While DCMS is not currently minded to depart from the licence fee model, various reforms are being considered to help support the broadcaster’s future financial sustainability
DCMS has kicked off its lengthy process to review the BBC’s Royal Charter
At the end of last year, the UK Government, via the Department for Culture, Media and Sport (DCMS), published a green paper and consultation on the review of the BBC’s Royal Charter (the constitutional basis for the BBC, which outlines its governance, regulatory and funding arrangements). The consultation kicks off an extensive renewal process ahead of the current charter’s expiration on 31 December 2027, with a view to ensuring the broadcaster is future-proof, thriving in the years to come while continuing to serve the public interest. In launching the review, Lisa Nandy (Secretary of State, DCMS) set out her vision for a BBC that showcases the UK’s values and culture, adapts to an evolving media landscape and remains an engine for economic growth. The review will focus on the three, interrelated objectives:
Broadcasting that is trusted by the public, is independent and accountable and is representative of communities across the UK;
Sustainable funding in support of the BBC’s vital public service role; and
Growth, opportunity and job creation throughout the country.
The consultation is open until 10 March 2026 and will precede a white paper on the future of the BBC expected from DCMS later in the year.
The public service broadcaster does not face equivalent commercial pressures to its competitors
According to DCMS, the BBC is the cornerstone of the UK’s creative industries, generating £5bn for the economy each year. However, in the decade since the last charter review, technological developments have changed how and where people consume content, with audiences moving away from traditional broadcasting to online platforms. Central to the consultation is therefore the ambition to ensure that the BBC has the sufficient and necessary resources to deliver high quality services, while keeping costs to households as low as possible. DCMS states that although the BBC is sheltered from some of the commercial pressures faced by other media providers, its ability to deliver services valued by audiences is under strain as its real terms income from the licence fee has declined by over 30% during the past 10 years. The Government wants to explore a range of funding models that could provide a sustainable level of funding for the BBC, presenting eight distinct options, and to consider how each could be collected and enforced fairly.
The Government considers that the licence fee model is adaptable, standing the test of time
Perhaps the most anticipated but contentious option proposed by DCMS is reforming the licence fee, which is tied to the (declining) number of people watching live TV. The Government states that it has not ruled out keeping the current licence fee in place with its existing structure. It refers to the fee as a “tried and tested” public funding model that still has many benefits and has adapted a number of times, stating that it is not considering replacing the charge with alternative forms of public funding, such as a new tax on households, using general taxation or introducing a levy on the revenues of streaming services. However, given the sustainability challenges the BBC is facing, DCMS is seeking to understand the public’s views on the “principle” of reforming the licence fee, while also reviewing with an “open mind” the scope of services for which the fee is required and considering differential rates for specific types of users. As such, it will consider the scope for change alongside broader reform options, which could support households with the cost of living and could include looking at options to support the BBC to generate more commercial revenue and operate more efficiently. This will involve exploring the potential for the BBC to carry advertising on its public services (noting that this would be a significant move) or moving to a top-up subscription service for some “more commercially viable” content on BBC iPlayer.
A decision on future IPTV migration will sit outside the charter review process
The consultation makes brief reference to the migration away from digital terrestrial TV (DTT) and the related impact on how the BBC delivers its services. Though DCMS leads on the transition to all-IP television (IPTV) on behalf of the Government, it makes clear that decisions regarding the transition away from DTT will sit outside this review process, and the charter will only reflect the path forward decided by the Government through a separate public consultation. DCMS notes that it will work to ensure that digital inclusion and the accessibility of services transitioned to online viewing are reflected in the broadcaster’s obligations moving forward. In addition, the consultation invites comment on how the BBC should leverage third-party platforms, including YouTube and other major video service providers, to distribute its content, taking into account Ofcom’s ongoing work on prominence of public service content shared through these services under the Media Act.
