BBC shake-up opens the door to flotation of £2bn Worldwide arm

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The Independent Online

The BBC is considering a radical, two-pronged restructuring of its Worldwide commercial arm that could result in a flotation of the business.

During the first two weeks of October, the committee reviewing the business will make its provisional recommendations to BBC director-general Mark Thompson. It will be the first time the committee will meet the executive board since being appointed to review the BBC's commercial operations in June. Worldwide is worth between £1bn and £2bn.

BBC executives have been discussing how to set up joint ventures or, less likely, how to sell stakes in its three arms: publishing, distribution and channels. Commercial companies would be "licensed" to run the businesses for a set period and would guarantee a dividend to Worldwide. This would allow the BBC to retain ultimate control while securing a future revenue stream.

But, according to City sources, the committee is considering going one stage further. The second phase would see a stake in Worldwide sold or floated on the stock market.

In either case, the BBC would want to retain a sizeable share in the business. The BBC would, in effect, be selling the right to receive a share of the operating profits from Worldwide. The proceeds would help the BBC fulfil its obligations, such as aiding the analogue switch-off by 2012, during the next charter period, which begins at the end of 2006.

Worldwide publishes magazines including Top Gear, it licenses BBC brands such as the Teletubbies for merchandising, and it sells content and broadcasts programmes overseas.

The two-part plan, if adopted, could be a way of brokering a compromise between Mr Thompson and BBC chairman Michael Grade. It is thought that Mr Grade is keener on a quick sale of part or all of Worldwide, while his director-general has adopted a more cautions stance over the business.

No decision has been made. The BBC is expected to make its final recommendation on Worldwide to Government by the end of the year. The BBC refused to comment.

The review of Worldwide could also benefit Channel 4, which is facing a funding shortfall. Channel 4 wants to enter into a profit sharing venture with Worldwide. Industry sources suggested that it would be a politically savvy move for the BBC, during its charter review negotiations with the Government, to help.

BBC Resources, which provides broadcasting facilities and services, is also under review. It faces an overhaul which could result in significant job losses.

It employs almost 1,300 people, and its wage bill last year was over a third of its £128m turnover. Because it is much larger than its commercial rivals, a break-up is more likely than a straight sale, which could cause competition issues.

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