The BBC will lay off 500 more staff by March 2026 as its annual report paints a worrying financial picture including a near-doubling of its deficit to almost £500M ($646M).
BBC headcount has fallen by 2,000 – or 10% – over the past five years, the corporation said, and a further 500 net public service posts will go over the next 20 months. A voluntary redundancy scheme was launched today. Headcount this year sat at 17,611. “Over the course of the next two years, we will look to further move the money we have into the priority areas that provide real value for audiences,” the BBC said. “This means, in public service, we will close and transfer roles in some areas, and create roles in growth areas.” Severance payments topped £50M this year, according to the report, a three-year high. The news comes with rivals ITV and Channel 4 laying off around 200 staff apiece amid the difficult economic backdrop.
The layoffs are being actioned as part of the BBC’s bid to become a “leaner, more agile organisation” but the annual report painted a worrying financial picture.
This year’s operating deficit increased by more than a third to £263M and is projected to nearly double to a whopping £492M by this time in 2025, it revealed. Chief Operating Officer Leigh Tavaziva put this down to the “significant funding impact” of the government’s decision to increase the license fee by a lower-than-inflationary rise, which was rubberstamped by the Conservatives late last year. BBC Director General Tim Davie told journalists today he has met new Culture Secretary Lisa Nandy and there is “no change to the funding agreement” that will see the fee rise with inflation over the next three years.
Tavaziva also cited mega savings that the corporation is currently implementing as impacting the hefty deficit, along with “exceptional spend in-year to transform the public service as we invest in the digital transition and video content.” The BBC has so far delivered £323M of a £500M savings plan that was unveiled two years ago, while it is making further savings of £200M over the next four years. Content spend will be hit, the BBC has previously said, and it fell by more than £100M in 2023-24 to just shy of £3B during a year that contained the King’s Coronation and a UK-hosted Eurovision Song Contest.
Writing in his report note, Davie said “below inflationary license fee settlements have chipped away at our income over many years and have put serious pressure on finances.”
Of serious concern is the rapid rise of license fee refuseniks over the past few years. While remaining comfortably the BBC’s biggest income driver, license fee income fell by 2% to £3.66B last year as 500,000 fewer people paid their fee. That figure has fallen by 2 million since 2018, our analysis found, and is now down to 23.8 million – just over one-third of the population. Tavaziva stressed that “the vast majority of our audiences remained commited to paying the licence fee.”
The new Labour government has made positive noises about the license fee funding model since taking charge, with Prime Minister Keir Starmer pledging a commitment to the £169.50 per year annual fee. It will be up for renewal in 2027, at which point a broader decision will be made about how the BBC is funded.
BBC Studios hit hard
It was also a difficult year for the BBC’s commercial arm, BBC Studios, which has been under pressure of late to generate more cash to negate declining license fee income.
After posting record profits last year, turnover at the Tom Fussell-led unit dipped below £2B and EBITDA tumbled by around 20% to £202M, while its 2023 operating surplus of £106M flipped to a deficit of £56M and returns to the BBC fell by around £40M. The figures show that Fussell’s lofty target for the producer-distributor to double revenues to £3.2B by 2027-28 is still quite a way away. BBC Studios said BBC Commercial is “on track to meet its five year returns commitment of £1.5B by 2026/27.”
The report set BBC Studios’ turnover and profits declines against a “backdrop of very challenging operating conditions, with softness in the commissioning and advertising sales market.” BBC Studios, which had its borrowing limit raised to £750M in March, also splashed £255M to acquire ITV’s shareholding in JV streamer BritBox International.
This year also saw the launch of Russell T Davies’ regenerated Doctor Who on Disney+ globally for the first time, “transforming Doctor Who into a global franchise,” according to the report. Our analysis last week found that the future of this deal hangs in the balance and this could have a material impact on BBC Studios’ future financials.
BBC execs have just addressed the press over the financials and other live issues such as the Strictly Come Dancing scandal.