UK Weighs Making Netflix Users Pay License Fee to Fund BBC

(Bloomberg) -- The UK is considering making households who only use streaming services such as Netflix and Disney pay the BBC license fee, as part of plans to modernize the way it funds the public-service broadcaster.

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Extending the fee to streaming applications is on a menu of options being discussed by Prime Minister Keir Starmer’s office, the Treasury and the Department for Culture, Media and Sport, according to people familiar with the matter who asked not to be named discussing internal government deliberations.

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Alternatives under discussion include allowing the British Broadcasting Corp. to use advertising, imposing a specific tax on streaming services, and asking those who listen to BBC radio to pay a fee.

The government is the early stages of examining how to overhaul the funding of Britain’s public broadcaster when its current 11-year charter ends on Dec. 31, 2027. Ministers are looking to either retain and alter the current television license fee model or scrap it and instead fund the BBC through alternative models such as taxation or subscription. That’s because viewing habits have changed as users gravitate toward on-demand services.

The talks are sensitive because the UK’s national broadcaster is often viewed as a key vehicle for the country’s soft power around the world. But the BBC — which is committed to maintaining impartiality in its editorial output — also frequently faces criticisms of bias from both the left and right of the country’s political spectrum.

Another option is to leave the license fee largely as it is, with a few tweaks, a continuation of uprating, and better enforcement, a person familiar with the internal deliberations said. If there were an obvious alternative model, the license fee would have been scrapped already, they added.

Government discussions remain preliminary and nothing has been decided, the people said. A spokesperson for the DCMS said in a statement that they wouldn’t comment on “speculation,” adding: “we will provide more details about charter review plans in due course.”

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The license fee dates back to 1946, when consumers watched programs at the time of broadcast. It currently costs households who watch live TV or use BBC iPlayer £169.50 ($210.60) a year, an amount that usually rises annually with inflation. Even if they don’t watch BBC programs, households are required to hold a TV license to view or stream programs live on sites including YouTube and Amazon Prime Video. However it’s not needed by those who only watch on-demand, non-BBC content.

License fee income in 2023/24 totaled £3.66 billion, little more than the £3.51 billion raised in 2010/11, according to government data. While expanding the fee to cover streaming services would address the shift from linear viewing to video-on-demand, it also risks a backlash from consumers who already pay subscriptions for the same services.

“Forcing streaming service users to cough up the license fee would truly be one of the most bonkers ideas ever concocted,” said John O’Connell, chief executive of the TaxPayers’ Alliance, a pressure group that campaigns for lower taxes. “Far from modernizing the BBC’s funding system, it would only further entrench the already archaic nature of the hated TV tax.”

A YouGov poll commissioned for the Sunday Times found that 36% of voters favor abolishing the license fee and funding the BBC through general taxation, with 49% opposed.

Other options under consideration include: imposing a specific tax on streaming; asking people who listen to BBC radio to also pay the license fee; and making users of the BBC’s on-demand app pay a subscription fee rather than the license, mirroring the business model of services like Netflix, Disney, Amazon Prime and Apple TV. Ministers are also looking at tiering the license fee to ensure lower-income households don’t pay the same rate as more affluent users.

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“We want everyone to get value from the BBC,” the BBC said in a statement. “We look forward to engaging with government on the next charter and securing the long term future of the BBC.”

Culture Secretary Lisa Nandy told BBC TV earlier this month that she has “already started initial discussions with the BBC leadership about the charter review” and hopes to “future proof our national broadcaster until well into the latter half of this century.”

Nandy later clarified that funding the BBC through general taxation is “not something we’re considering” after the Sunday Times reported that she had looked at that option. The newspaper reported that her preferred option was to abolish the license fee and that she wants to turn the BBC into a mutual organization to give direct control and ownership to the public.

Such a move would allow the government to address the rising fee evasion rate, which reached a high of 10.3% in 2022-23, according to a House of Commons report. The BBC estimates that every percentage point reduction in the evasion rate amounts to an extra £43 million of revenue, the report said.

Separately, Nandy has described the license fee as “insufficient” and “deeply regressive,” pointing to the number of women who are prosecuted for being unable to pay it, and its flat fee which means poorer people pay proportionately more than others.

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Those comments were seen as unhelpful inside Number 10, because it’s not certain the government will decide to scrap the license model, one of the people said. Nandy’s approach to the issue so far has not impressed people in Starmer’s office and the most important part of her brief hasn’t begun well, they said. Number 10 and Nandy’s office declined to comment.

--With assistance from Joe Mayes.

(Updates with BBC comment in 13th paragraph.)

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