The BBC warned that its future was in jeopardy after revealing a dramatic plunge in licence fee sales with a further 539,000 households cancelling the charge last year.
The BBC’s 2025/6 annual report revealed that evasion has hit an all-time high with the number of households paying the £180 a-year fee down from 23.8m to 23.3million.
The “steeper than expected” slump cost the BBC around £95m at a time when the broadcaster is making deep cuts to programmes and staff to fill a £500m “black hole” in its finances.
More than one million people have cancelled their licence in the past three years.
The BBC said the value of the licence fee had fallen in real terms by £1.3bn (26 per cent) since 2010.
However the BBC said the number of adults still using its TV, radio and digital services remained at 94 per cent of the population.
BBC bosses said the figures illustrated that the current funding mechanism was a “busted flush” in the streaming age and urged the government to back a new “sustainable” system, which would mean more people paying.
Culture Secretary Lisa Nandy this week suggested that subscribers to Netflix and Disney could have an additional payment added to cover the cost of funding the BBC.
Around 20m households currently subscribe to one or more streaming services, fewer than the declining number of licence fee payers, so the plan could still leave the BBC with a shortfall.
BBC finances ‘deteriorated’
The BBC report said: “Decline of households not requiring a TV licence due to not consuming licensable content accelerated in 2025/26 and a lighter sports year also led to fewer new licence sales.”
“Together, these factors reduced licences in force to 23.3 million at 31 March 2026, from 23.8 million at 31 March 2025.”
The report said that the “BBC’s financial outlook deteriorated in the second half of 2025” due to the “steeper than projected decline in licence fee sales” and cost inflation.
The cost of collecting the licence fee, including household visits and enforcement letters, rose from £166 to £190m despite the fall in licences in force.
An inflation-linked rise in the licence fee to £174.50 last year helped offset the sales slump, leaving the BBC with £3.9 bn of licence fee income, slightly up on the previous year.
‘Moment of jeopardy’
But evasion, running at 12 per cent, and “changing audience behaviours”, with younger audiences rejecting live TV viewing in favour of YouTube and TikTok videos on-demand, meant the licence fee was now in permanent decline.
Director-General Matt Brittin said: “This is a moment of real jeopardy, not just for the BBC but for public service broadcasting and the UK as a whole.”
The licence fee was a “straitjacket”, a model designed for “the past when audiences are living in the future” and “urgently” needed change.
It made sense for Netflix, or its subscribers, to make a contribution to the licence fee because the skills and training opportunities the BBC provides to acting and production talent “is one reason streamers can come here to make shows,” Brittin said.
BBC Chair Samir Shah added: “When 94 per cent of adults use the BBC per month yet fewer than 80 per cent of households contribute, it tells you the current funding model cannot maintain the BBC’s public service mission.”
The funding gap “is set to get wider”, Shah warned.
Scott Mills highest-paid star
There was embarrassment for the BBC when it emerged that Scott Mills, the Radio 2 breakfast show host sacked in March after allegations over an “historic relationship”, was by far the broadcaster’s highest-paid star.
Sara Cox eplaced Scott Mills, who was sacked over ‘personal conduct’ (Photo: Stuart C Wilson/Getty Images)Mills, axed after the BBC said it received new information about the alleged victim in a police investigation, saw his pay double from £360,000 to £750,000.
The pay rise represents Mills’s first full year presenting the Radio 2 Breakfast Show, after taking over from Zoe Ball in January 2025.
No charges were brought against Mills who said he fully co-operated with the police investigation at the time. He is reported to be considering lodging an unfair dismissal case against the BBC.
The BBC’s next highest-paid star is Radio 1 Breakfast Show host Greg James, who earned up to £445,000.
Sara Cox, who took over the Radio 2 Breakfast show this week, was paid £325,000 for her role presenting Radio 2 Drivetime. She can expect a major pay bump this year.
Gary Lineker, for years the BBC’s top-paid talent, taking home £1.3m last year, tumbles down the list after leaving the BBC last Summer.
Lineker was still paid £330,000 for fronting Match of the Day and FA Cup football in the months covered by the reporting period before his departure.
Stephen Nolan, the BBC Northern Ireland and 5 Live presenter is the highest paid journalist, earning up to £430,000.
Laura Kuenssberg is the second highest-paid journalist, taking home up to £410,000 for her Sunday programme as well as election night work and podcasts.
Doctor Who will return
Brittin said “Doctor Who had regenerated many times” during the past 60 years and pledged that the sci-fi show would return again. The BBC has put the show out to tender with production companies invited to propose new ways to reinvent the series, currently on pause.
Brittin said revenue from children’s hit Bluey played an important role in BBC Studios, the corporation’s commercial wing, generating £2.2bn in revenues, of which £377m was returned to the BBC to make programmes. “We need to grow more big shows,” Brittin added.
He confirmed that talks were ongoing with Channel 4 to create a new UK public-service broadcasting streaming champion. Channel 4 shows like Bake Off could appear on a new ad-funded spin off from the BBC iPlayer.
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