BBC faces tough competition in digital marketplace, say MPs

The BBC is stuck in a “yesteryear” TV and radio era and needs more resources and regulatory certainty in order to compete in the global digital media market, MPs have warned.

The broadcaster was contending with international rivals that have no public-service remit in a race to engage new audiences, according to a report by the House of Commons public accounts committee released on Friday.

The committee said the BBC was being held back by regulatory and funding uncertainties, making the broadcaster less competitive in a fast-changing digital marketplace.

The BBC will have a funding gap of nearly £400mn a year by 2027-28, according to estimates, owing to changes to the licence fee, through which it is principally funded, and the impact of rising inflation.

MPs on the committee said they were not convinced of the BBC’s plan to achieve its online strategy or whether the £500mn earmarked for annual digital investment by 2025 would be sufficient.

BBC director-general Tim Davie told the Royal Television Society in December that the broadcaster should be “active in planning” for an internet-only future “where broadcast TV and radio are being switched off and choice is infinite” by the 2030s. Several of its services and channels have already moved online-only.

MPs also questioned the BBC’s ability to recruit and retain staff as it faces a battle with large global tech rivals for workers. The committee pointed to a 23 per cent turnover rate among staff in its digital department as of June 2022.

Meg Hillier, chair of the committee, said that “the BBC is being held back in a yesteryear of TV and radio by uncertainty over funding and regulation, and by the [culture department’s] constant delays and downscaling of national fast broadband rollout plans”.

Hillier added that the broadcaster “fulfils an essential public-service function” and must have the “planning, resources and wider infrastructure support to do so”.

Davie told the RTS the BBC needed more money from the government, but was open-minded about the “future funding mechanics” after the current licence fee deal expires at the end of 2027.

Following its January 2022 licence fee settlement with the government, the BBC estimated that it would have a funding gap of £285mn a year by 2027-28.

The gap has increased to nearly £400mn due to high inflation, in addition to its funding being cut by 30 per cent in real terms over the past 10 years.

The MPs called on the BBC to develop a detailed plan for how it could switch to an internet-only future.

The report said the digital investment plan was “heavily dependent on it being able to achieve further savings for reinvestment, but it did not say what it will do if these saving targets become unachievable”. 

A BBC spokesperson said: “We have made significant progress and continue to build plans for a digital-first BBC, which includes working with the industry and government to ensure no audiences are left behind as changes are made. We have detailed plans covering many of the topics raised and look forward to engaging further with the committee.”