MALVERN Theatres' success could prove to be a sticking point when it comes to agreeing new funding from Malvern Hills District Council.

Under the Government's Best Value initiative, the council is reviewing its annual grant to the theatre and investigating a commercial take-over.

Although a new three-year grant has been mooted, it is likely to be about £150,000 per year - £80,000 less than last year.

MHDC said that the grant, which goes towards the theatre's running costs, has been cut because the theatre's accounts are looking so healthy. But Nic Lloyd, chief executive at Malvern Theatres, said he was not happy with the new funding agreement.

"We'll need to look at other commercial ventures and it's possible there could be an increase in prices."

He agreed that the theatre had had a very successful year but said that did not mean they could do without a subsidy.

As to the commercial take-over option, Mr Lloyd said: "My concern is we've built up a quality theatre with reasonable ticket prices and the loss of the theatre's independence would have to be considered."

Sharon Gray, the council's head of economic development and tourism, said they were simply looking for best value.

She said: "We're looking at the whole of the economic development service at all sorts of things including whether there would be any benefit to a commercial operator rather than a trust running the theatre. The best value review requires us to look at every funding agreement and justify its continued existence."