Commercial arm must restrict takeovers

LONDON — The world just got smaller for the BBC’s mighty commercial arm, BBC Worldwide.The pubcaster’s inhouse regulator, the BBC Trust, reined in Worldwide’s ambitions on Tuesday, responding to concerns that the for-profit unit is crushing commercial rivals and exceeding its mandate by buying up local companies and investing in non-BBC branded channels such as Animal Planet. Even Worldwide’s freedom to buy content for BBC America and other foreign channels is being curbed.The trust has ordered Worldwide to concentrate on selling BBC programs abroad and avoid mergers and acquisitions, such as its controversial £89 million ($147 million) purchase of travel-book publisher Lonely Planet — way outside its public broadcasting mandate — unless there are exceptional circumstances.

BBC Worldwide America topper Garth Ancier announced his intention to ankle after three years in the post (Daily Variety, Nov. 20). It’s unclear if Ancier’s decision was spurred by the conclusions of the BBC Trust’s 18-month study of the Worldwide unit’s operations.

It must also sell off its stakes in non-BBC branded channels, including Animal Planet, jointly owned with Discovery, when “it makes commercial sense.”

The report issued Tuesday also promises to change the complexion of the Beeb’s foreign spinoff channels in tightening the ability for managers to buy some programs from outside the BBC. For instance, BBC America airs controversial teen drama “Skins,” produced by Company Pictures for Channel 4′s digital web E4.

Now it must program quality fare in keeping with the BBC’s standards — leaving racier or more popular fare to other webs.

The trust wants Worldwide to earn two-thirds of total revenue from outside the U.K. within five years, chiefly from program sales and channel distribution. At present Worldwide earns about half its revenue overseas.

Presenting the study, trust chairman Michael Lyons warned that deals like the Lonely Planet pact, made two years ago, would be unacceptable in the future.

This shift in policy puts the brakes on the kind of voracious expansion Worldwide undertook in 2007 and 2008, when it acquired stakes in actor Simon Pegg’s Big Talk shingle, Steve Coogan’s Baby Cow, Jeremy Clarkson’s Bedder 6, Left Bank and the Freehand Group.

Commercial rivals have accused Worldwide of acting beyond its mandate in recent years; tough economic times have only added to this criticism.

Worldwide posted a net profit of $68.6 million in the year to March 31, down from $129.5 million a year earlier, as distrib and administrative costs rose, on revs up slightly to just over $1.6 billion.

But critics say Worldwide’s income plus the money the BBC gets from the TV license paid by every home in the U.K. gives the broadcaster an unfair advantage. By forcing Worldwide to operate within more strictly defined parameters and concentrate more on international activities, the BBC hopes to silence these critics.

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