BBC's serious challenges laid bare in annual report

By Katie Razzall Culture and Media Editor Published 6 minutes ago Scott Mills' earnings and those of other highly paid presenters may be making headlines , but there is a bigger story contained in the BBC's annual report. Set against the backdrop of the BBC's ongoing negotiations with the government over a new royal charter, the document features words such as "challenges", "financial pressures" and even "jeopardy". They were repeated in a press conference with senior leaders ahead of its release. With its current charter set to expire next year and sales of TV licences declining, the BBC needs to persuade the government that its role has never been more vital - and that it needs a new funding model to deliver it. The optics around this are a strategic choice. I can't remember an annual report where the difficulties for the BBC have been so front and centre. It was a message for the government and a new prime minister in waiting. But when the new director general said this is "a moment of real jeopardy, not just for the BBC but for public service broadcasting and the UK as a whole", he has a point. The dominance of the global streamers and changes in media habits are leaving our media institutions very challenged (to coin the BBC's phrase). For the BBC, there are bald facts in this report. The number of households paying the licence fee fell by about half a million last year. The number of TV licences in force has dropped by two million (or 8%) in five years - from 25.3 million in 2020-21 to 23.3 million in 2025-26. Is this rejection an anti-BBC choice - or a reaction to the fact that, as DG Matt Brittin put it to MPs last week , the licence fee system itself is a "busted flush"? The BBC would argue it's the latter. On Tuesday, Brittin said the licence fee model was focused on "yesterday's behaviour". The rules are that you have to buy a licence fee if you watch live TV or use the iPlayer. Before the days of streaming, that meant, for example, if you watched ITV and never turned on BBC, you still needed a TV licence. (By the way, if you listen to BBC radio only, you don't need to pay the fee - which is also an anomaly.) The BBC is arguing - with some justification - that licence fee payment is down in large part because people aren't consuming live TV in the way they used to. That trend won't reverse. In fact, it will accelerate. They say fewer than 80% of households pay the fee, but 94% of adults access the BBC. (Although that's not a like-for-like comparison because several adults often live in one household.) The BBC says licence fee income - the main source of its funding - is down by £1.2bn, or about a quarter, in real terms since the current charter began in 2017. That was caused by freezes in the licence fee through some of that period, as well as changes in audience behaviour. But those audience shifts are more dramatic if you drill into the generational divide that is once again evident in this year's report. While the BBC is still the