Market Insight

Sweden replaces radio and TV licence fee

January 03, 2019

Tim Westcott Tim Westcott Director – Research and Analysis, Programming, IHS Markit
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Sweden this week became the latest country to abolish the radio and TV licence fee. 
With effect from 1 January, the old system of a payment due from any household with a radio or TV set has been replaced by a fee levied on individuals liable for income tax aged over 18. The fee is based on 1% of taxable income, up to a maximum of Skr 1,300 ($144) per person. Anyone with no taxable income, such as full-time students, will not have to pay. 

The fee will be collected by the Swedish Tax Agency, which will pay the proceeds into a public service account which will be used to fund the country’s public broadcasters: SVT (TV), Sveriges Radio and educational service Utbildningsradion. 

The move was agreed by Parliament in November last year after an enquiry by a cross-party committee. Last year, the radio and TV fee was set at Skr2,400 ($266) per year. 
 

Our analysis
The system of funding public broadcasting by a receiver fee levied on any household with a TV or radio device, originated in the days when broadcasting was a state monopoly, but remains widespread. Sweden’s main public broadcaster SVT relied on the fee for most of its revenues – some SKr4.5 billion ($498 million) in the last reported year, 2017.

Neighbouring Denmark is phasing out its licence fee over a five-year period starting this year. Finland (in 2012) and Iceland (in 2008) have already moved to a taxation system.

With the number of linear TV channels available in most households proliferating and with timeshifted and on demand viewing on the rise, the foundations of licence fee-funded public broadcasting are weakening. In Sweden, increasing rates of non-payment were a key reason for the reform; according to government figures, the public broadcasting account had run up a deficit of between Skr200-300 ($22-33 million).

In theory, deducting the fee from each taxpayer’s monthly income will make for a smoother transition to the new system, and should also make for a more efficient collection system. IHS Markit Channels and Programming Intelligence is not currently forecasting any disruption in SVT’s annual revenues. 

Concerns over government influence over the funding of public broadcasting will be allayed by the fund being handled outside the state budget, although the government has appointed a commission to monitor the independence of public broadcasting under the new system.

If Sweden’s reform takes root without snags, other countries could also adopt similar reforms. France is preparing new legislation governing public broadcasting. In the UK, while the current BBC Charter is in place until 2027, the government is withdrawing funding for licence fees for people aged over 75 in 2020, and the BBC has launched a consultation over whether it should take over the obligation (which is expects will cost more than $900 million in 2021/20) or re-introduce some form of charging.  

Geography
Sweden
Organization
SVT
Research by Market
Media & Advertising
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