Former BBC director general Mark Thompson just made an ominous prediction about the broadcaster's future

Former BBC director general Mark Thompson thinks the British broadcaster is going to have to make some "serious" on-screen cuts if it is going to manage its new funding deal.

As part of its licence fee settlement last year, the BBC agreed to shoulder the £745 million ($978 million) cost of free TV licences for over-75 year olds from 2018/19. The bill currently comes out of the Department for Work and Pensions' budget.

As a result, the BBC's savings target has ballooned to £800 million ($1 billion) and it accepts that this will result in services being closed or cut.

Director general Tony Hall said last year: "It's inevitable that we'll be searching for much bigger savings from the vast majority of our spending that is not overheads."

But Thompson, now the New York Times Company chief executive, hammered the message home in an appearance on Radio 4's Media Show on Wednesday.

Asked by presenter Steve Hewlett if the savings can be achieved "without cutting something very serious," Thompson replied: "No."

He added:

"We are getting to the point now where the consequences of effectively reducing the licence fee are going to be shown in a lot of range and - I hope not - but possibly, a lot of quality. So I think it's serious. This is happening across Europe and across the world, public broadcasters are facing the same pressures."

There has always been speculation about the BBC that services might be in the firing line.

BBC3's move online in February has already delivered £30 million ($39 million) of savings, while some BBC insiders fear that BBC4 could be next in line for the chop. The broadcaster recently ruled out closing the BBC News channel.

Other cuts could be more subtle. As part of a previous savings plan, known as Delivering Quality First, the BBC axed daytime content on BBC2, while it has also relinquished sports rights, including Formula One.