TV licence fee frozen as future remains in doubt

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18th January 2022

Bite-sized business news from the UK and beyond
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Today's stories
  • TV licence fee frozen as future remains in doubt
  • Amazon shelves ban on UK Visa credit cards
MEDIA
TV licence fee frozen as future remains in doubt


What’s going on?
Yesterday the government announced that the TV licence fee, which funds the BBC, will be frozen at £159 until 2024 and will review whether the model is still fit for purpose.


Why is this important?
2022 marks 100 years since the creation of the BBC but it could be in for a less than happy centenary as the government is not increasing its funding in line with inflation – effectively an income cut.

The government said the move is to help household finances at a time when the cost of living is rising at the fastest rate in a decade.

The licence fee contributes £3.7bn or three-quarters of the BBC's annual £5bn revenue. The remainder comes from the commercial arm (think selling the rights to Strictly Come Dancing to over 50 countries).

It pays for everything from BBC TV and radio to the website, podcasts and iPlayer and is a legal requirement of any household watching live TV. The corporation says in light of the freeze it will have to make some tough choices that will impact audiences.
 
The government also announced that the days of the fee first introduced in 1946, could be numbered.

Critics argue that in a world of Netflix, YouTube and other streaming platforms, a licence fee model is outdated and increasingly irrelevant for young people who are less likely to watch traditional TV.

The BBC’s Royal Charter, which guarantees its funding via the TV licence, ends in 2027.

Possible changes to the licence could include pivoting to a monthly subscription model or introducing advertising like on ITV and Channel 4.

 
Takeaway
Debate over the TV licence have been brewing for years with the emergence of streaming services adding more questions. The timing of the latest round of discussion – when the prime minister faces pressure over his leadership – raises questions that it’s more of a political distraction rather than one to help household budgets.
RETAIL
Amazon shelves ban on UK Visa credit cards

Today was supposed to be the final day that Amazon would accept UK issued Visa credit cards for purchases on its site, but a last minute deal has put the plans on hold.

It means that for the time being Visa credit card customers will not need to update their payment details on Amazon.

It was last November that the world’s biggest online retailer went head-to-head with one of the largest card issuers in the world.

Amazon claimed Visa’s transaction fees were too high. Since Brexit the cost of cross-border transactions between firms in the UK and the European Union have risen. Visa has increased their fees fivefold to 1.5%. These costs are paid for by Amazon itself or merchants on its platform which either gets passed on to consumers or dents company profits.

But in an email to customers yesterday, Amazon said it was "working closely with Visa on a potential solution". No new date for the block has been announced which suggests a long-term deal could be on the cards.

The loss of credit card payments would have been a huge blow for Visa as almost 90% of Brits shop on Amazon.
Stat of the day

Last year funeral costs fell for the first time since 2003 to £4,056 
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