4th Report - BBC Royal Charter Review

We agree with the Chair of the BBC that this Charter review represents a fork in the road for the BBC. Without change our broadcaster will be left to shrink and decline. Given the benefits the BBC brings to our national life, including support for the creative economy, talent creation, social cohesion and our democracy, this cannot be allowed to happen. (Conclusion, Paragraph 25)

This is also a moment of opportunity for us as a nation to say that we want an ambitious and innovating BBC that can meet the challenges of the ever- changing media environment, compete with global platforms, and continue its foundational role as part of British life. (Conclusion, Paragraph 26) Options for funding the BBC

The current TV licence fee is outdated and no longer fit for purpose: it does not reflect the way people watch television now, and the amount of income it generates is declining year on year. If the government does not act now, and the pattern of non-payment of the licence fee continues, there will not be a BBC as we know it by the end of the next Charter period. (Conclusion, Paragraph 59)

The best next step is for the government to reform the licence fee, so it reflects modern media consumption and is no longer linked to a television set. This would be an easier sell to licence fee payers if expanding the base is paired with a drop in the individual cost. There are strong arguments for a household levy, but it would be a difficult model to introduce in the short term given the significant implementation challenges. Nevertheless, the government should not have ruled out this option entirely. (Conclusion, Paragraph 60)

We recommend that in the White Paper on the BBC Charter review the government sets out steps to broaden the scope of the licence fee in time for the start of the new Royal Charter in January 2028. At a minimum, the reformed fee should no longer be linked to a particular device or activity. 53 The intention of broadening the scope of the licence fee should be to capture a greater number of households, which in turn should lead to an increase in revenue. This should be done on the condition that the cost of the individual licence fee is decreased, as long as doing so does not reduce the sustainability of the BBC’s income and ability to fulfil its public purposes. (Recommendation, Paragraph 61)

We urge the government to keep an open mind on a household levy as a potential future model for funding the BBC. When it responds to its consultation on the Green Paper, the government should also set out the level of interest it received in a household levy. (Recommendation, Paragraph 62)

All of the other funding options have drawbacks. General taxation would risk the BBC’s independence. A levy on streaming services would be unlikely to raise sufficient revenue and could be counterproductive. Advertising would incentivise the BBC to focus more on commissioning commercial programmes and less on non-commercially viable content that is nevertheless valuable. It would also disrupt the business models of commercial public service broadcasters and radio. In addition, we believe there is a public appetite for media that does not carry advertising. Subscriptions would change the BBC into a very different media provider and a partial subscription model would inevitably lead to less investment in the public service genres that we want from the BBC, reduce the distinctiveness of the BBC brand and undermine universality. (Conclusion, Paragraph 63)

We do not support a paywall for domestic audiences to watch older content on iPlayer. This would make it more difficult for the BBC to deliver a universal service. However, we agree that there is potential for the BBC to earn revenue from limited older content on iPlayer and from its extensive archive. We do not expect revenue from this to be transformative and in no way could it come close to representing a sustainable funding model. (Conclusion, Paragraph 64)

We recommend that the government and BBC commission an independent assessment of the likely economic impact of earning revenue from limited older content on iPlayer for the BBC and other commercial broadcasters and of exploiting its extensive archive. (Recommendation, Paragraph 65) BBC operational efficiency

We understand why the BBC might have a strategy to bid for content that would attract audiences, especially younger viewers. However, at a time of constrained resources, the BBC should not be paying over the odds for 54 overseas content, particularly when it’s bidding against other commercial UK broadcasters to do so. We do not believe that this provides value for money for the licence fee payer. (Conclusion, Paragraph 70)

As the BBC leans into the creator economy across the country, it should strategically develop its current estate with facilities that can harness the potential of new media and support the creator economy. It would be a statement of the BBC’s intention to connect with creators, drive skills and give a stronger voice and greater opportunities to more communities. (Conclusion, Paragraph 72)

We recommend that the government raise BBC Commercial’s borrowing limit to enable BBC Studios to invest further, grow and put back more profit into the BBC. (Recommendation, Paragraph 76)

The BBC is currently unable to put all its back catalogue onto iPlayer because it no longer holds the intellectual property (IP) for many of its programmes. Since the introduction of the Terms of Trade rules, the IP is held by the independent production company which was commissioned to make the programme. (Conclusion, Paragraph 80)

