The number of households paying the BBC license fee plummeted last year at a time when the corporation is desperately seeking a revamp of its funding model.
Today’s BBC Annual Report showed that license fee payers slid by 539,000 last year to around 23.3 million. This is the biggest decline since 2020-21 and likely one of the biggest of all time.
Despite the number of people paying the annual £180 ($240) fee dropping significantly, the BBC’s license fee income rose by £36M to £3.9B, which for the second year in a row was a record figure. This was due to the license fee rising with inflation. For the previous year, the number paying the fee dipped by 300,000 and income was £3.84B.
News of the decline in license fee payers comes with the BBC seeking some sort of revamped financial model during its crucial charter renewal negotiations with the government, which will set the model for the next decade.
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The government has ruled out several options including a household tax, advertising and subscription service, and the license fee will continue in some form, but it is the shape of the future license fee that is being hotly debated.
Today’s report backs up the argument repeatedly stressed by the BBC that while 94% of the UK population use its services every month, fewer than 80% pay the £180.
Branding the current state of play “no longer sustainable,” the BBC said the “downward trend” is due to the acceleration of audiences “not consuming licensable content” and a “lighter sports year.” BBC finance boss Bérangère Michel then told press that the corporation only sees the trend “accelerating” as more and more people stop watching live TV.
The corporation is floating several ideas to improve the situation including expanding the license fee to cover households that watch non-live content via streaming services like Netflix, Prime Video and Disney+.
In a timely committee hearing yesterday, UK Culture Secretary Lisa Nandy cautiously backed this plan, arguing that those who watch both the BBC and streamers could pay the license fee, while those who only watch the streamers may pay a smaller charge. If the license fee scope expanded, Nandy said there is even potential to “cut the cost of the license fee for everybody.”
The license fee is so in the spotlight because the BBC is in a tricky place financially. A BBC insider said the decline in the number of people paying the licence fee made them “gasp” and was a big factor in the UK national broadcaster recently announcing £500M in cuts, including 2,000 layoffs. Income from the license fee was also the driving factor behind the BBC posting a deficit of £121M against a planned deficit of £33M, it said.
New Director General Matt Brittin, who will be quizzed by press over the next hour, is overseeing the 2,000 layoffs, which expands on an existing savings target worth £1.5B. The previous target of a reduction of 500 public service roles by March 2026 fell short by around 100 and was therefore “not fully achieved,” according to today’s report.
More detail recently emerged about the shape of the near-future cost-cutting, including that spend on TV, radio and news will be cut by £80M over the next three years and TV development spend will fall by 15%. Total content spend fell last year by £70M to £2.5B, according to today’s report.
In the 256-page tome, Brittin described the layoffs as “necessary” in the face of “a decline in licence fee sales, combined with cost inflation and a challenging commercial market.” This further “deteroriated” in the second half of 2025, according to the report, which covers the year to 1 April 2026.
“Making the savings we require will not be easy and will inevitably have an impact on what we make and how we deliver it,” wrote Brittin. “We have to ask ourselves, honestly: if we were inventing the BBC today, what would we do? Then respond with clarity, pace and purpose.”
With further pressure on commercial revenue, BBC Studios, the BBC’s commercial producer-distributor, had a solid year, with EBITDA rising by 17% to £267M and revenue remaining stable at £2.2B. BBC Studios cited “strong performance” from streamer BritBox International and Bluey. It returned £377M to the BBC and is on track to meet its five-year returns target of £1.5B. More than 60% of UK TV exports to the U.S. come from BBC Studios, according to Brittin.
Jake Kanter contributed.
