From subscription models to ‘Britflix’: key takeaways from BBC response to charter review

The 114-page document backs licence fee but suggests its current funding model is being tested to breaking point

It’s that time again. The BBC published its opening salvo in the current talks over its royal charter. The tortuous negotiations with the government, which take place every 10 years, are often accompanied by tough talk about radical change.

This time is no different. However, it also comes with data suggesting the BBC’s funding model is on an unsustainable course, fundamentally challenged by a transformation in how media is consumed.

The BBC’s 114-page document backed the current universal service, which is supported by the licence fee. However, it suggested its current funding model is being tested to breaking point and “a more sustainable” system is needed.

The licence fee no longer covers all those consuming the BBC

The BBC put one stark statistic up in lights – 94% of people in the UK used the BBC each month, but fewer than 80% of households contributed to the licence fee. The way viewers now watch on streaming services and catch-up players has caused confusion, making the licence fee rules appear outdated. While anyone watching live TV on a streaming service or digital platform should pay the licence fee, this is not widely known or properly enforced.

It continued to rule out subscriptions or adverts

For all the talk of radicalism, the BBC’s document knocked down the obvious alternatives to the licence fee. It supported a big efficiency drive and greater commercialisation, both of which it is already pushing – not least because of serious inflation in the television industry.

But it says switching to a subscription model would create “a very different BBC”, not based on providing content for everyone, but for those paying subs – and it would exclude those on low pay and many older people. Local services and educational content – which may not drive subscriptions – would be threatened.

It says an ad-funded model, meanwhile, would draw diminishing revenue away from other broadcasters and damage the perception of its editorial independence.

The BBC noted some countries guaranteed universal funding through taxation or a household levy but these measures have been ruled out by ministers.

YouTube alone is not the answer

The rise of YouTube has seen calls for the BBC to use that platform to raise cash by placing more of its content there, taking a share of the advertising in the process. But while it has said it is doing more on YouTube, it added there are actually “limited revenues on offer from video sharing platforms”. The economics might work for creators, but not for the BBC.

A reformed, simpler licence fee system looks a likely compromise

The BBC ddid not say how the licence fee could or should be modified to close the gap between the number of people using its services and those paying for them, but this appeared to be the direction it was pushing in.

Perhaps that could mean asking people watching on streaming services to pay the licence fee, or new rules around other platforms like ITV, Netflix or YouTube having to alert people when they need a licence fee. The BBC simply said it is “keeping an open mind”, but changing the point at which a licence fee is required looks like a potential landing zone for the negotiations.

Turn iPlayer into ‘Britflix’

One of the eye-catching changes proposed by the BBC was to allow ITV, Channel 4 and other public services broadcasters onto iPlayer, hosting their shows and allowing them to use subscriptions and advertising. The idea is to create a platform with the heft to compete with the global streaming giants.

It would be a big change for consumers, but it is unlikely that broadcasters who have invested in their own platforms would be up for switching to a British Netflix-style platform created and owned by the BBC.

A plea for greater political protection

The row over director general Tim Davie’s resignation and claims of a “coup” from the BBC’s board – with the looming threat posed by a potential Reform UK government – saw the corporation make a plea for greater safeguards over its independence. It wants all board members – including the chair – to go through the same process, with none appointed by ministers.

Meanwhile, it wanted the end of the 10-year charter, which it says creates an “existential threat” at regular intervals. A permanent charter like the one behind the Bank of England would mean the existential threats would at least be limited to economics, rather than politics.