In the upper echelons of broadcasting, Mark Thompson has always been the man for a crisis. He was talent-spotted by John Birt at the age of 30 and embarked on a seemingly inevitable rise to the helm of the BBC, leaving problem shows, from Brookside to Grandstand, on the scrapheap as he rose through the industry.

When the BBC imploded after the Hutton inquiry, the call came for a safe pair of hands and, by a stroke of fortune, Thompson, then briefly in charge of Channel 4, was the only credible contender not to be implicated.

Now the crisis that he must manage is one of his own making. As he prepares for a tense encounter with Sir Michael Lyons, the BBC’s watchdog, to thrash out a six-year plan, the corporation appears once again to be experiencing a collective nervous breakdown in public.

This weekend John Simpson, the BBC world affairs editor, warned that the corporation was on the path to destruction. He blamed the weakness of its management for failing to fend off attacks mounted by Tony Blair, which risked destroying the BBC as “the world’s most powerful, free-standing, independent broadcaster”.

Under the licence fee settlement bequeathed by Blair, the BBC is having to make cuts of £2 billion over the next six years. Next week Thompson and Lyons will announce job losses and swingeing budget cuts that will hollow out the programmes which, for many, represent the essence of public service broadcasting.

Despite vocal opposition from some of the BBC’s most prominent presenters, such as John Humphrys and Jeremy Paxman, the axe is likely to fall heaviest on news, current affairs and documentary films. Programmes such as Timewatch, Horizon, Imagine and Storyville are all expected to suffer. Insiders claim that even the 10 O’Clock News and Newsnight will have less money to spend on investigations. A rise in the number of repeats seems inevitable.

The announcement will cap an “annus horribilis” for Thompson, which began with the tough licence fee settlement and continued with seemingly endless admissions by the BBC that its programme output, including Blue Peter, Children in Need and Comic Relief, were tainted by fakery and deceit.

This weekend the inquiry into its misrepresentation of the Queen – a documentary trailer wrongly claimed that she had stormed out of a sitting with Annie Leibovitz, the American photographer – revealed an institution suffering from a loss of grip. The affair led to the departure of Peter Fincham, controller of BBC1, who had shown the misleadingly edited royal footage at a press launch.

The bloodletting was vintage Thompson – he was once said to have accidentally bitten a producer during horseplay – yet the staff remain in ferment, as they fear for their jobs and for the ethos of the corporation.

The mood of the troops was summed up at a trade union meeting on Friday lunchtime, where BBC News employees considered calling an all-out strike on the day of a potential November general election. “There is a growing level of resentment that our members are going to be punished for the failings of others at the top,” said Paul McLaughlin, of the National Union of Journalists.

“To plunge a knife through the heart of BBC news and current affairs output would leave the patient fatally wounded. We will not let this happen.”

Instead of squeezing programme budgets, critics argue that Thompson should have reined in by cutting niche digital channels such as BBC3.

The BBC has a guaranteed income of more than £3 billion a year and its most senior executives have accrued seven-figure pension pots. Why is it now pleading poverty? WHEN Thompson, 50, was chief executive of Channel 4, he famously accused the publicly funded BBC of wallowing in a “Jacuzzi of cash”. Since taking charge of the corporation in 2004, the phrase has come back to haunt him.

Veterans of previous BBC licence fee campaigns consider that Thompson, who earned £788,000 last year, played his cards poorly and was outmanoeuvred by the government.

Gordon Brown, then chancellor, is said by an informed source to have left one meeting with Thompson angered by his crude attempt to “blackmail” Brown into a large increase by threatening to pull the plug on the planned relocation of several large BBC departments to Salford.

The source said: “He has a nonrelationship with Brown.”

The case for an increase was not yet lost when the BBC hired Jonathan Ross for £18m over three years – the highest salary ever paid to a British television presenter. Ross did not help matters by asking David Cameron whether Margaret Thatcher had featured in any of his adolescent sexual fantasies.

A further series of leaks made public the names of other presenters who had benefited richly from the BBC’s largesse. Paxman, the Newsnight presenter, was reportedly earning more than £1m a year, while Chris Moyles, the Radio 1 DJ, was paid £630,000. Thompson was further hamstrung during the final rounds of licence fee talks by the defection of Michael Grade, the former BBC chairman, to ITV. Without Grade’s ability to read the political and public mood, Thompson appeared exposed.

“He’s not quite worked out what the BBC is for,” said a senior source at the corporation. “The business with Jonathan Ross did incalculable damage. How can we justify that sort of money to dedicated producers on £35,000, who have to fear for their programmes and, in many cases, their jobs? We hated John Birt [a former director-general], but at least he knew where he was taking us.”

One former colleague of Thompson’s said: “Although he’s highly intelligent, he seems to get outsmarted by people with more street sense.”

Thompson has decided not to cut any of the BBC’s services – despite warnings that the sheer scale of its “empire” mean that it is spread too thinly and further editorial failures will be inevitable. One senior executive said: “I’ve lost count of the number of times that we’ve promised to cut back on reality shows. We’ve got no business slugging it out with cheap and cheerful shows, but so long as we have so much air time to fill, we will never escape from this cycle.”

Thompson has continued to pour resources into internet activities, including the launch of the BBC iPlayer download service, and has earmarked about £650m to redevelop Broadcasting House, its grade II* listed building in central London.

