Commercial Income from BBC Worldwide
11. The licence fee is not and should not be the
BBC's sole source of income. In 1993 the National Heritage Committee
urged the BBC to institute "a restructured system to support
a more aggressive strategy for the sale of material, facilities,
services and expertise at home and abroad".[32]
The net benefit from BBC Worldwide since then is summarised in
the following table:
Table 1: Net benefit to the BBC from BBC Worldwide, 1993-94 to 1997-98[33]
| 1993-94 | 1994-95 | 1995-96 | 1996-97 | 1997-98 |
| £69 million | £53 million | £77 million | £74 million | £91 million |
There has thus been a 32 per cent increase in cash
terms in the net benefit to the BBC from BBC Worldwide over a
five year period. This hardly amounts to spectacular growth.
12. Sir John Birt believed that the recent partnerships
with Flextech and Discovery would greatly increase the BBC's commercial
revenues.[34]
The revenue from the BBC's commercial channels fell in 1997-98
and the losses on those channels increased by 7 per cent to £20
million.[35]
However, Mr Gavin attributed these losses to long-term investment
which would pay dividends as the channels became established and
the scale of the required investment diminished.[36]
Overall, he took comfort from BBC Worldwide's "strong, positive
performance" and the significantly increased cash-flow benefit
in 1996-97 compared with that in 1997-98.[37]
He noted that only one-third of the BBC's commercial revenues
came from abroad and believed that there was particular scope
for expansion of international activities.[38]
13. BBC Worldwide's Annual Report for 1997-98 states
as a target the "quadrupling of the cash that BBC Worldwide
returns to the BBC by 2006".[39]
This would equate to a cash-flow benefit in the order of £200
million or 10 per cent of current licence fee income.[40]
Cash-flow is composed of BBC Worldwide's profits and its investment
in BBC programming.[41]
Sir Christopher Bland described the target as "ambitious".[42]
Mr Rupert Gavin, who is responsible for meeting the target as
the recently-appointed Chief Executive of BBC Worldwide, termed
it "challenging, but ... achievable".[43]
14. We support the continued expansion of the BBC's
commercial activities. We welcome the appointment of Mr Rupert
Gavin as Chief Executive of BBC Worldwide, bringing as he does
outside commercial experience and knowledge of digital technology.
BBC Worldwide has a target to increase the net benefit to the
BBC from its activities to £200 million by 2006. We do not
accept Sir Christopher Bland's characterisation of this target
as "ambitious". In view of the potential for further
exploitation of the BBC's products and unique and respected brand
identity in an increasingly global market and the accelerating
demand for high-quality content arising from the onset of digital
television, we consider the target to be markedly unambitious.
We expect an external assessment of the growth potential of the
BBC's commercial income to form an important part of the forthcoming
review of the BBC's funding.
32 HC (1993-94) 77-I, para 101. Back
33 Report
and Accounts of the BBC for 1994-95, p
62; Report and Accounts of the BBC for 1996-97, p 51; Report
and Accounts of the BBC for 1997-98, p30. Back
34 Q
36. Back
35 Report
and Accounts of BBC Worldwide for 1997-98,
p 20. Back
36 Q
85. Back
37 QQ
85, 5. Back
38 QQ
5, 86. Back
39 Report
and Accounts of BBC Worldwide for 1997-98,
p 7. Back
40 Q
82. Back
41 Q
83. Back
42 Q
4. Back
43 Q
5. Back
|
