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The license fee model of the BBC and other European public service broadcasters faces further challenge


A bronzed George Orwell, lanky, cigarette in hand, guarding the headquarters of the British Broadcasting Corporation. The accompanying inscription reads: “If freedom means anything, it is the right to tell people what they don’t want to hear”. The public broadcaster has done a lot: Boris Johnson called it a “Brexit-bashing corporation”. His advisers once promised to “skin” the BBC’s source of funding.

The Prime Minister’s departure today comes as the broadcaster’s centenary celebrations take place in October. Yet the sense of relief for BBC executives may be temporary, as the company faces more serious challenges than Downing Street’s bluster. Like other European public broadcasters, the BBC faces uncertainty about its role in the era of Netflix and YouTube. Inside and outside the BBC, thoughts are turning to where future funding will come from.

The fee model in question

The BBC’s business model was much the same in 1923 when the Wireless Telegraphy Act imposed ten shillings (about £21 or €24 in today’s currency) for homes with radio sets. Today, the license fee is £159 (€185), payable by any household watching live television or using the BBC’s online catch-up service iPlayer. Last year, license fees brought in £3.8bn, or 74% of the BBC’s income, with the rest coming from commercial activities such as selling overseas shows.

“Universal royalty was justified by universal consumption. But competition from Hollywood and Silicon Valley is causing viewers to switch channels. Broadcast television’s share of UK video consumption has fallen from 97% in 2010 to 70% in 2021.

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Universal consumption justifies universal charging. Every week, 90% of UK adults tune in to eight channels […]

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