Written evidence submitted by Professor Maria Michalis

ABOUT ME

I am Professor of Communication Policy at the University of Westminster’s Communication and Media Research Institute (CAMRI), a leading research centre in the UK. The submission draws on my nearly 30 years of research and expertise on public service media, media policy and digital governance. In 2024/25, I contributed to the Systemic Threats to Public Service Media initiative by the Council of Europe and partner organisations.

This submission focuses on the future funding of the BBC, examining the appropriate funding model and the level and process by which it is determined. It takes into account UK developments and international experience, and pays attention to how different funding options shape the BBC’s independence, ability to fulfil its public service remit, and impact on the wider UK media ecology.

EXECUTIVE SUMMARY

1. This submission focuses on the future funding of the BBC.

2. It starts from the premise that the BBC, as the UK’s principal public service media (PSM) institution, is needed more than ever. In a media environment characterised by global competition, platform dominance, and rising concerns about misinformation and democratic resilience, a universally available and well-funded BBC with a broad digital remit remains essential.

3. The submission makes three central arguments. First, a universal public funding model remains both valid and necessary. It enables the BBC to operate independently of political and commercial forces, ensures universal access, and supports its vital cultural, societal, economic and democratic contributions. Alternative funding models (such as subscription, advertising or direct government funding) would undermine these core principles.

4. Second, the licence fee should be reformed rather than replaced. Reform should make the fee device- and service-neutral, and introduce carefully targeted progressive elements, to the extent that the Corporation’s financial viability is not compromised. This modernised universal licence fee would improve fairness, reduce evasion, and better align funding with contemporary patterns of media consumption. International evidence demonstrates that such reform of the licence fee can work.

5. Third, BBC funding must be adequate, predictable and determined through an independent process. Prolonged real-terms funding decline risks undermining the BBC’s ability to deliver its remit. The level of funding should therefore be set by an independent body to safeguard independence and enhance transparency.

THE BBC: MORE IMPORTANT THAN EVER

6. The contemporary media landscape is undergoing profound transformation. Processes of internationalisation, platformisation, datafication, and the shift to on-demand consumption have reshaped how content is produced, distributed and consumed. These developments have intensified competitive pressures while altering the structure of media markets. They have also accentuated pre-existing political, economic, social and commercial pressures on Public Service Media (PSM).

7. At the same time, democratic systems are facing significant challenges. Trust in public institutions is waning, misinformation and disinformation are proliferating, and public debate is increasingly polarised and fragmented.

8. A key driver of these changes is the rise of large, commercially driven digital platforms. These actors operate at a global scale, prioritise engagement and data extraction, and are not subject to public service obligations. Their dominance has led to growing concerns about epistemic harms, including the spread of inaccurate information, online hate speech, and the erosion of shared informational and epistemic foundations.

9. In this context, PSM are an essential part of the solution. They address audiences as citizens, rather than consumers, and provide trusted information, cultural representation, and shared spaces for democratic deliberation.

10. The BBC has, for over a century, contributed to a wide range of economic, cultural, societal, and democratic objectives. It invests significantly in original UK content, supports the national creative industries across the Nations, provides impartial and trusted news, and fosters social cohesion through common understandings and shared cultural experiences.

11. The BBC’s core mission – to inform, educate and entertain – remains fully valid. In view of the scale of the challenges, and with the domestic commercial PSM (ITV/STV, C4/ S4C and C5) having gradually retreated from their remits over recent years, it is imperative that the BBC retains such a broad remit as the only broadcaster in a position to serve all UK audiences with diverse content, and impartial and accurate news.

12. There is a strong case for updating and strengthening the BBC’s remit in light of contemporary challenges. This could include a more explicit role in supporting a healthy information ecosystem by delivering facts and evidence-based arguments, and a reinstatement of the 2007 Public Purpose requiring the BBC to contribute to technological innovation and infrastructure, roles that have increasingly been assumed by large non-UK technology companies.[1]

13. Any expansion of the BBC’s remit, however, must be accompanied by commensurate funding. Without adequate resources, additional obligations risk remaining purely aspirational, undermining both effectiveness and public trust.

