BBC Trust dampens Worldwide's plans for global domination

Corporation reins in its commercial division

Nick Clark
Wednesday 25 November 2009 01:00 GMT

The BBC'S governing body has stymied expansion plans at BBC Worldwide, blocking the commercial division from any further takeover deals except in "exceptional circumstances".

One of those exceptions would be to buy Virgin Media out of its 50 per cent stake in UKTV, according to the head of the BBC Trust, putting a deal with Channel 4 back in play.

Following an 18-month review into the corporation's commercial activity, the trust outlined a series of changes at Worldwide. The subsidiary's long-term future remains under review.

Sir Michael Lyons, chairman of the BBC Trust, said the arm "brings both significant financial benefits for the licence-fee payer and a tangible boost to the creative economy. But the trust and the executive both acknowledge that the boundaries for Worldwide activity need to be clearer."

The BBC's regulator yesterday outlined a series of points for the division. The first was "an end to mergers and acquisitions unless there are exceptional circumstances" adding that it would not expect "to consider a commercial deal of the scale and nature of the Lonely Planet acquisition in future".

It paid £89m for a dominant stake in the guidebook publisher in 2007, sparking anger from commercial rivals. However, the trust said yesterday it would not be forced to offload the business.

The trust wants "a clearer focus on securing value" from the BBC's intellectual property, an exit from activities not in keeping with the BBC's brand and the sale of its stakes in non-BBC-branded international channels "where it makes common sense".

During the review, the BBC Executive recommended Worldwide should become more international and the trust said it recognised the "important contribution" it can make to the BBC's fifth public purpose, which is to bring the UK to the world and the world to the UK.

It cautioned that "such activity must contribute to the BBC's fulfilment of its public purposes as well as the scale of the dividend passed back to the BBC."

The trust launched the review last year to ensure its strategy was aligned with the BBC's public service interest as well as being sensitive to other commercial players in the market.

It set out initial conclusions in March but put the review on ice in the run-up to the publication of the Digital Britain report. One of the cornerstones of the document, overseen by Lord Carter, was to create a rival public service broadcaster. The Government's preferred option was a tie-up between Channel 4 and Worldwide.

Worldwide remains in discussions with Channel 4 over a potential joint venture. A deal could now depend on whether the BBC can buy the 50 per cent stake it doesn't own in UKTV from Virgin Media. Should an agreement be reached, Sir Michael said the deal would fit into the "exceptional" category. The assets would be used in the joint venture with Channel 4.

"Discussions have been going on some time," Sir Michael said of talks between Channel 4 and Worldwide. "I think I can see discussions coming to an early conclusion. There is still the prospect of a deal."

Net policy: Trust boss rejects online charges for BBC news

Sir Michael Lyons, chairman of the BBC Trust, yesterday rejected calls to introduce charges for the BBC's online news service, despite fears that it skews competition. "We have no intention of diluting BBC commitment to universal access to free news online," he said, but added: "Beyond that we want to question honestly what licence-fee payers really expect to get from their licence fee and what they might be surprised to see the BBC doing in the online world."

Sir Michael said the trust recognised the concerns over the scale and growth of the BBC's internet operations. "Equally, it's an immensely popular service with audiences and an important tool for the UK economy," he said. Online news and sport, education and children's content as well as the iPlayer are seen as essential to the BBC's mission, but the review will consider which operations to close down.

News Corporation, which publishes The Sun and The Times in the UK, is one of the most outspoken critics of the BBC's free online service. James Murdoch, the chairman of News Corp in Europe and Asia, said in August: "Dumping free, state-sponsored news on the market makes it incredibly difficult for journalism to flourish on the internet." Mr Murdoch, whose company is set to introduce pay-walls for its online news, added: "It is essential for the future of independent journalism that a fair price can be charged for news to people who value it."

Sir Michael's comments came as he updated the market on the Trust's input to the BBC's strategic review run by the director general Mark Thompson.

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