BBC fee gap tough to 'swallow'

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BBC director general Mark Thompson said Thursday that the BBC faces a £2 billion ($3.9 billion) funding gap over the next six years under the long-awaited license fee settlement announced by Culture Secretary Tessa Jowell.

Speaking at a media conference, the director general said the settlement was a "real disappointment" but that it was "too soon" to give details of where the pubcaster will have to make cutbacks.

The settlement, announced by Jowell in the House of Commons, totals more than £20 billion ($39.4 billion) in guaranteed funding over the next six years. But it severs the traditional relationship between the BBC's income and the annual rate of inflation, effectively amounting to a net cut in income.

The BBC license fee, currently £131.50 ($260), will rise by 3% for the next two years, then by 2% for three years and by as much as 2% the year after. The compulsory per-household fee will rise to £151.50 by 2012, compared with the £185 a year the BBC had been hoping for.

The figures, which were effectively leaked before the Christmas break, are nonetheless bad news for an organization that already has weathered a campaign of job cuts that saw one in five of the pubcaster's posts axed.

"The quantum of the settlement remains a real disappointment," Thompson told the conference. "Given our vision, which was endorsed by the government in a White Paper, we'd argued for a license fee that would grow modestly in real terms. Instead, the government has opted for a settlement that is below the retail price index."

Thompson said the settlement will leave the BBC with "difficult choices" that could lead to further job losses.

"There remains a gap of £2 billion over the six years between what we thought we needed and what we expect. That is not a gap that any organization can easily swallow," he said.

Thompson said that the BBC's governing body and executives will spend the next days and weeks examining the details of the settlement.
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