Governors’ review of
commercial activities


Overview 

This has been a year of further major change in the BBC’s 
commercial activities following the full scale review in 
2004/2005 which recommended wide-ranging restructuring. 

One key recommendation was that the BBC did not 
need to own either BBC Resources or BBC Broadcast. 
In August 2005 BBC Broadcast, which provided playout 
and other services, was sold and now operates under the 
name Red Bee Media Limited.A sale of BBC Resources will 
not take place before June 2007. 

The commercial review recommended that BBC Worldwide 
should be retained and work has progressed to simplify the 
company structure and improve its financial performance. 
Profits from BBC Worldwide are re-invested for the 
benefit of licence fee payers. 

BBC Worldwide publishes its own annual review which is 
available online at www.bbcworldwide.com 

58 BBC Annual Report and Accounts 2005/2006 

The Office ringtones 

Exploiting BBC assets to benefit licence fee payers: 
BBC Worldwide deals, such as the one with 
Orange turning The Office catchprases into 
ringtones, produce investment funds for public 
service broadcasting 

BBC Worldwide 

BBC Worldwide is the main commercial 
subsidiary of the BBC. It exploits the BBC’s 
content assets, brands and intellectual 
property around the world, bringing value 
to the BBC for the benefit of licence fee 
payers.The BBC reinvests the earnings 
from its commercial activities into public 
service broadcasting. 

Moves to improve Worldwide’s transparency 
and governance include the publication 
of a more open annual review and the 
introduction of external non-executive 
directors. An independent non-executive 
Chairman, Etienne de Villiers, was appointed 
in August 2005 and further non-executive 
appointments will be announced in 
due course. 

BBC Worldwide’s target of doubling profit 
over two years from April 2004 was beaten 
with profits of £89million – an increase of 
144% over the two years and 62% year on 
year.This was achieved by turning around 
loss-making businesses and pulling out of, 
or finding partners for businesses which no 
longer fitted Worldwide’s new remit or 
which lacked scale, combined with good 
growth in other businesses and a cost 
reduction programme. 

In 2005/2006 sales were up 11% from 
£706million to £784million, and BBC 
Worldwide returned £185million in cash 
flow – profits and direct programme 
investment – to the BBC (up 28% from 
£145million in 2004/2005). 

The company expects further growth 
in 2006/2007, particularly in developing 
markets and its Global Channels business, 
as well as a number of new media 
opportunities such as an advertiser-funded 
international website, bbc.com and the 
potential commercialisation of an interactive 
media player, should these projects be 

BBC Worldwide profit before 
interest and tax (£million) 

2005/2006 89.4 
2004/2005 55.2 
2003/2004 36.7 
2002/2003 32.4 
2001/2002 25.7 

Source: BBC Worldwide. Profit before interest and tax 
based on continuing operations. Excludes BBC World 
and beeb.com 

approved. It is aiming to achieve a profit 
of £100million in 2006/2007. 

In January 2006, BBC Worldwide in 
partnership with the Indian media company, 
Mid Day Multimedia Limited, won the 
licences to broadcast radio on FM in seven 
major Indian cities. 

In March 2006, BBC Worldwide was told 
by JMC, its distributor in Japan, that it no 
longer had the financial means to distribute 
the BBC Japan channel. As a result, it went 
off the air at the end of April. However, 
BBC Prime found a new market in Korea. 

The Global Channels division achieved a 
73% increase in profits, £6.9million up from 
£4million last year. 

BBC Worldwide’s share of profits from its 
video/DVD joint venture with Woolworths 
plc – 2|entertain Limited, part of the 
Home Entertainment division – were 
£27.3million. Sales of its Little Britain DVDs 
have reached 3 million units. BBC Books, 
also part of the Home Entertainment 
division, has achieved profits of £1million, 
a significant improvement on the £3.1million 
loss of 2004/2005. 

The Children’s division, which was losing 
£11million in 2003/2004, again improved 
upon its 2004/2005 performance, reducing 
its losses from £6.6million last year to 
£0.9million.This business is expected to 
reach profit in 2006/2007. 

In June 2005, BBC Worldwide’s subsidiary, 
Broadcasting Data Services (BDS), was sold 
to BBC Broadcast which was subsequently 
itself sold. 

BBC Worldwide formed a partnership 
with Pearson Education for its academic, 
consumer and English language teaching 
(ELT) businesses.The partnership will publish 

BBC Worldwide cash flow 
to the BBC (£million) 

2005/2006 185 
2004/2005 145 
2003/2004 141 
2002/2003 123 
2001/2002 106 

Source: BBC Worldwide 

BBC-branded educational products and 
services under a new imprint, BBC Active. 
BBC Worldwide is seeking partnerships for 
its interactive learning business and for BBC 
Books, and to sell Audiocall, which supports 
functions such as telephone voting, donation 
and information lines. 

BBC Worldwide has begun to exploit new 
ways of bringing its content to audiences. 
A good example is the deal with Orange 
which enables mobile-phone users to 
download clips from BBC shows including 
The Office and Little Britain, and use their 
catchphrases as ringtones. 

BBC Resources 

BBC Resources is a wholly-owned subsidiary 
of the BBC. It supplies production facilities: 
outside broadcasts; post production; studios; 
and costumes and wigs. Its customers 
include the BBC, independent producers, 
other broadcasters and corporate clients. 

As expected, this was a challenging year for 
the business, which performed well against 
budget. In 2005/2006 BBC Resources 
delivered revenues of £128million and 
PBIT of £6million (£135million and 
£7million in 2004/2005); and a net cash 
inflow of £8million (£13million 2004/2005). 

BBC production highlights included Strictly 
Come Dancing and Strictly Dance Fever, Planet 
Earth, Life in the Undergrowth and Coast, 
Glastonbury, the Royal Wedding, the General 
Election and key sporting events such as 
Wimbledon, Six Nations and the Open Golf. 

Independent production highlights included 
Friday Night with Jonathan Ross for Open 
Mike, 8 out of 10 Cats for Endemol, the 
Live8 DVD Box Set for the Band Aid Trust 
and EMI, Come and Have a Go for 12 Yard, 
Lenny Henry for Tiger Aspect, Formula One 
for North One, horse racing for Sunset 
and Vine and snooker for TWI. 

BBC Annual Report and Accounts 2005/2006 59