BBC Worldwide waltzes away with record profits

Pubcaster hopes for even more coin by year's end

LONDON — Battered by low morale and a recent strike by about half his staff over job cuts, BBC director-general Mark Thompson finally had some good news last week: record profits from BBC Worldwide, the pubcaster’s commercial arm.

Worldwide delivered £145 million ($261million) to the pubcaster’s coffers on sales up by 7% to $1.27 billion and profits that doubled to $99 million.

Worldwide CEO John Smith’s strategy is to chase even more coin — and to return a profit of $135 million by the end of this financial year.

“This looks achievable,” says Worldwide deputy CEO Mike Phillips. “It’s a pretty remarkable performance. John knows that we have to justify ourselves as a media business player alongside any of our competitors.”

Key to Worldwide’s success is the closure of money-losing operations, cost cuts of $9 million and record profits in the TV sales unit, one of six businesses that make up the newly retooled and simplified Worldwide (the others are TV channels, magazines, home entertainment, children’s and new media).

TV sales, Worldwide’s most profitable division, made $57 million, up $15 million from last year, by selling 40,000 hours of programs internationally and at home.

“We had a successful year in the U.K., where the launch of new channels like UK Drama (part of the UKTV portfolio owned jointly with Flextech) benefited us,” Phillips says.

“Overall (sales to) Asia Pacific were down but business was good in Europe, the Middle East, Africa and the U.S., where we had a lot of success with shows like ‘Spooks’ (renamed ‘MI-5’ Stateside) and ‘The Weakest Link.’ ”

One of Worldwide’s theatrical releases, “Deep Blue,” the movie version of natural-history blockbuster series “The Blue Planet,” generated $25 million at the box office, performing strongly in Germany, France and Japan.

“Strictly Come Dancing” sold to 14 territories including Stateside, where it’s remodeled as “Dancing With the Stars” and has given ABC its first summer 18-49 demo ratings win with a series since “Who Wants to Be a Millionaire” in 2000.

The U.S. version of another BBC show, reality skein “The Sack Race,” reversioned as “Fire Me, Please,” is doing good numbers for CBS.

“It’s very difficult to say if we can keep this up, but I’m optimistic,” Phillips admits. “‘Dancing With the Stars’ is the first time that BBC Entertainment has actually produced a show in Los Angeles for BBC Worldwide.”

Phillips hopes this success can be leveraged. The original producer of “Strictly Come Dancing,” Richard Hopkins, who is also overseeing “Dancing With the Stars,” is pitching another show to the U.S. networks.

“All I can say is that it is a reality show involving an elimination element,” says Phillips.

While entertainment is paying dividends for the pubcaster, the children’s division is losing $12 million a year.

Having slimmed down overheads, Worldwide hopes the division will be back in the black by the end of this financial year.

“It’s a hits-driven business, and frankly we need a new ‘Teletubbies,'” Phillips acknowledges. “We invested in a number of shows that haven’t delivered, but we have high hopes for a new pre-school show from Tiger Aspect based on the ‘Charlie and Lola’ books and a new series from ‘Teletubbies’ creator Rag Doll.”

As for the channels business, soon to come under a new director in its streamlined form, the BBC, like every other big media operator, is turning its attention to China and aiming to expand in existing markets.

“It’s our intention to make the most of what opportunities there are in China, but talk of launching a channel there is premature,” Phillips cautions.

With BBC America under the new leadership of Bill Hilary and contemplating a relaunch (BBC America turned a small profit in 2004-05) the idea of launching a children’s channel in the U.S. remains an ambition. BBC Kids is up and running in Canada.

“BBC America is the main priority,” says Phillips. “There’s been a dip in the ratings, but we’re coming back. At the moment we’re distributed in 42 million homes. By the end of the year we want that to be 45 million. There’s lots of potential there.”

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