A FALLING audience share poses a risk to the BBC's licence fee income, a new report has found.
The National Audit Office (NAO) said viewing habits in recent years have "shifted dramatically" particularly among younger audiences, with a move away from watching television to streaming and online viewing on demand.
The report found this has created "some uncertainty over the BBC's financial future".
It states the BBC's licence fee income fell by £310 million between 2017-18 and 2019-20, to £3.52 billion.
There was a 450,000 fall in the number of non-over-75 households buying TV licences - due to changes in audience viewing habits and more of these households qualifying for a free over-75 licence.
The NAO said, while the BBC had made substantial savings in recent years, it is yet to tackle the most difficult aspects of its savings programme.
It generates some income from commercial activities, such as creating and selling television programmes, but "remains heavily reliant on the licence fee".
The report also states the broadcaster was "slow to change" on issues such as the fall in viewing by younger audiences, said the NAO, with "still no central strategy for tackling" the problem.
The NAO said "while the BBC remains the most used media brand in the UK, its share of younger audiences has been under pressure".
"Falling audience share poses a financial risk as people are less likely to pay the licence fee if they do not view licensable content," the report found.
Gareth Davies from the NAO said: "The BBC faces significant financial challenges as it embarks upon licence fee negotiations and its mid-term charter review.
"It has made significant cost savings and has identified the need for more with licence fee income under pressure.
"As decisions about the licence fee are made, the BBC needs to develop a clear financial plan for the future, setting out where it will invest and how it will continue to make savings.
"Without such a plan, it will be difficult for the BBC to effectively implement its new strategic priorities."
A BBC spokeswoman said it had "made significant savings and increased efficiencies, while maintaining our spending on content, and continuing to be the UK's most-used media organisation".
"We have set out plans for urgent reforms focused on providing great value for all audiences and we will set out further detail on this in the coming months," she said.
"The report also stresses the importance of stable funding for the future, which we welcome as we begin negotiations with government over the licence fee."
