Donald Trump’s vow while aboard Air Force One this weekend to sue the BBC for up to $5bn raised the question of how the Corporation could fund a swingeing financial settlement with the litigious President.
The Beeb has made clear that, for all its regret at the editing process in the Panorama documentary which led to the resignations of director general Tim Davie and head of news Deborah Turness, it “strongly disagrees” that Trump has grounds to claim defamation against it.
It argues that it owes him nothing in terms of financial damages.
The US President says the broadcaster has wronged him in its portrayal of his speech to supporters ahead of the storming of the Capitol building in 2021.
Despite an apology for an “error of judgment” issued last week by the BBC, Trump has vowed that he will pursue the BBC for “anywhere between $1bn and $5bn, probably sometime next week”.
He told GB News on Saturday: “I’m not looking to get into lawsuits. But I think I have an obligation to do it.”
Such astonomical sums – equivalent to £760m to £3.8bn – would be potentially devastating for the BBC’s finances – $5bn would more than match the BBC’s entire income from the TV licence fee of £3.7bn in 2024.
Legal experts, however, question whether the US President has a valid case before the American courts for a documentary that was never aired in the States. Even when Trump has successfully extracted settlements from US broadcasters and social media platforms in the past, the sums paid were no higher than $19m – a fraction of the billions initially claimed.
Yet the risk remains that the British broadcaster may yet find itself embroiled in a lengthy and expensive legal battle, with a hefty bill to be paid at the end of it.
Where does the BBC get its money from?
The bulk of the Corporation’s income originates from the licence fee which is enshrined in its royal charter as a key pillar of its funding and its role as an independent public broadcaster.
The annual fee of £174.50 payable by viewers last year generated £3.66bn for the Beeb. It is not, however, the organisation’s sole revenue stream.
While 68 per cent of its total income of £5.39bn came from the licence fee, the remaining 32 per cent – some £1.73bn – came from its commercial operations, including BBC Worldwide and BBC Studios, which are responsible for activities such as selling content abroad, and other sources such as grants, royalties and rental income.
‘Not smart’ to send licence fee funds to Mar-a-Lago
A key issue for onlookers is whether or not the cost of fighting a Trump lawsuit, and any eventual settlement, should be borne by the British public in the shape of licence fee payers.
Chris Philp, the shadow Home Secretary, this weekend said that while in his view the US President was the “wronged party” in the dispute with the BBC, he did not consider it would be wise to use funds sourced from the licence fee to settle the dispute. Referencing Trump’s Florida resort, Philp told the BBC’s Laura Kuenssberg: “I don’t think sending some of it over to Mar-a-Lago would be a smart thing to do.”
The Government has so far been circumspect. Sir Keir Starmer is expected to speak to Trump this week and reportedly concede to him that the broadcaster must “get its house in order” while emphasising that it remains a “strong British institution”. In a separate interview with Laura Kuenssberg, the Home Secretary, Shabana Mahmood, echoed similar sentiments, adding: “We support the BBC.”
First Amendment
For now, at least, the Beeb’s public position would seem to be that the question of whether or not it would have the wherewithal to finance a settlement with the US President is of little or no relevance – because it does not foresee having to pay him.
In a statement last week, the broadcaster said: “While the BBC sincerely regrets the manner in which the video clip was edited, we strongly disagree there is a basis for a defamation claim.”
According to legal experts, there are significant grounds for believing this to be the case.
Trump has made clear he expects to sue in the American courts. But libel and defamation cases are notoriously difficult to prove in the US system, not least because of the stringent protections of the First Amendment enshrining freedom of speech.
At the same time, the BBC has made clear that the offending Panorama programme was never broadcast in the States and that any argument the President had suffered material damage is undermined by the fact that he was elected to his second term shortly after it was aired in Britain on 28 October last year.
The potential for Trump’s lawyers to seek satisfaction in the English courts also looks narrow. The 12-month time limit on starting libel proceedings has already expired and even when defamation damages are awarded in UK courts they rarely tend to exceed £100,000.
Insurance policy
But Trump has a record of extracting sizable – if not quite ten-figure – settlements from US broadcasters who have earned his displeasure.
Last year, ABC settled a dispute over a complaint from Trump about its reporting of a sexual abuse case against him by paying $15m (£11.4m) towards his future presidential library. CBS paid $16m (£12.1m) for the same purpose to settle a separate $20bn claim over its editing of an interview with his Democrat presidential opponent Kamala Harris.
If – and for now it seems a big if – the BBC were to find itself in similar circumstances, it would have several options for meeting any bill.
In common with other broadcasters, it has insurance cover – known as an errors and omission or media liability policy – which is designed to meet its costs for journalistic legal challenges, including defamation and privacy infringements.
When in 2019, the Corporation paid around £2m to Sir Cliff Richard in legal fees and damages arising from his successful privacy claim, the BBC said its costs were “within the scope of our legal insurance”.
The terms of that insurance and its financial limits are not in the public domain.
When The i Paper asked the broadcaster if it would expect its policy to cover the costs of any entanglement with Trump, it pointed out that it had yet to hear anything more from the President’s legal representatives since its statement that it believed it owed him no financial recompense.
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A spokesperson said: “We have had no further contact from President Trump’s lawyers at this point. Our position remains the same.”
The Corporation would appear to have further options should it need to make a large pay-out. According to its annual financial report, it last year had group cash reserves of £477m.
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