BBC annual report touts profit for Studios, cites “threat” from FAANGs

The BBC has released its annual report for 2017/2018, touting the success of the pubcaster’s Studios division in its first year as a commercial entity while also noting what chairman ...
July 11, 2018

The BBC has released its annual report for 2017/2018, touting the success of the pubcaster’s Studios division in its first year as a commercial entity while also noting what chairman Sir David Clementi calls “a threat to British content from the west coast of America.”

That threat, one can assume, comes in the form of the FAANGs — the tech-based platforms that are taking an increasingly larger bite out of the content pie with aggressive acquisition strategies and formidable budgets for original programming.

Broadcasters in European territories including France and Germany are responding to that threat by banding together to create local SVOD platforms. Discovery and ProSiebenSat.1 recently announced plans to build a German OTT service, with ProSiebenSat.1 CEO Max Conze, in a statement, calling for RTL, ARD and ZDF to join the initiative “so we can have one German champion.”

In France, meanwhile, France Télévisions, M6 and TF1 Group have teamed up to create Salto, a joint platform devised to, in the words of France Télévisions chair and CEO Delphine Ernotte Cunci, “respond to the challenge of global platforms by offering a high-quality service to all our audiences and showcasing the best of the French and European creative industries.”

Clementi, in his statement, addressed the changing global media landscape, saying: “…the market around us is becoming more global and competitive. We face a threat to British content from the west coast of America, and we need to respond to the rapidly changing habits and needs of our audiences in the digital age. All this must be set alongside the BBC’s tougher-than-ever financial context.”

“As ever, this year has been above all about our programmes and our commitment to creativity and risk-taking,” wrote BBC director-general Tony Hall in his statement. “This is something I picked out at the start of the year as our first priority as we seek to reinvent the BBC for a new generation, and nowhere has it been more evident than in the quality and distinctiveness of our output on-air and on-screen.

“Landmark series like Blue Planet II on BBC One have proved once again that, when you create television that is truly world-class, audiences of all ages respond,” he said.

Blue Planet II (pictured) was among the programs cited in the report as driving the success of BBC Studios in its first year as a commercial entity. From its launch as a commercial subsidiary of the BBC in April of 2017, BBC Studios produced over 2,000 hours of content in 2017-18, and generated headline sales of £432.0 million (approximately US$572 million) and EBITDA of £7.2 million (approximately US$9,529,398).

Upon receiving approval from the BBC Trust to become its own commercial division in December of 2016, BBC Studios ceased to have a guarantee of in-house business from the pubcaster, but gained the freedom to pitch programming to other broadcasters in the UK and abroad.

In that regard, over the course of its first year in business, BBC Studios gained commissions from Channel 4 (Fatberg Autopsy), Channel 5 (Inside Hotel Chocolat, The Bermuda Triangle), UKTV (Sex, Knives and Liposuction) and Discovery (The Red List).

“It’s testament to the hard work and dedication of our hugely talented program-makers and business teams that we have turned a profit in our first year of operating as a commercial entity,” said Mark Linsey, current chief creative officer for BBC Studios, in a statement. “This year we received 200 nominations and over 80 awards for our content. Three of the top five British shows of 2017 were ours, proving that our programmes have made a huge impact on audiences. Not only that, we won new business from third-party broadcasters both here in the UK and around the world. We now look forward to consolidating and growing our success within the newly merged BBC Studios.”

In April of 2018, the Studios division and BBC Worldwide (BBCWW), the commercial arm of the broadcaster, merged to form one single integrated group under the BBC Studios banner. For the financial year of 2017-18, BBCWW saw a “slight reduction in headline sales” of 2% — to £1,044.0 million — due to declining DVD sales, less production hours ordered for ABC’s Dancing with the Stars, and the inter-group transfer of ad sales. EBITDA for BBCW, however, was up by 42% to £118.3 million. Again, the global success of Blue Planet II, sold to 234 territories by the year’s end, was a strong factor.

“BBC Worldwide entered the merger with BBC Studios from a strong position,” said Tim Davie, CEO of BBC Studios and former CEO of BBC worldwide, in a statement. “Joining our world-class distribution capability with the UK’s most awarded production company was the most natural step to keep us both fit for the future. I am confident about the prospects of the new BBC Studios and what we can achieve together.”

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