying that amount would be needed for seven years from next April to meet the cost of the BBC's digital obligations.

In April culture secretary Tessa Jowell dismissed the 2.3% plus inflation demand as an "opening bid". Last week BBC business editor Robert Peston said ministers were set to agree to a rise "bang in line with inflation".

But today's Financial Times says the BBC will issue a revised estimate of its needs and issue proposals for an annual rise of 1.5% above inflation, putting corporation chiefs on a collision course with ministers.

In a July debate which ratified the BBC's next 10-year charter, running to the end of 2016, Jowell said there was "no organisation better placed than the BBC to demonstrate the advantages of digital and to ensure its availability on a universal basis".

The licence fee settlement is the last part of the jigsaw puzzle to be added to the BBC's long-running charter renewal process.

Lovelace Consulting  |  11.10.2006

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