Changing behaviour is 'significant risk' to BBC commercial performance

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Increasingly competitive market for BBC's commercial work

The BBC is facing increasing challenges from commercial competitors including Netflix, Amazon and independent television channels. So its commercial work which can help fund its public service broadcasting is working in an increasingly competitive market.

Through its commercial activities the BBC seeks to deliver additional value for licence fee payers by providing extra funding for BBC programmes, by contributing to the BBC's Public Purposes, and by promoting the BBC brand around the world.

The commercial performance of these activities has been flat in recent years and the BBC faces significant risks to future performance arising from changing audience behaviour as people spend less time watching TV channels and buy fewer DVDs, while increasingly streaming programmes digitally via subscription video on demand services.

Balance must be struck between UK audience needs and international markets

The BBC has the challenge of striking the right balance between immediate UK audience needs, which must always be its primary focus, and creating programmes and other ventures that can be commercially successful and appealing to international markets.

The twin roles of the newly-merged BBC Studios commercial subsidiary—both making content for UK audiences and generating financial returns from sales—mean that it is now crucially important to the future success of the BBC as a whole.

The licence fee payer, therefore, has a fundamental interest in the value that the BBC's commercial activities deliver, for which the BBC Board is accountable. Lord Hall is clear that quality programmes will ensure commercial survival but this will be severely tested in the next few years.

This report is the Committee's first on the BBC's commercial activities, but we expect to look at them regularly in the coming years.

Chair's comments

Comment from Committee Chair, Meg Hillier MP:

"The BBC's commercial strategy requires it to compete in an evolving and highly competitive global market. Much is riding on the success of BBC Studios – the biggest change the BBC has undergone in a generation.

We recognise the need for the BBC to take risks but it must be responsible, not reckless, in doing so. That means acting on the lessons of past mistakes and taking a robust approach to assessing new ventures.

That should include improving the quality of information available to the BBC's Board so that it can, on behalf of licence fee payers, make properly informed judgements.

The BBC must remember that licence fee payers' money is on the line. It should never lose sight of its obligations to UK audiences.

There is considerable scope for conflicts to arise. If the BBC decides to extend the availability of programmes on the iPlayer, for example, it may reduce opportunities for commercially exploiting those programmes.

A balance must be struck and it is vital the BBC underpins its decisions with sound data and a clear-headed evaluation of the options."

Further information

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