Memorandum submitted by FremantleMedia
CONTENTS
1. Summary responses to the issues raised by the Select Committee
2. Introduction
3. Problems created by BBC Worldwide's current strategy and system of governance a. Lack of transparency in the relationship between the BBC & BBC Worldwide b. Underpaying for BBC public service-funded programmes and IP c. Overpaying for programmes and formats from third parties d. Exceeding the remit for the BBC's commercial activities e. Taking unnecessary financial and reputational risks f. Distorting the g. Ineffective regulation by the BBC Trust
4. Proposals for change a. Review the remit for the BBC's commercial activities to eliminate
the potential for b. End BBC Worldwide's first option on BBC output and open up BBC IP to competitive bidding c. Remove the directorship links between the BBC Executive Board and the Board of BBC Worldwide d. Sell off BBC Worldwide stakes in production companies e. Develop clearer guidelines for fit with Public Purposes f. Establish transparent transfer pricing between BBC & BBC Worldwide and publish the BBC's Fair Trading audit report g. Ensure the external credibility of the regulatory regime
1. SUMMARY RESPONSES TO THE ISSUES RAISED BY THE SELECT COMMITTEE a. The benefits and
opportunities offered by the BBC undertaking a range of commercial activities
in the i. FremantleMedia supports the BBC's attempts to maximise the value
returned to UK licence fee payers from its publicly-funded intellectual
property (IP) through commercial exploitation.
However, the BBC must always ensure all its commercial activities meet
the four criteria set out in its Agreement with the ii. The requirement to demonstrate commercial efficiency means that in
each area of exploitation, BBC Worldwide needs constantly to justify its role
against the alternative of a commercial relationship with an existing b. The potential risks to the BBC, licence fee payers and other stakeholders: i. The BBC's commercial activities create a wide variety of risks both for the BBC itself and for other stakeholders (see 3.e below): · Risk that speculative commercial ventures such as investments in overseas channels and production companies will lose money and reduce the funds available to the BBC from BBC Worldwide. The BBC's investment in overseas channels appears to be a significant drain on the BBC's resources[2]. It is not clear how these will deliver an appropriate return to the BBC, since these channels cannot readily be sold because the BBC must retain control to protect its brand, and in the short run they appear unlikely to be particularly profitable; · Reputational risk for the BBC when BBC Worldwide acts as a producer without editorial supervision from the BBC itself (i.e. the risk of poor editorial decision-making, which can lead to major reputational problems for producers: see the problems experienced in the UK over the past year, with the abuse of premium rate telephony and 'Queengate'); · Reputational risk for the BBC from the production of shows by BBC Worldwide's wholly commercial overseas associates which are not consistent with the values of the BBC brand (e.g. Joker Poker, a gaming show produced by Freehand in Australia sponsored by a casino group); · Risk for licence fee payers that the BBC's commercial activities will skew the BBC's public service output towards less UK-focused programming which will show a greater commercial return; · Risk that the BBC is distorting the ii. The chorus of exasperation at BBC Worldwide's activities which has motivated and informed the establishment of this Select Committee inquiry suggests that the BBC's reputation has already been put at risk, and that some stakeholders no longer have confidence that the BBC acts consistently in the public interest rather than pursuing its own institutional agenda. c. The extent to which the BBC's commercial activities meet the criteria required of them: i. The BBC's commercial activities do not meet the four criteria set out in the Agreement (see 3.d below): · Fit with Public Purposes: by embarking on an aggressive, financially-driven overseas acquisition strategy which has no discernible connection to the BBC's Public Purposes, BBC Worldwide is failing to meet the requirement that its activities should be "connected, otherwise than merely in financial terms, with the ways in which the BBC promotes its Public Purposes"[3]; · Commercial efficiency: by locking its most valuable IP into BBC Worldwide and failing to allow commercial players to bid for exploitation rights, the BBC is failing to exhibit commercial efficiency; · Reputational risk: by undertaking widespread overseas production activity, BBC Worldwide risks jeopardising the BBC's reputation and devaluing the BBC brand; · Market distortion: if, as we
believe may be happening, the BBC is over-bidding for rights, talent and
resources, then BBC Worldwide is distorting the production d. The appropriateness and effectiveness of the governance framework for the BBC's commercial activities: i. The existing governance framework has not been effective in
ensuring that BBC Worldwide's activities meet the criteria required of
