$665 mil and a decade worth of co-productions

LONDON — After 18 months of negotiation, BBC Worldwide and Discovery Communications Thursday signed their global alliance for factural broadcasting with Discovery committing a minimum of $665 million over the next decade for co-productions and joint-venture channels.

This includes the $100 million launch March 29 of BBC America, a 24-hour entertainment service aimed at the U.S. cable market, which will showcase the best of BBC programming and include two hours a day of bulletins from the pubcaster’s inter-national news channel, BBC World.

‘Unprecedented scope’

Described by BBC director-general John Birt as “a deal of unprecedented scope and complexity,” the partnership is intended to create “the greatest global force in factual broadcasting.”

“We are rewriting the rules of television,” claimed Discovery chairman John Hendricks.

In keeping with this grand — some might say grandiose — aspiration, Birt and Hendricks performed a ceremonial signing in front of an audience of journalists and BBC bigwigs at BBC TV Center in west London, with a live satellite link-up to New York for the benefit of the U.S. media.

Ron Neil, chief exec of BBC Production, and Judith McHale, president and chief operating officer of Discovery, had previously spent the morning signing more than 60 legal documents in quadruplicate to seal the deal.

BBC America investment

Discovery will invest $100 million into BBC America over the next four years, with the BBC retaining sole ownership and editorial control over the channel while Discovery takes charge of marketing. At the moment there are no carriage deals in place.

Discovery will spend $175 million over five years under a first-look deal to co-produce BBC documentaries and the remaining $390 million to roll out international channels, such as the existing joint venture services Animal Planet and People & Arts.

The shareholding in these channels will be split 50/50, except in the case of the U.S. version of Animal Planet, in which the BBC received a 20% stake on the signing of the global alliance.

BBC band name

Constrained by its public funding, the BBC will not contribute any cash to the partnership, but will bring its production expertise in such genres as natural history and science, its program archive and its brand name.

“This partnership will help the BBC become the world’s leading global broadcaster building on the international success and reputation in radio of BBC World Service,” said Birt.

“Discovery shares with the BBC a commitment to quality and integrity, as well as the building of knowledge.”

Hendricks added, “The marriage of the BBC and Discovery brands is truly a match made in heaven. Our two organizations will greatly benefit due to our shared missions, mutual business goals and complementary expertise.”

Like the Warner library

He highlighted the BBC’s huge archive of factual programming as a particular attraction to Discovery drawing a parallel with Ted Turner’s decision to merge his empire with Time Warner in order to benefit from the depth of the Warner library. “There was no studio for us to buy in non-fiction,” Hendricks said.

But because the BBC is “a powerful broadcaster,” he continued, the deal “will give us access to its huge archives as well as original productions, which will provide a steady content flow” to the eight Discovery networks in the U.S. and the global networks in the joint venture.

As well as getting the opportunity to co-produce BBC programs over which the pubcaster will keep its editorial control, Discovery will also fully finance some projects from BBC producers which will be tailor-made for broadcast on Discovery’s domestic and international services.

Under the complex structure of the deal, the co-production finances will be funneled through a U.S.-based company called the Joint Venture for Production, or JVP. The JVP will offer the BBC’s entire slate of factual projects to Discovery for co-financing, and then everything rejected by Discovery will be offered by the JVP to other American co-producers, such as A&E or PBS.

Flow to PBS unchanged

Hendricks was particularly keen to make reassuring noises that the flow of BBC factual programming to PBS would not be cut off by the Discovery/BBC alliance. He said he is working “aggressively” to make sure that PBS benefits from the deal.

Chief exec Neil defended the BBC’s decision to throw in its lot with a single long-term American partner by arguing that the $175 million co-production commitment from Discovery is 40% more than the BBC currently gets from the U.S. market for its factual programs.

BBC honchos also strenuously insisted that the editorial values of their focus would not be Americanized by this deal. They pointed out that most of the pubcaster’s large-scale natural history, science and human history series are already co-produced with American money, and often with Discovery, without any adverse effects upon the content.

The first three co-productions under the new alliance are already underway: “Walking With Dinosaurs,” “The Human Body” and “Blue Planet.”

Gritty contempo-drama

BBC America will give stateside exposure to the kind of gritty contempo drama and cutting-edge comedy that the pubcaster currently has a hard time selling to U.S. webs, which are more interested in costumers.

Hendricks said he hopes that the channel will be in 20 million to 25 million U.S. homes within two years.

BBC America will be able to offer exclusivity to cable operators — meaning no sales to direct-broadcast-satellite distributors like DirecTV, Primestar and Echostar — because Discovery strategically decided not to buy an equity stake in the network, according to sources.

If it had bought a piece of BBC America, laws against vertical integration would have prevented cable exclusivity. The reason: John Malone owns 49% of Discovery, and Malone also owns Tele-Communications Inc., the second-largest cable operator in the U.S.

Cable exclusivity might get BBC America cleared on the basic tier without the necessity of Discovery’s being forced to pony up millions of dollars in launch budgets to buy carriage on cable systems.

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