BBC Commercial Arm Told to Hike Profits 100%

01 November 2004

Despite shying away from an immediate BBC Worldwide sell-off [WAMN 14-Oct-04], the UK's state funded broadcaster is still looking to a future deal.

The BBC's commercial arm, which could sell for up to £1 billion ($1.8bn, €1.4bn), has been ordered by the broadcaster's chief operating officer, John Smith to double profits within two years to make it more attractive to potential suitors.

BBCW, which includes in its portfolio the BBC America channel, BBC Prime channels plus magazine titles, book publishing, merchandising and an overseas programs sales business, posted a disappointing £37 million profits in the year to March 2004, on revenues of £657m.

Says Smith: "After a period of focus on sales growth and cash flow, now is the time for a profit focus.

"The board of Worldwide is developing a plan which might see profits double in the next two years, which would be fantastic and send a strong message out there that we want to do better.

"Lots of people in this market want to do a deal, everyone wants to buy Worldwide... but we are absolutely not putting it up for sale at the moment."

In recent months BBCW has attracted the attention of media giants including Time-Warner and Disney. The broadcaster has invited several investment banks to look at all the commercial options

Although Smith has closed the door to a sell-off in the short-term, BBCW could still dispose of non-core assets such as parts of the books and magazine division or find joint venture partners for the post-production operation and studios.

However, any commercial deals will have to pay close attention to the BBC's core brand values, a major asset in themselves.

Adds Smith: ""I think the strategic attachment we have to [BBC Worldwide's] channels and sales [businesses] and anything that is BBC-branded or BBC-associated is strong and we mustn't let that go in any circumstances."

The BBC's current charter runs until 2006, ending at the same time as the present licence deal which funds the broadcaster. A BBCW sell-off in two years would allow director general Mark Thompson some financial leeway if public funding is less than desired.

Data sourced from; additional content by WARC staff