them. As set out in c. above, the BBC's commercial activities do not appear to fit with
its Public Purposes, they do not unchallengeably exhibit commercial efficiency,
they expose the BBC to reputational risk and the devaluing of the BBC brand,
and they may well be distorting the ii. The governance framework continues to allow the BBC to contravene its own policy on fair trading, which forbids BBC Worldwide from deriving advantages not available to commercial competitors[4]. Yet BBC Worldwide's right of first refusal on BBC IP and the cross-directorships between BBC Worldwide and the BBC Executive Board (the CEO of BBC Worldwide sits on the BBC Executive Board, while the Director of BBC Vision and the BBC Group FD sit on the Board of BBC Worldwide) together provide very significant contractual and informational benefits unavailable to the BBC's commercial competitors; iii. The BBC Trust's remit for the BBC's commercial activities does not make clear how they are intended to fit with the BBC's Public Purposes, and the Trust has not in a transparent way demonstrated that it requires BBC Worldwide to deliver a commercial level of return on investment; iv. There is a potential for conflict between the Trust's role in setting the BBC's commercial strategy, and its role as regulator overseeing the BBC's detailed execution of that strategy[5]; v. There is a lack of clarity about the Trust's role in strategy development, and the £50m limit over which investments need to be referred to the Trust for approval seems by commercial standards extremely high, so it appears that very significant investments could be made without authorization from the Trust; vi. As a result, the Trust is perceived as failing in its regulatory role by commercial players and does not yet appear to act as a fully independent and impartial regulator between the BBC and the commercial sector (see 3.g below). e. The future of BBC Worldwide and other BBC commercial subsidiaries: i. FremantleMedia would like to see (see 4. below): · The introduction of independent · The elimination of BBC Worldwide's first option on BBC programmes and formats and the introduction of competitive bidding for the right to exploit BBC IP; · The removal of the CEO of BBC Worldwide from the BBC Executive Board and the Director of BBC Vision and the BBC Group FD from the Board of BBC Worldwide to eliminate the informational advantages these management links provide over commercial competitors; · The sale of BBC Worldwide stakes in production companies, particularly overseas, to ensure fit with the BBC's Public Purposes and to avoid financial and reputational risk to the BBC; · The development and implementation of more defined and transparent guidelines on the required fit with Public Purposes for the BBC's commercial activities, and how these activities must be connected, other than merely in financial ways, with the ways in which the BBC promotes its Public Purposes; · The publication of the BBC's Fair Trading audit, and the establishment of a transparent transfer pricing regime: o Between the BBC as a seller and BBC Worldwide as a buyer of programme format and distribution rights; o Within BBC Worldwide, between its roles as programme distributor and as purchaser of programming for its overseas channels, to ensure that the BBC cannot compete on an unfair basis for distribution rights, and that the true return to the BBC of income from the exploitation of its IP is shown in BBC Worldwide's accounts separate from the results for BBC Worldwide's channel and other interests; · The impartial and effective regulation of the BBC's commercial activities by the BBC Trust and greater clarity about the Trust's involvement in the setting and assessment of commercial strategy. ii. It has recently been suggested that BBC Worldwide should be gifted
to Channel 4 in order to help address the shortfall in resources to support
public service broadcasting. Given the
arguments set out above, this appears an extremely difficult and impractical
proposition, but if it is pursued it is all the more important that there
should be transparency about its role and effective safeguards against f. How the money returned to the BBC by its commercial operations is invested: i. Subject to the comments above, FremantleMedia believes it is a matter for the BBC to determine how its commercial funds are reinvested in its public service activities. 2. INTRODUCTION a. FremantleMedia is one of the most successful independent creators and distributors of television content in the world. In 2007, we produced over 10,000 hours of original programming across 318 titles. We make award-winning and top-rated programmes in 22 production operations around the globe, including major production operations in the US, Germany, France, Italy and Australia as well as the UK. We produce prime time drama, serial drama, entertainment and factual entertainment, which we export to 150 territories. FremantleMedia's programmes include shows like Grand Designs, The Bill, X Factor[6], American Idol[7], QI, The Apprentice, Never Mind the Buzzcocks, Got Talent[8], IT Crowd, How Clean Is Your House?, Family Fortunes and Neighbours. Our headquarters are in London. We employ over 1,100 people in the UK and over 1,800 people worldwide. In addition, many people on fixed-term contracts and freelancers work on our various productions. b. FremantleMedia competes in the production and distribution of TV programming with the BBC's commercial operations at all stages of the value chain, both in the UK and abroad. FremantleMedia is also both a supplier of programming to the BBC (e.g. The Apprentice) and a major competitor to BBC Worldwide in formats, overseas production and the distribution of finished programmes. Our comments are made on the basis of longstanding familiarity with BBC Worldwide's activities and strategy in these areas. c. FremantleMedia
