Report calls on BBC to rein in biz ventures

Parliamentary missive will be delivered to culture secretary

LONDON -- The BBC's commercial division, BBC Worldwide, must scale back its commercial operations, share its license fee and exit its investments in overseas production companies and commercial Web sites, an all-party Parliamentary report is expected to say Tuesday.

The report will be delivered to Culture Secretary Andy Burnham as part of his oversight of the broadcasting industry and review of public service broadcasting.

In a hard-hitting review of the division, the House of Commons Culture, Media and Sport select committee has called for the BBC to share its public service license fee with struggling broadcaster Channel 4 -- also owned by the government -- and said that some of the pubcaster's commercial activities are damaging its brand as well as other players in the marketplace.

"The committee calls for the BBC to rein in its commercial operations, which have expanded and diversified in recent years," the report said. "It concludes that new activities undertaken by ... BBC Worldwide have had an adverse impact on its commercial competitors and risk jeopardizing the reputation of the BBC."

The committee's report is particularly critical of the pubcaster's acquisition of the Lonely Planet travel publishing group and of its stakes in independent production companies overseas, such as Mir Reality in Russia and Temple Street Prods. in Canada, which it said should "be disposed of when market conditions permit a profitable or at least loss-minimizing exit."

The BBC's decision to take stakes in production companies including Left Bank Pictures, Steve Coogan's Baby Cow Prods. and Cliffhanger Prods. in the U.K. also was questioned and the committee recommended they also should be divested "as soon as is feasible," although it accepted such exits will not be in the short term.

BBC Worldwide's role as a program sales operation also came under attack, with the committee recommending that BBC Worldwide should not have automatic "first look" for overseas and digital rights to BBC programming, saying that in many cases specialized independent distributors could do a better job and return more money to the BBC license fee payer than its own sales arm.

In a statement the BBC Trust said it will give the committee's report "careful consideration," but added that its own review into the activities of BBC Worldwide had most of the issues raised by the Culture Committee "in hand."

On the subject of sharing license fee income with Channel 4, the Trust said the move would not address the key issue, which was about finding "new sources of value rather than simply reallocating new funds."

It also defended its "first-look" arrangements, saying that they enabled Worldwide to be a source of production finance.