John Whittingdale, chairman of the Commons culture, media and sport select committee, questions the decision of BBC Worldwide, the broadcaster’s commercial arm, to buy the Lonely Planet travel guide company last week. “Why should the BBC effectively nationalise a publisher?” he said. “Where do its commercial activities stop?”

Whittingdale believes that Thompson has more “vision” than Greg Dyke, his predecessor, but reckons the BBC has failed to define its purpose in the multi-channel digital age.

Next Wednesday, as Thompson and his chairman meet in London to thrash out the future shape of the BBC, events 300 miles away in Cumbria will mark the start of a new era in broadcasting in which the existence of the corporation will come under fresh assault. Whitehaven will be the first town in England to have its analogue signal switched off, to be replaced by digital broadcasting offering far wider choice.

“They have missed an opportunity to sit back and say: what’s the core purpose of the BBC and where shall we concentrate our resources,” said Whittingdale. “Is it really necessary, for example, for the BBC to have so many channels?” SINCE the summer the BBC has admitted to rigging the results of audience competitions on at least 12 occasions. The latest case, involving the Jo Whiley show on Radio 1, emerged last week and – despite an extensive trawl of output – Thompson admits other deceptions may yet come to light.

The BBC has outlined a series of editorial measures to address the fakery, including plans to send staff on a new course called Safeguarding Trust.

Many employees, including some veteran broadcasters, have accused the BBC management of double standards. A former Blue Peter editor and a producer on the BBC 6 Music digital radio station have been sacked and up to 20 other junior staff have been disciplined.

Yet when Alan Yentob, the corporation’s creative director, admitted that he had allowed footage to be edited to make it seem as if he was personally conducting interviews on his Imagine programme when he was not actually present, he was given only a slap on the wrist.

Although Fincham resigned over the “Queengate” affair, his immediate superior Jana Bennett, head of BBC Vision, appears to have survived the row despite being criticised in an independent report for her “lack of curiosity” in failing to find out exactly what had gone wrong.

The cases have exacerbated a “them and us” culture between senior management and rank-and-file staff, who have already suffered almost 4,000 job losses during a previous efficiency drive. Union leaders claim that this – and any future redundancies – could lead to more editorial corners being cut.

Luke Crawley of Bectu, the broadcasting union, said: “The BBC needs to say out loud that these problems have been caused to an extent by the changes we have had, having already sacked 20% of the staff, and it has been caused in part by a demand for higher ratings and greater audience interactivity.” The fakery scandal, however, has by no means been restricted to the BBC. The Serious Fraud Office is believed to be considering launching an investigation into GMTV, which allowed 25m viewers to take part in phone-in competitions that they had no chance of winning. A report into failings on other ITV programmes is also imminent. That might briefly take the heat off Thompson and the BBC, but it will be of little comfort this weekend as the director-general who was once marked for great things tries to figure out where it all went wrong.

Faking it: the scandals that have tarnished the broadcaster

This year the BBC has admitted deceiving viewers on at least 13 occasions. The fakery includes:

- Blue Peter Ofcom fined the BBC £50,000 after a child visiting the studio was asked to pose as the winner of a phone-in competition. Separately, Richard Marson, the editor, was sacked after the programme decided to ignore the viewers’ vote to name a kitten Cookie, and called it Socks instead

- Comic Relief/Sport Relief Competition winners were actually part of the production team

- Children in Need In 2005 viewers were led to believe that a phone-in competition was won by a viewer, even though callers’ names were not forwarded to the production team

- Jo Whiley Members of the Radio 1 DJ’s production team posed as callers

- The Liz Kershaw Show Prerecorded competitions on BBC 6 Music were aired as if live. The “callers” were production team members and friends

Big guns, big pay packets

- Mark Thompson Director-general, earned a total of £788,000 in 2006-7. He is a BBC “lifer” who joined in 1979 from Oxford, leaving briefly from 2002-4 to become chief executive of Channel 4

- John Smith Chief executive of BBC Worldwide. Previously oversaw the corporation’s lavish building programme. £460,000

- Mark Byford Deputy director-general, lost out to Thompson in the race to succeed Greg Dyke after the Hutton inquiry three years ago. Son of Sir Lawrence, former chief inspector of constabulary. £437,000

- Jana Bennett Director, vision, who oversees BBC1, BBC2 and the minor television networks. She was criticised in the report for “lack of curiosity” in finding out what went wrong with the trailer of the Queen. £433,000

- Caroline Thomson Chief operating officer, is married to Roger Liddle, a former adviser to Tony Blair. She is one of the director-general’s most trusted aides but failed to deliver an inflation-busting licence fee. £361,000

- Ashley Highfield Director, future media and technology. Launched the iPlayer download service. £359,000

- Jenny Abramsky Director, audio and music; is a former editor of the Radio 4 Today programme. £329,000 Salary figures: BBC annual report and accounts 2006-7

Yentob doubts

The BBC has backtracked on claims that Alan Yentob misled viewers on his Imagine television programme.

Yentob, 60, above, the corporation’s creative director, admitted that he had appeared in footage manipulated to make it look as if he was conducting interviews when he was not present.

He had initially claimed that images of himself, nodding in agreement with guests, had been edited into shows on “a few occasions” where questions had been posed by a researcher.

The apparent deception prompted Mark Thompson, the BBC’s director-general, to ban such techniques. But his failure to discipline Yentob provoked anger from unions representing less senior staff who have been sacked for other cases of fakery.

The BBC now claims it could find no evidence of Yentob using trickery.

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