BBC accused of £500m digital spend



The true annual cost of the BBC's expansion into digital broadcasting could be nearly £500m - far more than the £279.9m figure included in the latest annual report.
When the amount spent on activities including transmission, marketing and on-air promotion are added to the £279.9m figure for programming spend, the BBC's expenditure on digital broadcasting in the year to March 31 2003 could be as high as £488.5m.

That is the equivalent of £20 out of each £112 licence fee paid last year by the UK's 24 million TV households.

A BBC spokeswoman accepted that when all digital costs were added up, the figure came out at between £15 and £20 per licence fee payer.

She added that, with 47% of the viewing population now having access to digital TV and take-up still growing, it was legitimate for the BBC to spend this money on the new broadcasting technology.

The digital spend also included the cost of running the BBCi website, which could be accessed by a greater proportion of licence fee payers than had digital TV, the spokeswoman added.

"We don't apologise for incurring these costs. We've been charged by the government with driving digital take-up, which is why we got a generous licence fee settlement. We are spending that extra money on digital services, as intended by the government," she said.

The BBC's investment in digital services has grown rapidly in the past 18 months as new TV channels BBC3 and BBC4 have been launched, along with a number of new radio services.

But the money spent on digital broadcasting is expected to fall in a couple of years, after the initial launch phase for these new services passes.

In the BBC's last annual report, for the 12 months to March 31 2002, spend on digital services was reported as £278m for that year.

But in the annual report published yesterday for 2002/2003, under the BBC's new accounting system, the figure for the previous year has been altered to just £184.4m.

In the new report, the BBC stripped out £93.6m from last year's figure, removing what it called overheads and "programme related spend" - including the cost of marketing, PR, newsgathering and running helplines.

For 2002/2003, when the BBC launched new TV channels BBC3 and BBC4, as well as radio services such as 1Xtra and BBC7, the annual report recorded that £279.9m was spent on digital channels.

Under the old accounting system, adding in overheads and programme related spend, the cost of the BBC's digital services for 2002/2003 would have been at least £373.5m - and could have been as much as £420m.

If the £68.5m cost of transmitting digital services is included as well, the total comes to £488.5m - which works out at around £20 for every licence fee payer in Britain.

"The BBC's digital spending is about as transparent as a brick after this accounting manoeuvre," said one commercial broadcasting insider.

"Analogue viewers deserve to know the truth about how much of their cash is being poured into services they cannot receive," the source added.

A BBC spokeswoman denied there was any deliberate move to try to downplay what the corporation was spending on its TV and radio services.

"It's absolutely wrong to say we've slimmed down our spending figures for charter renewal or anything else," she said.

The new way of accounting for expenditure on different channels is understood to have been introduced by the BBC following a request from the culture select committee.

BBC insiders insist it will make their expenditure more transparent by stripping out costs for things such as marketing and newsgathering.

"In the past, newsgathering and marketing costs were just divvied up between the different services," the spokeswoman said.

Using the BBC's new accounting system, the cost of running BBC News 24 miraculously dropped by nearly half, from £50m to £25.7m, in 2001/2002.

BBC News 24 was criticised last autumn in a government review of the service by the former editor of the Financial Times, Richard Lambert, which questioned why it cost far more to run than rivals Sky News and ITV News Channel.

The latest BBC annual report put the production spend on News 24 at £23.8m for 2002/2003. But this figure excluded £18.8m of newsgathering costs and a further £7.5m that had been allocated to "central costs".