is strongly supportive of the BBC. We acknowledge the high standard of public
service broadcasting the BBC has provided for the UK for more than sixty years,
and we recognise the importance of the role the BBC has played in the current
global creative success of the UK production sector. We believe the BBC can and should continue to
play a vitally important role in British broadcasting. However we do not believe that BBC Worldwide,
the BBC's commercial arm, is necessary in its current form and with its current
remit to maximise the benefit to UK licence fee payers of the commercial
potential of the BBC's programming. The
3. PROBLEMS CREATED BY BBC WORLDWIDE'S CURRENT STRATEGY AND SYSTEM OF GOVERNANCE a. Lack of transparency in the relationship between the BBC & BBC Worldwide i. There is a lack of transparency in the relationship between the BBC and BBC Worldwide. BBC Worldwide appears to have both an exclusive first look[9] and matching[10] right to the BBC's IP, but the precise nature of the relationship is unclear. Although the BBC Trust places great emphasis on the importance of transfer pricing (i.e. the price BBC Worldwide pays for rights secured from the BBC Commercial Agency, which represents all IP created in-house at the BBC) in ensuring compliance with its Policy on Fair Trading, there is no publicly available information on the level at which transfer prices between the BBC and BBC Worldwide are set. ii. The BBC does have guidelines
about the process to be used in setting transfer pricing levels. These establish that transfer prices "should broadly be in line with the overall iii. The BBC's
guidelines contemplate the use of indicators such as the incremental cost of
production as an alternative to bench b. Underpaying for BBC public service-funded programmes and IP i. As a result, it is very
possible the BBC may be subsidising BBC Worldwide because BBC Worldwide is not
paying the ii. Individual
programme bench c. Overpaying for programmes and formats from third parties i. BBC Worldwide may be
overpaying to acquire third party rights (i.e. rights owned by independent
producers) in order to maintain its d. Exceeding the remit for the BBC's commercial activities i. The remit for the BBC's commercial activities makes clear that they must "fit with the BBC's Public Purpose activities" and that this requires them to be "connected, otherwise than merely in financial terms, with the ways in which the BBC promotes its Public Purposes"[12]. Over the past couple of years, BBC Worldwide has embarked on an aggressive acquisition strategy in the production sector. It is not easy to see how this strategy fits within the remit. ii. In 2007, BBC Worldwide bought a 25% stake in Freehand Productions, an Australian independent production company. We understand that under the terms of the deal, Freehand now has a first look option in Australia and New Zealand to produce all BBC and independent formats to which BBC Worldwide has rights. Freehand also has all its formats distributed through BBC Worldwide. These purely commercial productions may never be seen on British screens, so BBC Worldwide's activities are going far beyond selling the BBC's existing programmes abroad. BBC Worldwide has also just done a similar deal with production company Temple Street in Canada and very recently with production company Mir Reality in Russia. It is also setting up, or has already set up, its own production companies in America, France, Germany and India. iii. BBC Worldwide has also bought stakes in UK production companies in order to guarantee a flow of distribution rights. For example, in January of this year it bought a 24.9% stake in Left Bank (a producer that has made programmes such as the feature film The Queen and Longford). As a result, BBC Worldwide will be the sole worldwide distributor of all the programmes produced by Left Bank. It has also bought a 24.9% stake in drama start-up Cliffhanger Productions, and recently purchased 24.9% stakes in Baby Cow, the production company part-owned by comedian Steve Coogan, and Big Talk, the company responsible for Simon Pegg's TV and feature projects. iv. It is hard to see how the acquisition of a stake in a purely commercial production company in Russia, Australia or Canada fits with the BBC's Public Purposes. One of these Purposes is to bring "the UK to the world and the world to the UK"[13], but this broad requirement needs to be interpreted in a way that links to clearly identifiable public benefits, otherwise the requirement is effectively meaningless, and gives the BBC the green light to pursue almost any activity involving the export or import of programming material. This cannot be the intention of the legislation setting out the BBC's remit. v. It is clearly not the case