THE CASE FOR UNIVERSAL PUBLIC FUNDING

14. The case for public funding of the BBC remains strong despite technological change.

15. The licence fee has historically delivered several key benefits. It provides stable and predictable funding, enabling long-term planning and investment. It supports editorial independence, insulating the BBC from both political and commercial pressures. It establishes a direct relationship with audiences, reinforcing accountability. It also allows the BBC to invest in domestic production and take creative risks, supporting the wider creative economy.

16. At the same time, the current system faces well-documented challenges.
    A) It is compulsory and uniform, making it regressive (every household pays the same fee regardless of their socio-economic circumstances, thereby placing a higher burden on lower-income households).
    B) It is increasingly misaligned with patterns of media consumption, as the link between live television viewing and media use has weakened.
    C) Public views on fairness have therefore become more contentious.
    D) According to the latest official figures, licence fee evasion (households that should be paying the licence fee but do not) has increased, reaching 12.52% in 2024/25, up 0.48% from the previous year, depriving the BBC of approximately £550mn in income. [2] Collection costs are also significant, amounting in 2024-25, to £166 mn (4.3% of licence fee income).[3]
    E) There is also a growing mismatch between consumption and payment. While around 94% of UK adults use the BBC every month, consuming on average over two hours daily of BBC services, more than any other media brand, fewer than 80% of households pay the licence fee.[4]

17. These challenges point to the need for reform, but do not undermine the fundamental rationale for universal public funding.

REFORMING THE LICENCE FEE

18. Reform of the licence fee should aim to retain its strengths while addressing its limitations. The licence fee should remain the Corporation's main source of funding.

19. A modernised fee should be device- and service-neutral, reflecting the reality that content is now consumed across multiple platforms, including on-demand and video-sharing platforms.

20. It should apply to all households, thereby broadening the funding base, improving fairness and reducing evasion.

21. At present, the licence fee is tied to watching or recording live television and BBC iPlayer content (live and on demand). This framework has not kept pace with the shift towards on-demand consumption and the growing importance of video-sharing platforms. A universal licence fee would address this anachronism and future-proof the system.

22. Reform of the licence fee could also include targeted progressive elements (in addition to the existing elements), such as concessions for those least able to pay, provided these do not undermine the sustainability of BBC funding.

23. A modern universal licence fee would simplify enforcement and collection (since every household would have to pay, with possible targeted concessions). Collection, for example, could be simplified by linking payments to existing billing systems, such as utility bills, as seen in countries like Italy and Greece.

24. International experience provides strong evidence and confidence that the licence fee can be modernised to reflect contemporary media consumption patterns, dissociating the fee from device ownership, while maintaining universality, affordability, stability and high compliance. Germany was the first country to modernise the licence fee along those lines in 2013, followed by Switzerland in 2019. Austria, in particular, which transitioned to a household levy scheme in 2024, is directly relevant. It broadened the payment base and, at the same time, improved affordability, providing the PSM with stable funding.[5]

25. Finally, it is essential that licence fee revenues are protected from top-slicing. The use of licence fee revenue to support other government policy objectives, such as economic (e.g., the rollout of broadband connections), social (e.g., provision of free licences to over 75s on pension credit), and soft power aims (e.g., contribution to international services like the BBC World Service) has undermined both the BBC’s financial capacity and the perceived legitimacy of the funding model. The licence fee revenue should be used exclusively to fund the BBC’s UK programmes and services, in reflection of where the funding comes from. Economic, social and geopolitical policies that a British government wishes to pursue should not be funded by diverting money from the licence fee. Existing obligations should gradually be returned to the government within a clear timeframe.

LIMITATIONS OF ALTERNATIVE FUNDING MODELS

26. Alternative funding models present significant risks.

Advertising

27. This option has been examined and rejected at various points in time, such as by the 1986 Peacock Committee, on the grounds that a) it would compromise independence by putting the BBC under potentially undue commercial pressure, b) lower programming standards and introduce commercial pressures that are incompatible with the BBC’s public service mission, and c) destabilise the commercial media market by diverting and reducing revenue from other commercially-funded media competitors. These arguments still stand.

