The BBC undertakes commercial activities to generate a return, which can be reinvested in BBC programmes and services and supplement income from the licence fee. These activities will need to adapt to the changing environment and respond to opportunities as they arise. Our role as regulator is to ensure that the relationship between the licence fee funded part of the BBC (the Public Service) and the commercial activities does not distort the market or create an unfair competitive advantage. We support the need for the BBC to innovate, grow and change as long as this is done fairly.
BBC Studios was created in 2017 as the majority of production activities (comedy, drama, entertainment, music & events and factual) were moved out of the licence fee funded part of the BBC (the Public Service). Since then there have been some significant changes.
In 2018 BBC Studios merged with BBC Worldwide, the distribution subsidiary. At the time of this merger, the BBC committed (amongst other things) to maintaining the lines of business within the new BBC Studios so that they were consistent with the lines of business that were in place before the merger. In 2019, the BBC reduced its lines of business within BBC Studios from five to two – ‘Production and distribution’ and ‘Branded Services’ (its channels business) – and it subsequently withdrew its earlier commitment. In 2019, BBC Studios also took full ownership of seven of the ten UKTV channels and agreed significant content deals, including with Discovery, Sky and BritBox UK.
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 (PDF, 767.2 KB) and to provide additional transparency on this to stakeholders.
In our review we will consider concerns on the relationship between the Public Service and BBC Studios. This will allow us to assess whether our regulation remains effective and whether further work needs to be undertaken, including amending our rules. As part of our review we are also assessing the changes BBC Studios made to its lines of business.
In our call for evidence, we invite stakeholder views on three key areas including: operational separation between BBC Studios and the Public Service; the supply and pricing of goods and services between BBC Studios and the Public Service; and the commercial rate of return earned by BBC Studios.
We have also published a report by Mediatique which sets out how the sectors BBC Studios operates in have developed and considers how they might evolve. The deadline for responding to this call for evidence is 4 December 2020. You can respond to bbc.studiosreview@ofcom.org.uk. We will consider all stakeholder representations, and are planning to publish our findings from this review in Spring 2021.
We have provisionally found that BBC Studios’ decision to combine its production and distribution activities into one line of business appears appropriate. However, we consider it is also important for Ofcom to be able monitor the rates of return within the new lines of business so we propose some amendments to our rules.
The deadline for responding to our consultation is 4 December 2020. You can respond to bbc.studiosreview@ofcom.org.uk. We will consider all stakeholder representations, and are planning to publish our statement in early 2021.