that the BBC has to have a stake in a production company in Australia or Canada
in order to enable successful BBC formats to be sold and shown there. There are thriving production vi. The BBC may argue that it has
greater control over the way formats are produced by owning a stake in the
production company; however, the logical conclusion of this argument is that
the BBC has to own production companies in all territories to which it exports
formats, which is clearly impractical.
In fact the BBC has successfully licensed its formats to third parties
for many years without acquiring production assets. As we will argue (see 3.e. below), we believe the BBC is taking more rather than less
risk by building overseas production capability. Since 2000, the vii. The BBC may
argue it is merely pursuing the strategy that the largest and most successful international
production companies like FremantleMedia and Endemol are following
themselves. If it is the right strategy
for them, why not for the BBC? However,
there is a crucial difference between the BBC's objectives and those of the
commercial players. Commercial
enterprises like FremantleMedia maximise returns by focusing development on
programming which has the potential to succeed in as many e. Taking unnecessary financial and reputational risks i. BBC Worldwide is exposing itself to significant financial risk through its ownership of BBC production operations and global BBC-branded channels such as BBC Knowledge and BBC America. It is entirely liable for these businesses. If these investments suffer losses, it directly impacts the BBC by reducing the amount of money returned to the public service parent. Recently BBC Worldwide has acquired a minority stake in a production company in Russia, which must be regarded as a very high risk territory in which to invest. ii. In addition to additional financial risk, the BBC is also taking on significant reputational risk by pursuing a strategy of building production capability overseas. BBC Worldwide does not have the sophisticated editorial and creative quality control and compliance structures the BBC production operation has evolved in the UK. Yet BBC Worldwide now must stand behind and take responsibility for any editorial or production problems created by its new partly-owned commercial subsidiaries like Freehand or Temple Street. The BBC's status means it is held to the very highest editorial standards everywhere in the world, yet these companies have no history of public service production and the elevated standards it demands even when making programmes which will never be seen on British screens. iii. This reputational risk extends to the production of BBC formats overseas. If the BBC licenses a programme to a third party, it may not have complete control over its production, but it also does not bear responsibility for any problems encountered in its making. Now these programmes are made by local BBC subsidiaries or associate companies, these risks are borne by BBC Worldwide, but without the support of the BBC's extensive experience in editorial quality control and compliance. BBC Worldwide appears to be running a complete 'parallel' editorial operation away from experienced UK supervision and entirely free from proper senior creative risk control. This does not mean the BBC should divert key editorial resources away from its public service activities in the UK; the point is that this additional editorial risk and responsibility is a distraction from the BBC's core public service purpose; iv. BBC Worldwide's strategy of acquiring stakes in UK independents inevitably raises suspicions that these companies both have preferred access to BBC slots and are being used to meet independent and WOCC[14] quota targets in a way which ensures BBC Worldwide holds onto programme rights. Whether or not this proves to be the case, the acquisition strategy exposes the BBC to reputational risk. v. The lack of transparency in the relationship between the BBC and BBC Worldwide, and the lack of confidence in the impartiality and effectiveness of the Trust in its regulatory role, continue to create further reputational risk for the BBC. This comes at a time when the BBC has already suffered a number of significant blows to the level of public trust it commands. The stress on the BBC's public profile will continue until remedial steps are taken. f. Distorting
the i. The BBC's
programme of acquiring companies and rights both in the UK and overseas