28. Moreover, advertising would not provide sustainable funding for the BBC. Traditional media advertising is in decline, and there is a notable shift to online advertising, where two big technology giants dominate the advertising market, Alphabet and Meta. Asking the BBC to rely on advertising would disregard the structural changes in the advertising market, which limit its viability as a stable source of income.

Subscription

29. A full or partial subscription is fundamentally incompatible with universality. It would restrict access to those able and willing to pay, increasing inequalities in access to public service content when it is most needed, and undermining the BBC’s role in promoting social cohesion and shared experiences.

30. Moreover, a subscription model would distort content priorities, encouraging a focus on content that drives subscriptions rather than delivering the full public service remit.

31. A subscription model would create additional substantial implementation costs, as the free-to-air television platforms do not currently support conditional access technology, and it is impossible to implement such a solution for radio.

General Taxation

32. The attraction of this model lies in its simplicity and potential for being fairer and progressive. A few countries with long traditions of strong public service media and equally long traditions of democratic politics have in recent years opted for this model.

33. For instance, Finland and Sweden have introduced a specific PSM tax that is ringfenced and sits outside the state budget in order to safeguard the independence of the PSM organisations. The tax is calculated on the basis of individual income earned.

34. In Norway, the debate over the future funding of NRK lasted nearly 6 years before they agreed to fund it through general taxation. Funding is agreed on a 4-year term, is proportionate to the public service remit, and is increased annually in line with the general inflation index (and this has been respected so far). At the same time, additional efforts have been made to safeguard and strengthen NRK's political independence through legislation.

35. While it seems to be working in countries with long and strong traditions of PSM, this funding option would raise serious concerns about the BBC’s independence and funding stability.

COMPLEMENTARY FUNDING: COMMERCIAL REVENUE AND LEVIES

Supplementary commercial revenue

36. The BBC already relies on commercial revenue (notably through BBC Commercial) to complement its funding. In 2024/25, BBC Commercial raised £2.15bn, having doubled its annual revenues over the current Charter period. [6]

37. To avoid distorting priorities and maintain public service incentives, the balance between public funding and commercial revenue must be carefully considered. Commercial revenue should continue to play a supplementary role and not displace the primacy of public funding. Currently, licence fee revenue provides 85% of BBC funding.[7] Indicatively, according to the latest available information, in 2024, across the EBU area, public funding accounted for 75.7% of total PSM funding, while in the EU27 area the percentage of public funding was higher at 80.5% of total PSM revenues.[8]

Levies on other providers (e.g., VoD, Technology companies, and broadband providers)

38. Recent policy debates have explored levies on VoD providers, large technology companies, and broadband providers as alternative or supplementary funding mechanisms. While such measures may play a useful role within the wider national media ecology, international evidence suggests that they are not suitable substitutes for a universal public funding model.

39. Levies on VoD services, such as Netflix, have been implemented in Europe (e.g., in France), particularly following the EU’s revised Audiovisual Media Services Directive (2018). These measures intend to support national production economies, and the levies are typically earmarked for content investment rather than institutional funding.

40. Similarly, levies on platforms such as Alphabet and Meta aim to address the imbalance between digital intermediaries and publishers. International examples include Australia’s News Media Bargaining Code. These arrangements typically provide support for journalism, rather than the comprehensive remit of a PSM organisation. Moreover, they are based on negotiations, lacking stability and predictability.

41. A broadband-based levy is aligned with changing consumption patterns. It could form part of a reformed licence fee, with broadband providers collecting it.

