So Gordon Brown is going to force a below inflation licence fee settlement on the BBC.
Is this a bullying Labour government's final revenge on the BBC for the Gilligan affair? Or is it about time that somebody reined in the BBC?
Nearly a month ago, I wrote a blog inviting people to suggest how BBC director general Mark Thompson should trim £1.6bn from his spending plans for 2007-2014.
Since then, things have got considerably worse for Thommo. The news that the £600m digital switchover subsidy will be part of the licence fee settlement, and that Gordon Brown will force a below inflation licence fee increase on the BBC means Mark will now be coming up somewhere in the region of £2.5bn short.
Thommo originally asked for inflation plus 1.8%, to fund £5.5bn of extra spending on programmes, content and services between 2007 and 2014. The BBC reckons it can find £3.9bn of that through 'self help', but wanted the 1.8% rise above inflation to plug the remaining £1.6bn gap.
So if the BBC is getting a deal pegged slightly under RPI - 0.45% below the projected rate of inflation between now and 2012, according to the FT - it will have to cut more than £1.6bn from its spending plans, or make deeper cuts to find more self help savings.
On top of this, culture secretary Tessa Jowell has further cut down the BBC's financial wiggle room by making the corporation honour its commitment to the Salford move, which is costed at £400m. And by announcing that the £600m digital switchover subsidy will be included in this licence fee deal - which the BBC not costed in its spending plans.
Here's how the BBC's £5.5bn spending plans stack up, as set out in the October 2005 document, Delivering Public Value:
Digital infrastructure - including kitting out transmission masts for digital TV and radio, as well as investment in high definition TV, FreeSat and internet distribution - £700m.
Digital services - including the i-Player and other on demand projects, the creative archive, mobile, broadband and interactive offerings - £1.2bn.
Quality content - for the BBC's existing TV and radio services, includes replacing repeats and low cost derivative and 'copycat' programmes with higher quality/cost original drama, comedy, entertainment, children's and factual output - £1.6bn.
New local investment - including the Salford move, 'ultra local' TV services, a new TV region for central England, new radio stations, open centres and buses - £600m (of which £400m for Salford).
Increase in base costs - superinflation in broadcast costs such as sports rights and talent deals - £1.4bn.
Total = £5.5bn