distorts the ii. It is not clear that the BBC operates to the same required rates of investment return as its commercial competitors. Although the BBC is tasked to exhibit commercial efficiency, the range of measures used to define this more closely is very broad[15]. Return on investment is merely one of a range of measures the BBC can refer to as it applies a "basket of ratios"[16] to assess the commercial efficiency of a new proposal. The BBC does not reveal whether the "basket of ratios" used is judged in the same way as a commercial company or whether the level of risk that BBC Worldwide is able to take on is higher because it has the backing of the BBC. It is not clear that BBC Worldwide has to achieve the same return on investment as commercial companies with shareholders, and it seems likely that their cost of capital will be lower than any commercial entity because they are de facto guaranteed by a state owned corporation, so it is very likely that BBC Worldwide has easier access to capital than its commercial competitors. iii. If the rates of return
required by the BBC are lower than its commercial competitors, it will be able
to bid more aggressively and undermine g. Ineffective regulation by the BBC Trust i. It is ultimately the Trust's
responsibility to ensure that the BBC interprets the remit for its commercial
activities in the most appropriate way and follows a strategy that falls within
that remit. It seems to be failing to do
so, by appearing to allow BBC executive management to define its own course
with insufficient reference to the uniqueness of the BBC's position and
insufficient regard for its potential impact on the commercial ii. We have drawn attention to the way in which BBC Worldwide appears to be exceeding its remit in pursuing its overseas investment strategy, setting up channels and acquiring production subsidiaries (see 3.d. above). In setting the framework for the BBC's commercial activities, there is a lack of clarity when the Trust comes to consider the issue of "fit" with the BBC's Public Purposes which goes to the heart of the definition of the remit[17]. When it does pronounce on the interpretation of "fit", it does so in a statement so convoluted and elliptical as to be meaningless: "The requirement for a connection, otherwise than merely in financial terms, with the ways in which the BBC promotes its Public Purposes should be assessed in relation to the activities that the BBC undertakes to fulfil its Public Purposes. This need not be at the level of the individual commercial services (e.g. demonstrating that a proposed Commercial Activity is connected with a specific BBC channel, such as BBC3) but the activity must link clearly with the way in which the BBC promotes its Public Purposes (for example, promoting innovative British content and talent aimed primarily at younger audiences)."[18] iii. The Trust
is also explicitly responsible for ensuring that the BBC's commercial
activities "comply with fair trading
guidelines... and in particular avoid distorting the a. It does not use the licence fee to fund commercial activities b. It ensures the transfer pricing regime for public service activity inputs is fair[20] iv. This interpretation is
erroneous and inadequate. Firstly, the
transfer pricing regime cannot be fair given the lack of competitive
bidding. Secondly, this policy fails to
take into account further ways in which the BBC can distort the v. The Trust also fails to take notice of flaws in the structure of the relationship between the BBC's public service operations and its commercial activities which lead to clear contraventions of its fair trading policy. The policy states that: "The BBC's Commercial Services should not receive from its Public Service Activities, an advantage which is not available to its commercial competitors."[21] Yet the relationship between the BBC and BBC Worldwide offers BBC Worldwide major advantages clearly not available to its competitors: a. BBC Worldwide's right of first refusal on and matching rights to BBC IP gives BBC Worldwide an overwhelming advantage in securing exploitation rights; b. The CEO of BBC Worldwide sits on the BBC Executive Board, and the Director of BBC Vision and the BBC Group FD sit on the BBC Worldwide Board, providing BBC Worldwide with direct access and input to BBC strategy, budgets and programme planning. These cross directorships also contravene the BBC's Fair Trading Guidelines, which state that the BBC's commercial services must always maintain "a clear and separate management structure" from the BBC's public service activities, and that the BBC's public service activities must not "provide the Commercial Subsidiaries with access to information (or resources) beyond what would be strictly necessary for the efficient commercial exploitation of a particular right or asset owned by the BBC's Public Services"[22]. vi. The overall impression is that
the Trust interprets the remit with which the BBC carries out its commercial
activities in a way which gives maximum flexibility to BBC management, and
which gives little consideration to ways in which the BBC can distort effective
and efficient
4. PROPOSALS FOR CHANGE a. Review the
remit for the BBC's commercial activities to eliminate the potential for i. The discussion above
illustrates the importance of a clear definition for the remit for the BBC's
commercial activities. The BBC should be
able to exploit the value of its intellectual property as far as possible to
offset the burden of the licence fee, but not at the expense of the other
criteria to which it is required to adhere.
