LONDON, Nov 11 (Reuters) - The BBC is battling its

biggest crisis in decades after its two most senior leaders

resigned over accusations of bias that have prompted U.S.

President Donald Trump to threaten legal action for "no less"

than $1 billion unless he gets compensation.

On Monday the BBC apologised for a Panorama documentary

which spliced together two parts of a Trump speech on January 6,

2021, the day his supporters stormed the Capitol, creating the

impression he had called for violence.

Below are details on how the crisis came about, how the BBC

is funded and governed, and how a new director general will be

selected.

AN INTERNAL MEMO SEIZED ON BY CRITICS

The scandal was sparked by the leaking of an internal memo

from a former standards adviser that listed what he said were

failings in the BBC's coverage of Trump, the Israel-Hamas war,

and transgender rights.

The memo by Michael Prescott, a former Sunday Times

political editor, set out what he said was a series of editorial

failings that showed systemic left-wing bias at the BBC.

Prescott was an external adviser to the BBC's Editorial

Guidelines and Standards Committee that oversees coverage,

compliance and complaints.

His memo to the BBC board was leaked to the right-wing Daily

Telegraph, and seized on by critics and rivals who object to the

BBC's perceived liberal stance and public funding.

The BBC took a week to respond, creating an impression of

paralysis in the face of a barrage of criticism.

Its media correspondent, Katie Razzall, and one of its top

political presenters, Nick Robinson, said there had been a clash

between news managers and the board: the former wanted to

apologise over the Trump edit while the latter argued that a

broader problem with institutionalised bias needed tackling.

Robinson pointed the finger at board member Robbie Gibb, a

spokesman for Theresa May when she was Conservative prime

minister. Robinson said Gibb had argued the BBC had systemic

failings. Gibb did not respond to a request for comment.

Jon Sopel, formerly the BBC's North America editor, said on

his podcast on Monday that Gibb had pursued complaints of a

left-wing bias in the BBC's output, but never a right-wing bias,

as alleged by some on the left over its coverage of Israel.

The BBC press office declined to comment.

WHAT HAS THE BBC SAID?

BBC Chair Samir Shah said it was "fanciful" to suggest a

hostile board had engineered the resignations of Director

General Tim Davie and the head of news, Deborah Turness.

In a letter to lawmakers on Monday, he also said the BBC had

not buried examples of failings. It had published corrections,

changed guidance and leadership and carried out formal

disciplinary measures when problems were found, he said.

He said Prescott's memo had only given a partial description

of issues, but he added that he had instigated a review of the

standards board, well before he received Prescott's memo.

GOVERNMENT TO REVIEW HOW TO FUND BBC

The BBC is funded by a licence fee paid by all

television-watching households in Britain. In 2024/25, it

brought in 3.8 billion pounds ($5.1 billion), while commercial

income took total revenue to 5.9 billion pounds.

The BBC's funding is detailed in its latest 10-year royal

charter that is due to expire in 2027. The government will set

out options for different funding models by the end of this

year, as it becomes harder to defend the licence when many

viewers are turning to Netflix ( NFLX ) and other streaming platforms.

The number of people paying the licence fee has been

steadily dropping - it was 23.8 million by the end of its last

financial year, down from 25.3 million two years ago.

PUBLIC SUPPORT FOR PUBLIC BROADCASTER

The BBC, which is a client of Reuters, is both the most

trusted and most-used news provider in Britain, surveys show.

Its news reaches 67% of all adults across TV, radio and

online, media regulator Ofcom said in July, although its reach

has fallen by 11 percentage points since 2019.

A snap YouGov survey on Monday showed half of those queried

believed the BBC was politically biased, although they split

along party lines. Some 31% said it was generally biased in

favour of left-wing views, while 19% said it favoured the right.

WHO SELECTS THE NEW BOSS, AND WHO IS IN THE RUNNING

The 14-strong board will select a new director general.

Five of the non-execs are chosen by the government,

including the chair.

Contenders to replace Davie include Charlotte Moore, a

former BBC Chief Content Officer. She is CEO of Left Bank

Pictures and has a senior role at Sony Pictures Television.

Jay Hunt, a former controller of BBC One and executive at

Channel 4 and Channel 5, has also been suggested. She is

currently creative director, Europe, Worldwide Video at Apple.

Other names in the frame include Alex Mahon, a former head

of Channel 4 who is running an events business, and ITV CEO

Carolyn McCall. Jane Turton, the head of All3Media, is also seen

as a possible candidate.

($1 = 0.7451 pounds)