BBC Worldwide/C4 tie-up would generate £800 million turnover
BBC Worldwide’s chief executive John Smith claims that the corporation’s forthcoming partnership with Channel 4 would generate annual profits of around £200 million.
Speaking at the House of Lords communication committee today, Smith said that a commercial venture between the two broadcasters, which is expected to be signed off before the final Digital Britain report is released, would generate an annual turnover of £800 million and a profit of £200 million.
Smith also revealed that the deal would include BBC Worldwide’s UK assets, such as its 50% stake in the UKTV channels, which it shares with Virgin Media, and its 60% stake in the DVD business 2Entertain.
Smith told the committee that the new partnership would look to buy the remaining stakes in the two business from their current owners, Virgin Media and the now defunct Woolworths plc, which had a 40% share of 2Entertain.
“The other partners want to sell their stakes and processes are under way about the on-sale of these other percentages in these ventures,” he said.
“If you form the venture with Channel 4 which would include these stakes, the effect on Worldwide is not that significant from a turnover point of view. The effect is much more substantial for Channel 4 as they get the benefit of 50% of the turnover. On top of that, both organisations would get 50% of the synergies.”
Channel 4 and BBC Worldwide would both hold an equal 50% share of the new venture, each receiving half of the estimated £200 million annual profits.
Smith also backed his counterpart at Channel 4, Andy Duncan, who told the House of Commons culture, media and sport select committee yesterday that he expected a deal to be signed off between the two broadcasters within weeks (see Andy Duncan: C4/BBC Worldwide deal is weeks away).
“[The deal] would take account of things they are very good at and the things that we are good at and put them together in a new venture,” Smith said.
“We have been negotiating that pretty well and we are at the point where we know the size and shape of the venture and how it would be formed. We are agreed on all the things that would really matter. There is not much fundamental disagreement, just a few things we haven’t run to ground.
“We are a few weeks away from signing it, but for us to enact it we need a fair bit of government support and we don’t know what is coming up in the next few months.”
Both broadcasters are keen to agree a deal before the government publishes its final Digital Britain report on June 16.
Yesterday, Duncan said: “The ambition of both sides would be to get some sort of broad agreement before that report. Discussions have been going well.
Duncan refused to go into detail about the partnership but said: “The core ambition of what we are trying to do is protect the public service output.”