BBC to Face $113 Million Shortfall from Lower License Fee Increase

The BBC’s current TV license fee of £159 is set to increase by £10.50, a rise of 6.6 percent, which is less than the BBC and Office for Budget Responsibility (OBR) had anticipated, leaving a funding gap.

The increased fee will come into effect in April after having been frozen for the past two years. The BBC had expected a rise closer to £15, around 9 percent, based on the average rate of inflation over the past 12 months (a metric that has been used previously). “However, in recognition of the ongoing cost of living pressures faced by families, the government has decided to change how the inflation-linked uplifts to the license fee are calculated for 2024,” the government said.

The decision to raise it by a smaller percentage will leave an expected funding gap of around £90 million ($113 million).

“We note that the government has restored a link to inflation on the license fee after two years of no increases during a time of high inflation,” the board said. “The BBC is focussed on providing great value, as well as programs and services that audiences love. However, this outcome will still require further changes on top of the major savings that we are already delivering. Our content budgets are now impacted, which in turn will have a significant impact on the wider creative sector across the U.K. We will confirm the consequences of this as we work through our budgets in the coming months.”

The government is also launching a review of the BBC’s funding model, according to Culture Secretary Lucy Frazer. “The review, supported by a panel of independent experts soon to be announced from across the broadcasting sector and wider business world, will assess a range of options for funding the BBC,” the government said. “It will look at how alternative models could help secure the broadcaster’s long-term sustainability amid an evolving media landscape, increased competition and changing audience behavior while reducing the burden on license fee payers.”

The BBC said in a statement: “The BBC is an important and beneficial intervention in the U.K. media market. It is absolutely right that we debate how it is best funded to ensure that the BBC can thrive, not just today, but in the future—performing a role where it projects the U.K.’s values across the globe while also producing impartial news, and telling stories through our content that reflect the real lives of people across the U.K. That role should not be separated from the debate about funding.

“We believe that public service should be at the heart of the BBC, and we need to ensure that if there are changes, that the public fully understands the implications of them so that we all have a BBC that everyone can support and benefit from. The government has confirmed that the license fee will be in place until at least 2027-28.”