BBC suspends executive bonuses indefinitely

By Kate Holton

LONDON, July 14 (Reuters) - British public broadcaster the BBC has suspended all executive director bonuses indefinitely, is reviewing their pay, and hopes to reduce the amount it spends on talent as it seeks to cut back in the economic downturn. The world-renowned corporation, funded by a tax paid by all television-watching households, said it was making the changes as it, too, was feeling the impact of the downturn, through a drop in property values and in trading at its commercial arm.

To counter the downturn, it has also made progress in its cost savings programme, delivering 237 million pounds ($385.6 million) of efficiencies in its first year in 2008/09.

The head of the BBC Trust, the body which oversees the corporation, said the BBC certainly looked bigger and more dominant during a recession as its rivals struggled.

"The Trust's view is that the BBC should never be bigger than it needs to be to fulfill its public purposes," Michael Lyons told reporters, as he delivered the BBC Annual report.

"Taking into account the current economic climate and the BBC's own financial challenges … agreement has already been reached that executive board bonus payments will be suspended until further notice and not be introduced without the approval of the BBC Trust.

"There has been considerable disquiet in recent weeks about the salaries of top BBC staff," he said. "And I can clearly understand why hard-pressed licence fee payers may feel that the pay of some top executives and staff is generous."

The size of bonuses and expenses, from bankers to politicians and directors at the BBC, has become a hot topic in Britain as members of the public struggle during the downturn.

The vast sums paid out to the corporation's most high-profile presenters has also drawn criticism from the country's press.

The BBC, known for its popular news and drama, agreed in 2007 to an annual rise in funding of no more than 3 percent over the next six years, giving it 3.6 billion pounds, less than it had originally asked for.

In comparison, however, the corporation's commercial rivals, such as ITV (ITV.L), have been hammered by the advertising downturn, making the BBC's position all the more enviable.

A recent report by Communications Minister Stephen Carter to address the country's digital future said it would look to the BBC to help support the rest of the industry.

BBC Worldwide, the commercial arm of the corporation, which exports programmes and magazines around the world, could partner with Channel 4, which is publicly owned but funded by advertising.

The BBC said on Tuesday that Worldwide's revenues had exceeded 1 billion pounds for the first time, but that profits before interest, tax and exceptional charges were down to 86 million pounds from 118 million the previous year.

A slice of the licence fee which was ring-fenced to help elderly people move from analogue to digital TV could also be used in the roll out of basic broadband coverage, and given to companies willing to provide regional news for commercial broadcasters, it added.

Lyons said on Tuesday he was opposed to the top slicing of the licence fee, as it could lead to a lack of independence and, eventually, an increase in the fee, but he said the group was open to partnerships. ($1=.6147 Pound) (Reporting by Kate Holton; editing by Simon Jessop)