Rupert Murdoch’s media conglomerate on Wednesday accused the British Broadcasting Corporation, the state broadcaster, of using taxpayers’ money to build a “digital empire” that would compete with commercial rivals.

The BBC, which receives about £3bn ($5.3bn, €4.2bn) a year in public funding, has announced plans to relaunch its website.

Dubbed “Creative Future”, the list of improvements includes greater personalisation and more user-generated content on the BBC website. And following the success of rock groups such as Arctic Monkeys through, the corporation said it wanted to be “the premier destination for unsigned bands” through broadband, podcasting and mobile phone services.

The BBC has joined other media companies in trying to find ways to reach younger audiences, which appear to spend less time watching traditional television and more on the internet and playing games. These consumers are particularly important as they are among the most sought-after by advertisers.

Apart from user-generated content, the BBC is planning to launch a video-on-demand catch-up service called BBC iPlayer.

James MacManus, an executive director of Mr Murdoch’s News International, accused the BBC of “blatantly commercial ambitions” and of seeking “to create a digital empire”.

“Our view is that can only damage the development of commercial digital media,” he said. “This is being done with public money. It really is outrageous.”

Rival broadcasters have long complained that the BBC uses public money to fund programmes supplied by commercial operators, abandoning a public service remit in a chase for viewers.

The BBC is seeking to renew the licence fee – now £131 a year – that it receives from every television-owning household in Britain. The government is considering the broadcaster’s request for increases that would take the fee to £180 by 2013.

Moving into new areas will require more investment. Mark Thompson, director-general of the BBC, said: “A strategy which concentrates uncompromisingly on content of the highest quality costs a great deal more than one which mixes outstanding output with repeats and content of low ambition. That’s why the BBC’s bid for more resources to make quality content is the most important line in the whole licence-fee submission.”

But a report commissioned by the UK Department for Culture, Media and Sport says the BBC is unlikely to receive the increase in funding.

The report points out the low level of cost savings in the BBC’s content divisions and recommends a higher rate of return for its commercial businesses.

It also recommends that the government and the BBC agree on various targets before any licence fee settlement.

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