'I can't think of a DG who has got off to a worse start. It's a disaster for the BBC'

Mark Thompson once bit news producer Anthony Massey. But it is not this aspect of the director-general's fondness for taking lumps out of things that is causing concern at the BBC.

Mark Thompson once bit news producer Anthony Massey. But it is not this aspect of the director-general's fondness for taking lumps out of things that is causing concern at the BBC.

Thompson is the DG who began his reign by making himself spectacularly unpopular, notably with his decision to make cuts across the board of 15 per cent. A story widely believed at Television Centre alleges that Thompson wanted to make cost reductions much deeper than that. Indeed, a confrontation took place between Thompson and the deputy director-general, Mark Byford. Thompson wanted to make 25 per cent cuts, but ended up agreeing to the lower figure.

Byford was the acting DG who infuriated staff after Greg Dyke's resignation in early 2004, steering the ship until Thompson took over last summer. Now Byford is being depicted as closer to the soul of the BBC than Thompson. It reveals how far the DG's stock has fallen.

When Thompson returned to the BBC from Channel 4 last June it felt to many like a bright new dawn. Into an institution traumatised by Hutton and its aftermath came a leader who seemed genetically programmed for the task. Thompson had been editor of the Nine O'Clock News, editor of Panorama, controller of BBC2 and controller of nations and regions. He was a lifer who had only stepped outside in order to gain perspective. There was optimism that he could handle the challenges facing the BBC.

They were daunting. As well as reviewing the future of BBC journalism in the wake of Hutton, overhauling complaints procedures for the same reason, and assessing the state of regional, commercial and production strategies, Thompson had to finalise the corporation's bid for charter renewal and prepare for a future in which broadcast technology will change faster than ever before. He said that charter renewal was "priority number one for the BBC. Everything we do now, everything we could do in the future, depends on this."

Nine months later, loyal journalists, managers and producers are accusing Thompson of making too many concessions to government. They say that 5,000 redundancies, more belt-tightening, and the forced relocation of Radio 5 Live to Manchester offer sacrifice with no clear evidence of return. One senior BBC figure says, "I can't think of a DG who has got off to a worse start. It is disastrous."

Less than a year into his regime, some at the BBC are questioning Thompson's competence with unprecedented hostility. One senior television source says: "It was like this towards the end of the Birt era, but that was mainly a response to character. With Thompson the problem is strategic. Even middle management is unpersuaded that he really knows what he is doing. They pass on his decisions but it is made very clear that they do not believe in what they are being required to do.

"Fools have been put into positions of responsibility at the BBC before, and the management has not complained."

Professor Justin Lewis of Cardiff School of Journalism says: "It is hard to think of anything he has done that makes the BBC better than it was before he arrived. The mood really is doom and gloom. Some people fear that he is doing more than is necessary to get charter renewal. All they have seen are gestures that he knows will go down well in certain quarters."

That, say top BBC insiders, is precisely the problem. "Thompson has got a hard message to sell," explains one correspondent, "but he has failed to convince us that there is a good reason for it. Internally, people think it is all being done to convince ministers that he is tough. It is macho posturing without a coherent purpose." Another BBC journalist says, "Thompson came in believing that Greg Dyke had a reputation as a profligate spender. He decided to prove that he is a different sort of animal. It is all about trying to impress the Treasury."

One experienced correspondent says, "Given that Mark Thompson spent nearly all of his career at the BBC, he does seem to be behaving a bit like an alien. It is as if he nipped off to Channel 4, heard a lot of people saying that the BBC is a ludicrously bloated place, and decided to believe the opposite of what he believed for the previous quarter of a century."

Should this vitriol be dismissed as the furious bleating of BBC staff driven out of the comfort zone by an icy blast of reality? Supporters insist that Thompson's approach has already delivered dividends. They regard last month's largely favourable government Green Paper on the corporation's future as a vindication of Thompson's strategy. The subsequent dismissal of top-slicing by Secretary of State for Culture, Tessa Jowell, is another victory.

A source says: "Nobody doubts that this process is extremely painful. But if the director-general did not do it ministers would do it for us. The Government will shortly appoint auditors to check the BBC's efficiency before deciding the level of the licence fee. If we did not make efficiency savings they would be imposed upon us in a manner we would not have chosen." Thompson argues that the BBC must make substantial savings in order to reinvest in a technologically challenging future. Digital take-up in television has accelerated. The BBC must introduce interactive media-playing technology for television along the lines of its popular RealPlayer system for radio. A source says: "People increasingly expect to be able to watch programmes when they want."

The same goes for investment in original drama and enhanced news coverage. "Competitors like Sky are spending more than ever on programming. It is not a sine qua non that the BBC will remain the benchmark of quality just because it always has been. Competitors are investing heavily. To do it at the BBC is about nothing less than survival as a world-class broadcaster."

Senior executives realise that this message is not getting through to staff. One says: "They are not listening. Mark Thompson's view is that unless we can free up funds to adapt the BBC for the future we are stuffed."

Redundancies, budget cuts and massive upheaval are never popular. At the moment Mark Thompson would be disliked if he had communicated his objectives brilliantly. But even supporters admit that his approach has upset potential supporters. One veteran insider says: "It is a very difficult message that he has to sell, but he has not sold it well." Another source says, "He sends out weekly emails saying he loves us, but nobody believes him. Mark Thompson got where he is by playing politics and that is all he is doing now."

If Thompson prolongs the licence fee, improves programme quality and renders the BBC globally competitive in the era of on-demand broadcasting he will emerge triumphant. But his failure to put that message in terms his staff can understand means that he has squandered the goodwill with which he took office.

The mood inside Television Centre is black, and it is amid that sort of atmosphere that leaks like the Thompson "biting" story occur. It all makes change even harder to effect.

10 Turbulent Months

2004

June: takes over as DG from acting DG Mark Byford, who has steadied ship following January departure of Greg Dyke. Thompson declares that the "BBC's journalism has been through the worst crisis in its 80-year history". It has to change "more rapidly and radically ... than at any previous point in its history. Publishes response to Hutton, including tighter guidelines for live reports and sources, and staff retraining.

August: Says BBC should move away from "derivative and tired" leisure and reality programming.

December: Announces the most sweeping cuts in BBC history to save 15 per cent of budget. This includes loss of 2,900 jobs, with more being outsourced, and moving 1,800 staff to Manchester - including children's department and Radio 5 Live. Says this is "the right price to pay to achieve the prize of a strong and independent, creative BBC". Promises fewer repeats on BBC1 and more money for high quality drama, comedy and news.

2005

March: Green Paper is published. Board of governors to be scrapped. But licence fee is safeguarded. Details emerge of job cuts: 1,730 to go in support services, including HR and marketing, another 1,500 to go from programming and contents departments.

Thompson defends cuts by saying, "I think there's quite a lot of wheelspin inside the organisation where different parts don't work together as well as they could". Thompson's growing unpopularity reflected in leak of email exchange between Jeremy Paxman and a producer which reveals that the producer was once bitten by Thompson. "If any of this came out, he'd be toast," Paxman says in his email. BBC dismisses incident as "high jinks and horseplay".

James Wallman