LONDON — Of late, few British TV toppers have been so conspicuously successful as Rupert Gavin, the larger-than-life CEO of BBC Worldwide.
Sales at the pubcaster’s commercial arm have surged by 96% since he joined from British Telecom in 1998. Last year, Worldwide delivered an impressive $254 million in cash to the BBC’s coffers.
So why is Gavin, once regarded as a possible future leader of ITV or Channel 4, quitting the BBC without another big job to go to? The answer can be summed up in one word: politics.
The new regime at Broadcasting House, led by chairman Michael Grade and director general Mark Thompson, is negotiating with the government over the renewal of the BBC’s 10-year Royal Charter that expires in 2006.
They are determined to persuade the politicians that even in a marketplace where pay TV is becoming the norm, the BBC must continue to be funded by a universally levied license fee if it is to meet all its responsibilities.
But to win the argument and retain what many competitors and commentators regard as an archaic funding model, the Beeb must persuade politicos its tarnished public service credentials can become whiter than white.
“Mark (Thompson) wants to distance himself from commercial activities and be Mr. Public Service,” says a senior BBC man. “He’s 100% focused on public service and the need to make a decent charter deal.”
In other words, Worldwide — criticized by rivals for being too entrepreneurial — has become an embarrassment for a BBC keen to prove it is putting public service performance before commercial gain.
The likelihood is that part or all of the division will be sold off, particularly those pieces (like magazines) that are more difficult to justify in public service terms.
This will appease politicians while raising extra cash at a time when the BBC’s coffers have started to empty.
Thompson, who has warned staff to expect cuts, wants to create a “war chest” to protect the Beeb from potential threats (including broadband) that may be looming on the digital horizon. And, with an eye toward the BBC’s public image, more coin already is earmarked for BBC4, the so-called ‘thinking person’s station.”
Gavin, a shrewd operator and independently wealthy, may yet play a future role in BBC Worldwide, perhaps mounting a bid for Worldwide himself.
It’s a gamble, since it’s not yet clear what a newly set up review of all the BBC’s commercial activities (including technical facilities as well as Worldwide) will recommend. The report is due in December, in advance of a government policy paper on the BBC.
“The BBC does not set up these reviews without some sense of what the likely outcome will be,” a Worldwide insider says. “Nothing is clear at the moment, but it is difficult to believe that something won’t be sold off.”
Some parts of the business, including magazines, are relatively easy to sell off. But divesting the channels — Worldwide’s fastest growing area, which includes BBC America, BBC Prime and U.K. TV owned jointly with Telewest — would be complicated.
Worldwide helps to fund programs since the BBC hardly ever fully funds anything.
“Then there is the question of our program exports, which Worldwide is responsible for,” says the insider. “Half of all U.K. TV exports are from the BBC.”
Still, the BBC is the U.K.’s only genuine global media brand, so carving it up, gets, well … dicey. Although the Beeb is a big player in the U.K., compared with the U.S. majors, it is still relatively small.
Now that the government has changed the law to allow U.S. congloms to take over a private U.K. TV network like ITV or Five, it is highly unlikely that, say, a Time Warner would be offered the chance to buy Worldwide outright. But licensing the company’s extensive magazine portfolio to Time Warner (owner of British publishing giant, IPC) could be a credible option.
And Gavin, perhaps as a partial owner of Worldwide, might be present to do the deal.