Half a million households cancelled their licence fee last year as the BBC struggled to connect with younger audiences drifting away to Netflix and YouTube.
The stark extent of the BBC’s challenges are set out in the corporation’s annual report, which shows the total number of British households paying the £169.50 licence fee fell to 23.9 million, suggesting a growing number of people feel able to go without BBC services.
The fall has hit the BBC’s income at a time when its finances were already struggling owing to a decade of funding cuts and high inflation.
The BBC also revealed the large salaries paid to some of its biggest stars, with Gary Lineker once again topping the list on £1.35m a year. The Match of the Day host’s contract is due to run out next year, amid speculation over whether he will remain after a long-running series of public clashes with the corporation that culminated in a staff mutiny last year.
Huw Edwards, who left the broadcaster earlier this year after a media scandal, was the BBC’s third highest paid star on £475,000 but spent most of the year signed off on medical leave.
The pay disclosures only cover payments directly from the BBC, meaning they do not cover income paid via third parties – meaning income paid to Amol Rajan and Fiona Bruce on University Challenge or Antiques Roadshow is not included.
Some of the most worrying numbers for the BBC show how young people increasingly feel the broadcaster is not relevant to them. Just 69% of Britons aged under 16 said they consumed any BBC content in an average week, with a particular weakness among people from an ethnic minority background.
The figures are even worse for younger age groups, with under-7s in particular tuned out. The BBC says it is struggling to compete against “global media companies” for these crucial future viewers.
The annual report comes at a tricky time for the corporation, which has until the end of 2027 to reach a new funding deal with the government. The prime minister, Keir Starmer, and the new culture secretary, Lisa Nandy, have expressed broad support for public funding of the BBC, unlike the previous government that vowed to abolish the licence fee.
However, it remains to be seen whether it will seek to maintain the existing licence fee model or follow the lead of many other countries and replace it with a different form of public funding, such as a levy on household bills, direct national funding, or a partial subscription.
It is a criminal offence to watch any live television or use BBC iPlayer without a licence, with tens of thousands of people – disproportionately women – prosecuted every year. Many of these cases are dealt with through the increasingly controversial single justice procedure.
The director general, Tim Davie, said he welcomed the new government’s “broad support of universal, public service broadcasting” but said the BBC faced “considerable financial and market challenges”. He said further job cuts would be on the cards, as money was diverted away from traditional television and radio channels: “What’s under way is a massive transfer of skills and resources from linear to digital.”
The BBC has already been that hinting the government should consider shouldering some of the cost of maintaining the BBC World Service, which used to be funded by the Foreign Office until the former chancellor George Osborne loaded the cost on to the broadcaster.
The BBC chair, Samir Shah, said the financial challenge was stark: “Over the last 10 years we’ve lost 30% of our income.”
Despite substantial investment in youth programming for BBC Sounds, at a time when the podcast industry has been expanding, the number of 16- to 34-year-olds using the BBC’s audio app flatlined at 590,000.
The audience for BBC television news continued to fall, with just 46% of the British population watching any BBC news or current affairs programming in a given week, with that audience propped up by older age groups.
All of this leaves the BBC facing a challenge. Older audiences, who grew up in a time where only a few broadcast channels were available, remain loyal to the broadcaster, with 96% of people aged 55 and over regularly using BBC services.
But in order to attract new, younger audiences at a time of financial restraint, the BBC will need to cut traditional broadcast channels enjoyed by older viewers in an attempt to reach the younger audiences who are increasingly switched off.