BBC feels inflationary pinch but sees no more job cuts

By Kate Holton

LONDON (Reuters) - The BBC expects the next few years to be difficult due to higher energy costs and inflationary pressure, but it said it did not expect to have to make further redundancies.

The broadcaster is paid for by the public through a licence fee and it agreed last year to an annual rise in funding of no more than 3 percent over the next six years, less than it had originally hoped for.

It is now in the process of cutting 1,800 jobs and integrating its TV, radio and Internet operations to keep it relevant in the digital age.

"In comparison to other (commercial) companies, we recognise that we are in a fortunate position of having a known licence fee settlement," Zarin Patel, the BBC's BBC.UL group finance director, told a press conference at the release of the annual report.

"(But) we're not immune to the tough economic conditions out there, and the next few years do look difficult."

Patel said the BBC had held off from selling some property after the fall in the commercial property market and it also expected the drop in the number of new houses being built to affect the growth that had been expected in the number of people paying the licence fee.

Some 45 percent of costs are also linked either directly or indirectly to inflation, she said, and the cost of powering the transmission network and the broadcaster's many sites had also risen sharply.

"Knowing what we know now, and indeed looking at the various cost risks we face because of rising energy costs and other inflationary pressures, we believe that the current planned level of employment and planned headcount reductions along with other steps will be sufficient," BBC Director General Mark Thompson said.