THE LEVEL OF FUNDING

42. The level of BBC funding is critical. It must be adequate, predictable and sustainable.

43. Various comparative studies have established a clear and strong positive correlation between well-funded PSM and healthier democracies, lower polarisation, and higher public trust.[9] In addition, other research analysed the EU markets and found a strong positive correlation between per capita revenues of PSM and commercial broadcasters and large pay-TV operators, while controlling for differences in GDP, thereby debunking the suggestion that well-funded PSM ‘crowd-out’ competitors.[10] In short, existing research suggests that higher PSM funding is associated with both healthier democracies and a healthier commercial media market. This is on top of the substantial contribution the BBC makes to the creative industries (almost £5bn in 2024/25, 50% of which outside of London) and the wider economy (generating £3.55 for every £1 of direct economic impact).[11]

44. These vital benefits positively impact society as a whole, regardless of the level of consumption by each household that will be asked to pay the modernised universal license fee, as recommended in this submission (positive externalities). This would be similar to other public services, such as education and health, where the whole society is required to financially contribute to them, even though the services are used unevenly across the population, but are considered beneficial to the society as a whole. [12]

45. The BBC provides strong value for money, set at £180 (as of 1 April 2026), £15 per month, roughly 50p per day. It is noticeably cheaper than pay-TV and SVoD competitors, many of whom have increased their prices in recent years. It is important to note that major global subscription video-on-demand (SVoD) platforms - such as Netflix, Disney+, and Amazon Prime Video - primarily offer content that drives subscriptions. This content must easily cross national borders, often diluting cultural specificities. Unlike PSM and national media, this content may not resonate with the particular values and interests of specific societies. Furthermore, these platforms typically do not offer news or current affairs programming, and their documentaries are not required to adhere to standards of impartiality and accuracy.

46. However, the BBC has been underfunded for a prolonged time. This prolonged period of underfunding has come at a time of increasing market competition, relatively high inflation in the UK economy and even higher media inflation, not least because global streamers have pushed up production costs, especially on high-end drama. As an illustration, the BBC has calculated that the number of hours of video content which cost them more than £1 million per hour rose six-fold between 2016/17 and 2021/22. [13]

47. VLV estimates that the BBC has experienced a 40% real-terms reduction in funding since 2010. This contrasts sharply with the average 8.6% real-terms drop in PSM funding across the EBU during the decade 2014-2024 (representing 62 PSM organisations in 45 markets).[14] Modest adjustments have not changed the downward funding trend. Indeed, the recent 3.1% inflation-linked increase of the licence for 2026/27 (raising it by £5.50 to £180 since April 2026), giving the BBC an additional roughly £33mn per year, is expected to be partly offset by those not paying the fee, and was followed by the BBC announcing a fresh round of 10% cuts over the next three years.[15] This is in addition to the already committed £700mn cuts by 2028.

48. The BBC has made considerable operational savings over the years, but inadequate funding has started to affect content and services, and employees. For instance, as part of the latest round of cuts mentioned above, the April 2026 announcement stated that the Corporation needs to make £500m in savings and plans to cut between 1,800 and 2,000 jobs (almost one in ten) in response to “significant financial pressures.”[16]

49. Ensuring adequate funding is essential not only for the BBC itself but for the wider media ecosystem and the public value it generates.

THE PROCESS OF SETTING THE LEVEL OF FUNDING

50. The process for determining the level of BBC funding is equally important.

51. Currently, funding decisions are subject to government control, creating risks of political influence and undermining transparency. This submission supports the establishment of an independent commission to determine the level of funding.

52. Such a body would assess funding needs in line with the BBC’s public service remit, ensure transparency and public accountability, and reduce the risk of political interference.

53. International models, such as Germany’s KEK, provide a useful example of this approach.

INTERNATIONAL STANDARDS

54. International frameworks provide clear guidance on PSM public funding, without prescribing a specific model.

55. The EBU, to which the BBC is a member, has put forward 4 core public funding principles for PSM: a) Stability and adequacy; b) Independence from political interference (and I would add undue commercial pressure); c) Fairness; d) Transparency and accountability. [17]

56. Similarly, the Council of Europe standards emphasise that funding should be secure, sufficient, allow long-term planning, and be designed to safeguard editorial independence and institutional autonomy. [18]

57. Finally, the EU’s European Media Freedom Act (2024/1083; Art. 5(3)) provides similar guidance around adequate, sustainable, and predictable funding corresponding to the fulfilment of and the capacity to develop the public service remit.

Professor Maria Michalis

Professor of Communication Policy

CAMRI (Communication and Media Research Institute)

University of Westminster