The BBC has hit back at claims its extensive online operations are hurting the commercial sector.

The publicly funded broadcaster has unveiled an independent report purporting to show that its internet properties – including Britain’s most visited website – divert just £4 million ($6.5m; €5.7m) annually from rivals financed by advertising.

Earlier this year, culture, media and sport secretary Tessa Jowell gave the BBC two months to justify the huge amount it spends on new media services before a government-appointed review gets underway [WAMN: 16-Apr-03].

Ad-funded rivals have accused the corporation of overstepping its public service remit, using public money to produce online offerings in areas catered for by the commercial sector (such as sport and search engines).

They argue that in 1998 the broadcaster and the government agreed an annual budget of £21m for BBC new media operations. By 2001, however, spend on web and interactive services had rocketed to £112m. In 2002 it fell to £81.8m, but only because the BBC changed its accounting methods to strip out marketing, news-sourcing and certain other costs; if these are included spend rose by £7.9m last year.

In response to such criticism, the BBC’s head of new media Ashley Highfield commissioned research by KPMG. This survey suggests that the BBC’s online activities reduce online ad revenues by just £4m in a web market worth £7.6bn. Moreover, although the report admits that the popularity of diverts some surfers from commercial sites, it claims that the BBC has boosted the entire internet sector by converting up to 2m Britons to the medium.

Jowell is due to appoint the head of the government review in coming weeks. Highfield has already taken pre-emptive action by cutting around 100 staff from the BBC’s online workforce and vowing to shift more funds from the web to its less controversial interactive TV service.

However, Highfield said he would not object if the review narrowed the BBC’s new media remit. “The recommendations might be a new charter for online because the original one was quite broad,” he said. “That would not be unwelcome.”

Data sourced from:; additional content by WARC staff