It is clearly not intended that the BBC should become entirely driven by
the commercial imperative. At present,
the balance between the two is struck at a point which appears to allow the
BBC, through BBC Worldwide, to use the bridgehead of its privileged funding and
programme supply to annex new commercial territory unrelated to its core
purposes. The wording of the remit for
the BBC's commercial activity is broad and imprecise; in its capacity as regulator
the Trust needs to take responsibility for defining the boundaries. These have to provide the BBC with clear
direction and commercial rigour while leaving the commercial sector satisfied
it is not competing with a player whose privileges give it significant, ii. This revision of the
guidelines needs to be supplemented by b. End BBC Worldwide's first option on BBC output and open up BBC IP to competitive bidding i. It is time to end BBC Worldwide's first right to the BBC's IP. This relationship is preventing the establishment of a transparent pricing structure between the BBC and BBC Worldwide, and is likely to under-represent the full value of the BBC's output. The distribution rights to BBC programmes and formats should be opened up for bidding across the commercial sector. c. Remove the directorship links between the BBC Executive Board and the Board of BBC Worldwide i. The CEO of BBC Worldwide should no longer sit on the BBC Executive Board, and the Director of BBC Vision and the BBC Group FD should no longer sit on the BBC Worldwide Board, giving BBC Worldwide privileged access to BBC strategy and programme plans. d. Sell off BBC Worldwide stakes in production companies i. The stakes that BBC Worldwide has built up in production companies both in the UK and overseas should be sold off, and the returns reinvested in programming for the UK licence fee payer. e. Develop clearer guidelines for fit with Public Purposes i. The Trust needs to develop more defined and transparent guidelines on the required fit with Public Purposes for the BBC's commercial activities, spelling out clearly how these activities must be connected, other than merely financially, with the ways in which the BBC promotes its Public Purposes. f. Establish transparent transfer pricing between BBC & BBC Worldwide and publish the BBC's Fair Trading audit report i. There should be transparency about the amount BBC Worldwide pays the BBC for distribution rights. The transfer pricing scheme should be open to public scrutiny. ii. The Fair Trading audit the BBC commissions each year from PwC should be publicly available. The BBC's Annual Report has for the last two years announced that details of the audit and opinion are available on the BBC's website, but they are not to be found. iii. The remit for the
Fair Trading audit should be revised. At
present, the audit is tasked: "to
determine whether BBC management has established and applied a system of
internal controls which provide reasonable assurance that it has complied with
the Fair Trading Policy"[24]. As we have argued, the Fair Trading policy
fails to take account of ways in which the BBC's commercial activity can
distort the g. Ensure the external credibility of the regulatory regime i. The Trust appears so far to have taken a laissez-faire approach to its responsibilities as regulator of the BBC's commercial activities, with the result that there is now widespread concern among the commercial sector (including publishers and newspapers as well as television producers) about the nature and scope of BBC Worldwide's ambitions. The Trust needs to demonstrate a much stronger appreciation of the limitations imposed by the BBC's unique position, and a much greater public willingness to establish clear guidelines for the BBC's commercial management. It also needs to occupy a more impartial position between the BBC and the commercial sector, and to show the commercial sector that it is ready to listen to its concerns. ii. The Trust needs to acknowledge it is the only element in the BBC's governance structure which is able to act effectively to ensure BBC Worldwide continues to act within its governing criteria. Neither BBC Worldwide's non-executive Directors nor the BBC Executive Board can or should fulfil this function. iii. The process for raising complaints over fair trading issues needs reform. At present complaints about BBC Worldwide have to be taken first to a member of the BBC's executive team[25] (i.e. an executive reporting to the BBC Executive Board), which is unsatisfactory. It is difficult to have faith in the impartiality and independence of an executive of the enterprise against whom a complaint is being raised. Given that most companies will want to continue to do business with the BBC there is inevitably a reluctance to knock on the front door and complain. This process also assumes that the fair trading rules themselves are satisfactory; we have argued here that there are many instances where they require further thought.
