Coalition Government Freezes BBC License Fee For 6 Years

October 20, 2010 · Posted in Business finance 
AHN News Staff

London, England, United Kingdom (AHN) – The British coalition government froze on Tuesday the license fee of British Broadcasting Company for six years. In exchange, the publicly-owned broadcasting company will be responsible for the funding of its World Service.

The TV license will be kept at $218.25 (145.50 pounds) a year until 2016. In turn BBC will pay for the $408 million (272 million pounds) yearly upkeep of World Service, currently being funded by the Foreign Office. BBC also agreed with coalition government ministers to pick the tab for the Welsh language channel S4C , which costs $153 million (102 million pounds) yearly.

Other agreements under the deal would have the BBC shoulder $225 million (150 million pounds) a year to provider superfast broadband connection to rural communities and another $37.50 million (25 million pounds) to fund BBC Monitoring, which tracks and reports activities of mass media worldwide.

BBC was initially asked by the government to also pay for the free TV licenses of Britons over 75 years old, which would cost the broadcasting firm $834 million (556 million pounds) yearly, but the proposed was shelved. The cost, which is expected to escalate as Britain’s population turns grey, is currently shouldered by the Department of Work and Pensions.

The freeze on the license fee, according to experts, is equivalent to a 16 percent reduction of the company’s fees in real terms. The license fees provide $5.4 billion (3.6 billion pounds) to BBC’s coffers yearly.

While the discussions for the license fees – which normally takes two years to negotiate – is seen as a victory for the license fee payers, experts said the deal also provided BBC long-term security while acceding to the coalition government’s spending cuts in its bid to reduce Britain’s budget deficit.

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    I dunno, it seems to be simple calculus to me. Democrats were always in favor of middle class tax cuts, so that aside what is the extra cost in a two year extension of millionaire tax cuts? 140 billion. For that they got 56 billion of unemployment extensions and reduction of payroll tax. All in all not a bad deal considering the alternative of doing nothing at all. Politically, the Republicans have a problem in forcing this issue.

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    But in the 21st Century, distribution IS exhibition. This merger wouldn’t stand a chance back then but it clearly does now. Until we get back to that place, and get out of a place where a corporation like GE could buy a network in the first place. It’s interesting evolution to watch.

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