BBC Media Planning and Buying Media

Why the BBC licence fee model is criminal


By Gordon Young, Editor-in-Chief

July 20, 2023 | 7 min read

Gordon Young, editor-in-chief and co-founder of The Drum, suggests a radical shift in how leading British broadcaster the BBC is funded. Could it work?


A recent, and relevent, piece of creative from the BBC / BBC Creative

The BBC is a great global brand. But in the UK at least it seems to be losing its luster as well as audience. It is a victim of that classic marketing phenomenon – an incumbent being outmaneuvered by more agile new players.

Its weird ownership model is hardly a recipe for agility – a statutory corporation, which means it is publicly owned, and in theory independent of government. In practice it’s a political football.

And at the moment the favorite game in town is how it is funded. At the moment it is via a licence fee that anyone who watches TV in the UK is obliged to pay.

However, the current Conservative government plans to review this structure – a move which may be countermanded if they are replaced by Labour at the next election.

As things stand it is a criminal offence to watch any live TV on any platform, without owning a licence which currently costs £159 (although this is discounted to £56 if you have a black and white set, underling how outmoded this system is). At the moment failure to have a TV licence is the second most frequent criminal offence in the UK (after speeding).

Over 1,000 people are prosecuted every week - many receiving fines of £1,000.

Social justice campaigners point out that the majority of those prosecuted tend to come from the poorest demographics and 70% are women (their childcare responsibilities mean they are most likely to be in when the TV inspector knocks at the door). And of course, since this is a criminal offence, people face prison if they fail to pay the fine. In fairness that risk is small. Nobody has been put away for a couple of years. But between 1995 and 2018, 2,023 people were locked up for the dastardly crime.

Young mothers facing prison, to cover the fees of the likes of big stars like football pundit Gary Lineker, who earned £1.3m last year? Perhaps not a great look.

Meanwhile, market trends, suggest the licence fee is increasingly unpopular. Even though the UK population grew by 230,000 last year, the number of people choosing to pay to BBC licence fee has declined by 500,000.

A loophole in the law allows people to legally opt out, as long as they stick to on-demand services, such as Netflix, avoid live shows and stay clear of the BBC itself.

Meanwhile, research by Electoral Calculus suggests, 71% of respondents said the licence fee was either bad value or not enough value. And other data shows the BBC is facing a demographic timebomb as only one in 20 young adults watch its live content daily. All the indicators about the future health of the BBC are flashing red in other words.

Despite this, the licence remains fundamental. 24.5m still stump up generating £3.74b in revenue for the corporation. It’s demise would leave a massive hole in BBC budgets. So how to move forward? One option would be to create new taxes on products like broadband services.

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The BBC is thought to favor this as linking a levy to household bills would make it easier to enforce. But the real question in my mind is that in an age of increasing choice is it fair to force consumers to pay for a service that they may not want to consume? It is reported the Government review may look at alternatives to a tax. It will consider the role subscription and advertising revenue might play for example. And the BBC also has a very successful studio business, which generated profits of £240m. Can this be expanded?

There is also an opportunity to cut costs. Maybe it could close channels, reduce its exposure to transmission overheads and restrict its expensive linear TV formats. All this would allow it to focus more on the likes of its digital player which the audience is migrating to in any case. But there is little doubt in my mind that this is a brand that should and could pay its way.

In fact in some markets it already is. For example, in the USA it has a joint venture with AMC which sees it running two successful channels BBC America and BBC World News, both funded by a combination of subscription and advertising.

Surely it’s now time to adopt a similar model across the board – where people pay for the BBC because they want it, not because they fear a criminal record.

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