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This week, BBC finance chief Glyn Isherwood told MPs the debt limit for BBC Studios must be increased from £350million to £500million to take on the streaming giant. Following the news of demands to increase the debt limit amid the cancellation of the free TV licence for the over-75, social media users expressed their anger at the BBC. Commenting on the story, one person said: “They’ll never compete with Netflix, just a pipe dream.”
A second said: “Make that £150m & £157.50 as cancelled my TV licence today.”
A third said: “If the BBC wants to compete with Netflix it should give viewers the choice which one to fund.”
Another said: “The real question is, Why is the BBC competing with Netflix at all, or anyone else for that matter?
“The only raison d’etre for the BBC is to provide a service considered necessary and not provided by the private sector.
“In short, it has no raison d’etre.”
In order to compete with the likes of Netflix and Disney, Mr Isherwood informed the public accounts committee the debt limit must be increased as it dated back almost 20 years.
The borrowing limit for BBC Studios was set at £350million in 2003 while the public services arm of the broadcaster holds a separate cap of £200million.
However, the broadcaster claimed it had lost more than £200million due to the coronavirus pandemic.
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The BBC uses the debt limit as capital in order to help the broadcaster raise funding for programmes.
BBC is currently negotiating with the Government over the price of the licence fee from 2022 until the end of its charter in 2027.
The charter, which was agreed in 2017, sits alongside the agreement between the broadcaster and Secretary of State for Culture, Media and Sport.
Mr Isherwood said: “To generate further growth, more access to investment capital would be welcomed to compete with the really big players that we’ve got.
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“The natural cap of most organisations is how much they can raise from banks, so £350m is well supported and we could raise more in the market if the cap was lifted.
“The profit level across the commercial organisation pre-pandemic was around £180m to £190m.
“That could support a borrowing level of £500m – around 1.5 times the current cap that we have.
“At the extent we grow further, there is the potential to have higher levels of borrowing and investment, but that is something for when we discuss our plans with DCMS.”
In order to save money, the BBC initiated a savings programme which cut 450 jobs in regional TV news and current affairs, local radio and online news last year.
The cuts were expected to save £25million by 2022 while more than 150 roles were axed in Scotland, Wales and Northern Ireland.
Despite these cuts, Mr Davie insisted the BBC will not survive unless it changes how it is funded.
He said this week: “We are not going to beat them.
“We need to do something radically different.”
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