LONDON -- The long wait for a decision on the future funding of the BBC is over: The pubcaster has won a 1.5% increase above inflation to its annual license fee for the next six years -- short of what was hoped for, but still a healthy boost.
The decision from the U.K. government -- estimated to give the BBC on average an additional £200 million ($320 million) per year -- nixes controversial plans for a special tax for digital TV viewers, which was strongly opposed by Britain's commercial broadcasters.
Instead, all of the nation's Beeb watchers will initially stump up another $4.80 on top of the existing $162 tax come April 1.
Culture Secretary Chris Smith, who announced the funding formula to the House of Commons Monday, linked the extra cash to the BBC raising $1.76 billion through efficiency savings and income from its commercial division, BBC Worldwide.
Smith's figure, $784 million higher than the pubcaster's own savings target for the period, means that the BBC must effectively seek to match every pound it gets with another pound saved.
Smith said, "The BBC needs to raise its game; it must become even more cost effective and quality conscious. That is why we are not going to allow the BBC the massive injection of funds it has sought from the license fee -- an increase reaching more than £700 million ($1.1 billion) a year by 2006."
On why he had rejected a fee specific to digital, as recommended by a government report, Smith said "it would be wrong to signal that (digital TV) was something special and only for the few" and that "the time has now come to recognize that digital television will soon be the norm."
But Smith also revealed that all of the BBC's digital services are to be reviewed to decide whether they are fulfilling public service criteria, beginning with BBC News 24, the rolling news channel.
BBC chairman Christopher Bland said: "Today's announcement is an important step forward. It gives us a clear and certain base on which to plan and develop BBC services during the next seven years."
Greg Dyke, the BBC's director general, added that "it will be more important than ever to make sure that we are spending our money on the things that really matter" but that the government's decision "gives us the opportunity to build strong public service broadcasting for the digital age."
Satcaster BSkyB, the most vociferous critic of BBC funding, described the decision as "a huge payday for the BBC" but welcomed the review of the BBC's channels, in particular News 24, the rival to Sky News.
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