The BBC is independent of government but is a public corporation, sponsored by the Department for Digital, Culture, Media & Sport (DCMS) and regulated by Ofcom. It is primarily funded by households paying the television licence fee - amounting to £3.52 billion in 2019-20 – and is also permitted by the Royal Charter that regulates it to generate income from commercial activities, such as creating and selling television programmes.
The BBC began negotiations with government about the future funding it will receive from the licence fee in November 2020. It enters these negotiations and the subsequent mid-term Charter review facing significant strategic financial challenges. Despite being a universal broadcaster and still the most used media brand in the UK, the BBC has seen a notable drop in audience.
The BBC’s principal source of income, the licence fee, has declined while its commercial income is not yet at a level to make a significant contribution. The BBC believes its ability to overcome these financial pressures through its savings programme will be challenging.
In recent years, many of the BBC’s competitors have swiftly moved ahead in the global marketplace in terms of size and scale of services offered, gaining audiences and investing in technology.
In a recent report the NAO found that the BBC will need to continue to make savings while investing in new technology, and address an underlying lack of pace in implementing change, in order to make progress in this marketplace while continuing to meet its obligations as a universal public service broadcaster.
The Committee will question the Director General and chief operating officer at the BBC on the licence fee and Charter reviews. If you have evidence on the questions raised in this inquiry, please submit it here by 6:00 pm on Monday 15 March 2021.