We urge both sides to engage constructively in discussions on the ‘rebalancing’ of intellectual property rights. The aims should be to: ensure the BBC can provide a competitive offer on iPlayer for audiences; get value for the licence fee payers; and continue to support the independent production sector, particularly the smaller companies across all parts of the UK. We ask the BBC to update us on progress before the end of 2026. (Recommendation, Paragraph 81)

We recommend that the BBC explore the opportunity for developing an international TV licence so that it can maximise the potential global audience and increase its revenue. (Recommendation, Paragraph 83)

The BBC has already made significant progress in moving its activity outside of London, with creative clusters playing an important role in attracting regional investment and stimulating economic activity. It has done so with a public service ethos, and we are concerned that giving it a specific public purpose with a focus on economic growth risks incentivising it to act contrary to that. (Conclusion, Paragraph 87)

The decline of local media and the growth in news deserts will only lead to a less informed society and less public engagement with local events. The BBC plays a part in addressing this challenge and can better do this through partnerships such as the Local Democracy Reporting Service. (Conclusion, Paragraph 90) 55

Local and regional news is a delicate ecosystem involving both public service and commercial operators, in addition to social media. The BBC has to define its role within this ecosystem. It should aim to support, not undercut or replace, other regulated news providers. In doing so, it risks reducing the reach of trusted voices in some local areas and among certain demographic populations, and giving more space to the unregulated voices on social media. The BBC should value the vital role played by BBC local radio. (Conclusion, Paragraph 91)

The BBC World Service is the BBC’s best asset for competing with other international news providers delivering trusted news and accurate information to a global audience. It is one of the UK’s best assets in combatting misinformation and disinformation around the world and a unique conduit of soft-power. The government should not assume that the World Service will always be there, because once it is gone, it is gone forever and its market share will be taken by international media that is hostile to the UK’s interests. (Conclusion, Paragraph 94)

We recommend that the government take back full funding for the BBC World Service with a view to maximising its potential. It should be considered a national security and soft power asset that departments across government value, take advantage of, and resource. (Recommendation, Paragraph 95) Independence and governance

The BBC’s independence, supported by effective checks and balances to ensure it is accountable, is fundamental to its existence and operation. It is also crucial to maintain the public’s perception of the BBC as separate from the government of the day. It is the national broadcaster, not the state broadcaster. (Conclusion, Paragraph 99)

The BBC has reviewed its processes for handling editorial standards, reformed its internal editorial standards committee and recreated the post of Deputy Director-General, handing them responsibility for editorial standards policy. We agree with the Secretary of State that these are positive steps. However, we will wait to see how any future incidents are handled. The BBC needs to be able to acknowledge when things go wrong; it needs to show it can respond promptly; and there needs to be accountability. It must also be able to robustly defend decision making when appropriate. We are concerned that, as of the time we agree this report, the BBC has been 10 months without a permanent Head of News. (Conclusion, Paragraph 103) 56

The experience of recent high-profile crises has demonstrated the need for robust and effective leadership and governance structures at the BBC. We want the BBC Board members to be chosen according to the skills, experience, and vision needed to lead the BBC through future challenges and build a robust and dynamic, modern national broadcaster. (Conclusion, Paragraph 111)

We recommend that the Charter remove both political and geographical appointments to the BBC Board. The government should also consider whether the appointment of the Chair of the BBC could be made by an independent body, provided it was subject to the approval of the Secretary of State. We further recommend that the Charter include provisions setting out a process and circumstances by which a board member can be removed ahead of their term ending. The BBC must recognise that ultimately board members are accountable to licence fee payers and their processes must reflect that accountability. (Recommendation, Paragraph 112)

The fact that the BBC’s existence is called into question every 10 years creates an avoidable opportunity for political interference which has damaged the perception of the BBC’s independence. It also creates a disproportionate distraction for the BBC when it needs to be focused on its mission to inform, educate and entertain. We therefore recommend the next BBC Charter be a permanent charter and not include an end date. (Recommendation, Paragraph 116)

The removal of the end date needs to be accompanied by robust mechanisms to enable periodic reviews of the BBC’s funding and public purposes, including a formal structure for how the government intends to engage stakeholders and the public. We recommend that these review processes are set out in the new Charter. (Recommendation, Paragraph 117) Looking to the future

The growth of misinformation and disinformation is an unwelcome development in an uncertain world. Coupled with the rise of AI and algorithms that disproportionately reward engagement, it has real-world consequences eroding social cohesion and inciting disorder, as we have seen in Southport and other parts of the UK. In addition to its role placing accurate news on social media, we would urge the BBC to continue to work with partners, including Ofcom, in this area. This should include media literacy and AI literacy. (Conclusion, Paragraph 123)

