BBC License Fee Frozen For Six Years

As government announces the biggest round of spending cuts in recent British history

LONDON -- BBC bosses were Wednesday coming to terms with the dramatic news that the pubcaster will have to live with a 16% real terms drop in income, after week-long round of intense and anguished negotiations with the government has led to a new license fee settlement.

The BBC Trust has been fast-tracked into agreeing to freeze the license fee at £145.50 ($230.60) over the next six years, and also underwrite the costs of the BBC World Service and Welsh broadcaster S4C, by a government that this week has announced the biggest round of spending cuts in recent British history.

BBC Trust chairman Michael Lyonssaid the six-year freeze was a "tough settlement" but that it would deliver predictability and stability for executives and viewers through 2017.

"There is no doubt that the settlement will present us with some difficult choices, but importantly, these choices will remain firmly in the hands of the BBC Trust and we will of course seek the views of license fee payers," he said.

Senior sources privately say the result of the negotiation, which will amount to costs of an extra £340 million ($539 million) a year, is nonetheless an improvement on being forced to take on the cost of paying for free TV licenses for seniors at the cost of £556 million ($881.3 million) a year, which had been another option government had put on the table.

The process of reviewing the BBC's license fee was due to kick off early in the New Year, and can typically take many months of political lobbying and haggling.

But the urgent demands of the Government Spending Review and hardball tactics from Culture Secretary Jeremy Huntmeant that the process was accelerated, leaving many BBC execs and management stunned by the news.

So far there is no word on where the axe will fall in terms of cuts in program budgets or pink slips for employees. But as industry body Pact -- which represents the production community -- warned, viewers could well feel cheated by the negotiations.

"There is a real danger that the license fee payer will be paying the same but getting less," it said.

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