BBC Targets $630 Million in Further Cost Cuts

Luke Macgregor/Reuters

"The challenge to avoid having to cut content is very real,” says Anne Bulford, managing director of finance and operations

The BBC plans to cut its annual costs by another $630 million (£400 million) in the next two years to bring overall savings per year to $2.36 billion (£1.50 billion) by fiscal year 2016-2017, according to a new report it is publishing on Thursday.

Programming spending is expected to be hit as part of the latest savings efforts, BBC News reported. But it wasn't immediately clear if the BBC would cut channels after the recent decision to end BBC Three's existence as a linear TV channel or other services, cut certain shows or reduce the budgets of shows. The BBC is set to disclose its latest savings figures and plans in a report ordered earlier this year by director general Tony Hall.

It says that the U.K. public broadcaster's spending has been more focused on programming since the launch of the cost cuts, but added that it would be "increasingly difficult" to avoid future cuts to content spending, according to reports.

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"The BBC remains passionate about delivering the great public service TV, radio and online content that our audiences deserve, but after a long period of delivering annual savings the challenge to avoid having to cut content is very real,” the BBC quoted Anne Bulford, managing director of finance and operations. “It’s vital that as much of the license fee [that U.K. taxpayers pay] as possible goes straight to the programs and services audiences love, and this report shows we’ve made great strides in becoming more efficient."

She added that many savings have come from "structural or one-off initiatives that can’t easily be repeated, making it more likely that content and services will be [affected] if the real-terms value of the license fee continues to be reduced.” That was seen as a reference to a freeze in the fee that taxpayers pay to help fund the BBC. Negotiations about the future of the fee and the BBC's charter are expected to start in the near future.

The BBC said its actual funding has dropped 26 percent in real terms since 2010, because of the fee freeze, inflation and more responsibilities given to it by the British government.

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So far, about 30 percent of the BBC's savings have come from so-called reductions in "content scope," the broadcaster said. The report mentioned that this was set to rise to 50 percent in the final years of the cost cutting initiative, according to Broadcast magazine. That includes the previously proposed closing of youth channel BBC Three as a linear channel, which the report said would save $79 million (£50 million) a year.

Cuts to annual talent costs have also been a key focus, with the BBC saying on Thursday that it has cut them by 15 percent or $55 million (£35 million) so far.

Twitter: @georgszalai