But it would also be a major blow to the BBC's finances as it tries to compete with privately funded news media and the like such as Netflix and other consumer streaming services funded by consumer subscriptions.
In November, the government began negotiations on how much the TV license would cost, part of a five-year financing agreement to begin in April 2022.
The Department of Digital, Media, Culture and Sports declined to comment when asked about the Mail on Sunday report.
Cultural Secretary Nadine Dorries said the license fee settlement would be the last such agreement, tweeting a link to the Mail on Sunday article.
"Now is the time to discuss and debate new ways to fund, support and sell great UK content," she said on Twitter.
The BBC declined to comment on Dorries' tweet or Mail on Sunday report.
The opposition Labor Party said the funding cut was politically motivated.
"The Prime Minister and the Minister of Culture seem to be keen on attacking this great British institution because they do not like its journalism," said Lucy Powell, Labor legislator and head of cultural policy.
The BBC's news output is regularly criticized by British political parties. Its coverage of Brexit issues - central to the Johnson government - has long been seen as too critical by supporters of leaving the EU.
Last week, a Conservative lawmaker said BBC coverage of parties in Johnson's Downing Street residence during Covid lockdowns was tantamount to a "coup attempt" against the prime minister.