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BBC Prepares to Protect Funding
BBC Prepares to Protect Funding By AARON O. PATRICK The British Broadcasting Corp. is preparing an aggressive defense against a plan to redistribute some of its funding to struggling commercial rivals -- the opening salvo in a broader budget struggle over one of the world's wealthiest state broadcasters. The outline of a law proposed by the ruling Labour Party this week would a......

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BBC Prepares to Protect Funding

By AARON O. PATRICK

The British Broadcasting Corp. is preparing an aggressive defense against a plan to redistribute some of its funding to struggling commercial rivals -- the opening salvo in a broader budget struggle over one of the world's wealthiest state broadcasters.

The outline of a law proposed by the ruling Labour Party this week would allocate £125 million ($200 million) of the BBC´s £4.4 billion annual budget to rival media outlets to provide television news. While the proposal involves a fairly small portion of the BBC´s budget, it could open the door to more sweeping attempts to tap into the BBC´s rich funding in the future, BBC executives fear.

Most of the BBC´s funding comes from the £3.4 billion it receives annually from a £142.50 tax -- known as the TV license fee -- on everyone who owns a TV in the U.K. Commercial rivals complain that gives the BBC an unfair advantage in dominating the radio and TV airwaves and, more recently, the Internet.

The BBC has never been forced to share its treasure trove, a spokeswoman said. But TV tax is scheduled for renewal in 2012, and already there is talk that it could either be reduced or shared with other outlets.

That may explain why the BBC is going all-out to shut down the current proposal. "We are going to fight as hard as we can" to defeat the plan, said Caroline Thomson, BBC´s chief operating officer, in an interview. She added that "the license fee has produced world-class broadcasting that people love. The stakes are high."

The rhetoric suggests that concern about the broadcaster´s huge influence over the British media industry is starting to take a toll.

While the BBC is known around the world for its journalism, quirky comedies and period drama, in its home market it is a media behemoth. About two-thirds of all shows made by U.K. television networks are BBC productions, 56% of all U.K. radio shows are made by the BBC, and the most-read news Web site in the U.K. is bbc.co.uk, according to government figures.

Cushioned by state funding, the BBC isn´t suffering much from the recession. Its revenue from the TV tax is guaranteed by law to increase 2% a year for the next three years.

Meanwhile, competitors like ITV PLC, Britain´s biggest commercial TV network, have been caught in a spiral: Falling ad revenue has reduced their capacity to develop new programs, making it harder to attract viewers and bring in more advertising. ITV lost £1.54 billion in the six months ended June 30 on big write-downs at its TV channels.

The draft law issued Monday has caused consternation at the BBC. Under the law, commercial media outlets would be given money earmarked for the BBC to produce TV news bulletins about cities and towns that don´t have their own commercial TV stations.

The plan could provide a useful source of funding for stretched media companies. The Guardian Media Group PLC, publisher of the Guardian newspaper, would like to broadcast TV news around Manchester, where it owns a small cable-TV channel, according to a spokesman.

ITN, a TV production company that already makes news bulletins for the Channel 4 network, has said it is interested in the money. Other British newspapers could be interested as well.

But some media outlets say they don´t want to accept government funding to provide news. A spokesman for British Sky Broadcasting Group PLC, a big TV broadcaster, said using the license fee to pay for commercial regional news is "a recipe for inefficiency." BSkyB is part owned by News Corp., which owns Dow Jones & Co., publisher of The Wall Street Journal.

BBC executives say giving its money to a variety of businesses could undermine public support for state broadcasting.

The plan will be debated publicly over the next three months and the government hopes it will become law before May, a spokeswoman said.

There is no guarantee it will be successful. The plan has to be approved by Parliament, which could vote against it.

The Minister for Communications, Technology and Broadcasting, Lord Stephen Carter, declined to comment.


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