The BBC is currently funded through an annual TV licence fee but Ministers are expected to launch a formal review into the future of the public broadcaster’s funding model in the autumn.
The review is set to examine alternatives to the licence fee, which is due to increase to £172 a year next April, after being frozen for two years.
The BBC’s royal charter, which includes the corporation’s funding model, expires at the end of 2027, placing a deadline on an alternative being agreed upon.
One alternative to the licence fee could be the introduction of a voluntary subscription service which would allow viewers to pay a monthly or annual fee to access some shows. Yet this would mean that the broadcaster is no longer offering a freely accessible universal service.
Another possibility is for the BBC to introduce external advertising to generate revenue, a model already adopted by other public broadcasters. But the state of the market could lead to inconsistent income for the BBC.
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A monthly broadband levy has also been considered as a new funding model, which would add a fee to existing broadband connection bills. Some European countries like Sweden have introduced a separate TV tax to fund public service media. This can be income-based meaning wealthier households pay more for services.
The UK Government could also fund the BBC with an annual grant, with the Foreign and Commonwealth Office already contributing to the BBC World Service. But there are fears about this impacting the broadcaster’s independence.
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The Times reports that a hybrid funding model has “gained traction” among Tory MPs which could see the introduction of a two-tier model with the licence fee being reduced with some content requiring an additional subscription charge.
The publication also suggested that media giants such as Netflix, Amazon, Apple and Disney could be taxed to preserve UK broadcasting with the revenue gained.
A spokesperson for the Department for Digital, Culture, Media and Sport said: “We remain committed to reviewing the licence fee model ahead of the next charter period to explore the potential for alternative ways to ensure the BBC remains appropriately funded over the long term.”
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