The BBC may only carry out commercial activities through subsidiary companies. The BBC’s commercial subsidiaries generate returns which can be reinvested in BBC programmes and services and supplement income from the licence fee.
The BBC Charter and Agreement require Ofcom to consider the impact of the BBC’s activities on fair and effective competition. One of Ofcom’s principal functions in regulating the BBC is to set requirements around the interaction between the BBC Public Service and its commercial activities.
We have put in place requirements aimed at addressing competition concerns that could arise from the relationship between the BBC Public Service and its commercial subsidiaries to ensure that commercial activities do not, as a result of their relationship with the BBC Public Service, trading activities or non-service activities, distort the market or create an unfair competitive advantage.
We have also considered how we will hold the BBC to account on the commissioning requirements in the Agreement. We have decided not to impose any additional requirements on the BBC in this area at this time, but we will continue to monitor how the BBC’s commissioning process operates.
If the BBC is making a significant change to its commercial activities or undertaking a new activity, it must consider whether the change is “material”. This includes determining whether there is a significant risk that the change may, as a result of the relationship of the activity with the BBC Public Service, distort the market or create an unfair competitive advantage.
BBC Studios produces and distributes content for consumers to watch in the UK and around the world. It also owns and operates channels (UKTV), has a joint venture international subscription video on demand service (BritBox in the US and Canada), sells programme formats internationally and consumer products such as DVDs and merchandise.
Given developments both in the media landscape and in BBC Studios over the past few years, it is important for us to enhance our understanding of how BBC Studios has implemented our rules and to provide additional transparency on this to stakeholders.
In 2017, we published requirements aimed at addressing competition concerns that could arise from the relationship between the BBC Public Service and its commercial subsidiaries to ensure that commercial activities do not, as a result of their relationship with the BBC Public Service, trading activities or non-service activities, distort the market or create an unfair competitive advantage.
Following further work in this area, including looking at the processes and practices around the operation of the commercial subsidiaries and their relationships with the BBC’s Public Service, we have published our statement setting out our decisions to modify the requirements (PDF, 1.3 MB).
The BBC’s commercial and trading activities: requirements and guidance (PDF, 307.2 KB). We published requirements covering the BBC’s trading activities (in addition to the commercial activities) in July 2017.
Deadlines for the publication and provision of information under the Monitoring, Reporting and Transparency requirements (PDF, 650.1 KB). We specified the dates by which the BBC must publish or provide information to Ofcom (as applicable) under our requirements for the first time and in subsequent periods in October 2017.
We have undertaken work on our approach to assessing the BBC’s compliance with the commissioning requirements set out in Schedule 3(7) of the Agreement which apply to the BBC’s television, radio and online public services. Schedule 3(7) requires the BBC to increase the amount of programmes it commissions following a contestable process between producers on fair and reasonable terms.
Our statement setting out our decisions can be found in the section ‘Commissioning for the BBC Public Services’ on the Competition page.