BBC faces review of licence fee model with alternative methods considered

* The BBC’s annual report revealed that the number of active licences had fallen by 500,000 to 24.4m since last year

* The evidence that there is a growing unwillingness to pay is shown by figures each year

* The licence fee model is becoming unsustainable

By Hayden Vernon, The Guardian

The British Broadcasting Corporation (BBC) is facing a review into its funding model with subscription, a broadband levy and even advertising touted as potential alternatives to the licence fee.

Ministers are expected to formally announce a review of its funding model in the autumn that will assess the advantages and disadvantages of each option.

The BBC’s annual report, published last week, revealed that the number of active licences had fallen by 500,000 to 24.4m since last year.

A government source told the Times: “The evidence that there is a growing unwillingness to pay is shown by figures each year. The licence fee model is becoming unsustainable.”

With the reduction in licences, the BBC made £3.74bn in fees last year, down from £3.8bn the year before and in the BBC’s annual report and accounts for 2022-23, the broadcaster said the “increasingly competitive” media landscape had led to increased financial pressure.

News of the funding review comes as the licence fee faces its biggest increase for 20 years in April next year after a two-year freeze.

The BBC’s royal charter – which sets out the corporation’s mission, purpose and funding model – is up for renewal in 2027.

The Times reports that the review of BBC funding is expected to examine “all options” for the future of the corporation. A partial subscription model, where some premium content is paid for while the bulk of the corporation’s output remains free to air, is said to be a frontrunner.

The review will also assess whether the BBC could make more money commercially. BBC Studios, the corporation’s production arm, made £240m in profit last year.

Advertising, the main source of funding for commercial television channels, is also reportedly up for consideration.

The BBC has previously floated the idea of funding its services through a levy on broadband connections. It said that linking the fee directly to an existing household bill, such as broadband, could make the licence fee easier to enforce.

Recently, the former chair of the BBC Richard Sharp called the licence fee system “regressive” and said that wealthier families may have to pay more to access the corporation’s services, potentially through a tax on broadband bills or a household levy based on property value.

A spokesperson for the Department for Digital, Culture, Media and Sport said: “We remain committed to reviewing the licence fee model ahead of the next charter period to explore the potential for alternative ways to ensure the BBC remains appropriately funded over the long term.”

Certain sections of the Conservative Party have long been hostile to the BBC, despite its importance to British life and the soft power it conveys globally, because they believe it to have unproven, liberal learnings.

Others oppose the legal obligation to pay, even for those who only watch non-BBC television channels, while some have issue with the criminalisation of non-payment.

However, dissenters’ attempts to abolish the fee have largely failed because they have been unable to propose a replacement – something this review would hope to resolve. Even the BBC’s strongest supporters acknowledge the licence fee is not a long-term solution.

This latest review seems to be a more pragmatic attempt to find a solution than a political witch hunt. The most likely outcome is a hybrid solution which sees the BBC able to maintain its universal service obligations, possibly through a broadband or household tax that would be easier to enforce, while offering more premium content behind a paywall.

But any significant reduction in funding would hinder the BBC’s ability to invest in sports rights and provide a platform for underserved properties and audiences.

The corporation’s recent strategy has been to focus on ‘national events’ like Wimbledon, as well as minority sports, but its reach has also been valued by competitions seeking new audiences, like cricket’s The Hundred and soccer’s Women’s Super League (WSL).

Barbara Slater, director of BBC Sport, told SportsPro Live in April that the BBC’s reach and ability to combine multiple platforms was unparalleled, adding that public service broadcasters showed six per cent of all televised sport in the UK but delivered 60 per cent of total viewership.

“That’s something that is incredibly precious and we should fight hard to keep,” she said.

An important caveat, however, is that the UK is set for a general election next year, with polls suggesting the opposition Labour Party is on course for a landslide victory.

It’s unclear whether a review would be concluded in time before Britain goes to the ballot box or whether Labour, which would likely be more supportive of the BBC, would continue it.—Additional reporting by sportspromedia.com