BBC in Peril: What $1.2 Billion Tab Means for 'Sherlock,' 'Doctor Who'

Rona_Fairhead_Tony_Hall_Split - H 2015

Rona_Fairhead_Tony_Hall_Split - H 2015

"It's very hard to see them being able to sustain current levels. Stuff is going to have to come out of various places," says one analyst.

This story first appeared in the July 24 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.

It was described as a "drive by shooting," a "heist" and, in more extreme circles, proof that the U.K.'s new Conservative-ruled British government was rewarding Rupert Murdoch and the Conservative press for their support during the recent election.

Announced July 5 as part of ongoing “savings” to be made in the public sector, a BBC policy change could potentially impact the availability of Britain's most globally beloved television series.

British households must pay an annual license fee for free TV, with the Department for Work and Pensions picking up the tab for viewers over age 75. But last week the government declared that the BBC would soon be responsible for those fees. By 2020 that burden is expected to exceed $1.15 billion — a sizeable slice of the BBC’s income, which reached $7.8 billion in 2013-2014.

Veep creator Armando Iannucci, a BBC regular since the 1990s, accused the government of "demonising" the broadcaster, while others including Daniel Craig, J.K. Rowling and Judi Dench signed an open letter claiming that a "diminished BBC would mean a diminished Britain."

' or '[The Great British] Bake Off,' or stations like Radio One or Two, should continue," it says, as 'The Voice' also gets mentioned in a government paper."]

Whether part of ongoing austerity economics or driven by more sinister ideological beliefs, the decision to shift the bill off the government’s books to those of the BBC would, critics fear, hurt the home of Sherlock, Top Gear, and Doctor Who. The broadcaster recently announced more than 1,000 job cuts and has taken on the $380 million costs for its World Service international radio network.

“It’s very hard to see them being able to sustain current levels,” says Toby Syfret at Enders Analysis. “Stuff is going to have to come out of various places. It isn’t good news for the independent sector. One of the things that has been keeping the indie sector up is the BBC spend.”

Following the news, the Office for Budget Responsibility forecast that the BBC’s spending was set to fall nearly 20 percent to $4.75 billion over the next five years. Laura Mansfield, chair of Pact, the British trade body representing independent TV producers, said the reduction would have a “mirror effect across the other broadcasters” and could lead to a decline in quality. Pact’s CEO, John McVay, said the situation was already “very close to the bone, where the BBC seldom if ever goes near paying the full cost of the program, which places more risk on the supplier.”

BBC Trust chair Rona Fairhead called the government’s decision “legitimate,” while former acting chair Diane Coyle told BBC Radio that with the number of people over 75 going up, she wasn’t sure how the broadcaster could “avoid service closures to cover [the added expense].” But BBC director general Tony Hall was more positive, saying that he’d “secured the right deal” for the BBC in the current economic climate. Hall pointed to new arrangements that would link the previously fixed license fee to the rate of inflation and make the growing number of households who only watch TV online now liable to pay.

Although the BBC is yet to detail where it might look for savings, those worried about the BBC’s original content — new titles such as Wolf Hall, Poldark and The Casual Vacancy, plus old favorites such as Pride and Prejudice and the original House of Cards — might not yet need to seek comfort in their VHS recordings of Colin Firth diving into a lake.

“I think [the BBC will] focus on high-quality drama and factual: what they’re known best for,” says IHS principal analyst Tim Westcott. “Where people will see a difference, I suspect, is in sport.” The BBC has already lost out to pay-TV for most big-name events, most recently to Discovery for the Olympics, and the latest cuts could be the death knell for significant future coverage. Of course, it will be a boon to rivals such as ITV and Sky.

Westcott adds that the BBC’s ability to compete for U.S. series will likely continue its downward trajectory - meaning one fewer well-financed buyer for American shows.