BBC To Double Worldwide Profits Before Sell Off
Continued rumours of a sell off for the BBC’s commercial arm, BBC Worldwide, indicate that the Corporation will embark on a profit-doubling programme before auctioning off the division in two years’ time.
According to reports, the move could “fatten up” the BBC’s revenue-producing commercial arm, potentially adding an extra £1 billion to the value of the business. The speculation surrounds an interview given by the Corporation’s new chief operating officer, John Smith, to in-house magazine Ariel, in which he called for an increased focus on profit from Worldwide.
He said: “Now is the time for a profit focus. The profit is only £37 million, and that’s low given the size of the business.”
Speculation surrounding the future of BBC Worldwide has been rife for several months, with various parties making suggestions for the company. The BBC’s director-general, Mark Thompson, has stated that he would rather the company pursue partnerships or joint ventures and was not in favour of a sell-off. However, the broadcast boss has not ruled out the possibility of a sale to trade buyers or private equity groups in the long term (see BBC Prefers Partnership Deals For Worldwide).
Amongst those believed to be interested in purchasing Worldwide are some of the world’s biggest media companies, including Bertelsmann, Time Warner and Disney. However, if the BBC were to increase profits from the organisation it could become a much more attractive proposition for potential buyers.
According to figures quoted in Ariel, BBC Worldwide’s £37 million profit was squeezed out of turnover of £657 million in the 12 months to 31 March, representing a profit margin of just under 6%. Stating his intent to boost the margin, Smith stated: “After a period of focus on sales growth and cash flow, now is the time for a profit focus. The profit is only £37 million and that’s low given the size of the business. Profit declined by £8m last year so now’s the time to focus more on profit.”
The latest rumours that the Corporation is preparing offload its non-core businesses represent a continued speculation that began almost four years ago. In 2000 the BBC denied reports that it was hatching a plan to sell off BBC Worldwide, with then chairman Rupert Gavin quoted as saying: “There is no question of selling off any of BBC Worldwide” (see BBC Denies Plans For Worldwide Sell Off).
Earlier this year the BBC escaped a Government grilling over its online activities when a review of the Corporation’s £111 million operation was completed by former Trinity Mirror chief executive, Philip Graf. A number of publishers and media owners had demanded that the BBC’s online activities be investigated, claiming that guaranteed funding through the licence fee had a detrimental effect on the marketplace for commercial website operators (see BBC To Emerge Unscathed From Online Review).
BBC: 020 8743 8000 www.bbc.co.uk
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