The BBC is facing a deepening financial crisis as the number of households paying the licence fee fell by 539,000 in the past year, far exceeding the 300,000 drop recorded a year earlier. The corporation's annual report now shows 23.3 million TV licences in force, a decline that has alarmed executives and prompted urgent discussions about the future of the funding model.
Director General warns of 'real jeopardy'
Matt Brittin, the BBC's director general, described the situation as a 'moment of real jeopardy' for the broadcaster. He stated that the current licence fee 'ties us to the past' and called for a fundamental rethink of how the BBC is funded. 'We have to ask ourselves, honestly: if we were inventing the BBC today, what would we do?' Brittin said in the annual report.
Declining licence fee income
The BBC's licence fee income rose slightly to £3.9 billion after the annual levy increased to £174.50 in April 2025, but the corporation still recorded an operating loss of £121 million for the third consecutive year. The report notes that licence fee income is around a quarter lower, about £1.3 billion in real terms, than in 2017 when the current royal charter was agreed. Changing audience behaviours, including the rise of streaming services like Netflix and YouTube, have had a 'significant adverse impact on licence fee income', the BBC said.
Top earners revealed
The annual report also disclosed that the BBC's highest-paid on-air talent in 2025-26 was Scott Mills, who earned £750,000 before being sacked over allegations about his personal conduct. The current top earner is radio presenter Greg James, earning up to £445,000, followed by Stephen Nolan (£430,000), Vernon Kay (£410,000), and Laura Kuenssberg (£410,000).
Cost-cutting measures and future funding
The BBC is aiming to save approximately £500 million over three years, with as many as 2,000 job losses planned. Brittin is conducting a root-and-branch review of the BBC's output. Among the options being discussed to replace the licence fee is expanding it to cover anyone watching streaming services such as Netflix, Disney+, or Amazon Prime, potentially adding the fee to subscriptions. However, ministers have ruled out a household levy, deeming it a new tax.
Chairman acknowledges controversies
Samir Shah, the BBC chair, acknowledged the impact of recent controversies, including the Panorama edit of President Trump's speech on 6 January 2021, breaches of editorial guidelines by 'Gaza: How to Survive a Warzone', and broadcasting errors at Glastonbury and the Bafta film awards. 'We know that people care deeply about these mistakes. They affect confidence in our journalism, trust in the BBC as a public institution, and perceptions about how effectively we are held to account,' Shah said.
Despite the challenges, Brittin emphasized the BBC's ability to reinvent itself, citing its restructuring during World War II, repurposing during Covid, and spinning up services in conflict zones. 'We need, collectively, to call on that sense of urgency now,' he added.
