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BBC boss told to deliver widespread cuts to cover funding gap

BBC boss Mark Thompson has been told to present options for wide-ranging cost cuts to the Trust that governs the UK public broadcaster’s activities by the summer. The director general has been asked to target savings in specific areas rather than across the BBC’s activities, with particular focus given to the broadcaster’s family of digital channels.

In a letter to Thompson, outgoing BBC Trust chairman Sir Michael Lyons says the BBC needs to undertake a fundamental review of its cost base in light of last year’s license fee settlement, which will effectively see its income reduced 16% by 2016. He asks Thompson to look at back office savings, but also notes that the BBC’s on-screen activities will be impacted.

“We do not expect that such [back office] efficiencies will fully meet the funding gap alone and some hard choices about content and services may need to be made as part of this process,” Lyons notes.

He adds that the principle of ‘doing fewer things better’ should guide Thompson’s thinking as he outlines the options for cutting costs. The letter says: “In line with this, we are clear that the licence fee payer will not be best served by equivalent reductions in each area of BBC activity, rather that savings should be targeted in those areas where the BBC’s public value is lower.”

The BBC’s family of digital channels are a particular area that Thompson has been asked to scrutinise. Youth-skewing channel BBC Three in particular has come received criticism for not being distinctive and for failing to provide the target audience with content they could not get elsewhere.

Lyons says: “We have also previously signalled that this process is a good opportunity to assess how the shape of the BBC’s television portfolio as a whole might develop after digital switchover is complete in 2012.”

Thompson must make his recommendations by the summer, after which the trust will start a consultation process and publish its conclusions at end-2011.