October 2008 [1] The four criteria for the BBC's commercial activities are set out in the Agreement, cl. 69(1): (a) they must fit with the BBC's Public Purpose activities (in the manner defined by paragraph (3)); (b) they must exhibit commercial efficiency; (c) they must not jeopardise the good reputation of the BBC or the value of the BBC brand; (d) they must
comply with fair trading guidelines in force under clause 67(1)(a) and in
particular avoid distorting the [2] In the year to 31 Mar 2008, BBC Worldwide relaunched channels in Asia at a cost to the P&L of £7.1m, and predicts that additional channel launches in Latin America, Australia and Africa will depress profits further in 2009 (BBC Worldwide Annual Review 2007-8, p.19). [3] BBC Agreement, cl. 69(3)(b) [4] BBC Trust Statement of Policy on Fair Trading, cl. 21: "The BBC's Commercial Services should not receive from the BBC's Public Service Activities, an advantage which is not available to its commercial competitors." [5] BBC Protocol B6 - Commercial Strategy, cl. 4.1: "To strike an appropriate balance between its duty to approve a strategy for the BBC's commercial services and its obligation to hold the Executive Board to account for the delivery of services according to that strategy, the Trust will communicate to the Executive Board its points of strategic direction and require it to develop, and submit for the Trust's approval, proposals for the commercial strategy for the BBC." [6] Co-produced in
the [7] Co-produced with 19TV [8] Co-produced in
the [9] Under a first look arrangement, a distributor has the first opportunity to bid for the exploitation rights to a producer's IP before any competitor can submit a bid. [10] Matching rights give a distributor the right to win exploitation rights if they are prepared to match the leading bid submitted by a competitor at the close of a bidding process. The combination of first and matching rights makes it practically impossible for a competitor to win the right to exploit BBC IP if BBC Worldwide wish to retain it. [11] BBC's Fair Trading Guidelines, cl. 3.12 [12] BBC Agreement, cl. 69 [13] BBC Charter, cl. 4 [14] The WOCC is the "Window of Creative Competition" commitment, under which in addition to the 25% independent quota, the BBC has agreed to open up a further 25% of its production requirements to competition between independent and in-house producers. [15] BBC Protocol D6 - The BBC's Commercial Services, Annex B [16] The "basket of ratios" is the mechanism set out in Annex B of BBC Protocol D6 - The BBC's Commercial Services which the BBC applies to measure the profitability, risk and return of new investment proposals. [17] The BBC's Public Purposes are defined in the Charter, cl. 4: (a) sustaining citizenship and civil society; (b) promoting education and learning; (c) stimulating creativity and cultural excellence; (d) representing the (e) bringing the (f ) in promoting its other purposes, helping to deliver to the public the benefit of emerging communications technologies and services and, in addition, taking a leading role in the switchover to digital television. [18] BBC Trust Statement of Policy on Fair Trading, cl. 28 [19] BBC Agreement, cl. 69 [20] BBC Trust Statement of Policy on Fair Trading, cl. 29 [21] BBC Trust Statement of Policy on Fair Trading, cl. 21 [22] BBC's Fair Trading Guidelines, cl. 3.6 [23] BBC Protocol D6 - The BBC's Commercial Services, cl. 5.4 [24] BBC Annual Report and Accounts 2007-8, p.63 [25] BBC Fair Trading Complaints and Appeals Process |