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BBC’s shortfall in licence fee income leads to 1000 job cuts

MUMBAI: In a major cost-cutting move, the UK’s public service broadcaster BBC will cut over a 1,000 jobs due to a $234 million (£150 million) budget gap in its licence fee income.

The shortfall comes on the back of an unexpected increase in the number of households that do not watch live TV, and hence do not pay for a licence.

Many cuts are to come from professional and support areas, while management structures will be streamlined as a cost-cutting measure.

Professional and support departments like IT, HR and engineering will be looked at closely to see where there is duplication, with the possibility of merging divisions across the BBC and its commercial arm BBC Worldwide.

BBC director general Tony Hall said this would save around $78 million (£50 million) a year, so more cuts will come.

Hall said that the BBC had already made $2.34 billion (£1.5 billion) in savings, but because of the shortfall in licence fee income, more needed to be done.

The four key areas for making the savings will be merging divisions, bringing together teams in BBC and BBC Worldwide, cutting out management layers, reducing management levels from 10 to seven, reducing management roles, bringing down the number of senior positions and simplifying procedures in professional areas including legal, marketing and finance.

Hall said that the BBC was facing ‘difficult choices’ because of the tough financial climate. He said that fewer than one million people had a television set than was predicted in 2011 when a previous round of efficiency savings was implemented.

“Despite the progress already made, and the realities of the licence fee being frozen for seven years, a new financial challenge means additional savings must now be found,” he said.

He added that decision-making had become too complicated in recent times with the introduction of new services and that he wanted to cut these back to make things simpler, which ‘inevitably would lead to fewer decision-makers’.

The BBC licence fee of $227 (£145.50) has been frozen for seven years and the process of charter renewal is getting under way, which will decide how the BBC is run when its current royal charter runs out at the end of 2016.

BBC is mainly funded by public tax. Households that watch any live video programming, whether streaming or broadcast, are required to buy an annual TV licence, which currently costs $227 (£145.50). Authorities enforce the tax through inspections.

The BBC expects its licence fee income in FY 2017 to be £150 million less than it had forecast in 2011 as consumers watch more archived video or on-demand programming via the internet.