Sept. 10 (Bloomberg) -- Former British Broadcasting Corp. Director General Mark Thompson, now chief executive officer of New York Times Co., defended himself in a hearing as U.K. lawmakers criticized his payouts to departing BBC executives.
Thompson, who left the publicly funded U.K. TV and radio service a year ago to take the Times job, was grilled by members of Parliament’s public accounts committee yesterday over his management of the broadcaster. Under scrutiny are the exit payments made to Mark Byford, a deputy director general, and Sharon Baylay, a marketing executive. Byford was paid about 1 million pounds ($1.6 million), while Baylay got 394,000 pounds.
“The program as a whole saved 35 million pounds,” Thompson said of his cost-cutting plan in the hearing.
The U.K.’s government-spending watchdog in July said the BBC broke rules on severance payments in spending 25 million pounds over three years to cut top jobs, paying some managers more than they were entitled -- either to keep them as consultants or ensure they left quickly. The BBC handed out 150 severance packages over three years ending in December 2012.
Committee Chairman Margaret Hodge questioned why Thompson felt it was necessary to pay Byford the maximum severance allowed under his contract, benefiting him by an extra 500,000 pounds.
“Why did you consider half a million too little as a fair redundancy payment to Mark Byford?” she asked Thompson.
Thompson said the amount was appropriate given the amount of work the BBC was undertaking with the coverage of the Queen’s Jubilee and other major events, and he didn’t want Byford distracted by looking for other work.
“This was not because I thought it was in the interest of Mark Byford,” Thompson said. “I believe it was in the BBC’s interest because of the immense operational challenges at the time.”
“You haven’t answered the question,” Hodge said.
Thompson also challenged claims from members of the BBC Trust, the service’s governing body, saying he believed he had their “full support” for his severance-payment plan.
The Metropolitan Police Service said last month that its Economic Crime office hadn’t found enough “evidence of dishonesty or criminal misconduct” to warrant an investigation into the matter.
The BBC is funded by U.K. residents through an annual license fee charged to households that own televisions. The current fee is 145.50 pounds for a color TV license.
The BBC’s severance policies drew increased scrutiny after former Director General George Entwistle received 450,000 pounds, more than twice his contracted entitlement, when he quit less than two months into the job in November. Entwistle stepped down after a television report by the BBC’s “Newsnight” program falsely implicated a former senior politician with sexual abuse of a child.
The shakeup followed a period of cost-cutting under Thompson, who shed jobs in a bid to streamline the BBC and pare expenses. While the cuts ultimately saved 35 million pounds over a three-year period -- more than they cost -- the severance payoffs “provided poor value for money for license fee payers,” according an auditor’s report from July.
“The level of some of these payments was wrong,” current BBC Director General Tony Hall said in a statement after the auditor’s report was released. “The BBC lost its way on payments in recent years.”
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