We recommend that, subject to the BBC being resourced sufficiently, the Charter gives the BBC an additional responsibility to counter misinformation and disinformation. This is clearly not solely the responsibility of the BBC 57 and it is not a problem that the BBC can solve by itself. However, through partnerships with other organisations, and with sufficient resources, the BBC could have significant impact. (Recommendation, Paragraph 124)

The challenge of providing accurate, impartial and trusted news to audiences is growing as more people access news through unregulated platforms. It is a particular challenge when it comes to the younger audiences. This trend is exacerbated by the fact that AI is becoming more important in the production and distribution of news. AI can be a tool to provide good quality, accurate and verifiable news and factual information to a large number of people across the world. However, it can also be used to disseminate misinformation and disinformation, and in high volumes that make it less likely for high-quality news to be visible. In this context, accurate, impartial and trusted news must be made more easily discoverable on platforms where people are choosing to access news, and where the risk of misinformation and disinformation is the greatest. (Conclusion, Paragraph 127)

The BBC remains a highly trusted news provider. It must therefore continue to innovate in how and where it delivers news, so it can be found in the places where audiences are, particularly young audiences, and in formats that are appealing without losing its own values. (Conclusion, Paragraph 128)

We recommend that the government legislate for a prominence regime specifically for trustworthy news content, including that from the BBC, on social media. We note that the government is currently consulting on a definition of “trustworthy news”. The government needs to ensure that any approach to defining trustworthy news providers is transparent and independent, and free from political influence. We may return to this matter when we see more detail on the government’s criteria to determine what constitutes a trustworthy news provider. (Recommendation, Paragraph 129)

The government is consulting on whether DTT is switched off in 2034 or

The transition to IPTV may bring benefits, but will also mean a more competitive environment for the BBC to operate in. It cannot presume that its content will be easily found on a smart television. The prominence regime in the Media Act needs to be fully implemented as soon as possible. (Conclusion, Paragraph 135) 58

As part of a programme of interventions to support the BBC, and broader public service media, we recommend that the government legislates to put a button on the remote control for a smart TV sold in the UK that provides a short cut to public service media destinations on the user interface. (Recommendation, Paragraph 136)

We received a range of proposals as to what the BBC could do if given a new public purpose on research, innovation and technology. The experience from 2007 to 2017 shows the benefits that putting such a public purpose on the face of the Royal Charter can bring. (Conclusion, Paragraph 142)

The BBC is well placed to innovate in areas where it can demonstrate public service values in its distribution, for example in the development of public service algorithms. We see value in the BBC innovating in how it fulfils the aim of meeting audiences where they are, on the platforms that they use, and in new formats, including user-generated and creator content. (Conclusion, Paragraph 143)

We recommend that the BBC be given a public purpose on innovation and technology. It should be broad and high-level and enable the BBC to interpret how it applies its resources to the challenges of the current media environment in pursuit of its public purposes. It should not be tied specifically to driving economic growth. (Recommendation, Paragraph 144)

The government has made it clear that there should be more collaboration between the PSBs. This is even more important given the pace at which the need for scale is driving consolidation in the sector. We hope that the enthusiasm for working together on iPlayer represents a positive move towards more partnerships between British broadcasters. (Conclusion, Paragraph 152)

We strongly support the opening up of iPlayer to content from other PSBs. We understand Channel 4 are in discussions with the BBC about the opportunity, which would build upon the arrangement already in place between the BBC and S4C. We accept that it may not be straightforward. However, we believe the need for scale in a future media environment requires ambition, and a broader, diverse range of content from other public service media will benefit audiences and the industry in the long term. (Conclusion, Paragraph 153)

With adequate safeguards around the protection of original content and intellectual property, we support the BBC expanding its activities on YouTube to make sure it is reaching audiences, particularly young audiences, where they are. The BBC should clarify if they consider YouTube-first content to be covered by the Terms of Trade for the independent production sector. (Conclusion, Paragraph 160) 59

We would support the BBC exploring the potential for earning revenue on its YouTube content both domestically and overseas, as it does with its other international commercial activities. (Recommendation, Paragraph 161)

We recommend that the government continues to press YouTube to agree a prominence regime that works for the BBC and other UK public service broadcasters. It should make clear that legislation remains an option if agreement cannot be reached. (Recommendation, Paragraph 165) 60