BBC Facing $113 Million Funding Gap After Lower Than Expected License Fee Hike

The annual license fee for the BBC will rise by £10.50 ($13.20) to £169.50 ($213.35), lower than what the corporation expected, causing a funding gap of £90 million ($113 million).

As revealed in the BBC’s annual report, the bulk of its income was from the license fee paid for by the public, which accounted for £3.74 billion, £60 million down from last year. The licence fee was been frozen for two years at £159.50. The license fee rise was linked to September’s rate of inflation, which was lower than preceding months, rather than an average of the past year and is lesser that the 15% anticipated. The fee, which will come into effect from April, 2024, has risen by 6.6%. This is expected to cause a funding gap of £90 million.

The BBC board said: “We note that the government has restored a link to inflation on the licence fee after two years of no increases during a time of high inflation. The BBC is focused 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.”

U.K. culture secretary Lucy Frazer has also announced a a review of the BBC’s funding model. Frazer had said earlier this week that a 15% license fee hike would be too much.

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 UK. 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 licence fee will be in place until at least 2027/28.”

Caroline Dinenage, chair of the U.K. parliament culture, media and sport committee that scrutinises the spending, policies and administration of the government department for culture, media and sport, said: “I welcome that the government’s increase to the licence fee is modest and is linked to further consideration on the long-term funding of the broadcaster. The success of the BBC is intrinsically linked with that of the U.K.’s wider creative industries. I look forward to the committee continuing our discussions with the corporation on how it plans to adapt to the changing media landscape, while ensuring it continues to deliver, in a financially sustainable way, for viewers and listeners, and for the nation’s creative economy.”