Falling audiences ‘pose risk to BBC’s licence fee income’

Broadcaster must develop ‘clear financial plan’ for future strategic priorities, says National Audit Office. By Kate Ng

Corporation 'still has no central strategy’ to address problem (PA)

A dramatic change in viewing habits among UK television viewers has led to falling audience share which could pose a risk to the BBC’s licence fee income, according to a report.

The report by the National Audit Office (NAO) highlighted “some uncertainty over the BBC’s financial future”.

It said the broadcaster had been “slow to change” on issues such as the fall in viewership among younger audiences, and there was “still no central strategy for tackling” the problem.

Although “the BBC remains the most used media brand in the UK, its share of younger audiences has been under pressure”, added the report.

“Falling audience share poses a financial risk as people are less likely to pay the licence fee if they do not view licensable content,” said the NAO.

A report by media regulator Ofcom last November also found that satisfaction among the BBC’s older audiences was also in decline, with the proportion of people over 55 with a positive impression of the broadcaster slipping from 64 per cent to 62 per cent in two years.

Ofcom said in its report: “For the first time, satisfaction levels among audiences who typically use the BBC the most, and have been most satisfied with it, are beginning to show signs of waning.”

Between 2017-18 and 2019-20, the BBC’s licence fee income fell by £310m to £3.52bn.

There was a fall of 450,000 households under the age of 75 buying TV licences due to changes in audience viewing habits and more of these households qualifying for a free over-75 licence.

Last November, the BBC began negotiations with the government about the future funding it will receive from the licence fee.

The NAO recommended that in order to stay afloat the broadcaster produce a long-term financial plan to set out the next stage of its savings programme and how it will fund its new priorities.

It added that while the BBC “considers that it delivers significant wider value to British and global society … it has not conducted an economic analysis of this in almost 10 years”.

Gareth Davies, head of the NAO, said: “The BBC faces significant financial challenges as it embarks upon licence fee negotiations and its mid-term charter review.

“It has made significant cost savings and has identified the need for more with licence fee income under pressure.

“As decisions about the licence fee are made, the BBC needs to develop a clear financial plan for the future, setting out where it will invest and how it will continue to make savings.

“Without such a plan, it will be difficult for the BBC to effectively implement its new strategic priorities.”

The Covid-19 pandemic has also had an impact on the BBC, as it “unexpectedly weakened” its financial health, said the NAO.

“Despite its purpose of being a universal broadcaster and still being the most-used media brand in the UK, the BBC has seen a notable drop in audience viewing times,” said the report.

Its “principal source of income, the licence fee, has also declined, and the BBC now faces considerable uncertainty about the income it will receive from the licence fee”.

In 2019, the amount of time that an adult spent watching broadcast BBC TV dropped from 80 minutes a day on average in 2010 to 56 minutes in 2019.

The broadcaster’s radio offering has also taken a hit, with audience time declining among adults by 15 per cent between 2013 to 2014 and 2019 to 2020. In contrast, national commercial radio stations have maintained or increased their audience time.

Additional reporting by PA