BBC will lose established stars, warns Mark Thompson

And last night Director General Mark Thompson flagged up that the corporation's top brass will not be exempt from the axe with major job losses on the horizon.

Speaking at the Edinburgh International Television Festival, Mr Thompson said "top talent" pay will be reduced, adding: "Sometimes we will lose established stars as a result. When we do, we will replace them with new talent".

The corporation recently lost two of its most high-profile stars, Christine Bleakley and Adrian Chiles, when they moved to ITV.

He also said the number of senior managers would be reduced by at least a fifth by the end of 2011 and the senior management payroll will fall by at least a quarter.

He said: "If we can go further, we will and we will look for reductions at every level in the organisation up to and including the Executive Board."

The audience at the James MacTaggart Memorial Lecture were warned to expect "significant movement" on executive pay and told the next round of discussions with the government about the licence fee "will be a moment for realism".

A large part of Mr Thompson's speech comprised a robust defence of the corporation and broadcasting in general, with Mr Thompson hitting back at what he called "exaggerated claims about waste and inefficiency" aimed at the BBC.

The BBC has come under fire from both inside and outside the corporation in recent years.

It has been widely criticised for the large sums of licence fee money paid to its stars and top managers.

Staff are currently being balloted on whether to take strike action over plans to reform its pension scheme and its rivals accuse the BBC of being overly powerful. Last year, News Corporation director James Murdoch used the lecture to deliver a withering attack on the BBC, saying the size of the corporation was a "threat" to independent journalism.

Mr Thompson called for increased collaboration between broadcasters to ensure the future success of the industry.

He said: "I don't believe that decline – creative, financial, institutional decline, above all, a decline in the quality of British television – is inevitable."

He warned that every pound taken out of the corporation's commissioning budget is a pound taken out of the country's "creative economy".

In the lecture, called The Battle for Quality, he cited public support for the BBC and referred to the 17 million people who tuned into BBC1 after the general election. He said: "There is still a very strong instinct in this country to come together through broadcasting to share great national moments".

Mr Thompson praised Sky's "technical innovation" and "willingness to take big risks" but said it was time they invested more in "British talent".

He raised the possibility of making up the shortfall in investment caused by the decline in advertising by introducing retransmission fees which would see cable and satellite companies, such as Sky, hand a share of their profits to free-to-air channels like ITV and Channel 4 in return for showing their content.

Mr Thompson also delivered a stirring defence of the BBC saying he was ready to fight to safeguard quality programming.

He said: "I believe that the real dirty little secret about British television is about how good it is, not how bad."

"But it's time that Sky pulled its weight by investing much, much more in British talent and British content.

"If we want a strong industry, if we want the resources and the collective will to go on producing the best television in the world, it's time for us to agree what really matters and then to take a leaf out of the public's book.

"They care about British television and, if necessary, they will be prepared to fight for it in their thousands and perhaps their millions.

"If you feel the same, if you think the battle for quality and creativity is worth winning, now is the time to stand up and be counted."

Criticism of the BBC:

"There is a land-grab, pure and simple going on… spearheaded by the BBC. The scale and scope of its current activities and future ambitions is chilling" James Murdoch, MacTaggart lecture August 2009

"...the BBC is the single most influential lobbying organisation in Britain ... when its 3.5bn 'jacuzzi of cash' is threatened, the entire machine dedicates itself to seeing off any rival" Luke Johnson, former chairman of Channel Four, February 2010

"...there are huge numbers of things that need to be changed at the BBC. They need to demonstrate the very constrained financial situation we are now in" Jeremy Hunt, Culture Secretary, July 2010